A new law requires the $52.7 billion Maryland State Retirement & Pension System, Baltimore, to disclose the amount of carried interest it pays to private equity general partners.
The bill passed unanimously in both chambers of the state Legislature in March and was signed into law in April by Gov. Larry Hogan. It went into effect July 1.
As carried interest represents shared profits that are retained by the general partner rather than paid by the investor, it is not typically reported as investment fees paid. Generally, GPs retain 20% of the investment profits in a limited liability partnership while the limited partners receive the other 80%, according to a summary of the bill.
The Maryland system does not characterize carried interest as a fee, but instead views it as shared profits, spokesman Michael Golden said. The system is in favor of the additional disclosure requirements, he added.
The initial report, due Dec. 31, will include information for fiscal years 2015 through 2019; annual reports will follow.
The Maryland system will be one of a handful of pension funds to disclose such information. The $365.1 billion California Public Employees' Retirement System, Sacramento, and the $57.2 billion Pennsylvania Public School Employees' Retirement System, Harrisburg, have released similar reports in recent years. For fiscal year 2015, CalPERS said it had paid $700 million in carried interest to private equity firms. For 2017, PennPSERS said its private equity, private real estate and private credit GPs earned $669 million in carried interest.