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11/27/2021 09:28 PM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20210&cosponId=35890
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House of Representatives
Session of 2021 - 2022 Regular Session

MEMORANDUM

Posted: June 16, 2021 10:06 AM
From: Representative Francis X. Ryan
To: All House members
Subject: PSERS/SERS Global Investment Performance Standards (GIPS)
 
With an eye towards improving investment performance within PSERS and SERS and giving the systems’ boards and professionals additional tools for oversight and decision-making, I plan to introduce legislation that will require both systems to take steps necessary to comply with the Global Investment Performance Standards for Asset Owners.  The Global Investment Performance Standards (GIPS) are a set of voluntary ethical standards developed by the CFA Institute and are used by investment management firms around the world.  According to the CFA Institute, at least 1,700 organizations, including institutional investors, claim to be GIPS compliant.

GIPS will offer a number of benefits to the PSERS and SERS boards, the systems’ beneficiaries and staff, and the taxpayers who help to fund these pension plans.   As a globally accepted industry standard for the calculation and presentation of historical investment performance data, GIPS will enable the boards and investment staff to compare the past performance of asset managers and conduct higher quality due diligence. Also, using GIPS compliance as a factor in manager searches enhances efficiency because it identifies those firms who are committed to the fair and transparent presentation of their track record.  Over time, I believe that the process of attaining and maintaining GIPS compliance will offer an opportunity to adopt robust policies, procedures, and controls.

There are four main elements of GIPS compliance found in my bill.  Under the bill the PSERS and SERS boards must each:
  • Ensure compliance with all requirements of the 2020 edition of GIPS;
  • Document compliance with all requirements of the 2020 edition of GIPS;
  • Create an annual GIPS Asset Owner Report; and
  • Engage a firm to conduct an independent performance verification and examination.
In addition, my legislation will allow the board to consider the adoption of additional policies and processes to ensure compliance with future editions of GIPS.

Please consider cosponsoring this reform proposal, which will bring greater transparency and higher quality performance reporting for all assets managed by PSERS and SERS. 
 

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Introduced as HB1698