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.