STATE OF NEW YORK
________________________________________________________________________
9668--A
IN ASSEMBLY
March 28, 2022
___________
Introduced by M. of A. ABBATE -- read once and referred to the Committee
on Governmental Employees -- committee discharged, bill amended,
ordered reprinted as amended and recommitted to said committee
AN ACT to amend the retirement and social security law, in relation to
investments by public pension funds
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph (a) of subdivision 9 of section 177 of the
2 retirement and social security law, as amended by chapter 22 of the laws
3 of 2006, is amended to read as follows:
4 (a) the investments by a fund made pursuant to this subdivision shall
5 not at any time exceed [twenty-five] thirty-five per centum of the
6 assets of such fund;
7 § 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend subdivision 9 of Section 177 of the Retirement
and Social Security Law to increase to 35% the percentage of assets
which may be invested by the New York State Teachers' Retirement System
in those investments that aren't otherwise specifically permitted under
the other subdivisions of this section. The current limit is 25%.
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 a
different manner due to this change in the investment restrictions.
Additional investment income will result in lower required employer
contributions, and vice-versa.
Member 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
Annual Report. System assets are as reported in the System's financial
statements and can also be found in the System's Annual Report. Actuari-
al assumptions and methods are provided in the System's Actuarial Valu-
ation Report and the 2021 Actuarial Assumptions Report.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14677-06-2
A. 9668--A 2
The source of this estimate is Fiscal Note 2022-38 dated April 26,
2022 prepared by the Office of the Actuary of the New York State Teach-
ers' Retirement System and is intended for use only during the 2022
Legislative Session. I, Richard A. Young, am the Chief Actuary for the
New York State Teachers' Retirement System. I am a member of the Ameri-
can Academy of Actuaries and I meet the Qualification Standards of the
American Academy of Actuaries 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
increase the limit on non-legal list investments for the eight public
retirement systems of New York State. It would replace the current 25%
limit with a 35% limit.
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
some investment changes. Any increases in investment earnings will
result in decreases in employer contributions. Similarly, any decreases
in investment earnings will result in increases in employer contrib-
utions.
Summary of relevant resources:
Membership data as of March 31, 2021 was used in measuring the impact
of the proposed change, the same data used in the April 1, 2021 actuari-
al valuation. Distributions and other statistics can be found in the
2021 Report of the Actuary and the 2021 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2020
and 2021 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, 2021
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This fiscal note does not constitute a legal opinion on the viability
of the proposed change nor is it intended to serve as a substitute for
the professional judgment of an attorney.
This estimate, dated April 27, 2022, and intended for use only during
the 2022 Legislative Session, is Fiscal Note No. 2022-127, prepared by
the Actuary for the New York State and Local Retirement System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend paragraph (a)
of subdivision 9 of Section 177 of the Retirement and Social Security
Law (RSSL) to increase, among others, the New York City Retirement
Systems and Pension Funds (NYCRS) asset allocation limits for "Basket
Clause" investments from 25% to 35% of each of the NYCRS's assets in the
aggregate. The Basket Clause provides a limit on the amount of NYCRS
assets that can be invested in vehicles not otherwise provided for in
Section 177.
Effective Date: Upon enactment.
FINANCIAL IMPACT - SUMMARY: 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 cost of a retirement program is funded by contributions and
investment income, the latter of which is driven by the rate of return
A. 9668--A 3
on the assets. To the extent that the NYCRS increase their investment in
the securities that would be authorized by this proposed legislation and
those securities produce greater (lesser) rates of return than the rates
of return that the NYCRS would otherwise have achieved, then employer
contributions will be lesser (greater).
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2021 (Lag) actuarial valuations of
NYCRS to determine the Preliminary Fiscal Year 2023 employer contrib-
utions.
ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have
been calculated based on the actuarial assumptions and methods in effect
for the Preliminary June 30, 2021 (Lag) actuarial valuations used to
determine the Preliminary Fiscal Year 2023 employer contributions of
NYCRS.
RISK AND UNCERTAINTY: The financial impact presented in this Fiscal
Note depends highly on the realization of the actuarial assumptions
used, as well as certain demographic characteristics of NYCRS and other
exogenous factors such as investment, contribution, and other risks. If
actual experience deviates from actuarial assumptions, the actual costs
could differ from those presented herein. Costs are also dependent on
the actuarial methods used, and therefore different actuarial methods
could produce different results. Quantifying these risks is beyond the
scope of this Fiscal Note.
As a reference, increasing the investment return by 1.0% each year
would reduce the unfunded liability by approximately $24.8 billion,
while decreasing it by 1.0% would increase the unfunded liability by
approximately $29.5 billion.
Not measured in this Fiscal Note are the following:
* Any additional administrative costs to each of the NYCRS and other
New York City agencies to implement, and maintain potentially increased
Basket Clause securities, based on the proposed legislation.
STATEMENT OF ACTUARIAL OPINION: I, Michael J. Samet, am the Interim
Chief Actuary for, and independent of, the New York City Retirement
Systems and Pension Funds. I am a Fellow of the Society of Actuaries and
a Member of the American Academy of Actuaries. I meet the Qualification
Standards of the American Academy of Actuaries to render the actuarial
opinion contained herein. To the best of my knowledge, the results
contained herein have been prepared in accordance with generally
accepted actuarial principles and procedures and with the Actuarial
Standards of Practice issued by the Actuarial Standards Board.
FISCAL NOTE IDENTIFICATION: This Fiscal Note 2022-31 dated April 21,
2022 was prepared by the Interim Chief Actuary for the New York City
Retirement Systems and Pension Funds. This estimate is intended for use
only during the 2022 Legislative Session.
