Bill Text: NY A07904 | 2019-2020 | General Assembly | Amended


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

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced - Dead) 2020-01-08 - referred to governmental employees [A07904 Detail]

Download: New_York-2019-A07904-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         7904--A

                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                      May 28, 2019
                                       ___________

        Introduced by M. of A. ABBATE -- read once and referred to the Committee
          on  Governmental  Employees  --  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
    21  subdivisions of this section, and not more than [ten] thirty per  centum
    22  of  the  assets  of  any fund shall be invested in the aggregate in such
    23  foreign equities.
    24    § 2. This act shall take effect immediately.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11293-03-9

        A. 7904--A                          2

          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 30% of the fund's assets in the aggre-
        gate.
          Effective Date: Upon enactment.
          FINANCIAL  IMPACT  -  SUMMARY:  This legislation, as it related 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
        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 depend-
        ent  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
        and  procedures  and  with the Actuarial Standards of Practice issued by
        the Actuarial Standards Board.
          FISCAL NOTE IDENTIFICATION: This Fiscal Note 2019-33  dated  June  11,
        2019  was prepared by the Chief Actuary for the New York City Retirement

        A. 7904--A                          3

        Systems and Pension Funds. This estimate is intended for use only during
        the 2019 Legislative Session.
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