Senate Bill S7053

2011-2012 Legislative Session

Requires the state comptroller to disclose information related to the management fees for the investment of the moneys in the New York state retirement fund

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Archive: Last Bill Status - In Senate Committee Civil Service And Pensions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Apr 26, 2012	referred to civil service and pensions

co-Sponsors

2011-S7053 (ACTIVE) - Details

Current Committee:: Senate Civil Service And Pensions
Law Section:: Retirement and Social Security Law
Laws Affected:: Amd §§11 & 311, R & SS L

2011-S7053 (ACTIVE) - Summary

Requires the state comptroller to disclose information related to the management fees for the investment of the moneys in the New York state retirement fund.

2011-S7053 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S7053

TITLE OF BILL:
An  act  to amend the retirement and social security law, in relation to
annual disclosure by the state comptroller of the management fees  asso-
ciated  with  the investment of the moneys in the New York state retire-
ment fund

PURPOSE:
The purpose of this bill is to provide greater transparency to  the  New
York  State  and  Local  Retirement System's investment management prac-
tices.  This bill requires the Office of the State Comptroller to  annu-
ally disclose in its already mandated annual comprehensive annual finan-
cial  report:  (1)  the performance of individual fund managers, (2) the
financial agreements made between the pension system's fund managers and
the Office of the State Comptroller to invest and manage such funds, and
(3) the overall performance of the fund and the management fees  charged
to obtain the aggregate annual return on such investments.

SUMMARY OF PROVISIONS:
Section 1: Amends the Retirement & Social Security Law section 11 (d) to
require  that  the  Comprehensive  Annual Financial Report issued by the
State Comptroller which outlines the financial performance  of  the  New
York  State Retirement Fund must be posted on the internet so that it is
easily accessible to the general public for their review.

Section 2: Amends the Retirement & Social Security Law section 11 to add
a new subsection (d-1) which relates to the preparation of the New  York
State and Local Retirement System Comprehensive Annual Financial Report.
This  bill provides that the State Comptroller, in preparing such annual
financial report, shall disclose the  name  and  address  of  each  fund
manager  that manages or administers a fund or investment portfolio, the
name of such fund, and  the  value  of  assets  under  such  management.
Further,  that  such  disclosure  shall  list for each fund, the average
annual net return and the gross management fee to managed such fund  and
for all funds in aggregate. In disclosing the gross management fee, such
fee  shall  be  broken down into its component parts such as management,
brokerage,  incentive,  performance,  and  administrative  fees,  equity
commissions,  and other expenses related to the management of such fund.
In addition, to better reflect and compare the risk  and  volatility  of
the  fund  being  managed  with  the corresponding gross management fees
being charged, the disclosure of such fees shall  be  organized  by  the
type  of  asset,  fund,  or portfolio of the fund that is being managed.
Such break down of fund or asset type can included, but is  not  limited
to  domestic  international  and blended domestic & international equity
markets, fixed income  portfolios,  real  estate  portfolios  and  other
alternative  investment  portfolios that are utilized by the State Comp-
troller to manage investments for the New York State Retirement System.

This section also provides definitions for  terms  such  as  fund,  fund
manager, gross expense ratio, and gross management fee.

Section  3:  Amends  Retirement  & Social Security Law section 311(d) to
require that such Annual comprehensive Financial Report as it relates to
the New York State and Local police and Fire Retirement Fund shall  also
be  posted  on  the  internet  to  facilitate such reports review by the
general public.

Section  4: Amends Retirement & Social Security Law section 311 to add a
new (d-1) which relates to the preparation of the  Comprehensive  Annual
Financial  Report  for  the  New  York  State  and Local police and Fire
Retirement System.   All of the  disclosures  described  above  in  bill
section one are required to be disclosed by this bill section 2 as well.

JUSTIFICATION:
A  recent  analysis  of the New York State and Local Retirement system's
Comprehensive Annual Financial Report found that there  is  an  asymmet-
rical  upward  trajectory  in the amount of money charged for management
fees, while  the  overall  investment  performance  of  such  retirement
investment  portfolios  has  declined.  By  enacting  this  legislation,
taxpayers, beneficiaries, and outside experts will be able to: (1)  more
fully   analyze  the  reasons  underlying  this  asymmetry  between  the
increased management fees charged by fund managers to manage  funds  and
the  returns  obtained by such fund managers (2) provide recommendations
to the Office of the State Comptroller to identify ways to  enhance  the
efficiency  and  performance  of the New York State and Local Retirement
System.

LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
This bill should better identify and hopefully curtail future  increases
in  management  fees  paid to fund managers that contract with the State
Comptroller to manage individual component fund parts that make  up  the
aggregate  investment portfolio of the New York State Retirement system.
These cost savings  could  then  be  translated  into  smaller  required
payments by New York State and local governments to support the New York
State and Local Retirement System.

EFFECTIVE DATE:
The  act  shall  take effect on the first of January next succeeding the
date on which it shall have  become  law,  and  shall  apply  to  annual
reports made after such date.

2011-S7053 (ACTIVE) - Bill Text download pdf

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

                                  7053

                            I N  S E N A T E

                             April 26, 2012
                               ___________

Introduced  by  Sen.  KLEIN  -- 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
  annual  disclosure  by  the  state  comptroller of the management fees
  associated with the investment of the moneys in  the  New  York  state
  retirement fund

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The opening paragraph of subdivision d of section 11 of the
retirement and social security law, as amended by  chapter  169  of  the
laws of 1994, is amended to read as follows:
  d.  The  comptroller shall make an annual report showing the valuation
of the assets and liabilities of the funds of the retirement system,  as
certified  by the actuary, a statement of receipts and disbursements and
his or her recommendations in  regard  thereto.  Such  report  shall  be
published  with  and  as a part of the annual report of the comptroller.
ALL REPORTS REQUIRED BY THIS SUBDIVISION AND SUBDIVISION D-ONE  OF  THIS
SECTION  SHALL,  UPON  PUBLICATION, BE POSTED ON THE INTERNET WEBSITE OF
THE DEPARTMENT OF AUDIT AND CONTROL ACCESSIBLE TO THE GENERAL PUBLIC. In
addition to the above annual report, an  actuarial  report  prepared  in
accordance  with  generally recognized and accepted actuarial principles
and practices which are consistent with  principles  prescribed  by  the
Actuarial  Standards  Boards  (ASB) and the Code of Professional Conduct
and Qualification Standards for Public Statements of  Actuarial  Opinion
of  the  American  Academy of Actuaries, shall be published on or before
October fifteenth of each fiscal year to include:
  S 2. Section 11 of the retirement and social security law  is  amended
by adding a new subdivision d-1 to read as follows:
  D-1.   THE ANNUAL REPORT PROVIDED FOR IN SUBDIVISION D OF THIS SECTION
SHALL DISCLOSE THE GROSS EXPENSE RATIO AND THE NAME OF EACH PRIMARY FUND
MANAGER.
  1. SUCH DISCLOSURE SHALL IDENTIFY:
  (I) THE NAME AND ADDRESS OF EACH FUND MANAGER;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14986-02-2

S. 7053                             2

  (II) THE GROSS EXPENSE RATIO FOR EACH FUND THAT IS  UNDER  THE  SUPER-
VISION OF SUCH FUND MANAGER;
  (III) A BREAKDOWN OF THE GROSS EXPENSE RATIO FOR EACH FUND AND FOR THE
AGGREGATE  OF  ALL FUNDS, BY THE FEES, COMMISSIONS, AND EXPENSES CHARGED
BY SUCH FUND MANAGER, FOR ITEMS INCLUDING, BUT NOT  LIMITED  TO  MANAGE-
MENT,  BROKERAGE,  INCENTIVE, PERFORMANCE OR ADMINISTRATIVE FEES; EQUITY
COMMISSIONS; AND OTHER EXPENSES RELATED TO THE MANAGEMENT OF SUCH  FUND.
SUCH  BREAKDOWN  OF FEES, COMMISSIONS AND EXPENSES SHALL BE EXPRESSED IN
MONETARY TERMS AND AS A PERCENTAGE OF THE ASSET BEING  MANAGED  BY  SUCH
FUND MANAGER AND BY THE AGGREGATE OF ALL FUND MANAGERS;
  (IV)  THE VALUE OF THE ASSETS ADMINISTERED BY SUCH FUND MANAGER AND BY
THE AGGREGATE OF ALL FUND MANAGERS FOR THE RETIREMENT SYSTEM AS  OF  THE
BEGINNING  OF  THE FISCAL YEAR ON APRIL FIRST AND ON THE FOLLOWING MARCH
THIRTY-FIRST OF EACH YEAR; AND
  (V) THE AVERAGE ANNUAL NET RATE OF  RETURN,  TO  THE  NEW  YORK  STATE
RETIREMENT FUND, OF EACH FUND MANAGED BY A FUND MANAGER AND OF ALL FUNDS
MANAGED  BY  FUND  MANAGERS  FROM ITS INCEPTION DATE, THE AVERAGE ANNUAL
RETURN RATE, AND AVERAGE ANNUAL RETURN RATE OVER THE  COURSE  OF  THREE,
FIVE, AND TEN YEARS, WHEN APPLICABLE.
  2.  TO BETTER REFLECT AND COMPARE THE RISK AND VOLATILITY OF EACH FUND
ASSET BEING MANAGED WITH THE CORRESPONDING GROSS MANAGEMENT  FEES  BEING
CHARGED TO MANAGE SUCH FUND, THE DISCLOSURE OF SUCH FEES SHALL BE ORGAN-
IZED  BY  THE TYPE OF ASSET OR FUND BEING MANAGED FOR THE NEW YORK STATE
RETIREMENT FUND (BOTH NEW YORK STATE  AND  LOCAL  EMPLOYEES'  RETIREMENT
SYSTEM  AND  THE  NEW  YORK  STATE  AND LOCAL POLICE AND FIRE RETIREMENT
SYSTEM). SUCH BREAK DOWN OF FUND OR ASSET TYPE MAY INCLUDE, BUT  NOT  BE
LIMITED TO:
  (I) DOMESTIC EQUITY MARKETS;
  (II) INTERNATIONAL EQUITY MARKETS,
  (III) BLENDED DOMESTIC AND INTERNATIONAL EQUITY MARKETS;
  (IV) FIXED INCOME PORTFOLIOS; AND
  (V) REAL ESTATE PROFILES; AND
  (VI) ALTERNATIVE INVESTMENT PORTFOLIOS, SUCH AS PRIVATE EQUITY PORTFO-
LIOS,  GREEN STRATEGIC INVESTMENT PROGRAMS, NEW YORK STATE MORTGAGE-PASS
THROUGH OR AFFORDABLE HOUSING LOAN PROGRAMS, NEW YORK EQUITY REAL ESTATE
INVESTMENTS, OR OTHER SUCH INVESTMENT PROGRAMS  THAT  INVEST  OR  RETAIN
ASSETS RELATED TO INVESTMENTS IN NEW YORK STATE.
  3. FOR THE PURPOSES OF THIS SUBDIVISION:
  (I)  "FUND"  SHALL MEAN AN INDIVIDUAL ASSET, INVESTMENT, FUND, PORTFO-
LIO, OR CONSORTIUM OF ASSETS THAT IS MANAGED BY A FUND MANAGER.
  (II) "FUND MANAGER" SHALL MEAN THE PRIMARY FUND MANAGER, FIRM, BROKER,
CONSULTANT,  CONSORTIUM,  OR  OTHER  ENTITY  THAT  IS  ASSIGNED  OR  HAS
CONTRACTED  WITH THE STATE COMPTROLLER TO ADMINISTER, OPERATE, OR MANAGE
AN INDIVIDUAL INVESTMENT, FUND, PORTFOLIO, OR CONSORTIUM OF ASSETS  THAT
IS  CONTAINED IN THE RETIREMENT ASSET OR INVESTMENT PORTFOLIO OF THE NEW
YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM OR THE NEW YORK  STATE
AND LOCAL POLICE AND FIRE RETIREMENT SYSTEM.
  (III)  "GROSS EXPENSE RATIO" SHALL MEAN THE RATIO OF THE GROSS MANAGE-
MENT FEES DIVIDED BY THE VALUE OF THE FUND THAT IS BEING MANAGED BY SUCH
FUND MANAGER.
  (IV) "GROSS MANAGEMENT FEE" SHALL INCLUDE ALL  FEES,  COMMISSIONS,  OR
EXPENSES  COLLECTED  OR  CHARGED BY A FUND MANAGER TO MANAGE, OPERATE OR
ADMINISTER A FUND ON BEHALF OF OR FOR THE BENEFIT OF THE NEW YORK  STATE
RETIREMENT  FUND,  INCLUDING,  BUT NOT LIMITED TO MANAGEMENT, BROKERAGE,
INCENTIVE, PERFORMANCE, OR ADMINISTRATIVE FEES; EQUITY, STOCK  OR  OTHER

S. 7053                             3

COMMISSIONS;  ADMINISTRATIVE  EXPENSES,  OR  OTHER EXPENSES CHARGED THAT
RELATE TO THE MANAGEMENT, OPERATION, OR ADMINISTRATION OF SUCH FUND.
  S 3. Subdivision d of section 311 of the retirement and social securi-
ty law, as added by chapter 1000 of the laws of 1966, is amended to read
as follows:
  d.  The  comptroller shall make an annual report showing the valuation
of the assets and liabilities of the funds of the [policemen's and fire-
men's] retirement system, as certified by the actuary,  a  statement  of
receipts  and  disbursements  and his recommendations in regard thereto.
Such report shall be published with and as a part of the  annual  report
of the comptroller.  ALL REPORTS REQUIRED BY THIS SUBDIVISION AND SUBDI-
VISION  D-ONE  OF THIS SECTION SHALL, UPON PUBLICATION, BE POSTED ON THE
INTERNET WEBSITE OF THE DEPARTMENT OF AUDIT AND  CONTROL  ACCESSIBLE  TO
THE GENERAL PUBLIC.
  S  4. Section 311 of the retirement and social security law is amended
by adding a new subdivision d-1 to read as follows:
  D-1.  THE ANNUAL REPORT PROVIDED FOR IN SUBDIVISION D OF THIS  SECTION
SHALL DISCLOSE THE GROSS EXPENSE RATIO AND THE NAME OF EACH PRIMARY FUND
MANAGER.
  1. SUCH DISCLOSURE SHALL IDENTIFY:
  (I) THE NAME AND ADDRESS OF EACH FUND MANAGER;
  (II)  THE  GROSS  EXPENSE RATIO FOR EACH FUND THAT IS UNDER THE SUPER-
VISION OF SUCH FUND MANAGER;
  (III) A BREAKDOWN OF THE GROSS EXPENSE RATIO FOR EACH FUND AND FOR THE
AGGREGATE OF ALL FUNDS, BY THE FEES, COMMISSIONS, AND  EXPENSES  CHARGED
BY  SUCH  FUND  MANAGER, FOR ITEMS INCLUDING, BUT NOT LIMITED TO MANAGE-
MENT, BROKERAGE, INCENTIVE, PERFORMANCE OR ADMINISTRATIVE  FEES;  EQUITY
COMMISSIONS;  AND OTHER EXPENSES RELATED TO THE MANAGEMENT OF SUCH FUND.
SUCH BREAKDOWN OF FEES, COMMISSIONS AND EXPENSES SHALL BE  EXPRESSED  IN
MONETARY  TERMS  AND  AS A PERCENTAGE OF THE ASSET BEING MANAGED BY SUCH
FUND MANAGER AND BY THE AGGREGATE OF ALL FUND MANAGERS;
  (IV) THE VALUE OF THE ASSETS ADMINISTERED BY SUCH FUND MANAGER AND  BY
THE  AGGREGATE  OF ALL FUND MANAGERS FOR THE RETIREMENT SYSTEM AS OF THE
BEGINNING OF THE FISCAL YEAR ON APRIL FIRST AND ON THE FOLLOWING  MARCH-
THIRTY FIRST OF EACH YEAR; AND
  (V)  THE  AVERAGE  ANNUAL  NET  RATE  OF RETURN, TO THE NEW YORK STATE
RETIREMENT FUND, OF EACH FUND MANAGED BY A FUND MANAGER AND OF ALL FUNDS
MANAGED BY FUND MANAGERS FROM ITS INCEPTION  DATE,  THE  AVERAGE  ANNUAL
RETURN  RATE,  AND  AVERAGE ANNUAL RETURN RATE OVER THE COURSE OF THREE,
FIVE, AND TEN YEARS, WHEN APPLICABLE.
  2. TO BETTER REFLECT AND COMPARE THE RISK AND VOLATILITY OF EACH  FUND
ASSET  BEING  MANAGED WITH THE CORRESPONDING GROSS MANAGEMENT FEES BEING
CHARGED TO MANAGE SUCH FUND, THE DISCLOSURE OF SUCH FEES SHALL BE ORGAN-
IZED BY THE TYPE OF ASSET OR FUND BEING MANAGED FOR THE NEW  YORK  STATE
RETIREMENT  FUND  (BOTH  NEW  YORK STATE AND LOCAL EMPLOYEES' RETIREMENT
SYSTEM AND THE NEW YORK STATE  AND  LOCAL  POLICE  AND  FIRE  RETIREMENT
SYSTEM).  SUCH  BREAK DOWN OF FUND OR ASSET TYPE MAY INCLUDE, BUT NOT BE
LIMITED TO:
  (I) DOMESTIC EQUITY MARKETS;
  (II) INTERNATIONAL EQUITY MARKETS,
  (III) BLENDED DOMESTIC AND INTERNATIONAL EQUITY MARKETS;
  (IV) FIXED INCOME PORTFOLIOS; AND
  (V) REAL ESTATE PROFILES; AND
  (VI) ALTERNATIVE INVESTMENT PORTFOLIOS, SUCH AS PRIVATE EQUITY PORTFO-
LIOS, GREEN STRATEGIC INVESTMENT PROGRAMS, NEW YORK STATE  MORTGAGE-PASS
THROUGH OR AFFORDABLE HOUSING LOAN PROGRAMS, NEW YORK EQUITY REAL ESTATE

S. 7053                             4

INVESTMENTS,  OR  OTHER  SUCH  INVESTMENT PROGRAMS THAT INVEST OR RETAIN
ASSETS RELATED TO INVESTMENTS IN NEW YORK STATE.
  3. FOR THE PURPOSES OF THIS SUBDIVISION:
  (I)  "FUND"  SHALL MEAN AN INDIVIDUAL ASSET, INVESTMENT, FUND, PORTFO-
LIO, OR CONSORTIUM OF ASSETS THAT IS MANAGED BY A FUND MANAGER.
  (II) "FUND MANAGER" SHALL MEAN THE PRIMARY FUND MANAGER, FIRM, BROKER,
CONSULTANT,  CONSORTIUM,  OR  OTHER  ENTITY  THAT  IS  ASSIGNED  OR  HAS
CONTRACTED  WITH THE STATE COMPTROLLER TO ADMINISTER, OPERATE, OR MANAGE
AN INDIVIDUAL INVESTMENT, FUND, PORTFOLIO, OR CONSORTIUM OF ASSETS  THAT
IS  CONTAINED IN THE RETIREMENT ASSET OR INVESTMENT PORTFOLIO OF THE NEW
YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM OR THE NEW YORK  STATE
AND LOCAL POLICE AND FIRE RETIREMENT SYSTEM.
  (III)  "GROSS EXPENSE RATIO" SHALL MEAN THE RATIO OF THE GROSS MANAGE-
MENT FEES DIVIDED BY THE VALUE OF THE FUND THAT IS BEING MANAGED BY SUCH
FUND MANAGER.
  (IV) "GROSS MANAGEMENT FEE" SHALL INCLUDE ALL  FEES,  COMMISSIONS,  OR
EXPENSES  COLLECTED  OR  CHARGED BY A FUND MANAGER TO MANAGE, OPERATE OR
ADMINISTER A FUND ON BEHALF OF OR FOR THE BENEFIT OF THE NEW YORK  STATE
RETIREMENT  FUND,  INCLUDING,  BUT NOT LIMITED TO MANAGEMENT, BROKERAGE,
INCENTIVE, PERFORMANCE, OR ADMINISTRATIVE FEES; EQUITY, STOCK  OR  OTHER
COMMISSIONS;  ADMINISTRATIVE  EXPENSES,  OR  OTHER EXPENSES CHARGED THAT
RELATE TO THE MANAGEMENT, OPERATION, OR ADMINISTRATION OF SUCH FUND.
  S 5. This act shall take effect on the first of January next  succeed-
ing  the  date  on  which it shall have become a law, and shall apply to
annual reports made after such date.

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Senate Bill S7053

Sponsored By

Archive: Last Bill Status - In Senate Committee Civil Service And Pensions Committee

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co-Sponsors

2011-S7053 (ACTIVE) - Details

2011-S7053 (ACTIVE) - Summary

2011-S7053 (ACTIVE) - Sponsor Memo

2011-S7053 (ACTIVE) - Bill Text download pdf

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Sponsored By

Jeffrey D. Klein

Archive: Last Bill Status - In Senate Committee Civil Service And Pensions Committee

Actions

co-Sponsors

David J. Valesky

2011-S7053 (ACTIVE) - Details

2011-S7053 (ACTIVE) - Summary

2011-S7053 (ACTIVE) - Sponsor Memo

2011-S7053 (ACTIVE) - Bill Text download pdf

Comments