BILL REQ. #: H-1016.4
State of Washington | 62nd Legislature | 2011 Regular Session |
Read first time 01/27/11. Referred to Committee on Ways & Means.
AN ACT Relating to changing the default investment option for new members of the defined contribution portion of the plan 3 retirement systems; and amending RCW 41.34.130, 41.34.060, and 41.34.140.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 41.34.130 and 2010 1st sp.s. c 7 s 34 are each amended
to read as follows:
(1) The state investment board has the full authority to invest all
self-directed investment moneys in accordance with RCW 43.84.150 and
43.33A.140, the default investment options set forth in RCW
41.34.060(1), and cumulative investment directions received pursuant to
RCW 41.34.060 and this section. In carrying out this authority the
state investment board, after consultation with the department
regarding any recommendations made pursuant to RCW 41.50.088(1)(b),
shall provide a set of options for members to choose from for self-directed investment.
(2) All investment and operating costs of the state investment
board associated with making self-directed investments or the default
investment options set forth in RCW 41.34.060(1) shall be paid by
members and recovered under procedures agreed to by the department and
the state investment board pursuant to the principles set forth in RCW
43.33A.160 and 43.84.160. All other expenses caused by self-directed
investment shall be paid by the member in accordance with rules
established by the department under RCW 41.50.088. With the exception
of these expenses, all earnings from self-directed investments shall
accrue to the member's account.
(3)(a)(i) The department shall keep or cause to be kept full and
adequate accounts and records of each individual member's account. The
department shall account for and report on the investment of defined
contribution assets or may enter into an agreement with the state
investment board for such accounting and reporting under this chapter.
(ii) The department's duties related to individual participant
accounts include conducting the activities of trade instruction,
settlement activities, and direction of cash movement and related wire
transfers with the custodian bank and outside investment firms.
(iii) The department has sole responsibility for contracting with
any recordkeepers for individual participant accounts and shall manage
the performance of recordkeepers under those contracts.
(b)(i) The department's duties under (a)(ii) of this subsection do
not limit the authority of the state investment board to conduct its
responsibilities for asset management and balancing of the deferred
compensation funds.
(ii) The state investment board has sole responsibility for
contracting with outside investment firms to provide investment
management for the deferred compensation funds and shall manage the
performance of investment managers under those contracts.
(c) The state treasurer shall designate and define the terms of
engagement for the custodial banks.
Sec. 2 RCW 41.34.060 and 2001 c 180 s 2 are each amended to read
as follows:
(1) ((Except as provided in subsection (3) of this section, the
member's account shall be)) Members may select investments as provided
in subsections (2) and (4) of this section. If a member of the public
employees' retirement system entering plan 3 under RCW 41.40.785, a
member of the teachers' retirement system entering plan 3 under RCW
41.32.835, or a member of the school employees' retirement system
entering plan 3 under RCW 41.35.610 does not select investments, the
member's account shall be invested in the default investment option of
the retirement strategy fund that is closest to the retirement target
date of the member. Retirement strategy fund means one of several
diversified asset allocation portfolios managed by investment advisors
under contract to the state investment board. The asset mix of the
portfolios adjusts over time depending on a target retirement date.
(2) Members may elect to have their account invested by the state
investment board. In order to reduce transaction costs and address
liquidity issues, based upon recommendations of the state investment
board, the department may require members to provide up to ninety days'
notice prior to moving funds from the state investment board portfolio
to self-directed investment options provided under subsection (((3)))
(4) of this section.
(a) For members of the retirement system as provided for in chapter
41.32 RCW of plan 3, investment shall be in the same portfolio as that
of the teachers' retirement system combined plan 2 and 3 fund under RCW
41.50.075(2).
(b) For members of the retirement system as provided for in chapter
41.35 RCW of plan 3, investment shall be in the same portfolio as that
of the school employees' retirement system combined plan 2 and 3 fund
under RCW 41.50.075(4).
(c) For members of the retirement system as provided for in chapter
41.40 RCW of plan 3, investment shall be in the same portfolio as that
of the public employees' retirement system combined plan 2 and 3 fund
under RCW 41.50.075(3).
(((2))) (3) The state investment board shall declare monthly unit
values for the portfolios or funds, or portions thereof, utilized under
subsection (((1))) (2)(a), (b), and (c) of this section. The declared
values shall be an approximation of portfolio or fund values, based on
internal procedures of the state investment board. Such declared unit
values and internal procedures shall be in the sole discretion of the
state investment board. The state investment board may delegate any of
the powers and duties under this subsection, including discretion,
pursuant to RCW 43.33A.030. Member accounts shall be credited by the
department with a rate of return based on changes to such unit values.
(((3))) (4) Members may elect to self-direct their investments as
set forth in RCW 41.34.130 and 43.33A.190.
Sec. 3 RCW 41.34.140 and 2010 1st sp.s. c 7 s 35 are each amended
to read as follows:
(1) A state board or commission, agency, or any officer, employee,
or member thereof is not liable for any loss or deficiency resulting
from member defined contribution investments selected, made, or
required pursuant to RCW 41.34.060 (1), (2), or (((3))) (4).
(2) Neither the department, nor director or any employee, nor the
state investment board, nor any officer, employee, or member thereof is
liable for any loss or deficiency resulting from a member investment in
the default option pursuant to RCW 41.34.060(1) or reasonable efforts
to implement investment directions pursuant to RCW 41.34.060 (1), (2),
or (((3))) (4).
(3) The state investment board, or any officer, employee, or member
thereof is not liable with respect to any declared monthly unit
valuations or crediting of rates of return, or any other exercise of
powers or duties, including discretion, under RCW 41.34.060(((2))) (3).
(4) The department, or any officer or employee thereof, is not
liable for crediting rates of return which are consistent with the
state investment board's declaration of monthly unit valuations
pursuant to RCW 41.34.060(((2))) (3).