Pennsylvania Public School Employees’ Retirement System, Harrisburg, disclosed in a statement earlier this week it has filed a lawsuit against Aon Investments USA related to an error in investment reporting.
The $69.7 billion pension fund filed its complaint on Monday in the Philadelphia Court of Common Pleas, Commerce Division, following its writ of summons in December, and said in the statement it “seeks to hold Aon accountable for the errors it made related to PSERS’ 2020 risk share analysis and recover damages to compensate PSERS for the significant and ongoing harm Aon has caused.”
In March 2021, PennPSERS commissioned a report from law firm Womble Bond Dickinson after its board was notified that the investment reporting figures used for an annual employer contribution rate increase contained a calculation error. According to that report, Aon Investments USA took responsibility for the error, which involved incorrect public markets investment returns in April 2015 that was only discovered by PennPSERS staff in 2020 following Aon’s release of nine-year investment return data.
In the complaint, PennPSERS alleges Aon “repeatedly admitted and acknowledged that it had made certain mistakes, to date — almost two and one-half years since Aon’s admissions — Aon has not come clean as to what actually occurred, and what it did and/or did not do.”
PennPSERS alleges breach of contract, breach of fiduciary duty and negligence against its former investment consultant and seeks damages to be determined at trial and “in excess of the court’s compulsory threshold,” as well as punitive damages, disgorgement of fees that PennPSERS has paid to Aon under its contract since 2013, and other fees and costs.
The pension fund in the complaint says “the impact of Aon’s errors on plaintiffs was, and continues to be, substantial. Aon’s errors were widely reported in the press. Those errors adversely affected plaintiffs’ reputation and have caused plaintiffs millions of dollars in damages.”
The fallout from the investment error resulted in the pension fund’s board in November 2021 voting for the retirements of James H. Grossman Jr., chief investment officer, and Glen R. Grell, executive director. They have since been replaced by Benjamin Cotton and Terrill J. Sanchez, respectively.