Current Status Bill Number:3913 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19970410 Primary Sponsor:Haskins All Sponsors:Haskins Drafted Document Number:JIC\6052HTC.97 Residing Body:House Current Committee:Ways and Means Committee 30 HWM Subject:Equity Investments Safeguards Act, Retirement Systems and Pensions
Body Date Action Description Com Leg Involved
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House 19970410 Introduced, read first time, 30 HWM
referred to Committee
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TO AMEND TITLE 9, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO RETIREMENT SYSTEMS, BY ADDING CHAPTER 16, ENACTING THE "EQUITY INVESTMENT SAFEGUARDS ACT" SO AS TO AUTHORIZE THE INVESTMENT OF FUNDS OF THE VARIOUS STATE RETIREMENT SYSTEMS IN EQUITY SECURITIES AND TO ESTABLISH THE STATE RETIREMENT SYSTEMS INVESTMENT PANEL AND PROVIDE FOR ITS MEMBERSHIP, POWERS, AND DUTIES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds that the implementation of the amendment to Article X, Section 16 of the Constitution of this State authorizing the investment and reinvestment of the funds of the various state-operated retirement systems in equity securities requires the enactment of implementing legislation. By the enactment of Chapter 16, Title 9 of the 1976 Code, the "Equity Investment Safeguards Act", the provisions of the amendment are carried into effect.
SECTION 2. Title 9 of the 1976 Code is amended by adding:
Section 9-16-10. This chapter may be cited as the 'Equity Investment Safeguards Act'.
Section 9-16-20. The funds of the South Carolina Retirement System, Retirement System for Judges and Solicitors, Retirement System for Members of the General Assembly, and Police Officers Retirement System, referred to in this chapter collectively as 'the state retirement systems' and individually as 'a state retirement system', may be invested and reinvested in equity securities of any corporation within the United States that is registered on a national securities exchange as provided in the Securities Exchange Act of 1934, or any successor act, or quoted through the National Association of Securities Dealers Automatic Quotations System, or a similar source. Investment and reinvestment of these funds in equity securities must be consistent with the laws of this State and the annual equity investment plan provided for in this chapter.
Section 9-16-30. There is created the State Retirement Systems Investment Panel, consisting of five members, one each appointed by the Governor, State Treasurer, Comptroller General, the chairman of the Ways and Means Committee of the House of Representatives, and the chairman of the Senate Finance Committee. The member appointed by the Governor shall serve as chairman. All members appointed to the panel must possess substantial financial investment experience. No person may be appointed or continue to serve who is an employee of the State or any of its political subdivisions, including school districts. Members shall serve for terms of two years and until their successors are appointed and qualify. Vacancies must be filled for the unexpired term in the manner of the original appointment. Members shall serve without compensation, but may receive the mileage, subsistence, and per diem authorized by law for members of state boards, commissions, and committees.
Section 9-16-40. (A) The members of the panel in discharging their duties shall act solely and exclusively in the interest of the state retirement systems, their participants, and beneficiaries and shall use the care, skill, and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims. A panel member, any business with which he is associated, or any member of his family may not directly or indirectly engage in any transactions involving any of the state retirement systems, their funds, or investments, or benefit economically from his service on the panel other than in his capacity as a member of the panel or as a participant or beneficiary of a state retirement system. For purposes of this subsection, the term:
(1) 'any member of his family' means the panel member's spouse, children, parents, siblings, or an individual claimed by the panel member or his spouse as a dependent for income tax purposes; and
(2) 'any business with which he is associated' means a business of which the panel member or any member of his family is a director, officer, owner, employee, agent, investor, or holder of stock.
(B) Before a panel member assumes his duties, and in addition to other disclosures required by law, the member shall fully disclose his and his spouse's assets, economic interests, and investment holdings on a form developed by the State Treasurer and filed with the State Ethics Commission. Each panel member shall file an updated disclosure statement with the State Ethics Commission by April fifteenth of each year of his term. This form is considered a filing pursuant to Article 11, Chapter 13, of Title 8; however, advisory opinions with respect to the form must be provided by the State Treasurer.
(C) Each panel member shall attend an educational program on fiduciary responsibilities to be conducted annually by the designee of the State Budget and Control Board.
(D) The provisions of this section are cumulative to, and not in lieu of, any other provisions of law applicable to the panel and its members in the performance of official duties.
Section 9-16-50. (A) The panel shall meet no later than May first of each year to review and adopt the proposed annual equity investment plan for the state retirement systems for the next fiscal year. The annual equity investment plan must be developed by the panel in consultation with the State Treasurer. No later than June first of each year, the panel shall submit the proposed plan to the State Budget and Control Board. The plan submitted to the board by the panel is deemed approved unless the board by a majority vote of its members disapproves or amends the plan before July first. Amendments may be made to the plan by the panel during the fiscal year with the approval of the board.
(B) The panel shall meet at least once during each fiscal year quarter for the purposes of reviewing the performance of equity investments, assessing compliance with the annual equity investment plan, and determining whether to recommend amendments to the plan to the board. The panel shall meet at other times as the chairman considers appropriate or as directed by the board.
(C) In addition to the other duties contained elsewhere in this chapter, the panel may:
(1) adopt, promulgate, amend, and repeal bylaws, subject to the approval of the board, not inconsistent with this chapter, for the administration of its affairs and implementation of its functions; and
(2) establish advisory committees to assist and advise the panel.
Section 9-16-60. The annual equity investment plan must include, but is not limited to, the following components:
(1) general operational and investment policies;
(2) investment objectives and performance standards;
(3) equity investment strategies, which may include indexed or enhanced indexed strategies as the preferred or exclusive strategies, and an explanation of the reasons for the selection of each strategy;
(4) ethical rules;
(5) fiduciary responsibilities;
(6) risk management policies;
(7) industry sector, market sector, issuer, and other allocations of assets that provide diversification in accordance with prudent investment standards;
(8) procedures and policies for selecting, monitoring, compensating, and terminating equity investment consultants, equity investment managers, and other necessary professional service providers; and
(9) methods for managing the costs of the equity investment program.
Section 9-16-70. No more than forty percent of the market value of the assets of a state retirement system may be invested in equity securities at any time, and any increase during any fiscal year in the proportion of the market value of the assets of a state retirement system invested in equity securities may not exceed ten percent of the market value of the assets of that system.
Section 9-16-80. The State Treasurer's Office shall provide staff for the panel, administer the annual equity investment plan, and provide equity investment reports at least quarterly to each member of the board and panel and to other appropriate officials and entities.
Section 9-16-90. The costs of administering and operating the equity investment programs for the state retirement systems, including the expenses of the panel, must be paid from the investment earnings of those systems."
SECTION 3. Notwithstanding the provisions of Chapter 16, Title 9 of the 1976 Code, as added by this act, during the first fiscal year in which the provisions of Chapter 16 are implemented, the State Budget and Control Board shall establish the dates for development, review, and approval of the annual equity investment plan.
SECTION 4. This act takes effect upon ratification of the amendment to the Constitution of this State proposed pursuant to Joint Resolution 473 of 1996.