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.