The Pennsylvania State Employees’ Retirement System (SERS) manages retirement benefits for employees of the Commonwealth of Pennsylvania and certain independent agencies. With approximately $38 billion in assets under management as of mid-2024, PA SERS serves over 240,000 active members and retirees.
Investment Strategy
PA SERS pursues a diversified investment strategy designed to meet its long-term actuarial return assumptions. The portfolio is allocated across public equities, fixed income, real estate, private equity, and other alternatives. The system’s board of trustees sets the strategic asset allocation policy, which is informed by periodic asset-liability studies.
The public markets portfolio includes allocations to domestic and international equities through a combination of active and passive strategies. Fixed income provides portfolio stability and cash flow for benefit payments. The system has progressively increased its alternatives allocation over the past decade as part of a strategy to enhance returns and diversify risk sources.
Private Markets Approach
PA SERS has developed a meaningful private markets program relative to its fund size. The private equity allocation targets approximately 15% of total assets, with commitments to buyout, growth equity, venture capital, and distressed strategies. The system invests across large-cap and mid-market strategies, recognizing the return potential of both segments.
Real estate represents another core alternative allocation, with investments in core, value-add, and opportunistic strategies. The system has also expanded into private credit, committing to direct lending and specialty finance strategies that offer attractive risk-adjusted yields.
The investment team evaluates prospective managers on performance track record, investment process, team stability, operational infrastructure, and alignment of interests. PA SERS values transparency in fee structures and reporting. Commitment sizes typically range from $25 million to $100 million, depending on fund size and strategy. The system maintains a structured approval process with staff recommendations reviewed by the board.
Frequently Asked Questions
How large is PA SERS's private equity program?
PA SERS targets approximately 15% of total assets in private equity, representing roughly $5-6 billion in committed capital. The system invests across buyout, growth equity, and venture capital strategies with a focus on consistent net returns over long time horizons.
Does PA SERS invest with mid-market managers?
Yes. PA SERS has maintained an active mid-market buyout program alongside commitments to larger funds. The system recognizes the return potential of mid-market strategies and has built relationships with managers across the fund size spectrum.
What is the best way for a fund manager to approach PA SERS?
PA SERS works with investment consultants and maintains an internal investment team that evaluates new opportunities. Managers should engage through consultant relationships or submit materials directly to the investment office. The board of trustees reviews and approves commitment recommendations from staff.
