S‑1787.1 _____________________________________________
SUBSTITUTE SENATE BILL 5152
_____________________________________________
State of Washington 57th Legislature 2001 Regular Session
By Senate Committee on Ways & Means (originally sponsored by Senators Fraser, Carlson, Franklin, Long, Honeyford and Jacobsen; by request of Joint Committee on Pension Policy)
READ FIRST TIME 02/26/01.
_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
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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 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
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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, 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
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_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
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_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
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_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.
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_1 (c) The state treasurer shall designate and define the terms of
_2 engagement for the custodial banks.
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