$25 billion in passive public equity assets will be shifted by PennPSERS to BNY Investments, marking a rare move by a large pension plan to hand external managers work often kept in-house.
The pension system said the outsourcing will cut costs by 53%, challenging the long-held industry view that internal management is the cheaper model for passive equities.
The switch also comes as PennPSERS addresses ongoing performance and staffing pressures that had weighed on its internal investment operation.
For public pension funds more broadly, the decision stands out as a potential test of whether scale no longer guarantees lower in-house costs.