09
HB 371/AP
House
Bill 371 (AS PASSED HOUSE AND SENATE)
By:
Representative Ehrhart of the
36th
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Article 7 of Chapter 20 of Title 47 of the Official Code of Georgia
Annotated, relating to the "Public Retirement Systems Investment Authority Law,"
so as to change the investment authority of large retirement systems; to provide
that public retirement systems having assets in excess of $200 million shall be
a large retirement system; to provide investment options; to provide an
effective date; to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Article
7 of Chapter 20 of Title 47 of the Official Code of Georgia Annotated, relating
to the "Public Retirement Systems Investment Authority Law," is amended by
revising Code Section 47-20-84, relating to large retirement systems, as
follows:
"47-20-84.
(a)
As used in this Code section, the term 'large retirement system'
means:
(1)
Any retirement system created by this title which has an accumulated unfunded
actuarial accrued liability not greater than 25 percent of the total of its
assets;
(2)
The Georgia Municipal Employees Benefit System created by Chapter 5 of this
title;
(3)
Any association of like political subdivisions which, on, before, or after July
1, 1999, contracts with its members for the pooling of assets;
and
(4)
Any public retirement system other than a retirement system defined in
paragraphs (1), (2), and (3) of this subsection which meets the following
criteria:
(A)
The retirement system
assets are
in excess of $50 million;
has:
(i)
An accumulated unfunded actuarial liability not greater than 25 percent of the
total of its assets; or
(ii)
Assets in excess of $50 million and an accumulated unfunded actuarial liability
not greater than 30 percent of the total of its assets;
(B)
The retirement system provides a defined benefit plan;
(C)
The retirement system investments are managed by one or more independent
professional investment managers recognized by the National Association of
Securities Dealers and the United States Securities and Exchange Commission and
which adhere to the code of ethical standards and conduct of the Association for
Investment Management and Research;
and
(D)
The retirement system investments are limited to those equities of investment
grade quality or better, provided that leverage techniques, option techniques,
futures, commodities, private placements, and direct participation plans may not
be used in making equity investments; and
(E)
Has an accumulated unfunded actuarial liability not greater than 25 percent of
the total of its assets
(5)
Any public retirement system which has more than $200 million in
assets.
(b)
A large retirement system may
not
invest more
than 15 percent of the retirement system
assets in corporations or in obligations
of corporations organized in a country other than the United States or Canada
subject to the provisions of paragraph (1) of subsection (a) of Code Section
47-20-83.
(c)
A fund shall not invest more than 55 percent of retirement system assets in
equities; provided, however, that
prior to July
1, 2010, a large retirement system shall
invest not more than
60
65
percent of its assets in
equities; on
and after July 1, 2010, a large retirement system shall invest not more than 70
percent of its assets in equities; and on and after July 1, 2011, a large
retirement system shall invest not more than 75 percent of its assets in
equities; provided, further, that no fund shall increase its assets in equities
through purchase by more than 20 percent in any fiscal
year. Any fund which is not in compliance
with the limitations imposed by this subsection shall be granted a two-year
period to come into compliance; provided, however, that during such two-year
period, the fund shall not increase the percentage of its assets invested in
equities.
(d)
In the event the value of a fund's assets decreases so as to render such fund
ineligible to invest in foreign equities as provided in subsection (b) of this
Code section and to invest in excess of 55 percent of its assets in total
equities as provided in subsection (c) of this Code section, such fund shall
have 12 months from the date of such event to come into compliance with the
investment authority provided by this article; provided, however, that during
such period such fund shall not increase its holdings in foreign equities and
shall not increase its total holdings in equities.
(e)(d)
Subject to all other limitations in this chapter, a large retirement system may
invest in securities issued by a unit investment trust or an open-end
company:
(1)
That is listed on a securities exchange;
(2)
The assets of which consist of securities managed so that the fund replicates a
listed index or specific market sector;
(3)
In which continuous markets are quoted by market makers in the applicable unit
investment trust or open-end company; and
(4)
That has the capability of creating or redeeming shares as necessary to reflect
demand.
(f)(e)
A large retirement system may enter into contracts, agreements, and other
instruments designed to manage risk exposure."
SECTION
2.
This
Act shall become effective upon its approval by the Governor or upon its
becoming law without such approval.
SECTION
3.
All
laws and parts of laws in conflict with this Act are repealed.