New York Bill to Increase Alternate Allocations Passes Legislature

Legislature-approved basket clause bill affects the state’s largest pension funds: New York State’s $279.7 billion Albany Common Retirement Fund. dollars; the $263.2 billion from New York City’s retirement systems; and the $146.9 billion New York State Teachers’ Retirement System, Albany.

“In times of economic uncertainty, this legislation will provide the flexibility our retirement systems need to appropriately diversify their portfolios and maximize risk-adjusted returns,” said New York City Comptroller Brad Lander. trustee of the five New York City pension funds. pension system, said Wednesday in an email.

Representatives of the New York State Common Retirement Fund and the New York State Teachers’ Retirement System declined to comment.

This is not the first time that a basket clause bill has been approved by the legislature and sent to the governor of New York. In 2014, a bill extending the basket clause to 30% of pension fund assets was vetoed by the then government. Andrew Cuomo.

“Existing statutory limits on investment by public pension funds are carefully designed to strike the appropriate balance between promoting growth and limiting risk,” Cuomo said in his veto message. “This bill would upset that balance by potentially exposing hard-earned retirement savings to the increased risk and higher fees frequently associated with the class of investment assets permitted under this bill.”

In 2014, as in 2022, the New York City Retirement Systems advocated greater flexibility in asset allocation. “The current 25% limit on alternative investments prevents the city’s pension funds from creating an optimal investment portfolio,” a spokesman for then-City Comptroller Scott Stringer said at the time. The Comptroller is the trustee of the five pension funds in the city’s pension system.

Eight years later, Mr. Lander presented the same message. The current law “does not reflect the realities of the modern investment world and hampers our ability to prudently diversify our portfolio, maximize our risk-adjusted returns and save money over the long term,” Lander said. in February. State Senate General Assembly hearing on the proposed state budget for fiscal year 2023.

James V. Hayes