1997
HOUSE BILL 971006
BY REPRESENTATIVES Entz, Allen, Dean, June, Schwarz, George, Mace, and Sullivant;
also SENATORS B. Alexander, Chlouber, Feeley,
Powers, and Reeves.
CONCERNING THE MANAGEMENT OF ASSETS HELD BY FIRE
AND POLICE PENSION PLANS THAT PROVIDE BENEFITS FOR PAID FIREFIGHTERS
AND POLICE OFFICERS.
Be it enacted by the General Assembly of the State
of Colorado:
SECTION 1. 3130.5503,
Colorado Revised Statutes, 1986 Repl. Vol., as amended, is amended
to read:
3130.5503. Alternative
investment authority. Notwithstanding
any other provision of this part 5, moneys of old hire pension
plans that are not affiliated with the fire and police pension
association under section 3131701, may be MANAGED
AND invested as provided in section
3130.5803, BY THE TRUSTEES
OF SUCH PLANS PURSUANT TO THE STANDARD AND OTHER PROVISIONS FOR
TRUSTEES SET FORTH IN THE "UNIFORM PRUDENT INVESTOR ACT",
ARTICLE 1.1 OF TITLE 15, C.R.S. but
Such investments shall meet earning
performance standards established by the fire and police pension
association board of directors and
shall be audited at least biennially.
SECTION 2. 3130.5803,
Colorado Revised Statutes, 1986 Repl. Vol., as amended, is amended
to read:
3130.5803. Investment authority.
(1) Except as provided in subsection (2) of this section,
moneys of exempt alternative plans that are not affiliated with
the fire and police pension association under section 3131702
or 3131706 may be MANAGED AND invested as
provided in section 3131302 (4),
BY THE TRUSTEES OF SUCH PLANS PURSUANT TO THE STANDARD AND OTHER
PROVISIONS FOR TRUSTEES SET FORTH IN THE "UNIFORM PRUDENT
INVESTOR ACT", ARTICLE 1.1 OF TITLE 15, C.R.S. but
Such investments shall meet earning
performance standards established by the fire and police pension
association board of directors and
shall be audited at least biennially.
(2) (a) Notwithstanding
any contrary provision in section 3131302 (4), assets
of an exempt alternative plan may be invested in corporate stocks,
corporate bonds, notes, or debentures that are convertible into
corporate stocks, or investment trust shares pursuant to the following
conditions:
(I) The original cost of all such
investments shall not exceed sixtyfive percent of the then
current market value of all assets in the exempt alternative plan;
and
(II) The fiduciary of the exempt
alternative plan is responsible for investing the assets of the
plan pursuant to the investment standards provided in section
151304, C.R.S., except to the extent the fiduciary
allows a participant to exercise control of investments pursuant
to paragraph (b) of this subsection (2).
(b) The fiduciary
TRUSTEES OF AN EXEMPT ALTERNATIVE PLAN may allow a participant
to exercise control of the investment of the participant's accrued
benefit under the plan, subject to the following requirements:
(I) The fiduciary
TRUSTEES shall select at least three investment alternatives,
each of which is diversified in itself, that allow the participant
a broad range of investments and a meaningful choice between risk
and return in the investment of the participant's accrued benefit;
(II) The fiduciary
TRUSTEES shall allow the participant to change investments at
least once each calendar quarter; and
(III) The fiduciary
TRUSTEES shall provide the participant with information describing
the investment alternatives and the nature, investment performance,
fees, and expenses of the investment alternatives and other information
to enable a participant to make informed investment decisions.
(c) Neither the state nor local governments
shall be held responsible to pay for any or all financial losses
experienced by participants of the exempt alternative plan; except
that nothing in this section relieves a local government's responsibility
as a fiduciary
TRUSTEE to the plan.
SECTION 3. 3131302
(1), (4), (5), and (6), Colorado Revised Statutes, 1986 Repl.
Vol., as amended, are amended to read:
3131302. Fund management
investment. (1) The
board shall be the trustee of the fund and shall have full and
unrestricted discretionary power and authority to invest and reinvest
such portions of the fund as in its judgment may not be immediately
required for the payment of refunds or benefits. In exercising
its discretionary authority with respect to the acquisition
or disposition of any investments,
MANAGEMENT AND INVESTMENT OF FUND ASSETS, the board shall be governed
by the standard for investments prescribed
in section 151304, C.R.S., except as provided in subsection
(4) of this section AND OTHER PROVISIONS
FOR TRUSTEES SET FORTH IN THE "UNIFORM PRUDENT INVESTOR ACT",
ARTICLE 1.1 OF TITLE 15, C.R.S. The
board may, by resolution, delegate to its executive director,
appointed pursuant to section 3131201 (3) (b), the
investment authority created by this subsection (1). The board
shall not delegate to its executive director the authority to
invest or reinvest more than five percent of the market value
of the assets of the fund between regularly scheduled meetings
of the board.
(4) (a) Subject
to the limitations on investments described in section 151304,
C.R.S., the board may invest all or any part of the fund in the
types of investments authorized by such section, including, but
not limited to, obligations of the United States government and
obligations fully guaranteed as to principal and interest by the
United States government, in state and municipal bonds, in corporate
notes, bonds, or debentures, convertible or otherwise, in railroad
equipment trust certificates, in real property and in loans secured
by first mortgages or deeds of trust on real property, in participation
guarantee agreements with life insurance companies, in real estate
limited partnerships, and in other types of investment agreements.
Such investments may be made without limitation as to the percentage
of the book value of the assets of the retirement fund so invested.
Investments may also be made in either common or preferred corporate
stocks, but the original cost of all investments in corporate
stocks or corporate bonds, notes, or debentures that are convertible
into corporate stock, or in investment trust shares, shall not
exceed fifty percent of the then book value of the assets of the
fund. In no event shall any investment be made in the common or
preferred stock, or both, of any single corporation in an amount
in excess of five percent of the then book value of the assets
of the fund, nor shall more than seven percent of the outstanding
stock or bonds of any single corporation be acquired for the fund;
except that the board may acquire up to one hundred percent of
the outstanding stock of any corporation described in sections
501 (c) (2) and 501 (c) (25) of the "Internal Revenue Code
of 1986", as amended. To the extent that any moneys in the
fund have been withdrawn from local financial institutions, the
board shall attempt to return a proportional share of such moneys
in the fund to the localities from which moneys were withdrawn.
(b) As used in this subsection
(4), unless the context otherwise requires:
(I) "Book value" means
current market value.
(II) "Current market value"
means the current exchange price of an asset that is publicly
traded, and, for a nonpublicly traded asset, it means the current
valuation as reflected in the books of the association.
(III) "Original cost"
means the acquisition cost of an asset.
(5) (a) The
board shall purchase and acquire and hold for the benefit of the
fund such investments in such amounts as may from time to time
be directed by the board in writing. Any such investments shall
be disposed of by the board when it determines such disposition
to be necessary to provide money for payment of refunds or pension
benefits or in order to reinvest the proceeds of such disposition
in other investments determined by the board to be in the best
interests of the fund.
(b) Notwithstanding any other
provision of this section, the board may employ or contract with
investment counselors to manage a portion of the assets of the
fund and may grant to such investment counselors the authority
to make investment decisions with respect to the assets they manage,
including the authority to purchase and sell investment assets.
The investment counselors retained by the board shall at all
times be subject to the standards and limitations set forth in
subsection (4) of this section and section 151304,
C.R.S.
(6) All transactions involving the purchase
and sale of investments authorized in this section shall be effected
on behalf of the association. To facilitate sale and exchange
transactions, securities belonging to the association may be registered
in the name of nominees in the discretion of the board and in
accordance with standard business practices. All such nominees
shall be bonded in such amounts as may be determined to be advisable
by the board. NOTHING IN THIS SUBSECTION (6) SHALL PRECLUDE THE
BOARD OR ITS AUTHORIZED AGENTS FROM FORMING A CORPORATION DESCRIBED
IN SECTION 501 (c) (2) AND (c) (25) OF THE FEDERAL "INTERNAL
REVENUE CODE OF 1986", 26 U.S.C. SEC. 501 (c) (2) AND (c)
(25), AS AMENDED, WITH RESPECT TO THE OWNERSHIP OF INVESTMENTS
IN REAL PROPERTY.
SECTION 4. 3131502
(2), Colorado Revised Statutes, 1986 Repl. Vol., as amended, is
amended to read:
3131502. Statewide money
purchase plan creation management.
(2) (a) There is hereby created the fire and police
members' statewide money purchase plan benefit fund, which shall
consist of moneys of employers that have withdrawn from the statewide
defined benefit plan pursuant to section 3131501,
including member and employer contributions and such amounts as
are transferred pursuant to section 3131501. The
board shall keep an accurate account of the fund and of each member's
separate account in the fund. The board may create,
and is authorized to offer to each member of the statewide money
purchase plan, various investment options including, but not limited
to the following: ALLOW A MEMBER
TO EXERCISE CONTROL OF THE INVESTMENT OF PART OR ALL OF THE MEMBER'S
ACCRUED BENEFIT UNDER THE PLAN. IN ALLOWING A MEMBER TO EXERCISE
SUCH CONTROL, THE BOARD SHALL:
(I) Option
A, which is investment in the fire and police members' benefit
fund created by section 3131301 (1) (a)
SELECT AT LEAST THREE INVESTMENT ALTERNATIVES, EACH OF WHICH IS
DIVERSIFIED IN ITSELF, THAT ALLOW THE MEMBER A BROAD RANGE OF
INVESTMENTS AND A MEANINGFUL CHOICE BETWEEN RISK AND RETURN IN
THE INVESTMENT OF THE MEMBER'S ACCRUED BENEFIT;
(II) Option
B, which is investment in a stock portfolio fund
ALLOW THE MEMBER TO CHANGE INVESTMENTS AT LEAST ONCE EACH CALENDAR
QUARTER; AND
(III) Option
C, which is investment in a bond portfolio fund; and
PROVIDE THE MEMBER WITH INFORMATION DESCRIBING THE INVESTMENT
ALTERNATIVES, THE NATURE, INVESTMENT PERFORMANCE, FEES, AND EXPENSES
OF INVESTMENT ALTERNATIVES, AND OTHER INFORMATION TO ENABLE A
MEMBER TO MAKE INFORMED INVESTMENT DECISIONS.
(IV) Option
D, which is investment in a guaranteed fund.
(b) The plan document created by the board
pursuant to subsection (1) of this section shall govern the calculation
and allocation of earnings and losses under the various investment
options listed in paragraph (a) of
this subsection (2) ALTERNATIVES
which the board may offer, the transfer of assets between funds
under each option
ALTERNATIVE, the allocation of a member's account between investment
options
ALTERNATIVES, and such other matters as may be necessary to the
board's administration and management of the fund created pursuant
to this section.
(c) In its administration, INVESTMENT,
and management of the fund, the board shall be subject to the
same provisions applicable to its administration, INVESTMENT,
and management of the fire and police members' money purchase
plan benefit fund as set forth in section 3131703
(2) to (7). Further, in its administration
and management of the fund, the board shall consider employing
or contracting with investment counselors to manage all or a portion
of the assets of the fund and may grant to such investment counselors
the authority to make investment decisions with respect to the
assets they manage, including the authority to purchase and sell
investment assets. Any investment counselors retained by the
board shall at all times be subject to the standards and limitations
set forth in section 151304, C.R.S.
SECTION 5. 3131602,
Colorado Revised Statutes, 1986 Repl. Vol., as amended, is amended
to read:
3131602. Withdrawn local
alternative pension plans investment authority.
(1) EXCEPT AS PROVIDED IN SUBSECTION (2) OF THIS SECTION,
any locally administered and financed alternative pension plan
fund established pursuant to this part 6 may be MANAGED AND invested
as provided in section 3130.5803
BY THE TRUSTEES OF SUCH PLAN PURSUANT TO THE STANDARD AND OTHER
PROVISIONS FOR TRUSTEES SET FORTH IN THE "UNIFORM PRUDENT
INVESTOR ACT", ARTICLE 1.1 OF TITLE 15, C.R.S. SUCH INVESTMENTS
SHALL BE AUDITED AT LEAST BIENNIALLY.
(2) THE TRUSTEES OF A LOCALLY ADMINISTERED
AND FINANCED ALTERNATIVE PLAN MAY ALLOW A PARTICIPANT TO EXERCISE
CONTROL OF THE INVESTMENT OF THE PARTICIPANT'S ACCRUED BENEFIT
UNDER THE PLAN, SUBJECT TO THE FOLLOWING REQUIREMENTS:
(a) THE TRUSTEES SHALL SELECT AT LEAST
THREE INVESTMENT ALTERNATIVES, EACH OF WHICH IS DIVERSIFIED IN
ITSELF, THAT ALLOW THE PARTICIPANT A BROAD RANGE OF INVESTMENTS
AND A MEANINGFUL CHOICE BETWEEN RISK AND RETURN IN THE INVESTMENT
OF THE PARTICIPANT'S ACCRUED BENEFIT;
(b) THE TRUSTEES SHALL ALLOW THE PARTICIPANT
TO CHANGE INVESTMENTS AT LEAST ONCE EACH CALENDAR QUARTER; AND
(c) THE TRUSTEES SHALL PROVIDE THE PARTICIPANT
WITH INFORMATION DESCRIBING THE INVESTMENT ALTERNATIVES AND THE
NATURE, INVESTMENT PERFORMANCE, FEES, AND EXPENSES OF THE INVESTMENT
ALTERNATIVES AND OTHER INFORMATION TO ENABLE A PARTICIPANT TO
MAKE INFORMED INVESTMENT DECISIONS.
SECTION 6. 3131703
(1), (2), (5), and (6), Colorado Revised Statutes, 1986 Repl.
Vol., as amended, are amended to read:
3131703. Money purchase
plan benefit fund creation management.
(1) (a) There is hereby created the fire and police
members' money purchase plan benefit fund that shall consist of
the assets of money purchase plan funds administered and managed
by the board pursuant to section 3131702. The board
shall keep an accurate account of each such individual fund.
In addition, the board shall keep an accurate account of each
member's separate account in any such individual fund. The board
may create, and is authorized to offer
to each member of an affiliated money purchase plan, various investment
options including, but not limited to, the following:
ALLOW A MEMBER TO EXERCISE CONTROL OF THE INVESTMENT OF PART OR
ALL OF THE MEMBER'S ACCRUED BENEFIT UNDER THE MEMBER'S PLAN.
IN ALLOWING A MEMBER TO EXERCISE SUCH CONTROL, THE BOARD SHALL:
(I) Option
A, which is investment in the fire and police members' benefit
fund created by section 3131301
SELECT AT LEAST THREE INVESTMENT ALTERNATIVES, EACH OF WHICH IS
DIVERSIFIED IN ITSELF, THAT ALLOW THE MEMBER A BROAD RANGE OF
INVESTMENTS AND A MEANINGFUL CHOICE BETWEEN RISK AND RETURN IN
THE INVESTMENT OF THE MEMBER'S ACCRUED BENEFIT;
(II) Option
B, which is investment in a stock portfolio fund
ALLOW THE MEMBER TO CHANGE INVESTMENTS AT LEAST ONCE EACH CALENDAR
QUARTER; AND
(III) Option
C, which is investment in a bond portfolio fund; and PROVIDE
THE MEMBER WITH INFORMATION DESCRIBING THE INVESTMENT ALTERNATIVES,
THE NATURE, INVESTMENT PERFORMANCE, FEES, AND EXPENSES OF INVESTMENT
ALTERNATIVES, AND OTHER INFORMATION TO ENABLE A MEMBER TO MAKE
INFORMED INVESTMENT DECISIONS.
(IV) Option
D, which is investment in a guaranteed fund.
(b) The board shall adopt rules governing
the calculation and allocation of earnings and losses under the
various investment options listed
in paragraph (a) of this subsection (1)
ALTERNATIVES that it may offer, the transfer of assets between
funds under each option
ALTERNATIVE, the allocation of a member's account between investment
options
ALTERNATIVES, and such other matters as may be necessary to its
administration and management of the fund created pursuant to
this section.
(2) The board shall be the trustee of
the fund and, subject to the members' allocation of moneys in
their accounts to the options set
forth in subsection (1) of this section
ALTERNATIVES OFFERED BY THE BOARD, shall have full and unrestricted
discretionary power and authority to invest and reinvest such
portions of the fund as in its judgment may not be immediately
required for the payment of refunds or benefits. In exercising
its discretionary authority with respect to the acquisition
or disposition of any investments
INVESTMENT AND MANAGEMENT OF THE FUND ASSETS, the board shall
be governed by the standard for investments
prescribed in section 151304, C.R.S.
AND OTHER PROVISIONS FOR TRUSTEES SET FORTH IN THE "UNIFORM
PRUDENT INVESTOR ACT", ARTICLE 1.1 OF TITLE 15, C.R.S. The
board may, by resolution, delegate to its executive director,
appointed pursuant to section 3131201 (3) (b), the
investment authority created by this subsection (2). The board
shall not delegate to its executive director the authority to
invest or reinvest more than five percent of the market value
of the assets of the fund between regularly scheduled meetings
of the board.
(5) The board
shall purchase and acquire and hold for the benefit of the fund
such investments in such amounts as may from time to time be directed
by the board in writing. Any such investments shall be disposed
of by the board when it determines such disposition to be necessary
to provide money for payment of refunds or pension benefits or
in order to reinvest the proceeds of such disposition in other
investments determined by the board to be in the best interests
of the fund. Notwithstanding any other provision of this section,
the board may employ or contract with investment counselors to
manage a portion of the assets of the fund and may grant to such
investment counselors the authority to make investment decisions
with respect to the assets they manage, including the authority
to purchase and sell investment assets. The investment counselors
retained by the board shall at all times be subject to the standards
and limitations set forth in section 151304, C.R.S.
(6) All transactions involving the purchase
and sale of investments authorized in this section shall be effected
on behalf of the association. To facilitate sale and exchange
transactions, securities belonging to the association may be registered
in the name of nominees in the discretion of the board and in
accordance with standard business practices. All such nominees
shall be bonded in such amounts as may be determined to be advisable
by the board. NOTHING IN THIS SUBSECTION (6) SHALL PRECLUDE THE
BOARD OR ITS AUTHORIZED AGENTS FROM FORMING A CORPORATION DESCRIBED
IN SECTION 501 (c) (2) AND (c) (25) OF THE FEDERAL "INTERNAL
REVENUE CODE OF 1986", 26 U.S.C. SEC. 501 (c) (2) AND (c)
(25), AS AMENDED, WITH RESPECT TO THE OWNERSHIP OF INVESTMENTS
IN REAL PROPERTY.
SECTION 7. Safety clause.
The general assembly hereby finds, determines, and declares that
this act is necessary for the immediate preservation of the public
peace, health, and safety.
____________________________ ____________________________
Charles E. Berry Tom Norton
SPEAKER OF THE HOUSE PRESIDENT OF
OF REPRESENTATIVES THE SENATE
____________________________ ____________________________
Judith M. Rodrigue Joan M. Albi
CHIEF CLERK OF THE HOUSE SECRETARY OF
OF REPRESENTATIVES THE SENATE
APPROVED________________________________________
_________________________________________
Roy Romer
GOVERNOR OF THE STATE
OF COLORADO