S T A T E   O F   N E W   Y O R K
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                                  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:

  Section  1.  Subdivision 8 of section 177 of the retirement and social
security law, as amended by chapter 594 of the laws of 1993, is  amended
to read as follows:
  8.  The  trustees  of a fund shall have the power to invest the moneys
thereof in foreign equity securities provided that (a) any  such  equity
security is registered on a national securities exchange, as provided in
an  act  of  congress  of  the  United  States, entitled the "Securities
Exchange Act of 1934", approved June  sixth,  nineteen  hundred  thirty-
four,  as  amended, or otherwise registered pursuant to said act and, if
such equity security is so otherwise registered, price quotations there-
for are  furnished  through  a  nationwide  automated  quotation  system
approved  by  the National Association of Securities Dealers, Inc. or is
registered on a foreign exchange organized and regulated pursuant to the
laws of the jurisdiction of such  exchange  and  (b)  the  [corporation]
ISSUER OF SUCH EQUITY SECURITY has averaged at least one billion dollars
in  annual  sales  for the three consecutive years preceding the year in
which the investment is made or has market capitalization  of  at  least
one  billion  dollars at the time the investment is made. Investments in
such foreign equities shall be included together with a  fund's  invest-
ments  in other equity securities for purposes of the percentage limita-
tions set forth in [the foregoing subdivisions] SUBDIVISION TWO of  this
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

assets of any fund shall be invested in the aggregate  in  such  foreign
equities PURSUANT TO THIS SUBDIVISION.
  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.