Aon Agrees to $15 Million Settlement With Pennsylvania Teachers

A unit of Aon Plc agreed to settle a class-action lawsuit alleging that calculation errors and faulty investment advice caused Pennsylvania public school teachers to make millions of dollars in extra contributions to their pension fund.

The firm’s Aon Investments USA subsidiary agreed to pay $15 million to settle the allegations, according to a filing last week in federal court in Philadelphia. It’s the third settlement between teachers and advisers to the $80 billion Pennsylvania Public School Employees’ Retirement System, the state’s largest public pension fund.

Asset managers Hamilton Lane and Portfolio Advisors previously settled allegations in the case after they were accused of recommending unsuitable and expensive private equity and private credit investments.

The settlement still requires court approval, said Gerard Mantese, a lawyer for the plaintiffs. An Aon spokesperson declined to comment.

The Pennsylvania teachers alleged that Aon recommended the pension invest in inappropriate, high-fee hedge funds that led to significant losses. Aon also relied on other financial advisers to compute returns, failed to confirm or check returns or disclose excessive fees, the lawsuit alleged.

Aon previously settled U.S. Securities and Exchange Commission allegations that it miscalculated returns of the teachers’ pension and failed to adequately investigate discrepancies in historical returns. Aon paid a $1 million penalty in 2024 without admitting or denying the SEC’s findings.

The miscalculations caused turmoil at the Pennsylvania pension, leading the chief investment officer and executive director to step down. Aon agreed to a $7 million settlement with the pension fund in 2024.