Bill Text: MI HB5231 | 2017-2018 | 99th Legislature | Introduced
Bill Title: Retirement; state employees; annuity option; provide for. Amends sec. 58 of 1943 PA 240 (MCL 38.58).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Vetoed) 2018-12-28 - Vetoed By The Governor 12/27/2018 [HB5231 Detail]
Download: Michigan-2017-HB5231-Introduced.html
HOUSE BILL No. 5231
November 8, 2017, Introduced by Reps. Albert and Marino.
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. 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
the employer. The retirement system shall select an annuity
provider based on a competitive proposal process. The retirement
system shall contract with an annuity provider to provide the
annuity options under this subsection. The retirement system 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
retirement system 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
7 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
supervision, 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 retirement system about all of the
following:
(i) The number of annuitants.
(ii) The types of annuities provided.
(iii) Any other information that the retirement system 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, tools, and counseling programs that
help participants understand the appropriate use of annuities as a
long-term retirement savings vehicle.
Enacting section 1. This amendatory act takes effect 120 days
after the date it is enacted into law.
