Connecticut mandates annual investment performance report from advisory firms for pension funds

Connecticut's Senate Bill 1557, introduced on April 9, 2025, aims to enhance the oversight and performance of the state's pension funds through the engagement of an advisory firm. This legislation seeks to address concerns regarding the management and investment strategies of Connecticut's public pension funds, which have faced scrutiny over their performance in recent years.

The bill mandates that the selected advisory firm conduct an annual report for the General Assembly's finance committee. This report will include a comparative analysis of the state's investment performance against at least fifty peer state pension funds, as well as benchmarks used by other states. The advisory firm will also provide recommendations for improving investment management practices, ensuring that Connecticut's pension funds are aligned with best practices in the industry.

One of the notable provisions of Senate Bill 1557 is the two-year prohibition on the advisory firm from receiving payments or performing work for the Office of the Treasurer or the state's pension funds after the termination of their contract. This measure aims to prevent conflicts of interest and ensure that the advisory firm remains impartial in its evaluations and recommendations.

The bill has sparked discussions among lawmakers and stakeholders regarding the effectiveness of current pension fund management and the potential for improved financial outcomes. Supporters argue that the oversight provided by an independent advisory firm could lead to better investment strategies and ultimately benefit retirees and taxpayers. However, some critics express concerns about the costs associated with hiring external advisors and whether the proposed measures will yield significant improvements.

Senate Bill 1557 is set to take effect on July 1, 2027, if passed. Its implications could be far-reaching, potentially reshaping how Connecticut manages its pension funds and ensuring greater accountability in financial practices. As the bill progresses through the legislative process, its outcomes will be closely monitored by both supporters and opponents, with the future of the state's pension management hanging in the balance.