Pennsylvania Pension Leadership to Retire After Year of Scandal

(Bloomberg) -- The leaders of Pennsylvania’s biggest pension said they are stepping down, five months after a group of trustees at the $72.5 billion plan sought to oust them amid a federal probe. 

James Grossman Jr., chief investment officer of the Pennsylvania Public School Employees’ Retirement System, will retire on May 1. Glen Grell, executive director, is retiring effective February 28. The PSERS board accepted their resignations at a Thursday board meeting. Both Grossman and Grell will remain on as senior advisers after their retirements.

The planned departures come after six board members sought a vote to oust the two officials in June, citing poor investment performance and an over reliance on alternative investments like private equity. That vote was never held. 

The six said in a June letter to the full board that the fund allocated 62.6% of its assets to alternatives, more than double the average for other public pensions, union, or corporate plans. 

PSERS has faced significant legal scrutiny this year. It is the subject of a federal grand jury probe and has been asked by the U.S. Securities and Exchange Commission to turn over documents related to possible gift exchanges with dozens of Wall Street firms. 

The fund said it is cooperating with the U.S. Attorney’s office in the Eastern District of Pennsylvania. 

In March, the pension said it miscalculated its nine-year average rate of return last year. That miscalculation was a 0.04 percentage point difference but correcting the error triggered increased payments for employees that pay into the pension.

In October, PSERS said it had notched $14.8 billion of net investment income for the 2020-2021 fiscal year, bringing total assets to $72.5 billion as of June 30. The pension plan serves teachers and other full-time school staff in Pennsylvania.

PSERS will immediately launch searches to replace both Grossman and Grell, who have served in their roles since 2013 and 2015, respectively, according to statements from the board. The Wall Street Journal reported Grossman’s planned departure earlier on Thursday. 

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