Bill Text: NY S05414 | 2019-2020 | General Assembly | Amended


Bill Title: Provides that not more than twenty per centum of the assets of any fund of the public retirement system shall be invested in foreign equities.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed) 2019-06-20 - referred to governmental employees [S05414 Detail]

Download: New_York-2019-S05414-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         5414--C

                               2019-2020 Regular Sessions

                    IN SENATE

                                     April 30, 2019
                                       ___________

        Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
          printed to be committed to the Committee on Civil Service and Pensions
          --  committee  discharged,  bill amended, ordered reprinted as amended
          and recommitted  to  said  committee  --  committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee --  committee  discharged,  bill  amended,  ordered  reprinted  as
          amended and recommitted to said committee

        AN  ACT  to amend the retirement and social security law, in relation to
          investment of moneys of retirement funds in foreign equity securities

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Subdivision 8 of section 177 of the retirement and social
     2  security law, as amended by chapter 594 of the laws of 1993, is  amended
     3  to read as follows:
     4    8.  The  trustees  of a fund shall have the power to invest the moneys
     5  thereof in foreign equity securities provided that (a) any  such  equity
     6  security is registered on a national securities exchange, as provided in
     7  an  act  of  congress  of  the  United  States, entitled the "Securities
     8  Exchange Act of 1934", approved June  sixth,  nineteen  hundred  thirty-
     9  four,  as  amended, or otherwise registered pursuant to said act and, if
    10  such equity security is so otherwise registered, price quotations there-
    11  for are  furnished  through  a  nationwide  automated  quotation  system
    12  approved  by  the National Association of Securities Dealers, Inc. or is
    13  registered on a foreign exchange organized and regulated pursuant to the
    14  laws of the jurisdiction of such exchange and (b)  the  corporation  has
    15  averaged  at  least  one  billion  dollars in annual sales for the three
    16  consecutive years preceding the year in which the investment is made  or
    17  has  market  capitalization  of at least one billion dollars at the time
    18  the investment is made. Investments in such foreign  equities  shall  be
    19  included  together  with a fund's investments in other equity securities
    20  for purposes of the percentage limitations set forth  in  the  foregoing

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11293-06-9

        S. 5414--C                          2

     1  subdivisions  of this section, and not more than [ten] twenty per centum
     2  of the assets of any fund shall be invested in  the  aggregate  in  such
     3  foreign equities.
     4    § 2. This act shall take effect immediately.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY  OF  BILL: This proposed legislation, as it relates to the New
        York City Pension Funds and  Retirement  Systems  (NYCRS),  would  amend
        section  177(8)  of  the  Retirement  and  Social Security Law (RSSL) to
        increase the current foreign equities investment cap  from  10%  of  the
        fund's assets in the aggregate to 20% of the fund's assets in the aggre-
        gate.
          Effective Date: Upon enactment.
          FINANCIAL  IMPACT  -  SUMMARY:  This legislation, as it relates to any
        costs in the potential reallocation of  current  NYCRS  investments,  is
        expected  to  have  minimal  to no impact on member or employer contrib-
        utions. The cost of a retirement program is based on the  benefits  paid
        plus  any  expenses  to  administer  the  program. The cost is funded by
        contributions and investment income, the latter of which  is  driven  by
        the  rate  of  return  on  the  assets. To the extent that this proposed
        legislation increases  or  decreases  this  rate  of  return,  it  would
        decrease or increase the employer contributions, respectively.
          OTHER COSTS: Not measured in this Fiscal Note are the following:
          *  The initial, additional administrative costs to each of the retire-
        ment systems and other New York City agencies to implement the  proposed
        legislation.
          *  The  impact  of  this  proposed legislation on Other Postemployment
        Benefit (OPEB) costs.
          CENSUS DATA: The estimates presented herein are based  on  the  census
        data  used  in  the June 30, 2016 (Lag) actuarial valuations of NYCRS to
        determine the Final Fiscal Year 2018 employer contributions.
          ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have
        been calculated based on the actuarial assumptions and methods in effect
        for the June 30, 2016 (Lag) actuarial valuations used to  determine  the
        Final Fiscal Year 2018 employer contributions of NYCRS.
          RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
        highly on the actuarial assumptions and methods used and are subject  to
        change  based  on  the realization of potential investment, demographic,
        contribution, and other risks. If actual experience deviates from  actu-
        arial  assumptions,  the  actual costs could differ from those presented
        herein. As a reference, increasing the current discount rate  (i.e.  the
        assumed  rate  of  return  on  the  Plan's assets of 7.0%) by 1.0% would
        reduce the unfunded liability by $22.6 billion, while decreasing  it  by
        1.0%  would  increase the unfunded liability by $26.8 billion. Costs are
        also dependent on the actuarial methods used,  and  therefore  different
        actuarial  methods  could  produce  different results. Quantifying these
        risks is beyond the scope of this Fiscal Note.
          STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief  Actu-
        ary  for,  and  independent of, the New York City Retirement Systems and
        Pension Funds. I am a Fellow of the Society of  Actuaries,  an  Enrolled
        Actuary under the Employee Retirement Income and Security Act of 1974, a
        Member of the American Academy of Actuaries, and a Fellow of the Confer-
        ence  of Consulting Actuaries. I meet the Qualification Standards of the
        American Academy of Actuaries to render the actuarial opinion  contained
        herein.  To  the best of my knowledge, the results contained herein have
        been prepared in accordance with generally accepted actuarial principles

        S. 5414--C                          3

        and procedures and with the Actuarial Standards of  Practice  issued  by
        the Actuarial Standards Board.
          FISCAL  NOTE  IDENTIFICATION:  This Fiscal Note 2019-37 dated June 17,
        2019 was prepared by the Chief Actuary for the New York City  Retirement
        Systems and Pension Funds. This estimate is intended for use only during
        the 2019 Legislative Session.
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