Georgia nears debut alternatives allocation

The state of Georgia, the last among US states to allow its public pension systems to invest in private equity, needs only the approval of governor Nathan Deal (pictured) after the legislature overwhelmingly approved a law authorising investments in the asset class.

Georgia’s General Assembly approved legislation earlier this week that will allow the state’s pensions to invest in private equity and other alternative asset classes. 

Georgia is the last state in the US to allow its pensions to commit to alternatives, a point that was not lost on the bill’s sponsors.

“Georgia is the only state in the country where a fund of the Employees’ Retirement System size is not allowed to use alternative investments. All 49 other states allow for the use of alternative investments in their retirement funds,” according to talking points made available by the bill’s sponsors. 

Under the legislation, the $13 billion Georgia Employees’ Retirement System would be able to invest up to 5 percent of its assets in alternatives. 

The Employees’ Retirement System of Georgia Enhanced Investment Authority Act received widespread support from both houses of the legislature, passing the state’s House of Representatives by a vote of 104 to 53 and the Senate by a vote of 50 to 4. Legislation requires the approval of Georgia Governor Nathan Deal before it can be enacted as policy.  

The bill limits how ERS would be able to launch its alternatives strategy, preventing the system from committing any more than 1 percent of its overall assets to alternatives in any given year. Furthermore, the system’s commitments could not be any more than 20 percent of any given fund, and fund managers must receive investments from at least four other investors on similar fund terms before they could receive an ERS commitment. 

The bill notably excludes the $54 billion Teachers Retirement System of Georgia. A spokesperson from senate majority leader Chip Rogers, who also co-sponsored the bill, did not return requests for comment.