New York State Pension Funds May Add More Alternative Investments Under New Law

New York Gov. Kathy Hochul signed legislation to expand what is known as the basket clause, allowing large public pension plans to increase their alternative investment allocation from 25% to 35%.

The governor signed the law on December 23.

State law has provided a set of approved investments, known as the “legal list”, covering 75% of pension fund assets. Any investment not mentioned in the law is referred to as a “basket clause,” a nickname for various categories of assets, such as private equity and hedge funds, that are not listed on the “legal list” under Section 177 of the State Pension and Social Act. Security Law.

The “Legal List” includes public stocks, certain conventional mortgages, bonds, certain mortgage co-investments, certain real estate investments, mutual funds and collective investment funds, and other investments.

The Basket Act affects the state’s largest public pension funds: the $233.2 billion New York State General Pension Fund, Albany; New York City Pension Systems, $233.5 billion; and the $132 billion New York State Teachers’ Retirement System, Albany.

The expansion of the basket clause is a “critical piece of legislation” that “will give public pension funds the flexibility we need to make investment decisions for the benefit of our members and beneficiaries,” New York City Comptroller Brad Lander said in December. 28 news release.

“In challenging market conditions, we believe this is the most important long-term adjustment we can make to safely maximize profits,” said Mr. Lander, trustee of five pension funds at New York City Retirement Systems.

Representatives for the New York State Teachers’ Retirement System and the New York State General Retirement Fund declined to comment.

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