S T A T E O F N E W Y O R K
________________________________________________________________________
4005
2015-2016 Regular Sessions
I N S E N A T E
February 25, 2015
___________
Introduced by Sen. GOLDEN -- (at request of the New York State Teachers'
Retirement System) -- read twice and ordered printed, and when printed
to be committed to the Committee on Education
AN ACT to amend the retirement and social security law, in relation to
eligible investments in foreign equity securities by public retirement
systems of the state
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]
15 ISSUER OF SUCH EQUITY SECURITY has averaged at least one billion dollars
16 in annual sales for the three consecutive years preceding the year in
17 which the investment is made or has market capitalization of at least
18 one billion dollars at the time the investment is made. Investments in
19 such foreign equities shall be included together with a fund's invest-
20 ments in other equity securities for purposes of the percentage limita-
21 tions set forth in [the foregoing subdivisions] SUBDIVISION TWO of this
22 section, and not more than [ten] TWELVE AND A HALF per centum of the
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09195-01-5
S. 4005 2
1 assets of any fund shall be invested in the aggregate in such foreign
2 equities PURSUANT TO THIS SUBDIVISION.
3 S 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend subdivision 8 of Section 177 of the Retirement
and Social Security Law to increase to 12.5% the percentage of assets
which may be invested by the New York State Teachers' Retirement System
in foreign equity securities. The current limit is 10%.
If this bill is enacted, any cost or savings to the employers of
members of the New York State Teachers' Retirement System would depend
on the investment performance of any assets that are invested in foreign
equity securities due to this change in the investment restrictions.
Additional investment income results in lower required employer contrib-
utions, and vice-versa.
Employee data is from the System's most recent actuarial valuation
files, consisting of data provided by the employers to the Retirement
System. Data distributions and statistics can be found in the System's
Comprehensive Annual Financial Report (CAFR). System assets are as
reported in the System's financial statements, and can also be found in
the CAFR. Actuarial assumptions and methods are provided in the System's
Actuarial Valuation Report.
The source of this estimate is Fiscal Note 2015-4 dated December 30,
2014, prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2015 Legislative Session.
I, Richard A. Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American Academy of Actuaries
and I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend the Retirement and Social Security Law to allow
the 8 public retirement systems of New York State to invest up to 12.5
percent of their assets in Foreign Equity Securities. The current limit
on foreign equities is 10 percent.
If this bill is enacted, insofar as this bill affects the New York
State and Local Employees' Retirement System and the New York State and
Local Police and Fire Retirement System, we assume that there would be
small investment changes. Any increases or decreases in investment earn-
ings will result in decreases or increases, respectively, in employer
contributions. Annual changes in assets will be shared by all employers
and will be spread over the future working lifetimes of active members.
Summary of relevant resources:
The membership data used in measuring the impact of the proposed
change was the same as that used in the March 31, 2014 actuarial valu-
ation. Distributions and other statistics can be found in the 2014
Report of the Actuary and the 2014 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2010,
2011, 2012, 2013 and 2014 Annual Report to the Comptroller on Actuarial
Assumptions, and the Codes Rules and Regulations of the State of New
York: Audit and Control.
The Market Assets and GASB Disclosures are found in the March 31, 2014
New York State and Local Retirement System Financial Statements and
Supplementary Information.
S. 4005 3
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the statement of actuarial opinion
contained herein.
This estimate, dated February 5, 2015, and intended for use only
during the 2015 Legislative Session, is Fiscal Note No. 2015-62 prepared
by the Actuary for the New York State and Local Employees' Retirement
System and the New York State and Local Police and Fire Retirement
System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: With respect to the New York City
Retirement Systems ("NYCRS"), this proposed legislation would amend
Retirement and Social Security Law ("RSSL") Section 177.8 to provide for
an increase in the percentage of the assets of a fund that can be
invested in foreign equity securities from 10.0% to 12.5%.
The Effective Date of the proposed legislation would be the date of
enactment.
FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: With respect to the NYCRS,
the enactment of this proposed legislation would not, in and of itself,
result in any change in employer contributions.
The ultimate cost of a Retirement Program is the benefits it pays. The
financing of that ultimate cost is provided by contributions and invest-
ment income.
Investment income depends upon the amount of assets of the respective
NYCRS fund and the rate of return received on those assets. The rate of
return depends to a large extent upon the asset allocation policy of the
respective NYCRS fund.
To the extent that the NYCRS increase their investments in the securi-
ties authorized by this proposed legislation and those securities
produce greater (lesser) rates of return than the NYCRS would otherwise
have achieved, then employer contributions to the NYCRS will be lesser
(greater).
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Acting
Chief Actuary for the New York City Retirement Systems. I am a Fellow of
the Society of Actuaries and a Member of the American Academy of Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-05, dated
February 5, 2015, prepared by the Acting Chief Actuary for the New York
City Retirement Systems.