Pennsylvania Public School Employees’ Retirement System has settled its lawsuit against Aon Investments USA Inc., its former investment consultant, for $7 million. The settlement revolved around accounting errors that Aon made in a 2020 risk share analysis, which the education workers’ retirement plan alleged damaged its finances and hurt its reputation.
“This resolution is a clear reminder that we take our stewardship of the assets and resources entrusted to PSERS seriously,” said PSERS board chairman, Richard Vague, in a statement. Aon could not be reached for comment.
Last August, PSERS filed a lawsuit against Aon in Pennsylvania’s Court of Common Pleas for Philadelphia County over accounting errors made in the 2020 risk share analysis. The legal action, which accused Aon of breach of contract, breach of fiduciary duty and negligence, was rooted in an error the firm made that led PSERS to inaccurately report its returns in December 2020.
Aon at first reported that the pension fund’s nine-year performance figure was 6.38%, just above a 6.36% threshold that required additional contributions from plan participants. But a review later found that the figure was actually 6.36%, which meant the pension fund’s beneficiaries had to boost their payments.
Those miscalculations prompted the resignation of PSERS’ executive director, Glen Grell, and its CIO, Jim Grossman. The legal action also called into question a year-long U.S. Department of Justice inquiry that found no wrongdoing.
PSERS has reported that it paid Aon $7.2 million for investment advice over almost a decade.
The pension plan’s board has ended its contract with Aon; Verus Investments took over from the accounting firm.
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Tags: accounting errors, Aon, investment advice, Jim Grossman, Lawsuit, Pennsylvania Public School Employees Retirement System, PSERS, Richard Vague