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Pensions & Investments' 11th annual Databook.

In this issue, readers will find a collection of charts, tables and statistics on a variety of investment management subjects. This compilation is a reference book for tax-exempt fund executives as well as executives of money management firms, consulting firms and other vendors.

Bill Introduced to Ban Pension Investments in Adversarial Countries

"[T]he Protecting Americans' Retirement Savings Act [S 928] ... prohibits ERISA-covered retirement plans from investing in companies based in foreign adversary countries, including China, Russia, North Korea, and Iran.... ERISA plan fiduciaries [would be required to] report: [1] All assets invested in sanctioned entities, including their identities and reasons for sanctions. [2] The total value of investments in foreign adversary companies. [3] A detailed list of specific investments in these companies. [4] Justifications for retaining such investments in retirement plans."

Effects of the New UBTI Rules on Tax-Qualified Pension Investments Are Still Unclear (PDF)

"[Consider] a situation where a tax-qualified pension fund invests in 20 private equity partnerships, each of which then invests in 15 private equity investments. Is investing in private equity, generally, a separate trade or business? Or is investing in each private equity partnership a separate trade or business? Or, must a plan look through each private equity partnership to each separate investment? If the latter is the case, can a plan aggregate investments across investments that involve a similar trades or businesses? How should a plan handle investments in a fund of funds, a fund that invests in other funds, each of which in turn makes their own investments?"

Florida Eliminates ESG Considerations from State Pension Investments

"This update to the fiduciary duties of the SBA's investment fund managers and investment advisors clearly defines the factors fiduciaries are to consider in investment decisions and states that ESG considerations will not be included in the state of Florida's pension investment management practices."

New Jersey Pension Investments Guided by Social, Environmental Values

"The State Investment Council has withdrawn investments from a company that manufactures high-powered firearms, pressured two private-equity firms not to foreclose on Puerto Ricans displaced by Hurricane Maria last year, and urged Target not to do business with trucking companies that classify their drivers as contractors rather than employees.... [T]he investment council now is working on a formal policy on ... considering environmental, social and governance factors in deciding where to put pension investments."

North Carolina Treasurer May Cede Control of Pension Investments

"North Carolina's [state treasurer] Janet Cowell ... [is] poised to voluntarily surrender her status as one of four officials nationwide with sole control over state pension investments. The 45-year-old Democrat, a former equities analyst, this month appointed a commission to evaluate how investments are made for North Carolina's $83 billion public pension ... The board may recommend in April removing Cowell as sole trustee, replacing her with a panel or another model[.]"

Public Pension Investments Up 12%, Biggest Gain in Two Years

"U.S. state and local-government pension investments gained the most in two years in fiscal 2013, overshadowed by intensifying scrutiny of underfunded municipal-retirement plans following Detroit's record bankruptcy. Public pensions booked a median gain of 12.4 percent for the 12 months through June, powered by a surge in U.S. stock prices to a record ... The funds chalked up an annualized three-year median return of 11.4 percent while their assets surpassed a pre-recession peak to reach $2.9 trillion[.]"

New York Pension Systems Sued for Politicizing Public Pension Investments

"The lawsuit ... claims the divestment decision inserted political beliefs into investment decisions and thus violated the pension plans' core fiduciary responsibility to maximize investment returns at prudent levels of risk for the plan's beneficiaries. The lawsuit says that putting net-zero emissions goals ... ahead of investment goals breaks the fiduciary agreement in favor of political and social interests." [Wong v. NYCERS, TRS and BERS, No. 652297/2023 (New York County, complaint filed May 11, 2023)]

New Kentucky Lawsuit Takes Aim at Risk in Public Pension Investments

"The state of Kentucky revived and expanded a lawsuit that claims former officials of the state pension system and hedge fund firms violated their fiduciary duty by choosing risky investments. The state is demanding compensation from hedge funds for their excessive fees and underperformance. Kentucky's pension system remains one of the worst-funded in the nation, hovering around a 32.8% funding level." [Mayberry v. KKR & Co., L.P., No. 17-CI-01348 (Franklin Cir., Commonwealth of Ky. intervening complaint filed Jul. 20, 2020)]

Secrecy in Pension Investments Triggers Legislative Brawl in North Carolina

"A legislative fight between North Carolina Treasurer Janet Cowell and a state employee association is signaling growing tension over disclosure practices as public pensions seek to improve returns with alternative investments.... North Carolina has about $18.7 billion of alternative investments, or 21.5 percent of its assets.... The pension lagged behind both of its benchmarks for private equity and hedge funds for the past 10 years ... [T]he state paid $416.2 million to firms hired to manage pension money last fiscal year, according to its annual report. A footnote says that it didn't disclose all fees[.]"