The State Employees Retirement System, or SERS, the State Employees Pension Fund, is reforming travel rules for staff

The Pennsylvania State Workers’ Pension Fund has revised its staff travel rules and will no longer allow hedge funds and other outside businesses to book flights and hotels for the fund’s investment experts.

The unanimous decision by the board of directors of the $38 billion State Employees Retirement System, or SERS, follows that of its larger sister fund for teachers in the state, which adopted the same reform five months ago. This fund, known as PSERS, acted after The Inquirer revealed a lavish travel pattern of its investment staff, such as a $15,627 round-trip plane ticket to London and an overnight stay at the $1,178 hotel in New York.

For years, the two taxpayer-funded pension plans, like others across the country, used what critics say were deliberately obscure and convoluted travel policies under which they allowed hedge funds and other providers to arrange for fund employees when traveling to verify investments. Outside companies would bury the specific charges in subsequent billings, so the funds essentially didn’t know what they were paying.

But critics, including former Pennsylvania Treasurer Joseph Torsella, warned when he was a board member of both funds that luxury travel reflected an all too comfortable relationship between the systems’ investment staff and the private companies with which they were negotiating.

Now both pension plans book all travel in-house and pay for it directly.

SERS pays out $3.6 billion a year in retirement checks to 133,000 former public servants. Last year, its earnings included $3.9 billion in investment profits, $3.2 billion from taxpayers and $410 million from active public workers. Even so, it faces a $22 billion shortfall between bonds and investments.

The PSERS — the $73 billion public school employee retirement system — is twice as big. It pays benefits to 250,000 retired teachers and other former school workers.

Last week, the government employees fund also released its first-ever travel report for its 28 investment professionals after The Inquirer asked about its commitment to making travel expenses public. The one-sentence report simply states that no staff traveled in the first year of the COVID-19 pandemic. SERS did not reveal anything about previous years.

Unlike SERS, the PSERS fund released three years of travel reports in March, dating back to 2017. This fund said its 40 investment experts were spending $300,000 a year on travel before COVID hit. The PSERS, however, acknowledged that its disclosure had big holes, omitting many meals and specific trips.

Reports showed that the most frequent destinations for PSERS personnel were New York, followed by London, Boston and Philadelphia. Other destinations included Beijing, Bermuda, Dublin, Edinburgh, Hong Kong, Lisbon, Macau, Madrid, Paris, Saudi Arabia, Singapore, Seoul, Stockholm, Sydney and dozens of US cities.

As for SERS, it also said it had closed a 25-year-old loophole under which its 11 board members, chief executive, chief investment officer and a senior deputy were exempt from limits. of the State on meal and travel expenses. Like other state workers, they must follow a schedule that states, for example, that they cannot spend more than $36 per person for dinner in Philadelphia.

Unlike the fund for government employees, the PSERS plan was disrupted for most of the year by an ongoing FBI investigation into its board’s financial misconduct and Harrisburg real estate purchases. In September, the U.S. Securities and Exchange Commission joined in, asking the PSERS in a subpoena for any acceptance of “money, gifts, gratuities, travel, or anything of value” by its staff. . SERS said Friday it had not received a similar subpoena from the SEC.

The SERS board of directors adopted the new travel policies at a meeting on Wednesday in which it also promoted Joseph A. Torta, 57, to the position of the plan’s next executive director. Torta, a 32-year SERS employee who is currently one of three principal deputies, will replace Terri Sanchez, who has led the agency since 2018. She was paid $226,133 a year; SERS said Torta’s salary is still being negotiated.

Sanchez, 60, who was due to retire on December 31, is reportedly being considered to become acting executive director of PSERS, whose chief executive agreed to retire last month amid investigations.

SERS also named a new chief investment officer in June, promoting James G. Nolan, the third such executive in the past five years. Nolan, paid $325,009 a year. received an 8% raise over his predecessor, who had only been in the job for 11 months.

On Wednesday, the fund also set a series of pay rises for the investment unit of around 4.5%. This is double the pending wage increase due to other employees of the fund under a union contract.

Dolores W. Simon