Bill Text: MI HB4275 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Retirement: state employees; annuity option; provide for. Amends sec. 58 of 1943 PA 240 (MCL 38.58). TIE BAR WITH: HB 4274'19
Spectrum: Partisan Bill (Republican 2-0)
Status: (Engrossed - Dead) 2020-02-19 - Referred To Committee On Appropriations [HB4275 Detail]
Download: Michigan-2019-HB4275-Introduced.html
HOUSE BILL No. 4275
February 28, 2019, Introduced by Reps. Albert and Marino and referred to the Committee on Financial Services.
A bill to amend 1943 PA 240, entitled
"State employees' retirement act,"
by amending section 58 (MCL 38.58), as added by 1996 PA 487.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 58. (1) Each qualified participant, former qualified
participant, and refund beneficiary shall direct the investment of
the individual's accumulated employer and employee contributions
and earnings to 1 or more investment choices within available
categories of investment provided by the state treasurer. The
limitations on the percentage of total assets for investments
provided
in Act No. 314 of the Public Acts of 1965, being sections
38.1132
to 38.1140i of the Michigan Compiled Laws, the public
employee retirement system investment act, 1965 PA 314, MCL 38.1132
to 38.1141, do not apply to Tier 2.
(2) In addition to the categories of investments provided by
the state treasurer under subsection (1), the retirement system
shall offer access to 1 or more fixed annuity options and 1 or more
variable annuity options. While a qualified participant is employed
by the employer, the annuity options offered under this subsection
must allow a qualified participant the ability to purchase a fixed
rate annuity and may allow the option to purchase a variable rate
annuity. Subject to subsection (4), the state treasurer shall
select 2 or more annuity providers based on a competitive proposal
process. Subject to subsection (4), the state treasurer shall
contract with 2 or more annuity providers to provide the annuity
options under this subsection. The state treasurer shall select and
contract with an annuity provider that meets all of the following
conditions, as determined by the state treasurer:
(a) The annuity provider and its subsidiaries and affiliates
have the appropriate financial strength and stability. In
determining the financial strength and stability under this
subdivision, the state treasurer shall obtain written
representation from the annuity provider of all of the following:
(i) That the annuity provider is an authorized insurer as that
term is defined in section 108 of the insurance code of 1956, 1956
PA 218, MCL 500.108.
(ii) That all of the following apply to the annuity provider,
at the time of selection and for each of the immediately preceding
5 years:
(A) The annuity provider operates under a certificate of
authority from the insurance commissioner of its domiciliary state
that has not been revoked or suspended.
(B) The annuity provider has filed audited financial
statements in accordance with the laws of its domiciliary state
under applicable statutory accounting principles.
(C) The annuity provider maintains and has maintained reserves
that satisfy the statutory requirements of each state where the
annuity provider does business.
(D) The annuity provider is not operating under an order of
rehabilitation or liquidation.
(iii) That the annuity provider undergoes, at least every 5
years, a financial examination, within the meaning of the law of
its domiciliary state, by the insurance commissioner of the
domiciliary state or representative, designee, or other party
approved by the insurance commissioner of the domiciliary state.
(iv) That the annuity provider will notify the retirement
system of any change in circumstances occurring after the
representations made in subparagraphs (i), (ii), and (iii) that
would preclude the annuity provider from making the representations
at the time the annuity provider issues the annuity.
(b) The annuity provider is able to provide contracted rights
and benefits to a qualified participant.
(c) The costs, including fees and commissions, of the annuity
options in relation to the benefits and product features of the
annuity option are reasonable.
(d) The administrative services to be provided under the
annuity option are appropriate. At a minimum, the administrative
services must include periodic reports to the state treasurer about
all of the following:
(i) The number of annuitants.
(ii) The types of annuities provided.
(iii) Any other information that the state treasurer may
require.
(e) The annuity provider is experienced in paying lifetime
retirement income through annuities offered to public employee
defined contribution retirement plans.
(f) The annuity provider offers annuity options that meet all
of the following conditions:
(i) The annuity options are suitable for qualified
participants, former qualified participants, and refund
beneficiaries.
(ii) The contract terms and income benefits are clearly
stated, based on reasonable assumptions.
(iii) The annuity options offer a range of lifetime income
options.
(iv) If the annuity is a variable annuity, the annuity offers
a fixed account option along with its variable options.
(g) The annuity provider is able to offer objective and
participant-specific education and tools that help participants
understand the appropriate use of annuities as a long-term
retirement savings vehicle.
(3) The office of retirement services shall verify the
information in a report submitted under subsection (2)(d). A report
submitted under subsection (2)(d) must be published on the office
of retirement services's website.
(4) After the competitive proposal process under subsection
(2) is complete, the state treasurer may select and contract with
only 1 annuity provider to provide annuity options to qualified
participants under subsection (2) if either of the following
applies:
(a) The state treasurer determines that selecting more than 1
annuity provider is not in the interests of qualified participants.
(b) Only 1 annuity provider meets the conditions under
subsection (2).
(5) If the state treasurer selects only 1 annuity provider to
provide annuity options under subsection (2) as provided in
subsection (4), the state treasurer shall notify the speaker of the
house of representatives, the minority leader of the house of
representatives, the senate majority leader, and the senate
minority leader within 30 days after selecting and contracting with
an annuity provider of the reasons for selecting only 1 annuity
provider.
(6) There is appropriated for the fiscal year ending September
30, 2019, $100,000.00 to the office of retirement services in the
department of technology, management, and budget for administration
of the changes under the amendatory act that added this subsection.
(7) The appropriation authorized in subsection (6) is a work
project appropriation and any unencumbered or unallotted funds are
carried forward into the following fiscal year. The following is in
compliance with section 451a(1) of the management and budget act,
1984 PA 431, MCL 18.1451a:
(a) The purpose of the project is to administer changes under
the amendatory act that added this subsection.
(b) The work project will be accomplished through a plan
utilizing interagency agreements, employees, and contracts.
(c) The total estimated completion cost of the work project is
$100,000.00.
(d) The estimated completion date for the work project is
September 30, 2020.
Enacting section 1. This amendatory act takes effect 120 days
after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No. ___ or House Bill No. 4274 (request no.
01170'19 **) of the 100th Legislature is enacted into law.
