H. B. 2832
(By Delegates Kiss, Browning, Farris, Pettit, Walters, Miller
and Border)
(Originating in the Committee on Finance)
[February 28, 1995]
A BILL to amend and reenact section twenty-two, article
twenty-two, chapter eight of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to further
amend said article by adding thereto a new section,
designated section twenty-two-a, all relating to the
investment of funds of municipal firemen and policemen
pension funds, restrictions on investments, performance
evaluations and reporting requirements.
Be it enacted by the Legislature of West Virginia:
That section twenty-two, article twenty-two, chapter eight
of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted; and that said
article be further amended by adding thereto a new section,
designated section twenty-two-a, all to read as follows:
ARTICLE 22. RETIREMENT BENEFITS GENERALLY; POLICEMEN'S PENSION
AND RELIEF FUND; FIREMEN'S PENSION AND RELIEF
FUND; PENSION PLANS FOR EMPLOYEES OF WATERWORKS
SYSTEM, SEWERAGE SYSTEM OR COMBINED WATERWORKS
AND SEWERAGE SYSTEM.
§8-22-22. Investment of funds; exercise of judgment in making
investments; actuarial studies required; annual
report.
The board of trustees may invest a portion or all of the
fund assets in the state consolidated fund or the consolidated
pension fund. The board of trustees shall keep as an available
sum for the purpose of making regular retirement, disability
retirement, death benefit, payments and administrative expenses
in an estimated amount not to exceed payments for a period of
ninety days. The board of trustees, in acquiring, investing,
reinvesting, exchanging, retaining, selling and managing property
for the benefit of the fund shall exercise judgment and care
under fiduciary duty which persons of prudence, discretion, and
intelligence exercise in the management of their own affairs, not
in regard to speculation, but in regard to the permanent
disposition of their funds, considering the probable total return
as well as the preservation of principal. Within the limitations
of the foregoing standard, the board of trustees is authorized in
its sole discretion to invest and reinvest any funds received by it and not invested in the consolidated fund or the consolidated
pension fund in the following:
(a) Any direct obligation of, or obligation guaranteed as to
the payment of both principal and interest by, the United States
of America;
(b) Any evidence of indebtedness issued by any United States
government agency guaranteed as to the payment of both principal
and interest, directly or indirectly, by the United States of
America including, but not limited to, the following: Government
national mortgage association, federal land banks, federal
national mortgage association, federal home loan banks, federal
intermediate credit banks, banks for cooperatives, Tennessee
valley authority, United States postal service, farmers home
administration, export-import bank, federal financing bank,
federal home loan mortgage corporation, student loan marketing
association and federal farm credit banks;
(c) Readily marketable (i.e. traded on a national securities
exchange) debt securities having a Standard & Poor rating of A
(or equivalent to Moody's rating) or higher, excluding municipal
securities;
(d) Any evidence of indebtedness that is secured by a first
lien deed of trust or mortgage upon real property situated within
this state, if the payment thereof is substantially insured or guaranteed by the United States of America or any agency thereof;
(e) Repurchase agreements issued by any bank, trust company,
national banking association or savings institutions which mature
in less than one year and are fully collateralized, no reverse
repurchase agreements shall be allowed;
(f) Interest bearing deposits including certificates of
deposit and passbook savings accounts that are FDIC insured;
(g)
Equity. -- Common stocks, securities convertible into
common stocks, or warrants and rights to purchase such
securities:
Provided, That each shall be listed on the NYSE, ASE
or are traded on the National OTC Market and listed on the NASDAQ
National Market;
(h) The board of trustees of each fund may delegate
investment authority to equity mutual funds managers and/or
professional registered investment advisors who are registered
with the Securities and Exchange Commission, in addition to being
registered with the Investment Advisors Act of 1940 and
appropriate state regulatory agencies, if applicable, who also
manage assets in excess of seventy-five million dollars.
§8-22-22a. Restrictions on investments.
Moneys invested as permitted by section twenty-two of this
article are subject to the following restrictions and condition
contained in this section:
(a) Fixed income securities shall at no time exceed ten
percent of the total assets of the pension fund, which are issued
by one issuer, other than the United States government or
agencies thereof, whereas this limit shall not apply;
(b) At no time shall the equity portion of the portfolio
exceed fifty percent of the total portfolio. Furthermore, the
debit or equity securities of any one company or association
shall not exceed five percent with a maximum of fifteen percent
in any one industry;
(c) Notwithstanding any other provisions of this article,
any investments in equities under subsections (g) and (h),
section twenty-two of this article shall be subject to the
following additional guidelines:
(1) Equity mutual funds shall be no sales load (front or
back) and no contingent deferred sales charges shall be allowed.
The total annual operating expense ratio shall not exceed one and
three-quarter percent for any mutual fund;
(2) The stated investment policy requires one hundred
percent of the equities of the portfolio be that of securities
which are listed on the New York Stock Exchange, the American
Stock Exchange, or the NASDAQ National Market;
(3) Equity mutual funds may be only of the following fund
description stated purpose: growth funds, growth and income funds, equity income funds, index funds; utilities, funds,
balanced funds and flexible portfolio funds;
(4) The equity value of investments shall not exceed
twenty-five percent of the total portfolio for the first twelve
months from enactment of these articles; thereafter no more than
five percent of the total portfolio be invested in equity
securities per calendar quarter up to the maximum of fifty
percent.
(d) The board of trustees of each fund shall obtain an
independent performance evaluation of the funds at least
annually and such evaluation shall consist of comparisons with
other funds having similar investment objectives for performance
results with appropriate market indices;
(e) Each entity conducting business for each pension fund,
shall fully disclose all fees and costs of transactions conducted
on a quarterly basis. Entities conducting business in mutual
funds for and on behalf of each pension fund, shall timely file
revised prospectus and normal quarterly and annual Securities
Exchange Commission reporting documents with the board of
trustees of each pension fund.
NOTE: The purpose of this bill is to enlarge the
permissible investments that may be made by the board of trustees of a municipal police or firefighters pension system.