A central component of new state Gov. Tom Wolf’s plan to slash the retiree pension funding gap by more than $10 billion puts a significant amount of faith in Malvern’s mutual fund giant, Vanguard Group, according to a Philly.com blog post critical of the governor’s budget proposal.

The strategy involves pulling money out of the hands of “hundreds of high-fee money managers and strategies” and putting it into “index funds and other low-fee investments” that have made Vanguard an attractive choice for investment portfolios in recent years.

Wolf described the move as a way to “‘institute pension investment reforms to significantly reduce excessive management fees and overreliance on high-risk investment strategies’ and instead ‘seek less costly passive investment approaches where appropriate,’” just as Montgomery County sought to do in 2013, the article stated.

Blog author Joseph N. DiStefano, however, questioned the logic behind the plan, saying “Wolf appears to assume these savings will be passed along to the pension systems with no change in investment returns, as if the only difference between buying actively-managed stock, hedge, real estate or private equity funds and buying index funds is that the actively-managed funds cost more and the net, after-fee return from index funds is correspondingly higher.”

Read more about the state’s pension funding plan over at the New York Times’ Dealbook blog as well.