Auditor General DePasquale Calls Subsidy for Saudi Arabia from PA Teachers’ Pension Plan Completely Unacceptable

December 31 2018

Auditor General DePasquale Calls Subsidy for Saudi Arabia from PA Teachers’ Pension Plan Completely Unacceptable

HARRISBURG (Dec. 31, 2018) – A long-time critic of investment fees paid by state pension plans, Auditor General Eugene DePasquale today issued the following statement on learning that Pennsylvania’s Public School Employees’ Retirement System (PSERS) subsidized lower fees for Saudi Arabia:

“It is completely unacceptable that Pennsylvania teachers paid higher fees than Saudi Arabia on an investment with an American company.

“I’m not suggesting that PSERS made a conscious decision to subsidize Saudi Arabia, but this is more evidence that Pennsylvania’s retirement system needs to take a harder look at the fees it’s paying Wall Street money managers.

“We’re talking about money that should be securing the future of our dedicated public servants, not subsidizing fee discounts for investors in other countries.”

According to a story published today by the Philadelphia Inquirer, PSERS invested $500 million in the Blackstone Infrastructure Partners private equity fund. PSERS received a discount on the fees it paid for the investment, however, the Public Investment Fund of Saudi Arabia received a larger discount. According to the story, the lower fees paid by the Saudis were subsidized by PSERS and other U.S. investors.

“Controlling who pays what in fees is an example of the power Wall Street elites wield in secret over average Americans. It must end.”

DePasquale continues to push for eliminating Wall Street fees. In separate audits released in May and August 2017, he found that PSERS and the State Employees’ Retirement System were suffering from sky-high investment management fees. He is following up on those audits with a special report.

Learn more about the Department of the Auditor General online at www.paauditor.gov.

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