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Pa. Treasurer Urges Stricter Oversight of Local Pensions

By: Dinah Wisenberg Brin
Dow Jones Newswire, August 27, 2002

PHILADELPHIA -- Pennsylvania Treasurer Barbara Hafer urged tighter state oversight or consolidation of local pension plans Tuesday, citing a lack of information about how corporate scandals and the decline in the stock market have affected such funds.

Pennsylvania's state pension funds - the State Employees' Retirement System and the Public School Employees' Retirement System - are fully funded at 110% and 114%, respectively, Hafer told the Pennsylvania House Special Advisory Committee on Securities in Harrisburg.

Hafer chairs the PSERS board and is a member of the SERS board.

The two state pension funds "have a great success story to tell. We've weathered one of the worst bear markets in history, outperformed our benchmarks and kept our pension funds fully funded," she said in a statement.

But Hafer said there's "a real lack of detailed, current information" on the status of municipal pension funds.

The committee should consider legislation to either consolidate local pension plans or strengthen state oversight of them, said Hafer. The panel is examining ways to better protect invested public funds.

Pennsylvania has nearly 3,000 municipal pension funds - most of them locally managed - more than four times the number of public employee pension plans in any other state, according to Hafer. The funds serve almost 135,000 members, she said.

A report issued last year by a state commission showed that in 1999, before the bear market, a quarter of Pennsylvania's local public employee pension funds had unfunded liabilities, she said.

"We don't know what investment policies these locally managed funds are using. Worse than that, there's no law that even requires them to have investment policies, let alone one that dictates standards for asset allocation," she said.

It also is unclear what procedures local boards use to choose money managers, said Hafer.

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