09 LC
21 0264
House
Bill 371
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 provide for an increase in allowable retirement system fund investment
in equities to 75 percent; to change the definition of the term "large
retirement system" for purposes of enhanced investment authority; 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 in Code
Section 47-20-83, relating to certificated or uncertificated forms of investment
and real estate investments, by adding a new subsection to read as
follows:
"(c)
Prior to July 1, 2010, a fund may invest not more than 65 percent of retirement
system assets in equities. On and after July 1, 2010, a fund may invest not
more than 70 percent of retirement system assets in equities. On and after July
1, 2011, a fund may invest not more than 75 percent of its assets in equities.
Any fund which is not in compliance with the investment limitations provided in
this subsection shall be granted a two-year period to come into compliance, but
no such fund shall increase the percentage of investments in equities during
such period."
SECTION
2.
Said
article is further 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
in excess of
$200 million;
(2)
The Georgia Municipal Employees Benefit System created by Chapter 5 of this
title;
and
(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;
(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;
(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.
(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 a large retirement system shall invest not more than 60
percent of its assets in equities. 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)
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)(d)
A large retirement system may enter into contracts, agreements, and other
instruments designed to manage risk exposure."
SECTION
3.
All
laws and parts of laws in conflict with this Act are repealed.