SB 141: "An Act creating the Alaska pension trust reserve fund; and providing for an effective date."
00 SENATE BILL NO. 141 01 "An Act creating the Alaska pension trust reserve fund; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 37.10.210(a) is amended to read: 05 (a) The Alaska Retirement Management Board is established in the 06 Department of Revenue. The board's primary mission is to serve as the trustee of the 07 assets of the state's retirement systems, the State of Alaska Supplemental Annuity Plan 08 [,] and the deferred compensation program for state employees, the Alaska pension 09 trust reserve fund established under AS 39.14.900, and the Alaska retiree health 10 care trusts established under AS 39.30.097. Consistent with standards of prudence, the 11 board has the fiduciary obligation to manage and invest these assets in a manner that is 12 sufficient to meet the liabilities and pension obligations of the systems, plan, program, 13 and trusts. The board may, with the approval of the commissioner of revenue and upon 14 agreement with the responsible fiduciary, manage and invest other state funds so long
01 as the activity does not interfere with the board's primary mission. In making 02 investments, the board shall exercise the powers and duties of a fiduciary of a state 03 fund under AS 37.10.071. 04 * Sec. 2. AS 37.10.220(a) is amended to read: 05 (a) The board shall 06 (1) hold regular and special meetings at the call of the chair or of at 07 least five members; meetings are open to the public, and the board shall keep a full 08 record of all its proceedings; 09 (2) after reviewing recommendations from the Department of 10 Revenue, adopt investment policies for each of the funds entrusted to the board; 11 (3) determine the appropriate investment objectives for the defined 12 benefit plans established under the teachers' retirement system under AS 14.25 and the 13 public employees' retirement system under AS 39.35; 14 (4) assist in prescribing the policies for the proper operation of the 15 systems and take other actions necessary to carry out the intent and purpose of the 16 systems in accordance with AS 37.10.210 - 37.10.390; 17 (5) provide a range of investment options and establish the rules by 18 which participants can direct their investments among those options with respect to 19 accounts established under 20 (A) AS 14.25.340 - 14.25.350 (teachers' retirement system 21 defined contribution individual accounts); 22 (B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 23 Annuity Plan); 24 (C) AS 39.35.730 - 39.35.750 (public employees' retirement 25 system defined contribution individual accounts); and 26 (D) AS 39.45.010 - 39.45.060 (public employees' deferred 27 compensation program); 28 (6) establish the rate of interest that shall be annually credited to each 29 member's individual contribution account in accordance with AS 14.25.145 and 30 AS 39.35.100 and the rate of interest that shall be annually credited to each member's 31 account in the health reimbursement arrangement plan under AS 39.30.300 -
01 39.30.495; the rate of interest shall be adopted on the basis of the probable effective 02 rate of interest on a long-term basis, and the rate may be changed from time to time; 03 (7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 04 (8) coordinate with the retirement system administrator to have an 05 annual actuarial valuation of each retirement system prepared to determine system 06 assets, accrued liabilities, and funding ratios and to certify to the appropriate 07 budgetary authority of each employer in the system 08 (A) an appropriate contribution rate for normal costs; and 09 (B) an appropriate contribution rate for liquidating any past 10 service liability; 11 (9) review actuarial assumptions prepared and certified by a member 12 of the American Academy of Actuaries and conduct experience analyses of the 13 retirement systems not less than once every four years, except for health cost 14 assumptions, which shall be reviewed annually; the results of all actuarial assumptions 15 prepared under this paragraph shall be reviewed and certified by a second member of 16 the American Academy of Actuaries before presentation to the board; 17 (10) contract for an independent audit of the state's actuary not less 18 than once every four years; 19 (11) contract for an independent audit of the state's performance 20 consultant not less than once every four years; 21 (12) obtain an external performance review to evaluate the investment 22 policies of each fund entrusted to the board and report the results of the review to the 23 appropriate fund fiduciary; 24 (13) by the first day of each regular legislative session, report to the 25 governor, the legislature, and the individual employers participating in the state's 26 retirement systems on the financial condition of the systems in regard to 27 (A) the valuation of trust fund assets and liabilities, including 28 the results of the actuarial calculations made under (17) of this subsection; 29 (B) current investment policies adopted by the board; 30 (C) a summary of assets held in trust listed by the categories of 31 investment;
01 (D) the income and expenditures for the previous fiscal year; 02 (E) the return projections for the next calendar year; 03 (F) one-year, three-year, five-year, and 10-year investment 04 performance for each of the funds entrusted to the board; and 05 (G) other statistical data necessary for a proper understanding 06 of the financial status of the systems; 07 (14) submit quarterly updates of the investment performance reports to 08 the Legislative Budget and Audit Committee; 09 (15) develop an annual operating budget; [AND] 10 (16) administer pension forfeitures required under AS 37.10.310 using 11 the procedures of AS 44.62 (Administrative Procedure Act); and 12 (17) annually calculate, by independent actuarial assessment, 13 (A) the value of the assets of the Alaska pension trust 14 reserve fund (AS 37.14.900); and 15 (B) the ratio of assets to liabilities, including unfunded 16 liabilities, for 17 (i) the Public Employees' Retirement System of 18 Alaska; 19 (ii) the Teachers' Retirement System of Alaska. 20 * Sec. 3. AS 37.14 is amended by adding new sections to read: 21 Article 10. Alaska Pension Trust Reserve Fund. 22 Sec. 37.14.900. Alaska pension trust reserve fund established. (a) The 23 Alaska pension trust reserve fund is established in the general fund. The fund consists 24 of money appropriated to the fund. Nothing in AS 37.14.900 - 37.14.990 creates a 25 dedicated fund. 26 (b) Money appropriated to the fund may be transferred as provided in 27 AS 37.14.920 without further appropriation. Money appropriated to the fund does not 28 lapse. The legislature may appropriate to the fund interest earned on money in the 29 fund. 30 Sec. 37.14.910. Powers and duties of the Alaska Retirement Management 31 Board. The Alaska Retirement Management Board shall manage the fund as required
01 under AS 37.10.210(a), subject to AS 37.14.900 - 37.14.990. 02 Sec. 37.14.920. Use of fund. (a) If the actuarial calculation made under 03 AS 37.10.220(a)(17)(B)(i) indicates that the ratio of assets to liabilities in the Public 04 Employees' Retirement System of Alaska is below 50 percent, the board shall transfer 05 from the Alaska pension trust reserve fund (AS 37.14.900) to the Public Employees' 06 Retirement System of Alaska an amount necessary to bring the ratio to 50 percent. 07 (b) If the actuarial calculation made under AS 37.10.220(a)(17)(B)(ii) 08 indicates that the ratio of assets to liabilities in the Teachers' Retirement System of 09 Alaska is below 50 percent, the board shall transfer from the Alaska pension trust 10 reserve fund (AS 37.14.900) to the Teachers' Retirement System of Alaska an amount 11 necessary to bring the ratio to 50 percent. 12 (c) If the actuarial calculation made under AS 37.10.220(a)(17)(A) indicates 13 that the assets of the Alaska pension trust reserve fund (AS 37.14.900) are not 14 sufficient to make the adjustments required under (a) and (b) of this section, the board 15 shall transfer the total assets of the fund to the Public Employees' Retirement System 16 of Alaska and Teachers' Retirement System of Alaska, apportioning the assets of the 17 Alaska pension trust reserve fund (AS 37.14.900) so as to bring the ratio of assets to 18 liabilities of each system as close to 50 percent as possible. 19 (d) If, based on the actuarial calculation made under AS 37.10.220(a)(17), the 20 board determines that the combined total value of the assets of the Public Employees' 21 Retirement System of Alaska, the Teachers' Retirement System of Alaska, and the 22 Alaska pension trust reserve fund (AS 37.14.900) exceeds 95 percent of the combined 23 total value of the liabilities calculated under AS 37.10.220(a)(17), and if the legislature 24 has appropriated money from the budget reserve fund (art. IX, sec. 17, Constitution of 25 the State of Alaska) to the Alaska pension trust reserve fund (AS 37.14.900) and the 26 amount appropriated has not yet been repaid to the budget reserve fund (art. IX, sec. 27 17, Constitution of the State of Alaska), the board shall transfer from the Alaska 28 pension trust reserve fund (AS 37.14.900) to the budget reserve fund (art. IX, sec. 17, 29 Constitution of the State of Alaska) an amount of money 30 (1) equal to the amount by which the combined total value of the assets 31 of the Public Employees' Retirement System of Alaska, the Teachers' Retirement
01 System of Alaska, and the Alaska pension trust reserve fund (AS 37.14.900) exceeds 02 95 percent of the total value of the liabilities calculated under AS 37.10.220(a)(17); 03 and 04 (2) that does not exceed the amount owed to the budget reserve fund 05 (art. IX, sec. 17, Constitution of the State of Alaska). 06 Sec. 37.14.990. Definitions. In AS 37.14.900 - 37.14.990, unless the context 07 otherwise requires, 08 (1) "board" means the Alaska Retirement Management Board; 09 (2) "fund" means the Alaska pension trust reserve fund established in 10 AS 37.14.900. 11 * Sec. 4. This Act takes effect June 30, 2012.