Large Public Pension Funds to Increase Allocations to 35%Bills that would allow large public pension funds have been introduced by New York state legislators, to increase allocations to alternative investments such as private equity and hedge funds to 35% from 25%.
The legislation would affect the $176.2 billion New York State Common Retirement Fund, Albany; $150 billion New York City Retirement Systems; and $104.3 billion New York State Teachers' Retirement System, Albany.
Under state law, these public pension funds are governed by a “legal list,” containing a broad category of primarily fixed income and equity investments. The plans may allocate up to 25% of assets outside this list in a basket of investments such as private equity, hedge funds, commodities and international bonds.
The bills, introduced in the state Senate and state Assembly, would amend the so-called basket clause, allowing public pension funds to devote as much as 35% of allocations outside the “legal list” rather than the existing 25%.
“The current 25% limit on alternative investments prevents the (five) city pension funds from creating an optimal investment portfolio,” said Eric Sumberg, a spokesman for city Comptroller Scott Stringer, the fiduciary for the five pension funds.Source: Pensions & Investments