WSR 97-16-039

PERMANENT RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[Filed July 30, 1997, 1:35 p.m., effective July 30, 1997]

Date of Adoption: July 30, 1997.

Purpose: To adopt rules governing the assessment of expenses for teachers' retirement system plan 3 members who wish to avail themselves of the self-directed investment options authorized by the Employee Retirement Benefits Board.

Statutory Authority for Adoption: RCW 41.50.088, 41.32.060.

Adopted under notice filed as WSR 97-13-058 on June 16, 1997.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 2, amended 0, repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.

Number of Sections Adopted on the Agency's own Initiative: New 2, amended 0, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 2, amended 0, repealed 0.

Number of Sections Adopted using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 0, repealed 0.

Other Findings Required by Other Provisions of Law as Precondition to Adoption or Effectiveness of Rule: The rules that are the subject of this rule adoption process were first adopted as emergency rules effective April 1, 1997, see WSR 97-08-053. Under RCW 34.05.350, those rules expire one hundred twenty days from the effective date. In order to ensure that there is no gap in coverage, the permanent rules are adopted effective July 30, 1997.

Effective Date of Rule: July 30, 1997.

July 28, 1997

John Charles, Chair

Employee Retirement

Benefits Board

NEW SECTION

WAC 415-200-030 Teachers' retirement system plan III external administrators. The employee retirement benefits board may obtain external investment management services to assist with the provision of self-direct investment options. External administrator and investment management services will be obtained through competitive procurement processes to ensure teachers' retirement system plan III members receive quality services and competitive pricing. The department of retirement systems may select external administrators to assist with the administration of the defined contribution portion of the teachers' retirement system plan III established under chapter 41.34 RCW.

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NEW SECTION

WAC 415-200-040 Self-directed investment--Expenses paid by members. RCW 41.34.060 allows members of the teachers' retirement system plan III to elect to self-direct their investments using options approved by the employee retirement benefits board. Members electing to self-direct their investments must pay the expenses caused by the self-directed investment program.

(1) Assessment of member expenses for self-directed investment. Each month, the third-party administrator will allocate self-directed investment expenses to each participating member. The expenses allocated to members shall include:

(a) External third party administrator costs;

(b) External investment manager and consultant costs; and

(c) State investment board investment management operating expenses, in the case of investment options provided through the state investment board.

Each category of expense shall be expressed in terms of basis points. A basis point is equal to one-hundredth of one percent. The administrator will determine the participating member's monthly fee by multiplying the average monthly value of each participating member's self-directed account assets by the basis points for each expense category.

(2) Adoption of expense charge. The expense charges used to calculate self-directed investment fees for participating members shall be established in a memorandum of understanding, interagency agreement, and/or contract. Each expense charge shall be reviewed and approved at a regularly scheduled meeting of the employee retirement benefits board, with opportunity for public testimony. No expense charge may be included in a memorandum of understanding, interagency agreement, and/or contract until such charge has been approved by the employee retirement benefits board. No expense charge which has been approved may be changed unless such change has been approved by the board.