Bill Text: MI HB5230 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Retirement; public school employees; annuity option; expand. Amends sec. 127 of 1980 PA 300 (MCL 38.1427).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Vetoed) 2018-12-28 - Vetoed By The Governor 12/27/2018 [HB5230 Detail]
Download: Michigan-2017-HB5230-Engrossed.html
HB-5230, As Passed House, March 21, 2018
SUBSTITUTE FOR
HOUSE BILL NO. 5230
A bill to amend 1980 PA 300, entitled
"The public school employees retirement act of 1979,"
by amending section 127 (MCL 38.1427), as amended by 2017 PA 92.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 127. (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 department. The
limitations on the percentage of total assets for investments
provided in 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 investment provided by
the department under subsection (1), the retirement system shall
offer access to 1 or more fixed annuity options and may offer 1 or
more variable annuity options. The annuity options offered under
this subsection must allow a qualified participant the ability to
purchase an annuity while the qualified participant is employed by
a reporting unit. 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
consider all of the following in selecting an annuity provider
under this subsection:
(a) The financial strength and stability of the annuity
provider and its subsidiaries and affiliates. In considering 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 ability of the annuity provider to provide contracted
rights and benefits to a qualified participant.
(c) The reasonableness of the costs, including fees and
commissions, of the annuity options in relation to the benefits and
product features of the annuity option.
(d) The administrative services to be provided under the
annuity option. 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 experience of the annuity provider in paying lifetime
retirement income through annuities offered to public employee
defined contribution retirement plans.
(f) Whether 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.
(g) The ability of the annuity provider 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) If, after the competitive proposal process under
subsection (2) is complete, the state treasurer determines that it
is in the best interests of qualified participants to select and
contract with only 1 annuity provider to provide annuity options to
qualified participants under subsection (2), the state treasurer
may select and contract with only 1 annuity provider to provide
annuity options to qualified participants under subsection (2). The
state treasurer shall notify the senate and house of
representatives appropriations committees within 30 days after
selecting and contracting with an annuity provider under this
subsection.
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 House Bill No. 5231 of the 99th Legislature is enacted into
law.
