SF 996

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to retirement; making administrative changes 
  1.3             to the higher education individual retirement account 
  1.4             plan and the supplemental retirement plan; creating an 
  1.5             advisory committee; amending Minnesota Statutes 1996, 
  1.6             section 354B.25, subdivisions 2, 3, 5, and by adding a 
  1.7             subdivision; 354C.12, subdivision 4; and 354C.14. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1996, section 354B.25, is 
  1.10  amended by adding a subdivision to read: 
  1.11     Subd. 1a.  [ADVISORY COMMITTEE.] (a) A committee is created 
  1.12  to advise the board of trustees of the Minnesota state colleges 
  1.13  and universities concerning administration of the individual 
  1.14  retirement account plan and the supplemental retirement plan 
  1.15  established in chapter 354C.  The exclusive representatives of 
  1.16  the state university instructional unit, the community college 
  1.17  instructional unit, and the technical college instructional unit 
  1.18  shall each appoint two members to the committee.  The chancellor 
  1.19  of the Minnesota state colleges and universities shall appoint 
  1.20  three members.  Members serve at the pleasure of the appointing 
  1.21  authority.  Members shall be reimbursed for expenses as provided 
  1.22  in section 15.059, subdivision 3. 
  1.23     (b) The committee shall: 
  1.24     (1) advise the board of trustees on the structure and 
  1.25  operation of the individual retirement account plan and the 
  1.26  supplemental retirement plan; 
  2.1      (2) along with any other consultants selected by the board, 
  2.2   advise the board on selection of financial institutions and on 
  2.3   the type of investment products to be offered by these 
  2.4   institutions for the plans; 
  2.5      (3) advise the board on administration of the plans, 
  2.6   including selection of a third-party plan administrator, if any, 
  2.7   for the individual retirement account plan. 
  2.8      (c) The board of trustees shall provide the advisory 
  2.9   committee with meeting space and other administrative support.  
  2.10  Expenses of the advisory committee are considered administrative 
  2.11  expenses of the plans under subdivision 5 and section 354C.12, 
  2.12  subdivision 4. 
  2.13     Sec. 2.  Minnesota Statutes 1996, section 354B.25, 
  2.14  subdivision 2, is amended to read: 
  2.15     Subd. 2.  [ANNUITY CONTRACTS AND CUSTODIAL ACCOUNTS.] (a) 
  2.16  The plan administrator shall arrange for the purchase of fixed 
  2.17  annuity contracts, variable annuity contracts, a combination of 
  2.18  fixed and variable annuity contracts, or custodial accounts from 
  2.19  financial institutions which have been selected by the state 
  2.20  board of investment trustees of the Minnesota state colleges and 
  2.21  universities under subdivision 3, as the investment vehicle for 
  2.22  the retirement coverage of plan participants and to provide 
  2.23  retirement benefits to plan participants.  Custodial accounts 
  2.24  from financial institutions shall include open-end investment 
  2.25  companies registered under the federal Investment Company Act of 
  2.26  1940, as amended. 
  2.27     (b) The annuity contracts or accounts must be purchased 
  2.28  with contributions under section 354B.23 or with money or assets 
  2.29  otherwise provided by law by authority of the board and deemed 
  2.30  acceptable by the applicable financial institution. 
  2.31     (c) In addition to contracts and accounts from financial 
  2.32  institutions, the Minnesota supplemental investment fund 
  2.33  established under section 11A.17 and administered by the state 
  2.34  board of investment is one of the investment options for the 
  2.35  individual retirement account plan. 
  2.36     Sec. 3.  Minnesota Statutes 1996, section 354B.25, 
  3.1   subdivision 3, is amended to read: 
  3.2      Subd. 3.  [SELECTION OF FINANCIAL INSTITUTIONS.] (a) The 
  3.3   financial institutions provided for under subdivision 2 must be 
  3.4   selected by the state board of investment trustees of the 
  3.5   Minnesota state colleges and universities.  Financial 
  3.6   institutions include open-end investment companies registered 
  3.7   under the federal Investment Company Act of 1940, as amended. 
  3.8      (b) The state board of investment trustees may select up to 
  3.9   five financial institutions to provide annuity contracts, 
  3.10  custodial accounts, or a combination, as investment options for 
  3.11  the individual retirement account plan in addition to the 
  3.12  Minnesota supplemental investment fund.  In making its 
  3.13  selection, at a minimum, the state board of investment shall 
  3.14  consider at least the following: 
  3.15     (1) the experience and ability of the financial institution 
  3.16  to provide retirement and death benefits that are suited to meet 
  3.17  the needs of plan participants; 
  3.18     (2) the relationship of those retirement and death benefits 
  3.19  provided by the financial institution to their cost; and 
  3.20     (3) the financial strength and stability of the financial 
  3.21  institution. 
  3.22     (c) After selecting a financial institution, the state 
  3.23  board of investment trustees must periodically review each 
  3.24  financial institution selected under paragraph (b).  The 
  3.25  periodic review must occur at least every three years.  In 
  3.26  making its review, the state board of investment may retain 
  3.27  appropriate consulting services to assist it in its periodic 
  3.28  review, establish a budget for the cost of the periodic review 
  3.29  process, and charge a proportional share of these costs to the 
  3.30  reviewed financial institution. 
  3.31     (d) Contracts with financial institutions under this 
  3.32  section must be executed by the board and must be approved by 
  3.33  the state board of investment before execution. 
  3.34     (e) The state board of investment shall also establish 
  3.35  policies and procedures under section 11A.04, clause (2), to 
  3.36  carry out the provisions of this subdivision. 
  4.1      Sec. 4.  Minnesota Statutes 1996, section 354B.25, 
  4.2   subdivision 5, is amended to read: 
  4.3      Subd. 5.  [INDIVIDUAL RETIREMENT ACCOUNT PLAN 
  4.4   ADMINISTRATIVE EXPENSES.] (a) The reasonable and necessary 
  4.5   administrative expenses of the individual retirement account 
  4.6   plan must be paid by plan participants in the following manner: 
  4.7      (1) from plan participants with amounts invested in the 
  4.8   Minnesota supplemental investment fund, the plan administrator 
  4.9   may charge an administrative expense assessment as provided in 
  4.10  section 11A.17, subdivisions 10a and 14; and 
  4.11     (2) from plan participants with amounts through annuity 
  4.12  contracts and custodial accounts purchased under subdivision 2, 
  4.13  paragraph (a), the plan administrator may charge an 
  4.14  administrative expense assessment of a designated amount, not to 
  4.15  exceed two percent of member and employer contributions, as 
  4.16  those contributions are made. 
  4.17     (b) Any administrative expense charge that is not actually 
  4.18  needed for the administrative expenses of the individual 
  4.19  retirement account plan must be refunded to member accounts. 
  4.20     (c) The board of trustees shall report annually to the 
  4.21  advisory committee created in subdivision 1a on administrative 
  4.22  expenses of the plan.  The report must include a detailed 
  4.23  accounting of charges for administrative expenses collected from 
  4.24  plan participants and expenditure of the administrative expense 
  4.25  charges.  Charges collected from plan participants must be kept 
  4.26  in a separate account from any other funds under control of the 
  4.27  board of trustees and may be used only for administrative 
  4.28  expenses of the plan. 
  4.29     Sec. 5.  Minnesota Statutes 1996, section 354C.12, 
  4.30  subdivision 4, is amended to read: 
  4.31     Subd. 4.  [ADMINISTRATIVE EXPENSES.] The board of trustees 
  4.32  of the Minnesota state colleges and universities is authorized 
  4.33  to pay the necessary and reasonable administrative expenses of 
  4.34  the supplemental retirement plan.  The administrative fees or 
  4.35  charges must be paid by participants in the following manner: 
  4.36     (1) from participants whose contributions are invested with 
  5.1   the state board of investment, the plan administrator may 
  5.2   recover administrative expenses in the manner provided by 
  5.3   section 11A.17, subdivisions 10a and 14; or 
  5.4      (2) from participants where contributions are invested 
  5.5   through contracts purchased from any other authorized source, 
  5.6   the plan administrator may assess an amount of up to two percent 
  5.7   of the employee and employer contributions. 
  5.8      Any recovered or assessed amounts that are not needed for 
  5.9   the necessary and reasonable administrative expenses of the plan 
  5.10  must be refunded to member accounts. 
  5.11     The board of trustees shall report annually to the advisory 
  5.12  committee created in section 354B.25, subdivision 1a, on 
  5.13  administrative expenses of the plan.  The report must include a 
  5.14  detailed accounting of charges for administrative expenses 
  5.15  collected from plan participants and expenditure of the 
  5.16  administrative expense charges.  Charges collected from plan 
  5.17  participants must be kept in a separate account from any other 
  5.18  funds under control of the board of trustees and may be used 
  5.19  only for administrative expenses of the plan.  
  5.20     Sec. 6.  Minnesota Statutes 1996, section 354C.14, is 
  5.21  amended to read: 
  5.22     354C.14 [INVESTMENT OF DEDUCTIONS AND CONTRIBUTIONS.] 
  5.23     (a) The board of trustees of the Minnesota state colleges 
  5.24  and universities shall invest the deductions and contributions 
  5.25  under section 354C.12, after deduction of administrative 
  5.26  expenses under section 354C.12, subdivision 4, in annuity 
  5.27  contracts or custodial accounts from financial institutions 
  5.28  selected by the state board of investment trustees under section 
  5.29  354B.25, subdivision 3. 
  5.30     (b) The retirement contributions and death benefits 
  5.31  provided by annuity contracts or custodial accounts purchased by 
  5.32  the board of trustees of the Minnesota state colleges and 
  5.33  universities are owned by the supplemental retirement plan and 
  5.34  must be paid in accordance with those annuity contracts or 
  5.35  custodial account agreements. 
  5.36     Sec. 7.  [EFFECTIVE DATE.] 
  6.1      Sections 1 to 6 are effective July 1, 1997.