Montana Administrative Register Notice 2-43-525 No. 7   04/16/2015    
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In the matter of the amendment of ARM 2.43.3505 pertaining to establishment of long-term disability trust fund









TO: All Concerned Persons


1. On June 26, 2015, the Public Employees' Retirement Board proposes to amend the above-stated rule.


2. The Public Employees' Retirement Board will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Public Employee Retirement Administration no later than 5:00 p.m. on May 8, 2015, to advise us of the nature of the accommodation that you need. Please contact Kris Vladic, Public Employee Retirement Administration, P.O. Box 200131, Helena, Montana, 59620-0131; telephone (406) 444-2578; fax (406) 444-5428; TDD/Montana Relay Service (406) 444-1421; or e-mail kvladic@mt.gov.


3. The rule as proposed to be amended provides as follows, stricken matter interlined, new matter underlined:



(1) remains the same.

(2) The long-term disability trust fund is a governmental plan under Internal Revenue Code section 401(a)(24) and may be invested in one or more group trust funds as determined by the Montana Board of Investments.

(a) The group trust fund or funds may be a group trust fund presently in existence or later established as permitted under IRC section 401(a)(24), IRS Revenue Ruling 81-100, IRS Revenue Ruling 2004-67, IRS Revenue Ruling 2011-1, and IRS Revenue Ruling 2014-24.

(b) The group trust fund or funds must be operated and maintained exclusively for the commingling and collective investment of monies pursuant to applicable IRS guidance and must be adopted as a part of the long-term disability trust fund.

(c) No part of the corpus or income of the long-term disability trust fund may be used for, or diverted to, any purpose other than the exclusive benefit of the disabled DCRP participants and their beneficiaries. This exclusive benefit provision is irrevocable.

(2) and (3) remain the same but are renumbered (3) and (4).

          (4) (5) In addition to the requirements of (2), funds in the long-term disability trust fund will be invested pursuant to Article VIII, section 13, of the Constitution and Title 17, chapter 6, part 2, MCA. No funds will be invested in equities. 


AUTH: 19-3-2104, 19-3-2141, MCA

IMP:    19-3-2117, 19-3-2141, MCA


REASON:  The Public Employees' Retirement System's Defined Contribution Retirement Plan includes a long-term disability plan that has been determined to be an "Other Post-Employment Benefit" (OPEB). OPEBs are subject to the same actuarial funding requirements as the other trust funds administered by MPERA.  Since the long-term disability plan is a governmental retirement plan, the assets in the plan's trust fund may be invested in equities pursuant to Article VIII, section 13 of the Montana Constitution. In an effort to improve the long-term disability trust fund's funding status, the Montana Board of Investments has adopted an Investment Policy Statement permitting investment of the long-term disability trust fund in certain BlackRock collective investment funds. In order for the long-term disability trust fund assets to be invested in collective, or group investment funds, the terms of the defined contribution retirement plan must be amended as proposed. These proposed changes are consistent with changes adopted by the 2015 Legislature through House Bill 124, the Public Employee Retirement Board's federal tax qualification legislation.


4. Concerned persons may submit their data, views, or arguments concerning the proposed action in writing to: Public Employee Retirement Administration, P.O. Box 200131, Helena, Montana, 59620-0131; telephone (406) 444-3154; fax (406) 444-5428; or e-mail mpera@mt.gov, and must be received no later than 5:00 p.m., May 15, 2015.


5. If persons who are directly affected by the proposed action 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 to Kris Vladic at the above address no later than 5:00 p.m., May 15, 2015.


6. If the agency receives requests for a public hearing on the proposed action from either 10 percent or 25, whichever is less, of the persons directly affected by the proposed action; 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 directly affected has been determined to be 209 persons based on 2091 Public Employees' Retirement System Defined Contribution Retirement Plan participants.


7. The Public Employees' Retirement Board maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the contact person in 5 above or may be made by completing a request form at any rules hearing held by the Public Employees' Retirement 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 in the event of a discrepancy 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 contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor was contacted by letter on February 23, 2015.


10. With regard to the requirements of 2-4-111, MCA, the Public Employees' Retirement Board has determined that the amendment of the above-referenced rule will not significantly and directly impact small businesses.



/s/ Melanie A. Symons                          /s/ Scott Moore                         

Melanie A. Symons                               Scott Moore

Chief Legal Counsel                              President

and Rule Reviewer                                Public Employees' Retirement Board



Certified to the Secretary of State April 6, 2015.



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