Z‑0333.2   _____________________________________________

HOUSE BILL 1214

           _____________________________________________

State of Washington      57th Legislature     2001 Regular Session

By Representatives H. Sommers, Lambert, Doumit and Delvin; by request of Joint Committee on Pension Policy

Read first time 01/19/2001.  Referred to Committee on Appropriations.

_1      AN ACT Relating to the composition and responsibilities of the

_2  employee retirement benefits board; amending RCW 41.50.086 and

_3  41.34.130; and reenacting and amending RCW 41.50.780.

_4  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

_5      Sec. 1.  RCW 41.50.086 and 1998 c 341 s 506 are each amended to

_6  read as follows:

_7      (1) The employee retirement benefits board is created within

_8  the department of retirement systems.

_9      (2) The board shall be composed of ((eleven)) twelve members

10  appointed by the governor and one ex officio member as follows:

11      (a) Three members representing the public employees' retirement

12  system:  One retired, two active.  The members shall be appointed

13  from a list of nominations submitted by organizations representing

14  each category.  The initial term of appointment shall be two years

15  for the retired member, one year for one active member, and three

16  years for the remaining active member.

17      (b) Three members representing the teachers' retirement system:

18  One retired, two active.  The members shall be appointed from a

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_1  list of nominations submitted by organizations representing each

_2  category.  The initial term of appointment shall be one year for the

_3  retired member, two years for one active member, and three years

_4  for the remaining active member.

_5      (c) Three members representing the school employees' retirement

_6  system:  One retired, two active.  The members shall be appointed

_7  from a list of nominations submitted by organizations representing

_8  each category.  The initial term of appointment shall be one year

_9  for the retired member, two years for one active member, and three

10  years for the remaining active member.

11      (d) Two members with experience in defined contribution plan

12  administration.  The initial term for these members shall be two

13  years for one member and three years for the remaining member.

14      (e) One member representing the deferred compensation program.

15  The member shall be a deferred compensation program participant

16  chosen from a list of nominations submitted by organizations

17  representing employees eligible to participate in the deferred

18  compensation program.  The initial term of appointment for this

19  member shall be three years.

20      (f)  The director of the department shall serve ex officio and

21  shall be the chair of the board.

22      (3) After the initial appointments, members shall be appointed

23  to three-year terms.

24      (4) The board shall meet at least quarterly during the calendar

25  year, at the call of the chair.

26      (5) Members of the board shall serve without compensation but

27  shall receive travel expenses as provided for in RCW 43.03.050 and

28  43.03.060.  Such travel expenses shall be reimbursed by the

29  department from the retirement system expense fund.

30      (6) The board shall adopt rules governing its procedures and

31  conduct of business.

32      (7) The actuary shall perform all actuarial services for the

33  board and provide advice and support.

34      Sec. 2.  RCW 41.50.780 and 1998 c 245 s 42 and 1998 c 116 s 12 are

35  each reenacted and amended to read as follows:

36      (1) The deferred compensation principal account is hereby

37  created in the state treasury.  ((Any deficiency in the deferred

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_1  compensation administrative account caused by an excess of

_2  administrative expenses disbursed from that account over balances

_3  credited to that account shall be eliminated by transferring

_4  moneys to that account from the deferred compensation principal

_5  account.))

_6      (2) The amount of compensation deferred by employees under

_7  agreements entered into under the authority contained in RCW

_8  41.50.770 shall be paid into the deferred compensation principal

_9  account and shall be sufficient to cover costs of administration

10  and staffing in addition to such other amounts as determined by

11  the department.  The deferred compensation principal account shall

12  be used to carry out the purposes of RCW 41.50.770.  All eligible

13  state employees shall be given the opportunity to participate in

14  agreements entered into by the department under RCW 41.50.770.

15  State agencies shall cooperate with the department in providing

16  employees with the opportunity to participate.

17      (3) Any county, municipality, or other subdivision of the state

18  may elect to participate in any agreements entered into by the

19  department under RCW 41.50.770, including the making of payments

20  therefrom to the employees participating in a deferred

21  compensation plan upon their separation from state or other

22  qualifying service.  Accordingly, the deferred compensation

23  principal account shall be considered to be a public pension or

24  retirement fund within the meaning of Article XXIX, section 1 of

25  the state Constitution, for the purpose of determining eligible

26  investments and deposits of the moneys therein.

27      (4) All moneys in the state deferred compensation principal

28  account and the state deferred compensation administrative

29  account, all property and rights purchased therewith, and all

30  income attributable thereto, shall be held in trust by the ((state

31  investment board, as set forth under RCW 43.33A.030,)) employee

32  retirement benefits board for the exclusive benefit of the state

33  deferred compensation plan's participants and their

34  beneficiaries.  Neither the participant, nor the participant's

35  beneficiary or beneficiaries, nor any other designee, has any

36  right to commute, sell, assign, transfer, or otherwise convey the

37  right to receive any payments under the plan.  These payments and

38  right thereto are nonassignable and nontransferable.  Unpaid

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_1  accumulated deferrals are not subject to attachment, garnishment,

_2  or execution and are not transferable by operation of law in event

_3  of bankruptcy or insolvency, except to the extent otherwise

_4  required by law.

_5      (5) The state investment board has the full power to invest

_6  moneys in the state deferred compensation principal account and

_7  the state deferred compensation administrative account in

_8  accordance with RCW 43.84.150, 43.33A.140, and 41.50.770, and

_9  cumulative investment directions received pursuant to RCW

10  41.50.770.  All investment and operating costs of the state

11  investment board associated with the investment of the deferred

12  compensation plan assets shall be paid pursuant to RCW 43.33A.160

13  and 43.84.160.  With the exception of these expenses, one hundred

14  percent of all earnings from these investments shall accrue

15  directly to the deferred compensation principal account.

16      (6)(a) No state board or commission, agency, or any officer,

17  employee, or member thereof is liable for any loss or deficiency

18  resulting from participant investments selected pursuant to RCW

19  41.50.770(3).

20      (b) Neither the employee retirement benefits board nor the

21  state investment board, nor any officer, employee, or member

22  thereof is liable for any loss or deficiency resulting from

23  reasonable efforts to implement investment directions pursuant to

24  RCW 41.50.770(3).

25      (7) The deferred compensation administrative account is hereby

26  created in the state treasury.  All expenses of the department

27  pertaining to the deferred compensation plan including staffing

28  and administrative expenses shall be paid out of the deferred

29  compensation administrative account.  Any excess balances credited

30  to this account over administrative expenses disbursed from this

31  account shall be transferred to the deferred compensation

32  principal account at such time and in such amounts as may be

33  determined by the department with the approval of the office of

34  financial management.  Any deficiency in the deferred compensation

35  administrative account caused by an excess of administrative

36  expenses disbursed from this account shall be transferred to this

37  account from the deferred compensation principal account.

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_1      (8) In addition to the duties specified in this section and RCW

_2  41.50.770, the department shall administer the salary reduction

_3  plan established in RCW 41.04.600 through 41.04.645.

_4      (9) The department shall keep or cause to be kept full and

_5  adequate accounts and records of the assets of each individual

_6  participant, obligations, transactions, and affairs of any

_7  deferred compensation plans created under RCW 41.50.770 and this

_8  section.  The department shall account for and report on the

_9  investment of state deferred compensation plan assets or may enter

10  into an agreement with the state investment board for such

11  accounting and reporting.

12      (10) The department may adopt rules necessary to carry out the

13  purposes of RCW 41.50.770 and this section.

14      Sec. 3.  RCW 41.34.130 and 1998 c 341 s 307 are each amended to

15  read as follows:

16      (1) The state investment board has the full authority to invest

17  all self-directed investment moneys in accordance with RCW

18  43.84.150 and 43.33A.140, and cumulative investment directions

19  received pursuant to RCW 41.34.060 and this section.  In carrying

20  out this authority the state investment board, after consultation

21  with the employee retirement benefits board regarding any

22  recommendations made pursuant to RCW 41.50.088(((2))) (1)(b),

23  shall provide a set of options for members to choose from for self-

24  directed investment.

25      (2) All investment and operating costs of the state investment

26  board associated with making self-directed investments shall be

27  paid by members and recovered under procedures agreed to by the

28  board and the state investment board pursuant to the principles

29  set forth in RCW 43.33A.160 and 43.84.160.  All other expenses

30  caused by self-directed investment shall be paid by the member in

31  accordance with rules established by the board under RCW

32  41.50.088.  With the exception of these expenses, all earnings from

33  self-directed investments shall accrue to the member's account.

34      (3) The department shall keep or cause to be kept full and

35  adequate accounts and records of each individual member's

36  account.  The department shall account for and report on the

37  investment of defined contribution assets or may enter into an

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_1  agreement with the state investment board for such accounting and

_2  reporting under this chapter.  Recordkeeping duties shall include

_3  conducting the activities of trade instruction, settlement

_4  activities, and direction of cash movement and related wire

_5  transfers with the custodian bank and outside investment firms.  The

_6  department is the sole contracting agency with any recordkeepers

_7  for individual member accounts and will manage the performance of

_8  recordkeepers under those contracts.

‑‑‑ END ‑‑‑

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