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House, Senate Give Funds More Leeway
2005-07-07
Managers of state pension funds and permanent funds would be able to pick from a broader range of investments by scrapping current restrictions under separate bills approved Tuesday by the House and Senate.
The House approved its version of the legislation (HB389) on a 61-7 vote, while the Senate passed a companion measure (SB392) on a 33-7 vote. The bills go to the other chamber for consideration.
Both measures would expand allowable investment options for state pension funds managed by the Public Employees Retirement Association and the Educational Retirement Board, as well as the Land Grant Permanent Fund and the Severance Tax Permanent Fund.
The total value of the portfolios of the pension and permanent funds is roughly $29 billion, said Rep. Luciano "Lucky" Varela, a Santa Fe Democrat and sponsor of the House bill.
The bills would replace the funds' lists of permitted investment categories with the guidelines of the Uniform Prudent Investment Act, which requires fund managers to consider the entire fund portfolio.
Sen. Joe Carraro, an Albuquerque Republican and sponsor of the Senate bill, said 44 other states already follow those guidelines.
The legislation would allow fund managers to invest in a wider variety of assets, including real estate, private equity and hedge funds.
Managers of the two permanent funds currently may invest in such assets, but the measure would remove limits on such investments.
The proposed investment changes are estimated to generate an additional $42 million for the funds in the next fiscal year and more than $1 billion over the next four years.
excerpts from The Albuquerque Journal, Article by David Miles
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