March 11, 2015, Introduced by Rep. Forlini and referred to the Committee on Financial Liability Reform.
A bill to amend 1980 PA 300, entitled
"The public school employees retirement act of 1979,"
by amending sections 125, 127, and 131a (MCL 38.1425, 38.1427, and
38.1431a), sections 125 and 127 as added by 2010 PA 75 and section
131a as added by 2012 PA 300.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
125. (1) The Subject to
section 131a, the department
shall administer Tier 2 and shall be the fiduciary and trustee of
Tier 2. The department may appoint an advisory board to assist the
department in carrying out its duties as fiduciary and trustee. The
department and the state treasurer shall comply with Executive
Reorganization Order No. 1999-5, MCL 38.2721, in the administration
of Tier 2.
(2) The department shall determine the provisions and
procedures of Tier 2 and the plan document in conformity with this
act and the internal revenue code.
(3)
The Subject to section
131a, the department has the
exclusive authority and responsibility to employ or contract with
personnel and for services that the department determines necessary
for the proper administration of and investment of assets of Tier
2, including, but not limited to, managerial, professional, legal,
clerical, technical, and administrative personnel or services.
(4)
Each employer shall be deemed is
considered to have
adopted and shall comply with the provisions and procedures of Tier
2 and the plan document.
Sec.
127. Each Subject to
section 131a, each qualified
participant, former qualified participant, and refund beneficiary
shall direct the investment of the individual's accumulated
employer and employee contributions and earnings to 1 or more
investment choices within available categories of investment
provided by the department. The limitations on the percentage of
total assets for investments provided in the public employee
retirement system investment act, 1965 PA 314, MCL 38.1132 to
38.1140m,
38.1141, do not apply to Tier 2.
Sec. 131a. Tier 2 accounts are subject to the following terms
and conditions:
(a) On or before January 1, 2013, the retirement system shall
design an automatic enrollment feature that provides that unless a
qualified participant who makes contributions under this act elects
to contribute a lesser amount, the qualified participant shall
contribute the amount required to qualify for all eligible matching
contributions under this act. The retirement system shall implement
this automatic enrollment feature on or after January 1, 2013, as
determined by the retirement system.
(b) Employer matching contributions do not have to be made to
the same plan or account to which the elective employee
contributions were contributed as the basis for the matching
contributions.
(c) Elective employee contributions shall not be used as the
basis for more than an equivalent amount of employer matching
contributions or, in the case of matching contributions under
section 131(2) and (6), 50% of the employer matching contributions.
(d) The retirement system shall design and implement a method
to determine the proper allocation of employer matching
contributions based on elective employee contributions as provided
in this section.
(e) Notwithstanding any provision of this act to the contrary,
a reporting unit may designate its own Tier 2 contracts or account
plans by an alternate provider to offer to its employees who are
qualified participants of Tier 2. A reporting unit shall
substantially comply with this act in designating Tier 2 contracts
or account plans under this subdivision and shall comply with
applicable state rules and federal regulations with regard to
retirement plans. A reporting unit shall not offer a defined
benefit option, in whole or in part, under this subdivision. A
reporting unit shall offer the same benefits as described in
section 131 and this section and vesting provisions as described in
section 132 in designating Tier 2 contracts or account plans under
this subdivision. The department shall not collect employer or
employee contributions related to Tier 2 from a reporting unit that
designates a Tier 2 contract or account plan under this subdivision
unless authorized to do so by the reporting unit. If a reporting
unit designates an alternate provider under this subdivision, this
state and the reporting unit do not have a duty to monitor the
alternate provider's performance. This state and the reporting unit
are not liable to employees for damages relating to the performance
of the alternate provider.
(f) On or before July 1, 2015, the department shall implement
a system to facilitate the administration of Tier 2 contracts or
account plans designated by a reporting unit under subdivision (e).
All of the following apply to the administration of Tier 2
contracts or account plans:
(i) The department may employ or contract with personnel for
services that the department determines necessary for the proper
administration of Tier 2 contracts or account plans.
(ii) The department shall select a third party administrator to
administer Tier 2 contracts or account plans. The third party
administrator shall not be affiliated with an entity that provides
investment services to the retirement system or any reporting unit.
The third party administrator shall provide services to maintain
account values, issue statements of accounts, and facilitate
compliance administrators selected by reporting units to comply
with the internal revenue code.
(iii) All materials relating to an annuity plan described in
section 403(a) of the internal revenue code, 26 USC 403, including,
but not limited to, summaries of the plan and plan marketing, that
are provided by the retirement system to a reporting unit, or by a
reporting unit to its employees eligible to participate in the
plan, shall not favor a specific annuity or investment provider or
product, including, but not limited to, an investment provider or
product that the retirement system offers to qualified
participants.