Pennsylvania Treasurer Joe Torsella announced Monday a Service Level Agreement (SLA) with Bank of New York Mellon (BNYM), Pennsylvania’s custodial banking partner.
The agreement includes all Commonwealth funds, including the state’s largest pension systems: the Public School Employees’ Retirement System (PSERS), State Employees’ Retirement System (SERS), and Pennsylvania Municipal Retirement System (PMRS).
“Every dollar in Commonwealth funds comes from the hard work of Pennsylvania taxpayers,” Torsella said. “As treasurer, I work to make sure every taxpayer dollar is valued as much as the hard work that earned it. This historic agreement elevates the level of service by BNYM. The agreement lays out very specific service details with financial repercussions if BNYM violates the commitments and strict standards we expect.”
The Pennsylvania Treasury Department negotiated the SLA in partnership with the three pension systems to identify deliverables and terms of service that must be met. BNYM agreed to pay significant financial penalties if it fails to meet the standards.
Treasury conducted an independent review of custodial services through institutional investor analytics consultant, M.J. Hudson Amaces, to help in understanding available custodial banking options and negotiating the SLA.
“The thorough and independent review revealed conclusively that Pennsylvania is paying the lowest fees when compared to peer investors,” Torsella said. “I am pleased with the findings of the independent analysis, and look forward to maintaining this important relationship with BNYM.”
Amaces concluded that few banks can handle the demands and breadth of service the Commonwealth funds require. As compared to 17 other investors of similar size and scope, Ameres found that Pennsylvania is paying the lowest fees, which are 46 percent below the peer average, with BNYM.