Senate Bill 2434

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 AUTHORIZE CONTRIBUTIONS OF PARTICIPANTS IN THE OPTIONAL RETIREMENT PROGRAM FOR STATE INSTITUTIONS OF HIGHER LEARNING TO BE INVESTED IN MUTUAL FUNDS OR SIMILAR INVESTMENT PRODUCTS; TO PROVIDE THAT COMPANIES DESIGNATED BY THE BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM TO PROVIDE INVESTMENT PRODUCTS UNDER THE PROGRAM SHALL ACT IN A FIDUCIARY CAPACITY WHEN SELECTING INVESTMENT PRODUCTS; TO REQUIRE SUCH COMPANIES TO SEEK APPROVAL OF THE BOARD OF TRUSTEES FOR INVESTMENT PRODUCTS MADE AVAILABLE UNDER THE PROGRAM; TO REQUIRE SUCH COMPANIES TO ANNUALLY REPORT TO THE BOARD OF TRUSTEES REGARDING PARTICIPANT USAGE OF SUCH PRODUCTS; TO PROVIDE THAT THE BOARD OF TRUSTEES SHALL HAVE THE RIGHT TO APPROVE THE INVESTMENT PRODUCTS OFFERED BY THE COMPANIES UNDER THE PROGRAM AND TO DISCONTINUE ANY PRODUCTS SO OFFERED; TO PROVIDE THAT THE BENEFITS OF PARTICIPANTS WHOSE FUNDS ARE INVESTED IN MUTUAL FUNDS OR SIMILAR INVESTMENT PRODUCTS SHALL BE LIMITED BY THE VALUE OF THE ACCOUNT; TO PROVIDE THAT MUTUAL FUND ACCOUNTS OR SIMILAR INVESTMENT PRODUCTS 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 STATE INCOME TAX AND SHALL BE UNASSIGNABLE; 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 such 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. (1) 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, mutual fund accounts or similar investment products which may be offered by the designated companies. In making such 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 such contracts or accounts, or both, for participants and their beneficiaries;

(b) The relation of such 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 such suitable rights and benefits under such contracts or accounts, or both; and

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

(2) Companies designated pursuant to subsection (1) of this section shall act in a fiduciary capacity in selecting investment products that are suitable for the optional retirement program. The companies shall report to the Board of Trustees of the Public Employees' Retirement System and seek the approval of the board for the investment products made available by the companies under the optional retirement program. The companies shall annually report to the board of trustees regarding participant usage of products made available by the companies under the optional retirement program. The board of trustees shall have the right to approve the investment products offered by the companies under the optional retirement program and to discontinue any product so offered.

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 which he would be required to contribute to the Public Employees' Retirement System of Mississippi if he 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 pursuant to 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 such 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. Such 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 annuity contracts issued by such company or companies. The benefits of participants whose funds are invested in mutual funds or similar investment products shall be limited by 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, in the case of an annuity contract, as specifically otherwise provided in the annuity contract. 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.