AN
ACT Relating to the composition and responsibilities of the employee retirement
benefits board; amending RCW 41.50.086 and 41.34.130; and reenacting and
amending RCW 41.50.780.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
41.50.086 and 1998 c 341 s 506 are each amended to read as follows:
(1)
The employee retirement benefits board is created within the department of
retirement systems.
(2)
The board shall be composed of ((eleven)) twelve members
appointed by the governor and one ex officio member as follows:
(a)
Three members representing the public employees' retirement system: One
retired, two active. The members shall be appointed from a list of nominations
submitted by organizations representing each category. The initial term of
appointment shall be two years for the retired member, one year for one active
member, and three years for the remaining active member.
(b)
Three members representing the teachers' retirement system: One retired, two
active. The members shall be appointed from a list of nominations submitted by
organizations representing each category. The initial term of appointment
shall be one year for the retired member, two years for one active member, and
three years for the remaining active member.
(c)
Three members representing the school employees' retirement system: One
retired, two active. The members shall be appointed from a list of nominations
submitted by organizations representing each category. The initial term of
appointment shall be one year for the retired member, two years for one active
member, and three years for the remaining active member.
(d)
Two members with experience in defined contribution plan administration. The
initial term for these members shall be two years for one member and three
years for the remaining member.
(e)
One member representing the deferred compensation program. The member shall
be a deferred compensation program participant chosen from a list of
nominations submitted by organizations representing employees eligible to
participate in the deferred compensation program. The initial term of
appointment for this member shall be three years.
(f)
The director of the department shall serve ex officio and shall be the chair of
the board.
(3)
After the initial appointments, members shall be appointed to three-year terms.
(4)
The board shall meet at least quarterly during the calendar year, at the call
of the chair.
(5)
Members of the board shall serve without compensation but shall receive travel
expenses as provided for in RCW 43.03.050 and 43.03.060. Such travel expenses
shall be reimbursed by the department from the retirement system expense fund.
(6)
The board shall adopt rules governing its procedures and conduct of business.
(7)
The actuary shall perform all actuarial services for the board and provide
advice and support.
Sec.
2. RCW
41.50.780 and 1998 c 245 s 42 and 1998 c 116 s 12 are each reenacted and
amended to read as follows:
(1)
The deferred compensation principal account is hereby created in the state
treasury. ((Any deficiency in the deferred compensation administrative
account caused by an excess of administrative expenses disbursed from that
account over balances credited to that account shall be eliminated by
transferring moneys to that account from the deferred compensation principal
account.))
(2)
The amount of compensation deferred by employees under agreements entered into
under the authority contained in RCW 41.50.770 shall be paid into the deferred
compensation principal account and shall be sufficient to cover costs of
administration and staffing in addition to such other amounts as determined by
the department. The deferred compensation principal account shall be used to
carry out the purposes of RCW 41.50.770. All eligible state employees shall be
given the opportunity to participate in agreements entered into by the
department under RCW 41.50.770. State agencies shall cooperate with the
department in providing employees with the opportunity to participate.
(3)
Any county, municipality, or other subdivision of the state may elect to
participate in any agreements entered into by the department under RCW
41.50.770, including the making of payments therefrom to the employees
participating in a deferred compensation plan upon their separation from state
or other qualifying service. Accordingly, the deferred compensation principal
account shall be considered to be a public pension or retirement fund within
the meaning of Article XXIX, section 1 of the state Constitution, for the
purpose of determining eligible investments and deposits of the moneys therein.
(4)
All moneys in the state deferred compensation principal account and the state
deferred compensation administrative account, all property and rights purchased
therewith, and all income attributable thereto, shall be held in trust by the
state investment board, as set forth under RCW 43.33A.030, for the exclusive
benefit of the state deferred compensation plan's participants and their
beneficiaries. Neither the participant, nor the participant's beneficiary or
beneficiaries, nor any other designee, has any right to commute, sell, assign,
transfer, or otherwise convey the right to receive any payments under the plan.
These payments and right thereto are nonassignable and nontransferable. Unpaid
accumulated deferrals are not subject to attachment, garnishment, or execution
and are not transferable by operation of law in event of bankruptcy or
insolvency, except to the extent otherwise required by law.
(5)
The state investment board has the full power to invest moneys in the state
deferred compensation principal account and the state deferred compensation
administrative account in accordance with RCW 43.84.150, 43.33A.140, and
41.50.770, and cumulative investment directions received pursuant to RCW
41.50.770. All investment and operating costs of the state investment board
associated with the investment of the deferred compensation plan assets shall
be paid pursuant to RCW 43.33A.160 and 43.84.160. With the exception of these
expenses, one hundred percent of all earnings from these investments shall
accrue directly to the deferred compensation principal account.
(6)(a)
No state board or commission, agency, or any officer, employee, or member
thereof is liable for any loss or deficiency resulting from participant
investments selected pursuant to RCW 41.50.770(3).
(b)
Neither the employee retirement benefits board nor the state investment board,
nor any officer, employee, or member thereof is liable for any loss or
deficiency resulting from reasonable efforts to implement investment directions
pursuant to RCW 41.50.770(3).
(7)
The deferred compensation administrative account is hereby created in the state
treasury. All expenses of the department pertaining to the deferred
compensation plan including staffing and administrative expenses shall be paid
out of the deferred compensation administrative account. Any excess balances
credited to this account over administrative expenses disbursed from this
account shall be transferred to the deferred compensation principal account at
such time and in such amounts as may be determined by the department with the
approval of the office of financial management. Any deficiency in the deferred
compensation administrative account caused by an excess of administrative
expenses disbursed from this account shall be transferred to this account from
the deferred compensation principal account.
(8)
In addition to the duties specified in this section and RCW 41.50.770, the
department shall administer the salary reduction plan established in RCW
41.04.600 through 41.04.645.
(9)(a)(i)
The department shall keep or cause to be kept full and adequate accounts and
records of the assets of each individual participant, obligations,
transactions, and affairs of any deferred compensation plans created under RCW
41.50.770 and this section. The department shall account for and report on the
investment of state deferred compensation plan assets or may enter into an
agreement with the state investment board for such accounting and reporting.
(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.
(10)
The department may adopt rules necessary to carry out ((the purposes of))
its responsibilities under RCW 41.50.770 and this section.
Sec.
3. RCW
41.34.130 and 1998 c 341 s 307 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, 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 employee retirement benefits board regarding any recommendations made
pursuant to RCW 41.50.088(((2))) (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 shall be paid by members and recovered
under procedures agreed to by the board 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 board 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.
