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S04596 Summary:

Amd 423, R & SS L
Relates to limitations on investments of public pension funds.
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S04596 Memo:

Memo not available
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S04596 Text:

                STATE OF NEW YORK
                               2017-2018 Regular Sessions
                    IN SENATE
                                    February 21, 2017
          LATIMER, MONTGOMERY,  PARKER,  PERKINS,  SERRANO  --  read  twice  and
          ordered  printed, and when printed to be committed to the Committee on
          Civil Service and Pensions
        AN ACT to amend the retirement and social security law, in  relation  to
          limitations on investments of public pension funds
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. This act shall be known and may be  cited  as  the  "fossil
     2  fuel divestment act".
     3    § 2. Section 423 of the retirement and social security law, as amended
     4  by chapter 770 of the laws of 1970, is amended to read as follows:
     5    §  423.  Investments.    [a.]  1.  On  and after April first, nineteen
     6  hundred sixty-seven, the comptroller shall invest the  available  monies
     7  of  the common retirement fund in any investments and securities author-
     8  ized by law for each retirement system and shall hold  such  investments
     9  in his name as trustee of such fund, notwithstanding any other provision
    10  of  this  chapter.  Participating interests in such investments shall be
    11  credited to each retirement system in the manner and at the time  speci-
    12  fied  in  [paragraph] subdivision two of section four hundred twenty-two
    13  of this article.
    14    [b.] 2. (a) To assist in the management of the monies  of  the  common
    15  retirement  fund,  the  comptroller shall appoint an investment advisory
    16  committee consisting of not less than seven members who shall serve  for
    17  his  term of office. A vacancy occurring from any cause other than expi-
    18  ration of term shall be filled by the comptroller for the  remainder  of
    19  the term. Each member of the committee shall be experienced in the field
    20  of  investments  and shall have served, or shall be serving, as a senior
    21  officer or member of the board of an insurance company,  banking  corpo-
    22  ration  or  other  financial or investment organization authorized to do
    23  business in the state of New York. The committee shall advise the  comp-
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 4596                             2
     1  troller  on  investment  policies  relating  to the monies of the common
     2  retirement fund and shall review, from  time  to  time,  the  investment
     3  portfolio  of  the  fund  and make such recommendations as may be deemed
     4  necessary.
     5    (b) The comptroller shall appoint a separate mortgage advisory commit-
     6  tee,  with  the advice and consent of the investment advisory committee,
     7  to review proposed mortgage and real estate investments  by  the  common
     8  retirement  fund. In making investments, as authorized by law, the comp-
     9  troller shall be guided by policies established by each  committee  from
    10  time  to  time; and, in the event the mortgage advisory committee disap-
    11  proves a proposed mortgage or real estate investment, such shall not  be
    12  made.
    13    (c)  No officer or employee of any state department or agency shall be
    14  eligible for  membership  on  either  committee.  Each  committee  shall
    15  convene  periodically  on  call  of  the  comptroller, or on call of the
    16  chairman. The members of each committee shall be entitled to  reimburse-
    17  ment  for  their  actual  and  necessary  expenses  but shall receive no
    18  compensation for their services.
    19    3. (a) Notwithstanding any provision of law to the contrary, the comp-
    20  troller shall not have the power to invest the available monies  of  the
    21  common  retirement  fund  in any stocks, debt or other securities of any
    22  corporation or company, or any subsidiary, affiliate or  parent  of  any
    23  corporation  or  company,  among the two hundred largest publicly traded
    24  fossil fuel companies, as established by carbon content  in  the  compa-
    25  nies'  proven  oil,  gas  and  coal  reserves. The comptroller shall, in
    26  accordance with sound investment criteria and consistent with his or her
    27  fiduciary obligations, divest any such stocks or other securities wheth-
    28  er they are owned directly or held  through  separate  accounts  or  any
    29  commingled  funds.  Divestment  pursuant  to  this  subdivision  must be
    30  completed by January first, two thousand twenty-two, with the  exception
    31  of  companies  engaged  in the mining, extraction or production of coal,
    32  divestment from which must be completed no later than one year after the
    33  effective date of this subdivision.
    34    (b) The comptroller shall be permitted to cease divesting from  compa-
    35  nies under paragraph (a) of this subdivision, reinvest in companies from
    36  which  it  divested under paragraph (a) of this subdivision, or continue
    37  to invest in companies from which it has not yet divested upon clear and
    38  convincing evidence showing that as a direct result of such  divestment,
    39  the  total  and aggregate value of all assets under management by, or on
    40  behalf of, the common retirement fund becomes or shall become: (i) equal
    41  to or less than ninety-nine and one-half percent; or  (ii)  one  hundred
    42  percent  less fifty basis points of the hypothetical value of all assets
    43  under management by, or on behalf of, the common retirement fund  assum-
    44  ing no divestment from any company had occurred under said paragraph (a)
    45  of  this  subdivision.    Cessation  of  divestment, reinvestment or any
    46  subsequent ongoing  investment  authorized  by  this  section  shall  be
    47  strictly limited to the minimum steps necessary to avoid the contingency
    48  set  forth  in  the preceding sentence. For any cessation of divestment,
    49  and in advance of such cessation, authorized by  this  subdivision,  the
    50  comptroller  shall provide a written report to the attorney general, the
    51  senate standing committee on civil service and pensions, and the  assem-
    52  bly  standing committee on governmental employees, updated semi-annually
    53  thereafter as applicable, setting forth the reasons  and  justification,
    54  supported  by  clear and convincing evidence, for its decisions to cease
    55  divestment, to reinvest or to remain invested in fossil fuel companies.

        S. 4596                             3
     1    (c) Within sixty days of the effective date of this  subdivision,  the
     2  comptroller shall facilitate the identification of fossil fuel companies
     3  from  which the common retirement fund is required to divest under para-
     4  graph (a) of this subdivision, and file a copy of  this  list  with  the
     5  attorney  general,  the  senate  standing committee on civil service and
     6  pensions, and the assembly standing committee on governmental employees.
     7  Annually thereafter, the public fund shall file a report with the attor-
     8  ney  general,  the  senate  standing  committee  on  civil  service  and
     9  pensions,  and the assembly standing committee on governmental employees
    10  that includes: (i) all investments sold, redeemed, divested or withdrawn
    11  in compliance with paragraph (a)  of  this  subdivision;  and  (ii)  all
    12  prohibited investments from which the common retirement fund has not yet
    13  divested under paragraph (a) of this subdivision.
    14    § 3. This act shall take effect immediately.
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