2020 Alternative Investments Annual Update






2016 Annual Report from ERS 


HB 383:
This bill would remove current consumer protections governing large retirement systems authorized to invest in certain alternative investments. This bill was withdrawn from committee consideration by its author and was dormant for the 2015 session.


2016 Alternative Investments Annual Update



From April, 2012:
SB 402
Alternative Investments for ERS Passed by Legislature
As reported in last month’s Newsletter, GSRA members made a valiant effort to convince the House Retirement Committee to make four amendments to SB402— Alternative Investments—but in the end, a majority of the Committee passed a substitute with only two of the changes — a mild disclosure provision and a non-conflict of interest provision. The first amendment requires the ERS to post on its website the report the bill requires to be made to the Governor and the two retirement committees every March. The second amendment prohibits retirement system trustees and other public officials from making any of the initial investments. SB 402 was brought to the House floor on March 26. It was presented by Rep. Howard Maxwell, who advanced the supporting information provided by the bill’s author, Sen. Tim Golden. Rep. Maxwell discussed the two amendments, accurately attributing the second amendment to GSRA request and noting that we “are pretty darned happy about it.” Rep. Maxwell went on to say that PAGE and GAE were happy with the bill and would support the bill if the TRS board were to ask for it.
(Note: active and retired teacher organizations’ legislative liaisons never expressed support of alternative investments to GSRA. They told us only that they were not taking a position on the bill because it did not apply to them.)
Rep. Debbie Buckner took the well and spoke eloquently in opposition, most notably questioning the disparate treatment of ERS members and TRS members. Rep. Maxwell presented closing arguments in which he said, among other things, that TRS retirees get COLAs and ERS retirees do not because, since the early 1980s,teachers have paid 7% of salary to their retirement while state employees have paid only 1.25%. SB 402 passed the House 104-53. Besides Rep. Buckner, Reps. Benton and 28 other Republicans and the one Independent voted “no.” The Senate accepted the House amendments and, therefore, SB 402 will be submitted to the Governor for signature. The GSRA March newsletter provides a more complete description of the bill.


Legislative bills to amend the investment authorizations to include "Alternative Investments" have been re-introduced in the 2009 Legislative Session.  House Bill 249 and SB 129 are almost identical to legislation (SB 80) proposed in the 2007-2008 General Assembly Session.  Senate Bill 80 was introduced and passed the Senate and House Retirement Committee, but failed to pass in the House of Representatives during the 2008 Session.  


Briefly stated, HB 249, SB 129 and Senate Bill 80 (2007-2008 Session) provide for investing up to 5% of Employees Retirement System assets in alternative investments, which are higher-risk investments than other categories that are allowed for investment by law. GSRA members appealed to the General Assembly members during the 2008 Session not to pass the legislation on the basis that this type of investment included too much risk and was not appropriate for the retirement funds.  Although HB 249 and SB 129 can be passed through the 2010 General Assembly Session, the House Retirement members demonstrated concern about the bill when it favorably reported a substitute to HB 249, which allowed the alternative investments only for the Firefighters Pension Fund. GSRA Members will, however, need to watch carefully the legislative process during the 2009 and 2010 Sessions.


The economic crisis that has infected the United States investment community has generated extensive discussion and opinion.  The following links provide information to GSRA members regarding alternative investments and how these funds have performed in the economic downturn.