H 3913 Session 112 (1997-1998)
H 3913 General Bill, By Haskins
Similar(S 958)
A BILL 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.
04/10/97 House Introduced and read first time HJ-69
04/10/97 House Referred to Committee on Ways and Means HJ-70
A BILL
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:
"CHAPTER 16
Equity Investment Safeguards Act
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.
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