Z 0334

Z‑0334.2 _____________________________________________

SENATE BILL 5152

_____________________________________________

State of Washington 57th Legislature 2001 Regular Session

By Senators Fraser, Carlson, Franklin, Long, Honeyford and Jacobsen; by request of Joint Committee on Pension Policy

Read first time 01/12/2001. Referred to Committee on Ways & Means.

_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

p. 1 SB 5152

_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~~

SB 5152 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,~~)) 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

p. 3 SB 5152

_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.

SB 5152 p. 4

_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

p. 5 SB 5152

_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 ‑‑‑

SB 5152 p. 6