House Bill 1232

(As Sent to Governor)

AN ACT TO AMEND SECTIONS 25-11-403, 25-11-407, 25-11-411, 25-11-417 AND 25-11-419, MISSISSIPPI CODE OF 1972, TO EXPAND THE INVESTMENTS AVAILABLE TO PARTICIPANTS IN THE OPTIONAL RETIREMENT PROGRAM TO INCLUDE MUTUAL FUND ACCOUNTS AND SIMILAR INVESTMENT PRODUCTS IN ADDITION TO ANNUITY CONTRACTS; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 25-11-403, Mississippi Code of 1972, is amended as follows:

25-11-403. Retirement and death benefits shall be provided to participants in the optional retirement program by contribution to annuity contracts, fixed or variable in nature, mutual fund accounts or similar investment products, or a combination thereof, at the option of the participant. The state and the participants shall contribute, in accordance with this article, toward the purchase of benefits under those contracts or accounts, which contracts or accounts shall become the property of the participants.

SECTION 2. Section 25-11-407, Mississippi Code of 1972, is amended as follows:

25-11-407. The Board of Trustees of the Public Employees' Retirement System shall designate not less than three (3) nor more than five (5) companies to provide annuity contracts, mutual fund accounts or similar investment products, and the types of investment contracts or funds that may be offered by those companies. In making those designations, the board of trustees shall consider and be guided by:

(a) The nature and extent of the rights and benefits to be provided by those contracts or accounts, or both, for participants and their beneficiaries;

(b) The relation of those rights and benefits to the amount of contributions to be made;

(d) The efficacy of the contracts or accounts, or both, in the recruitment and retention of faculty and administrators; * * *

(e) The ability and experience of the designated companies in providing those suitable rights and benefits under those contracts or accounts, or both; and

(f) The ability and experience of the designated companies to provide both suitable participant investment guidance and investment options.

The companies shall act in a fiduciary capacity in selecting investment products that are suitable for the optional retirement program. It shall be the duty of the companies to report to and seek approval from the board for the investment products made available under this paragraph and to report the participant use of those options annually. The board reserves the right to refuse or discontinue any product offered by those companies.

SECTION 3. Section 25-11-411, Mississippi Code of 1972, is amended as follows:

25-11-411. Each participant shall contribute monthly to the optional retirement program the same amount that he or she would be required to contribute to the Public Employees' Retirement System of Mississippi if he or she were a member of that retirement system. Participant contributions may be made by a reduction in salary in accordance with the provisions of Section 403(b) of the United States Internal Revenue Code or any amendment thereto, or in accordance with Section 25-11-124, as may be appropriate under the determination made in accordance with Section 25-11-421. The entirety of each participant's contribution shall be remitted to the appropriate company or companies for application to the participant's * * * contracts or accounts, or both. Each employer of a participant in the optional retirement program shall contribute on behalf of each participant in the optional retirement program the same amount the employer would be required to contribute to the Public Employees' Retirement System of Mississippi if the participant were a member of the retirement system. The employer's contribution shall be remitted as follows:

(a) An amount equal to seven and one-fourth percent (7-1/4%) of the participant's total earned compensation as defined in Section 25-11-103 shall be remitted to the appropriate company or companies for application to the participant's * * * contracts or accounts, or both;

(b) An amount equal to two and one-half percent (2-1/2%) of the participant's total earned compensation as defined in Section 25-11-103 shall be remitted to the Public Employees' Retirement System of Mississippi for application to the accrued liability contribution fund;

(c) The remainder, if any, shall be remitted to the appropriate company or companies for application to the participant's * * * contracts or accounts, or both.

If the employer's contribution level is decreased below nine and three-fourths percent (9-3/4%) of the employee's total earned compensation, the remittance provided by paragraph (b) of this section shall be reduced accordingly. There shall be no reduction in the remittance provided by paragraph (a) of this section until such time, if any, that the employer's contribution level is less than seven and one-fourth percent (7-1/4%) of the participant's total earned compensation. If the accrued liability contribution is reduced or discontinued under Section 25-11-123, the amount of the reduction, or the entirety of the employer's contribution, in case of discontinuance, shall be remitted to the appropriate company or companies for application to the participant's * * * contracts or accounts, or both. Any remittance required to be made by the employer to the Public Employees' Retirement System of Mississippi shall be made at the times the employer remits contributions for members of the retirement system.

SECTION 4. Section 25-11-417, Mississippi Code of 1972, is amended as follows:

25-11-417. Benefits payable to participants under the optional retirement program are not obligations of the State of Mississippi. Those benefits and other rights of optional retirement program participants or their beneficiaries are the liability and responsibility solely of the designated company or companies. The benefits of participants whose funds are invested with annuity providers shall be governed solely by the terms of the * * * contracts issued by that company or companies. The benefits of participants whose funds are invested in mutual funds or other similar investment products shall be limited to the value of the account.

SECTION 5. Section 25-11-419, Mississippi Code of 1972, is amended as follows:

25-11-419. Annuity contracts, mutual fund accounts or similar investment products authorized under the optional retirement program and all rights thereto of a participant in the optional retirement program shall be exempt from any state or municipal tax (except to the extent that state income tax is payable under Chapter 7, Title 27, Mississippi Code of 1972), shall be exempt from any levy and sale, garnishment, attachment, or any process whatsoever, and shall be unassignable except as specifically otherwise provided in the * * * contract or account. Annuity contracts issued under the optional retirement program shall be treated under the State Life and Health Insurance Guaranty Association Act in the same manner as contracts qualified under Section 403(b) of the Internal Revenue Code.

SECTION 6. This act shall take effect and be in force from and after July 1, 2005.