_____________________________________________
SUBSTITUTE HOUSE BILL
1214
_____________________________________________
Passed Legislature ‑
2001 Regular Session
State of Washington 57th
Legislature 2001 Regular Session
By
READ
FIRST TIME 02/8/01. Clarifying certain
administrative and investment duties of the department of retirement systems
and the state investment board.
_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 from
13 a list
of nominations submitted by organizations representing each
14 category.
The initial term of appointment shall be two years for
15 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
p.
1 SHB 1214.PL
_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 from
_7 a list
of nominations submitted by organizations representing each
_8 category.
The initial term of appointment shall be one year for the
_9 retired
member, two years for one active member, and three years
10 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
SHB 1214.PL p.
2
_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, for the
32 exclusive
benefit of the state deferred compensation plan's
33 participants
and their beneficiaries. Neither the participant, nor
34 the
participant's beneficiary or beneficiaries, nor any other
35 designee,
has any right to commute, sell, assign, transfer, or
36 otherwise
convey the right to receive any payments under the
37 plan.
These payments and right thereto are nonassignable and
38 nontransferable.
Unpaid accumulated deferrals are not subject to
p.
3 SHB 1214.PL
_1 attachment,
garnishment, or execution and are not transferable by
_2 operation
of law in event of bankruptcy or insolvency, except to
_3 the
extent otherwise required by law.
_4 (5)
The state investment board has the full power to invest
_5 moneys
in the state deferred compensation principal account and
_6 the
state deferred compensation administrative account in
_7 accordance
with RCW 43.84.150, 43.33A.140, and 41.50.770, and
_8 cumulative
investment directions received pursuant to RCW
_9 41.50.770.
All investment and operating costs of the state
10 investment
board associated with the investment of the deferred
11 compensation
plan assets shall be paid pursuant to RCW 43.33A.160
12 and
43.84.160. With the exception of these expenses, one hundred
13 percent
of all earnings from these investments shall accrue
14 directly
to the deferred compensation principal account.
15 (6)(a)
No state board or commission, agency, or any officer,
16 employee,
or member thereof is liable for any loss or deficiency
17 resulting
from participant investments selected pursuant to RCW
18 41.50.770(3).
19 (b)
Neither the employee retirement benefits board nor the
20 state
investment board, nor any officer, employee, or member
21 thereof
is liable for any loss or deficiency resulting from
22 reasonable
efforts to implement investment directions pursuant to
23 RCW
41.50.770(3).
24 (7)
The deferred compensation administrative account is hereby
25 created
in the state treasury. All expenses of the department
26 pertaining
to the deferred compensation plan including staffing
27 and
administrative expenses shall be paid out of the deferred
28 compensation
administrative account. Any excess balances credited
29 to
this account over administrative expenses disbursed from this
30 account
shall be transferred to the deferred compensation
31 principal
account at such time and in such amounts as may be
32 determined
by the department with the approval of the office of
33 financial
management. Any deficiency in the deferred compensation
34 administrative
account caused by an excess of administrative
35 expenses
disbursed from this account shall be transferred to this
36 account
from the deferred compensation principal account.
37 (8)
In addition to the duties specified in this section and RCW
SHB 1214.PL p.
4
_1 41.50.770,
the department shall administer the salary reduction
_2 plan
established in RCW 41.04.600 through 41.04.645.
_3 (9)(a)(i)
The department shall keep or cause to be kept full
_4 and
adequate accounts and records of the assets of each individual
_5 participant,
obligations, transactions, and affairs of any
_6 deferred
compensation plans created under RCW 41.50.770 and this
_7 section.
The department shall account for and report on the
_8 investment
of state deferred compensation plan assets or may enter
_9 into
an agreement with the state investment board for such
10 accounting
and reporting.
11 (ii)
The department's duties related to individual participant
12 accounts
include conducting the activities of trade instruction,
13 settlement
activities, and direction of cash movement and related
14 wire
transfers with the custodian bank and outside investment
15 firms.
16 (iii)
The department has sole responsibility for contracting
17 with
any recordkeepers for individual participant accounts and
18 shall
manage the performance of recordkeepers under those
19 contracts.
20 (b)(i)
The department's duties under (a)(ii) of this subsection
21 do
not limit the authority of the state investment board to
22 conduct
its responsibilities for asset management and balancing of
23 the
deferred compensation funds.
24 (ii)
The state investment board has sole responsibility for
25 contracting
with outside investment firms to provide investment
26 management
for the deferred compensation funds and shall manage
27 the
performance of investment managers under those contracts.
28 (c)
The state treasurer shall designate and define the terms of
29 engagement
for the custodial banks.
30 (10)
The department may adopt rules necessary to carry out
31 ((the
purposes of)) its responsibilities under RCW 41.50.770 and
32 this
section.
33 Sec. 3. RCW 41.34.130
and 1998 c 341 s 307 are each amended to
34 read as
follows:
35 (1)
The state investment board has the full authority to invest
36 all
self-directed investment moneys in accordance with RCW
37 43.84.150
and 43.33A.140, and cumulative investment directions
p.
5 SHB 1214.PL
_1 received
pursuant to RCW 41.34.060 and this section. In carrying
_2 out
this authority the state investment board, after consultation
_3 with
the employee retirement benefits board regarding any
_4 recommendations
made pursuant to RCW 41.50.088(((2))) (1)(b),
_5 shall
provide a set of options for members to choose from for self-
_6 directed
investment.
_7 (2)
All investment and operating costs of the state investment
_8 board
associated with making self-directed investments shall be
_9 paid
by members and recovered under procedures agreed to by the
10 board
and the state investment board pursuant to the principles
11 set
forth in RCW 43.33A.160 and 43.84.160. All other expenses
12 caused
by self-directed investment shall be paid by the member in
13 accordance
with rules established by the board under RCW
14 41.50.088.
With the exception of these expenses, all earnings from
15 self-directed
investments shall accrue to the member's account.
16 (3)(a)(i)
The department shall keep or cause to be kept full
17 and
adequate accounts and records of each individual member's
18 account.
The department shall account for and report on the
19 investment
of defined contribution assets or may enter into an
20 agreement
with the state investment board for such accounting and
21 reporting
under this chapter.
22 (ii)
The department's duties related to individual participant
23 accounts
include conducting the activities of trade instruction,
24 settlement
activities, and direction of cash movement and related
25 wire
transfers with the custodian bank and outside investment
26 firms.
27 (iii)
The department has sole responsibility for contracting
28 with
any recordkeepers for individual participant accounts and
29 shall
manage the performance of recordkeepers under those
30 contracts.
31 (b)(i)
The department's duties under (a)(ii) of this subsection
32 do
not limit the authority of the state investment board to
33 conduct
its responsibilities for asset management and balancing of
34 the
deferred compensation funds.
35 (ii)
The state investment board has sole responsibility for
36 contracting
with outside investment firms to provide investment
37 management
for the deferred compensation funds and shall manage
38 the
performance of investment managers under those contracts.
SHB 1214.PL p.
6
_1 (c)
The state treasurer shall designate and define the terms of
_2 engagement
for the custodial banks.
‑‑‑ END ‑‑‑
p.
7 SHB 1214.PL
