§ 177 — Eligible investments

New York § 177

• Jurisdiction: New York
• Law RSS: Retirement & Social Security
• Art. 4-A: Investments of Public Pension Funds

Text

§ 177. Eligible investments. In addition to the powers contained in\nany other provision of law, including the provisions of the\nadministrative code of the city of New York, the trustee or trustees of\na fund shall have the power to invest the moneys thereof in: 1. Such\nsecurities in which the trustees of a savings bank may invest the moneys\ndeposited therein as provided by law, subject, however, to the following\nlimitations:\n (a) (i) Except as provided in sections one hundred seventy-eight and\nthree hundred six of the public housing law, no conventional mortgage\nmay exceed sixty per centum of the appraised value of improved and\nunencumbered real property or seventy-five per centum of the appraised\nvalue thereof if such real property is improved by a building or\nbuildings, the major portion of which is used, or in the case of a\nbuilding under construction is to be used, for residential, business,\nmanufacturing or agricultural purposes; (ii) the aggregate unpaid\nprincipal amount of all conventional mortgages at any time held in a\nfund shall not exceed thirty per centum of the assets of such fund; and\n(iii) not more than five per centum of the assets of any fund shall be\ninvested in any one conventional mortgage;\n (b) the aggregate unpaid principal amount of obligations issued or\nguaranteed by the international bank for reconstruction and development\nat any time held in a fund shall not exceed five per centum of the\nassets of such fund;\n (c) the aggregate unpaid principal amount of all obligations of the\nDominion of Canada, of any province of the Dominion of Canada, and of\nany city of the Dominion of Canada at any time held in a fund shall not\nexceed five per centum of the assets of such fund;\n (d) the aggregate unpaid principal amount of equipment trust\ncertificates at any time held in a fund shall not exceed five per centum\nof the assets of such fund; and\n (e) not more than two and one-half per centum of the assets of any\nfund shall be invested in the obligations of any one railroad or\nindustrial corporation, or any one corporation engaged directly and\nprimarily in the production, transportation, distribution, or sale of\nelectricity or gas, or the operations of telephone and telegraph systems\nor waterworks, or in some combination thereof; and\n (f) not more than thirty per centum of the assets of any fund shall be\ninvested in bonds of electric and gas corporations as defined in\nsubdivision thirteen of section two hundred thirty-five of the banking\nlaw, notwithstanding the provisions of paragraph (h) of such\nsubdivision.\n 1-a. Obligations payable in United States funds of the United States,\nany state of the United States, District of Columbia or Commonwealth of\nPuerto Rico, of any department, agency or political subdivision thereof,\nor of any corporation, company or other issuer of any kind or\ndescription created or existing under the laws of the United States, any\nstate of the United States, District of Columbia or Commonwealth of\nPuerto Rico and obligations payable in United States funds of Canada or\nany province or city of Canada, provided\n (a) each such obligation at the time of investment shall be rated\ninvestment grade by two nationally recognized rating services or by one\nnationally recognized rating service in the event only one such service\nrates such obligation; and\n (b) the aggregate investment by a fund in the obligations of any one\nissuer pursuant to this subdivision (other than the obligations of the\nUnited States, or those for which the faith of the United States is\npledged to provide payment of the interest and principal) shall not\nexceed two per centum of the assets of such fund or five per centum of\nthe direct liabilities of such issuer.\n 2. Equity securities, and interest-bearing obligations payable in\nUnited States funds which are convertible into equity securities, of any\ncorporation created or existing under the laws of the United States, any\nstate of the United States, District of Columbia and Commonwealth of\nPuerto Rico, or any investment company, as defined by, and which is\nregistered under, an act of Congress of the United States, entitled the\n"Investment Company Act of 1940", approved August twenty-second,\nnineteen hundred forty, as amended, subject to the following\nlimitations:\n (a) the maximum investment by a fund in such securities shall not\nexceed (i) in any one year fifteen per centum of the assets of such\nfund, or (ii) seventy per centum in the aggregate; provided, further,\nhowever, that more than fifteen per centum of such assets, but not more\nthan twenty per centum thereof, may be so invested in any one year but\nonly to the extent that the per centum of such investments over all\nprior years from the effective date of this act when added to the per\ncentum of such investments during that year does not exceed an average\nof fifteen per centum of the assets of such fund over all prior years\nand the year in which the investment is being made;\n (b) not more than two per centum of the assets of any fund shall be\ninvested in the equity securities of any one corporation and subsidiary\nor subsidiaries thereof;\n (c) not more than five per centum of the total issued and outstanding\nequity securities of any one corporation shall be owned by any fund; and\n (d) notwithstanding any other provision of law, the equity securities\nacquired hereunder must be registered on a national securities exchange,\nas provided in an act of congress of the United States, entitled the\n"Securities Exchange Act of 1934", approved June sixth, nineteen hundred\nthirty-four, as amended, or otherwise registered pursuant to said act\nand, if such equity securities are so otherwise registered, price\nquotations for such equity securities are furnished through a nationwide\nautomated quotations system approved by the National Association of\nSecurities Dealers, Inc.\n 3. Conventional mortgages guaranteed by a state bank or trust company\nhaving a net worth in excess of five hundred million dollars, provided,\nhowever, that not more than ten per centum of the assets of any fund\nshall be invested in any such mortgage so guaranteed.\n 4. Bonds and notes of any bank, trust company, savings bank or savings\nand loan association organized under the laws of this state having a net\nworth of at least ten million dollars, which bonds and notes shall be\nvalidly secured at all times to the extent of one hundred and ten per\ncentum of the unpaid principal amount of such bonds and notes by\nmortgages upon real estate insured by the federal housing administrator\nor any of his successors in office and guaranteed by the United States\nunder the provisions of the national housing act, as amended or\nsupplemented, and to the extent of one hundred and thirty-three and\none-third per centum of the unpaid principal amount of such bonds and\nnotes by conventional mortgages, the valuation of which mortgages shall\nbe based upon the unpaid principal amount thereof upon the date of the\npledge, assignment or transfer thereof to such fund or its trustee or\ntrustees as security for such bonds and notes, such bonds or notes to be\namortized in substantially equal annual or semi-annual payments of\nprincipal and interest over a period not in excess of twenty-five years,\nprovided the aggregate unpaid principal amount of bonds and notes\nsecured by conventional mortgages shall not exceed five per centum of\nthe assets of such fund.\n 5. The trustee or trustees shall have the power to participate or\nco-invest in any whole or part interest in any conventional mortgage or\ninsured mortgage, or in any whole or part interest in any such mortgage,\nwhich mortgage is held for the benefit of the holder or holders of a\nwhole interest or part interests therein, but no such investment shall\nbe made in any part interest which is junior or subordinate to any other\npart interest therein nor if the aggregate amount of all investments by\nthe fund in whole and part interests in such mortgages when added\ntogether will exceed the limitations set forth in the foregoing\nsubdivisions of this section applicable to investments in such\nmortgages.\n 6. Real estate only if acquired or used for one or more of the\nfollowing purposes and in the following manner:\n (a) The land and the building thereon in which it has its principal\noffice.\n (b) Such as shall be requisite for its convenient accommodation in the\ntransaction of its business.\n (c) Such as shall have been acquired in satisfaction of loans,\nmortgages, liens, judgments, decrees or other debts previously owing to\nsuch fund in the course of its business.\n (d) Such as shall have been acquired in part payment of the\nconsideration on the sale of real property owned by it, if each such\ntransaction shall have effected a net reduction in the fund's investment\nin real property.\n (e) Such real property, other than property to be used primarily for\nagricultural, horticultural, ranch, mining, recreational, amusement or\nclub purposes, as may be acquired, as an investment for the production\nof income (including capital appreciation), or as may be acquired to be\nimproved or developed for such investment purpose pursuant to an\nexisting program therefor, subject to the following limitations: (1) the\ncost of each parcel of real property so acquired under the authority of\nthis subdivision, including the estimated cost to the fund of the\nimprovement or development thereof, when added to the value of all other\nreal property then held by it pursuant to this subdivision, shall not\nexceed ten per cent of its assets, and (2) the cost of each parcel of\nreal property acquired under the authority of this subdivision,\nincluding the estimated cost to the fund of the improvement or\ndevelopment thereof, shall not exceed two per cent of the fund's assets.\n (f) Notwithstanding any other provision of this article, for the\npurposes of this subdivision, an investment in an entity that invests or\nproposes to invest, directly or indirectly through one or more other\nentities, at least a majority of its assets in (1) any interest in real\nproperty of any kind or character as an investment for the production of\nincome (including capital appreciation), or (2) debt instruments secured\nby any interest in real estate may be considered an investment in real\nestate pursuant to this subdivision and included in the assets subject\nto the ten percent limitation of paragraph (e) of this subdivision.\n 7. The trustees of a fund shall have the power to invest the moneys\nthereof in limited partnerships, joint ventures, stock of corporations\n(including subsidiaries of the fund), group trusts, common trust funds,\ncollective investment funds, investment companies (as defined by an act\nof Congress entitled the "Investment Company Act of 1940"), separate\naccounts established by a domestic life insurance company in accordance\nwith section forty-two hundred forty of the insurance law, separate\naccounts of the kinds authorized for domestic life insurance companies\nin accordance with section forty-two hundred forty of the insurance law\nestablished by life insurance companies doing business in this state,\nreal estate investment trusts (as defined in section 856 of the Internal\nRevenue Code of 1986) or any other similar investment entity, whether\nowned in whole or in part by the fund, provided that (a) such limited\npartnership, joint venture, corporation (including a subsidiary of the\nfund), group trust, common trust fund, investment company, separate\naccount, collective investment entity, real estate investment trust or\nother similar investment entity has been established or organized\nprimarily for the purpose of investing in securities, real estate or\nother investments in which the trustee or trustees of a fund are\nauthorized to invest pursuant to this section; and (b) each investment\nby a fund pursuant to this subdivision shall be deemed to be the\ninvestment of the fund in such investment entity (rather than in the\nassets of such investment entity), except that in calculating the amount\nof the fund's investment in assets for purposes of the percentage\nlimitations, if any set forth in this section, there shall be included\nall assets held by any such investment entity in which the fund shall\nhave an investment as of the date of determination, but only to the\nextent of the fund's indirect interest in such assets resulting from its\ninvestment in such investment entity.\n 8. The trustees of a fund shall have the power to invest the moneys\nthereof in foreign equity securities provided that (a) any such equity\nsecurity is registered on a national securities exchange, as provided in\nan act of congress of the United States, entitled the "Securities\nExchange Act of 1934", approved June sixth, nineteen hundred\nthirty-four, as amended, or otherwise registered pursuant to said act\nand, if such equity security is so otherwise registered, price\nquotations therefor are furnished through a nationwide automated\nquotation system approved by the National Association of Securities\nDealers, Inc. or is registered on a foreign exchange organized and\nregulated pursuant to the laws of the jurisdiction of such exchange and\n(b) the corporation has averaged at least one billion dollars in annual\nsales for the three consecutive years preceding the year in which the\ninvestment is made or has market capitalization of at least one billion\ndollars at the time the investment is made. Investments in such foreign\nequities shall be included together with a fund's investments in other\nequity securities for purposes of the percentage limitations set forth\nin the foregoing subdivisions of this section, and not more than ten per\ncentum of the assets of any fund shall be invested in the aggregate in\nsuch foreign equities.\n 9. Investments, which do not qualify or are not permitted under any\nother subdivision of this section, notwithstanding any other provision\nof law, provided\n (a) the investments by a fund made pursuant to this subdivision shall\nnot at any time exceed thirty-five per centum of the assets of such\nfund;\n (b) such investments shall be for the exclusive benefit of the\nparticipants and beneficiaries, and the trustee or trustees of a fund\nshall make such investments with the care, skill, prudence and diligence\nunder the circumstances then prevailing that a prudent person acting in\na like capacity and familiar with such matters would use in the conduct\nof an enterprise of a like character and with like aims; and\n (c) such investments shall, to the extent reasonably possible, benefit\nthe overall economic health of the state of New York, so long and only\nif such investments satisfy paragraph (b) of this subdivision.\n 10. In calculating assets of a fund and percentages thereof for the\npurposes of this section, a fund is authorized to use a market valuation\nmethodology, provided the valuation methodology is used consistently for\nall such calculations and is in accordance with recognized accounting\nmethodology.\n