The New York State Common Retirement Fund, Albany, should scrap its sole trustee system, respondents to a Pensions & Investments' survey believe.
Some 91% agreed that New York Attorney General Andrew Cuomo's proposal to replace the sole trustee of the $116.5 billion pension fund with a 13-member board of trustees to help guard against “play-to-pay” activities by placement agents was a good idea. Nearly the same amount (90%) said they favor eliminating all sole trustee systems at state pension funds.
“This is not rocket science, it's common sense,” said Roger Levy, CEO of consultancy Cambridge Fiduciary Services LLC, Greenwich, Conn. “When dealing with a large state pension fund, there is a need for a depth and breadth of knowledge. A board also provides a system of checks and balances, with people watching over each other to prevent any corruption.”
Scott Griffiths, managing partner at Houston-based private equity firm Gryphon Venture Partners, agreed. “It's difficult to argue that one person overseeing a fund — no matter how smart he or she is — is better than several people. It's preferable to have a whole bench of experts to work with.”
Sixty-two percent of respondents agreed that banning the use of placement agents is a good idea for the New York state fund, while 60% said they supported banning placement agents for public pension plans in general.
Only three other states — Michigan, North Carolina and Connecticut — have sole trustees, rather than boards, according to Keith Brainard, research director at the National Association of State Retirement Administrators, who is based in Georgetown, Texas.