HARRISBURG (WSKG) -- The Auditor General's office has released a report detailing how Pennsylvania's pension system for state employees can cut costs. The system, known as SERS, is grappling with roughly $20 billion in unfunded liabilities, and has been making concerted efforts to streamline spending.
Since 2007, the fund has reduced the fees it pays to investment managers by more than half.
But in his report, Auditor General Eugene DePasquale said there's room to cut even more of those expenses, noting he doesn't think SERS's returns justify its expenditures.
"We have some of the highest management investment fees in the country, and we were below the national average rate of return," he said.
SERS has moved 14 percent of its assets out of expensive, actively managed funds and into passive index funds, which can make less money, but are cheaper and more stable.
A little over half of SERS's funds are still in active accounts, and DePasquale said he thinks the number should be lower.
"I'd like to get it to 25 percent," he said. "It's where other states are going, and also what we've seen in other counties as well."
A spokeswoman for SERS says the fund doesn't have a specific target for investment savings, and maintains that "asset allocation and portfolio diversity is the key to long-term growth of the Fund and protection against downside markets."
DePasquale's audit also recommended the state update pension forfeiture law, to make sure any employee who commits a crime against a person in their care must give up retirement benefits.