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Montana Administrative Register Notice 2-43-434 No. 8   04/29/2010    
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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

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NOTICE OF PROPOSED AMENDMENT

 

NO PUBLIC HEARING CONTEMPLATED

 

TO:  All Concerned Persons

 

1.  On June 25, 2010, the Montana Public Employees' Retirement Board (PER Board) proposes to amend the above-stated rules.

 

2.  The PER 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 the PER Board no later than 5:00 p.m. on May 14, 2010, to advise us of the nature of the accommodation that you need.  Please contact Dena Helman, Montana Public Employee Retirement Administration, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, Montana 59620-0131; telephone (406) 444-2578; TDD (406) 444-1421; fax (406) 444-5428; or e-mail dhelman@mt.gov.

 

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 8, 2009 February 11, 2010.

(2)  The board adopts and incorporates by reference the State of Montana 401(a) Plan Full Discretion Guidelines for the Stable Value Investment Option Guidelines Schedule approved by the board on February 22, 2001 December 29, 2009.

(3)  remains 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 8, 2009 February 11, 2010.

(2)  The board adopts and incorporates by reference the State of Montana 457 Plan Full Discretion Stable Value Investment Guidelines for the stable value investment option Schedule approved by the board on December 13, 2007 December 29, 2009.

(3)  remains the same.

 

AUTH: 19-50-102, MCA

IMP: 19-50-102, MCA

 

REASON: The PER Board, as the administrator of the Defined Contribution Retirement Plan (DCRP) of the Public Employees' Retirement System and the Deferred Compensation Plan (457 Plan), adopted the original investment policy statements for both plans by reference in 2002.  The PER Board last amended both investment policy statements on February 11, 2010.

 

The recent amendments impact both the Deferred Compensation and the Defined Contribution plans' investment policy statements (IPS):

 

(1)  The PER Board amended Section III.B.1.a (Investment Selection Guidelines – Requirements) of the DCRP IPS to correct the acronym for the Chartered Financial Analyst Institute, or CFA Institute. The acronym was correct in the 457 Plan IPS.

 

(2)  The PER Board also amended Section IV.A. (Constraints – Liquidity Needs) for each IPS.  The PER Board, on the advice of its Employee Investment Advisory Council and with the concurrence of its investment consultant, Michael Schlachter of Wilshire Associates, determined there to be no real difference in the liquidity needs of the plans.  The PER Board therefore deleted the reference to moderate liquidity needs in the DCRP IPS and the reference to high liquidity needs in the 457 IPS.

 

The PER Board believes the remaining language, "MPERB must ensure that sufficient liquid assets are available to meet the plan's liquidity needs while also ensuring daily investment earnings on those assets" is adequate to describe the liquidity needs of the plans.  There need be no reference to whether those needs are moderate or high.

 

(3)  The PER Board has adopted entirely new Stable Value Fund Investment Guidelines to be applied to the stable value fund in both the DCRP and the 457 Plan.  Due to the recent economic downturn, Aegon, the entity that provides book value protection to stable value participants, now requires the use of Aegon's "standard" investment guidelines, with the recognition that some flexibility and customization is necessary.  Aegon, PIMCO (the stable value plans' investment manager), and the PER Board have agreed upon new guidelines that allow Aegon to appropriately manage risk and provide greater security for stable value fund participants, while permitting PIMCO to continue to obtain adequate yield on those investments.

 

The PER Board determined to adopt the original investment policy statements by reference.  Because 2-4-307(3), MCA, requires that changes to documents also be adopted by reference, it is necessary to amend the rules that adopt the statements by reference.

 

4.  Concerned persons may present their data, views, or arguments concerning the proposed amendments in writing to Roxanne M. Minnehan, Executive Director, Montana Public Employee Retirement Administration, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, Montana 59620-0131; telephone (406) 444-5459; fax (406) 444-5428; or e-mail rminnehan@mt.gov and must be received no later than 5:00 p.m., May 28, 2010.

 

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 Dena Helman at the above address no later than 5:00 p.m., May 28, 2010.

 

6.  If the board receives requests for a public hearing on the proposed amendment from either 10 percent or 25, whichever is less, of the persons 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 directly affected has been determined to be 1043 persons based on approximately 2367 participants in the Defined Contribution Retirement Plan and 8070 participants in the Deferred Compensation Plan as of December 2009, for a total 10,437 participants.

 

7.  The PER 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 PER 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 contact requirements of 2-4-302, MCA, do not apply.

 

 

/s/  Melanie A. Symons                                 /s/  John Nielsen                               

Melanie A. Symons                                       John Nielsen

Chief Legal Counsel and                             President

Rule Reviewer                                               Public Employees' Retirement Board

 

/s/  Michael P. Manion                                             

Michael P. Manion

Chief Legal Counsel and

Rule Reviewer

           

Certified to the Secretary of State April 19, 2010.

 

 

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