BEFORE THE PUBLIC EMPLOYEES' RETIREMENT BOARD
OF THE STATE OF MONTANA
In the matter of the proposed amendment of ARM 2.43.3502 pertaining to the investment policy statement for the Defined Contribution Retirement Plan and ARM 2.43.5102 pertaining to the investment policy statement for the 457 Deferred Compensation Plan
NOTICE OF PROPOSED AMENDMENT
NO PUBLIC HEARING CONTEMPLATED
TO: All Concerned Persons
1. On June 26, 2009, the Montana Public Employees' Retirement Board (the board) proposes to amend the above-stated rules.
2. The board will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process and need an alternative accessible format of this notice. If you require an accommodation, contact the board no later than 5:00 p.m. on May 5, 2009, to advise us of the nature of the accommodation that you need. Please contact Ann Reber, Montana Public Employee Retirement Administration, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, Montana 59620-0131; telephone (406) 444-0155; TDD (406) 444-1421; FAX (406) 444-5428; e-mail email@example.com.
3. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:
2.43.3502 ADOPTION OF INVESTMENT POLICY STATEMENT AND STABLE VALUE FUND INVESTMENT GUIDELINES (1) The board adopts and incorporates by reference the State of Montana 401(a) Defined Contribution Plan Investment Policy Statement approved by the board on January
10, 2008 8, 2009.
(2) and (3) remain the same.
AUTH: 19-3-2104, MCA
IMP: 19-3-2104, 19-3-2122, MCA
2.43.5102 ADOPTION OF INVESTMENT POLICY STATEMENT AND STABLE VALUE FUND INVESTMENT GUIDELINES (1) The board adopts and incorporates by reference the State of Montana 457 Plan (deferred compensation) Investment Policy Statement approved by the board on January
10, 2008 8, 2009.
(2) and (3) remain the same.
AUTH: 19-50-102, MCA
IMP: 19-50-102, MCA
STATEMENT OF REASONABLE NECESSITY: The board, as the administrator of the Defined Contribution Retirement Plan of the Public Employees' Retirement System and the Deferred Compensation Plan (sometimes called a 457 Plan), adopted the original investment policy statements for both plans by reference in 2002. The board last amended both investment policy statements on January 8, 2009. Most of the amendments are format changes. There are also several substantive amendments.
Three amendments impact both the Deferred Compensation and the Defined Contribution plans' investment policy statements:
(1) The Board amended Section IIIBa of each investment policy statement to set the minimum measurable operation history at three years, rather than five. Funds and investment houses are restructuring on a more frequent basis than in the past. This change will permit inclusion of a greater number of fund options, provided the fund managers have five years experience and the funds meet other requirements in the investment policy statements.
(2) Section IIIBa of each investment policy statement was also amended to permit reliance on the Certified Financial Analyst Institute (CFAI). The CFAI provides global standards for measuring portfolio management and investment analysis and certifies investment professionals. A manager who manages a composite fund pursuant to CFAI standards for a minimum of five years is recognized as a manager sufficiently skilled to manage a fund in either the Deferred Compensation Plan or the Defined Contribution Retirement Plan.
(3) The board amended Section III2 of each investment policy statement to permit reliance on "an appropriate industry accepted database." The board's current investment consultant, Wilshire Consulting, uses its own proprietary database when reviewing the funds. Previous consultants have used either "Morningstar" or the "Callan" database. Rather than mandate a specific database in the investment policy statement, the board would like the flexibility of selecting a database that corresponds with databases preferred by the board's investment consultant.
Finally, the board amended the Deferred Compensation (457) Plan's default fund. The board, on the advice of its investment consultant and the Employee Investment Advisory Council, selected the balanced fund as the default in that plan as opposed to the stable value fund. The balanced fund meets the definition of a qualified default investment alternative under the federal 2006 Pension Protection Act.
Section 2-4-307(3), MCA, requires that the amended investment policy statements be adopted by reference.
4. Concerned persons may present their data, views, or arguments concerning the proposed amendments in writing to Roxanne Minnehan, Executive Director, Public Employees' Retirement Board, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, Montana 59620-0131; FAX (406) 444-5428; e-mail firstname.lastname@example.org and must be received no later than 5:00 p.m., May 22, 2009.
5. If persons who are directly affected by the proposed amendment wish to express their data, views, or arguments orally or in writing at a public hearing, they must make written request for a hearing and submit this request along with any written comments they have to the Public Employees' Retirement Board, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, Montana 59620-0131; FAX (406) 444-5428; e-mail email@example.com, and must be received no later than 5:00 p.m., May 22, 2009.
6. If the board receives requests for a public hearing on the proposed amendment from either 10% or 25, whichever is less, of the persons who are directly affected by the proposed amendment; from the appropriate administrative rule review committee of the Legislature; from a governmental subdivision or agency; or from an association having not less than 25 members who will be directly affected, a hearing will be held at a later date. Notice of the hearing will be published in the Montana Administrative Register. Ten percent of those persons directly affected has been determined to be 1037 persons based on approximately 2352 Defined Contribution Retirement Plan members and approximately 8020 457 Plan participants.
7. The board maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by the agency. Persons who wish to have their name added to the list shall make a written request which includes the name and mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding public retirement rulemaking actions. Such written request may be mailed or delivered to Ann Reber, Montana Public Employee Retirement Administration, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, Montana 59620-0131; faxed to the office at (406) 444-5428; or e-mailed to firstname.lastname@example.org, or may be made by completing a request form at any rules hearing held by the board.
8. An electronic copy of this Proposal Notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of this Notice conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that if a discrepancy exists between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.
9. The bill sponsor notice requirements of 2-4-302, MCA, do not apply.
/s/ Melanie Symons /s/ John Paull
Melanie Symons, Legal Counsel John Paull, President
and Rule Reviewer Public Employees' Retirement Board
/s/ Michael P. Manion
Michael P. Manion, Chief Legal Counsel
and Rule Reviewer
Department of Administration
Certified to the Secretary of State April 6, 2009.