One of the oldest and largest statewide retirement systems for public employees in the United States,[2] it was founded on March 13, 1923[3] during the administration of Pennsylvania Governor Gifford Pinchot.

While eliminating a $23 million state deficit and creating a retirement system for state employees, Pinchot also created an old age pension system, settled a coal mining strike in 1923, and revised laws for the care and treatment of individuals with mentally illness and developmental disabilities.

[6] Assisting Pinchot in creating the Pennsylvania State Employees’ Retirement System was Leon Henderson, who would later be referred to by newspapers as "The Paul Bunyan of Bureaucracy.

"[7] In June 1980, John V. Corrigan, a former administrator of the retirement system, pleaded guilty to twenty-six counts of forgery and twenty-six counts of theft connected with his embezzlement of $366,750 from the fund.

[8] In early 1990, the Pennsylvania State Employees’ Retirement System committed to providing $5 million of the goal of Frederic J. Beste III, the president and chief executive officer of NEPA Management Corp., to raise $15 to $20 million in economic development investment funds for businesses in the northeastern Pennsylvania region.