Bill Text: MN HF1555 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Minnesota public pension plan investment authority provisions revised.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced - Dead) 2011-04-26 - Introduction and first reading, referred to Government Operations and Elections [HF1555 Detail]
Download: Minnesota-2011-HF1555-Introduced.html
1.2relating to retirement; all Minnesota public pension plans; revising investment
1.3authority provisions; amending Minnesota Statutes 2010, sections 11A.24; 69.77,
1.4subdivision 9; 69.775; 354A.08; 356A.06, subdivisions 6, 7.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 11A.24, is amended to read:
1.711A.24 AUTHORIZED INVESTMENTS.
1.8 Subdivision 1. Securities generally. (a) The state boardshall have the authority is
1.9authorized to purchase, sell, lendor and exchange the following securities specified in this
1.10section, for funds or accounts specifically made subject to this section, including puts and
1.11call options and future contracts traded on a contract market regulated by a governmental
1.12agency or by a financial institution regulated by a governmental agency. These securities
1.13may be owned directly or through shares in exchange-traded or mutual funds, or as units
1.14in commingled truststhat own the securities described in subdivisions 2 to 6, subject to
1.15any limitations as specified in this section.
1.16(b) Any agreement to lend securities must be concurrently collateralized with cash
1.17or securities with a market value of not less than 100 percent of the market value of the
1.18loaned securities at the time of the agreement. Any agreement for put and call options
1.19and futures contracts may only be entered into with a fully offsetting amount of cash or
1.20securities. Only securities authorized by this section, excluding those under subdivision 6,
1.21paragraph (a), clauses (1) to(4) (3), may be accepted as collateral or offsetting securities.
1.22 Subd. 2. Government obligations. The state boardmay is authorized to invest
1.23funds in governmental bonds, notes, bills, mortgages, and other evidences of indebtedness
1.24provided if the issue is backed by the full faith and credit of the issuer or if the issue
2.1is rated among the top four quality rating categories by a nationally recognized rating
2.2agency. The obligations in which the board may invest under this subdivisioninclude are
2.3guaranteed or insured issues of(a):
2.4(1) the United States, its agencies, its instrumentalities, or organizations created
2.5and regulated by an act of Congress;(b)
2.6(2) the Dominion of Canadaand or any of its provinces, provided the principal and
2.7interestis are payable in United States dollars; (c)
2.8(3) any of the statesand or any of their municipalities, political subdivisions,
2.9agencies or instrumentalities;(d) the International Bank for Reconstruction and
2.10Development, the Inter-American Development Bank, the Asian Development Bank, the
2.11African Development Bank, or and
2.12(4) anyother United States government sponsored organization of which the United
2.13States is a member,provided if the principal and interest is are payable in United States
2.14dollars.
2.15 Subd. 3. Corporate obligations. (a) The state boardmay is authorized to invest
2.16funds in bonds, notes, debentures, transportation equipment obligations,or and any other
2.17longer term evidences of indebtedness issued or guaranteed by a corporation organized
2.18under the laws of the United States or any statethereof of the United States, or the
2.19Dominion of Canada or any Canadian provincethereof provided that if:
2.20(1) the principal and interest of obligations of corporations incorporated or organized
2.21under the laws of the Dominion of Canada or any Canadian provincethereof shall be
2.22are payable in United States dollars; and
2.23(2) the obligationsshall be are rated among the top four quality categories by a
2.24nationally recognized rating agency.
2.25(b) The state board may invest in unrated corporate obligations or in corporate
2.26obligations that are not rated among the top four quality categories as provided in
2.27paragraph (a), clause (2),provided that if:
2.28(1) the aggregate value of these obligationsmay does not exceed five percent of the
2.29marketor book value, whichever is less, of the fund for which the state board is investing;
2.30(2) the state board's participation is limited to 50 percent of a single offering subject
2.31to this paragraph; and
2.32(3) the state board's participation is limited to 25 percent of an issuer's obligations
2.33subject to this paragraph.
2.34 Subd. 4. Other obligations. (a) The state boardmay is authorized to invest funds in
2.35bankers acceptances, certificates of deposit, deposit notes, commercial paper, mortgage
2.36securities and asset backed securities, repurchase agreements and reverse repurchase
3.1agreements, guaranteed investment contracts, savings accounts, and guaranty fund
3.2certificates, surplus notes, or debentures of domestic mutual insurance companies if they
3.3conform to the following provisions:
3.4(1) bankers acceptances and deposit notesof United States banks are limited to those
3.5if issued bybanks a United States bank that is rated in the highest four quality categories
3.6by a nationally recognized rating agency;
3.7(2) certificates of depositare limited to those if issued by (i) a United States banks
3.8and savings institutions that are bank or savings institution that is rated in the top four
3.9quality categories by a nationally recognized rating agency or whose certificates of deposit
3.10are fully insured by federal agencies;, or (ii) certificates of deposits issued by a credit
3.11unions union in amounts up to an amount within the limit of the insurance coverage
3.12provided by the National Credit Union Administration;
3.13(3) commercial paperis limited to those if issued by a United States corporations
3.14corporation ortheir its Canadian subsidiaries subsidiary and if rated in the highest two
3.15quality categories by a nationally recognized rating agency;
3.16(4) mortgage securitiesshall be and asset-backed securities if rated in the top four
3.17quality categories by a nationally recognized rating agency;
3.18(5)collateral for repurchase agreements and reverse repurchase agreements is
3.19limited to if collateralized with letters of credit and or securities authorized in this section;
3.20(6) guaranteed investment contractsare limited to those if issued by an insurance
3.21companies company or banks a bank that is rated in the top four quality categories by a
3.22nationally recognized rating agency orto alternative guaranteed investment contracts
3.23where if the underlying assets comply with the requirements of this section;
3.24(7) savings accountsare limited to those if fully insured by a federal agencies
3.25agency; and
3.26(8)asset backed securities shall be rated in the top four quality categories by a
3.27nationally recognized rating agency guaranty fund certificates, surplus notes, or debentures
3.28if issued by a domestic mutual insurance company.
3.29(b) Sections16A.58 ,
16C.03, subdivision 4 , and
16C.05 do not apply to certificates
3.30of deposit and collateralization agreements executed by the state board under paragraph
3.31(a), clause (2).
3.32(c) In addition to investments authorized by paragraph (a), clause (4), the state board
3.33may is authorized to purchase from the Minnesota Housing Finance Agency all or any
3.34part of a pool of residential mortgages, not in default, that has previously been financed
3.35by the issuance of bonds or notes of the agency. The state board may also enter into a
3.36commitment with the agency, at the time of any issue of bonds or notes, to purchase at
4.1a specified future date, not exceeding 12 years from the date of the issue, the amount of
4.2mortgage loans then outstanding and not in default that have been made or purchased from
4.3the proceeds of the bonds or notes. The state board may charge reasonable fees for any
4.4such commitment and may agree to purchase the mortgage loans at a price sufficient to
4.5produce a yield to the state board comparable, in its judgment, to the yield available on
4.6similar mortgage loans at the date of the bonds or notes. The state board may also enter
4.7into agreements with the agency for the investment of any portion of the funds of the
4.8agency. The agreement must cover the period of the investment, withdrawal privileges,
4.9and any guaranteed rate of return.
4.10 Subd. 5. Corporate stocks. The state boardmay is authorized to invest funds in
4.11stocks or convertible issues of any corporation organized under the laws of the United
4.12States orthe any of its states thereof, the Dominion of Canada or any of its provinces, or
4.13any corporation listed on an exchange that is regulated by an agency of the United States
4.14or of the Canadian national government, if they conform to the following provisions:.
4.15(a) The aggregate value of corporate stock investments, as adjusted for realized
4.16profits and losses, shall not exceed 85 percent of the market or book value, whichever is
4.17less, of a fund, less the aggregate value of investments according to subdivision 6;
4.18(b) Investments shall An investment in any corporation must not exceed five percent
4.19of the total outstanding shares ofany one that corporation, except that the state board may
4.20hold up to 20 percent of the shares of a real estate investment trust and up to 20 percent
4.21of the shares of a closed-end mutual fund.
4.22 Subd. 5a. Asset mix limitations. The aggregate value of investments under
4.23subdivision 5, plus the aggregate value of all investments under subdivision 6, must not
4.24exceed 85 percent of the market value of a fund.
4.25 Subd. 6. Other investments. (a) In addition to the investments authorized in
4.26subdivisions 1 to 5, and subject to the provisions in paragraph (b), the state boardmay
4.27is authorized to invest funds in:
4.28(1)venture capital equity and debt investment businesses through participation in
4.29limited partnerships, trusts, private placements, limited liability corporations, limited
4.30liability companies, limited liability partnerships, and corporations;
4.31(2) real estate ownership interests or loans secured by mortgages or deeds of trust or
4.32shares of real estate investment trusts through investment in limited partnerships,bank
4.33sponsored bank-sponsored collective funds, trusts, mortgage participation agreements,
4.34and insurance company commingled accounts, including separate accounts;
5.1(3) regional and mutual funds through bank sponsored collective funds and open-end
5.2investment companies registered under the Federal Investment Company Act of 1940, and
5.3closed-end mutual funds listed on an exchange regulated by a governmental agency;
5.4(4) (3) resource investments through limited partnerships, trusts, private placements,
5.5limited liability corporations, limited liability companies, limited liability partnerships,
5.6and corporations; and
5.7(5) (4) international securities.
5.8(b) The investments authorized in paragraph (a) must conform to the following
5.9provisions:
5.10(1) the aggregate value of all investments madeaccording to under paragraph (a),
5.11clauses (1) to(4) (3), may not exceed 35 percent of the market value of the fund for
5.12which the state board is investing;
5.13(2) there must be at least four unrelated owners of the investment other than the state
5.14board for investments made under paragraph (a), clause (1), (2), or (3), or (4);
5.15(3) state board participation in an investment vehicle is limited to 20 percent thereof
5.16for investments made under paragraph (a), clause (1), (2), or (3), or (4); and
5.17(4) state board participation in a limited partnership does not include a general
5.18partnership interest or other interest involving general liability. The state board may not
5.19engage in any activity as a limited partner which creates general liability.
5.20(c) All financial, business, or proprietary data collected, created, received, or
5.21maintained by the state board in connection with investments authorized by paragraph (a),
5.22clause (1), (2), or(4) (3), are nonpublic data under section
13.02, subdivision 9 . As used
5.23in this paragraph, "financial, business, or proprietary data" means data, as determined by
5.24the responsible authority for the state board, that is of a financial, business, or proprietary
5.25nature, the release of which could cause competitive harm to the state board, the legal
5.26entity in which the state board has invested or has considered an investment, the managing
5.27entity of an investment, or a portfolio company in which the legal entity holds an interest.
5.28As used in this section, "business data" is data described in section13.591, subdivision 1 .
5.29Regardless of whether they could be considered financial, business, or proprietary data, the
5.30following data received, prepared, used, or retained by the state board in connection with
5.31investments authorized by paragraph (a), clause (1), (2), or(4) (3), are public at all times:
5.32(1) the name and industry group classification of the legal entity in which the state
5.33board has invested or in which the state board has considered an investment;
5.34(2) the state board commitment amount, if any;
5.35(3) the funded amount of the state board's commitment to date, if any;
5.36(4) the market value of the investment by the state board;
6.1(5) the state board's internal rate of return for the investment, including expenditures
6.2and receipts used in the calculation of the investment's internal rate of return; and
6.3(6) the age of the investment in years.
6.4 Subd. 7. Appropriation. There is annually appropriated to the state board, from
6.5the assets of the funds for which the state board investspursuant relating to authorized
6.6investments under subdivision 6,clause paragraph (a), sums sufficient to pay the costs for
6.7the management of thesefunds assets by private management firms.
6.8EFFECTIVE DATE.This section is effective the day following final enactment.
6.9 Sec. 2. Minnesota Statutes 2010, section 69.77, subdivision 9, is amended to read:
6.10 Subd. 9. Local police and paid fire relief association investment authority.
6.11(a) Thefunds special fund of the association must be invested in securities that are
6.12authorized investments under section356A.06, subdivision 6 or 7, whichever applies.
6.13Notwithstanding any provision of section
356A.06, subdivision 6 or 7 to the contrary, the
6.14special fund of the relief association may be additionally invested in:
6.15(1) open-end investment companies registered under the federal Investment
6.16Company Act of 1940, if the portfolio investments of the investment companies comply
6.17with the type of securities authorized for investment under section
356A.06, subdivision 7,
6.18up to 75 percent of the market value of the assets of the fund; and
6.19(2) domestic government and corporate debt obligations that are not rated in the top
6.20four quality categories by a nationally recognized rating agency, and comparable unrated
6.21securities if the percentage of these assets does not exceed five percent of the total assets
6.22of the special fund or 15 percent of the special fund's nonequity assets, whichever is less,
6.23the special fund's participation is limited to 50 percent of a single offering of the debt
6.24obligations, and the special fund's participation is limited to 25 percent of an issuer's debt
6.25obligations that are not rated in the top four quality categories. Securities held by the
6.26association before June 2, 1989, that do not meet the requirements of this subdivision may
6.27be retained after that date if they were proper investments for the association on that date.
6.28(b) The governing board of the association may select and appoint investment
6.29agencies to act for and in its behalf or may certify special fund assets for investment by the
6.30State Board of Investment under section
11A.17. The governing board of the association
6.31may certify general fund assets of the relief association for investment by the State Board
6.32of Investment in fixed income pools or in a separately managed account at the discretion
6.33of the State Board of Investment as provided in section
11A.14. The governing board of
6.34the association may select and appoint a qualified private firm to measure management
7.1performance and return on investment, and the firmshall must use the formula or formulas
7.2developed by the state board under section11A.04 , clause (11).
7.3(c) The governing board of the association may certify general fund assets of the
7.4relief association for investment by the State Board of Investment in fixed income pools
7.5or in a separately managed account at the discretion of the State Board of Investment
7.6as provided in section 11A.14.
7.7EFFECTIVE DATE.This section is effective the day following final enactment.
7.8 Sec. 3. Minnesota Statutes 2010, section 69.775, is amended to read:
7.969.775 INVESTMENTS.
7.10(a) The special fund assets of a relief association governed by sections69.771 to
7.1169.776
must be invested in securities that are authorized investments under section
7.12356A.06, subdivision 6
or 7, whichever applies.
7.13(b) Notwithstanding the foregoing, up to 75 percent of the market value of the assets
7.14of the special fund, not including any money market mutual funds, may be invested in
7.15open-end investment companies registered under the federal Investment Company Act of
7.161940, if the portfolio investments of the investment companies comply with the type of
7.17securities authorized for investment under section
356A.06, subdivision 7.
7.18(c) Securities held by the associations before June 2, 1989, that do not meet the
7.19requirements of this section may be retained after that date if they were proper investments
7.20for the association on that date.
7.21(d) The governing board of the association may select and appoint investment
7.22agencies to act for and in its behalf or may certify special fund assets for investment by the
7.23State Board of Investment under section
11A.17.
7.24(e) The governing board of the association may certify general fund assets of the
7.25relief association for investment by the State Board of Investment in fixed income pools
7.26or in a separately managed account at the discretion of the State Board of Investment
7.27as provided in section
11A.14.
7.28(f) (b) The governing board of the association may select and appoint a qualified
7.29private firm to measure management performance and return on investment, and the
7.30firmshall must use the formula or formulas developed by the state board under section
7.3111A.04
, clause (11).
7.32EFFECTIVE DATE.This section is effective the day following final enactment.
8.1 Sec. 4. Minnesota Statutes 2010, section 354A.08, is amended to read:
8.2354A.08 AUTHORIZED INVESTMENTS.
8.3(a) In addition to investments authorized under section
356A.06 , subdivision 7, a
8.4teachers retirement fund association may receive, hold, and dispose of:
8.5(1) real estate or personal property acquired by it, whether the acquisition was by
8.6purchase, or any other lawful means, as provided in this chapter or in the association's
8.7articles of incorporation; and.
8.8(2) domestic government and corporate debt obligations that are not rated in the top
8.9four quality categories by a nationally recognized rating agency, and comparable unrated
8.10securities if the percentage of these assets does not exceed five percent of the total assets
8.11of the pension plan or 15 percent of the pension plan's nonequity assets, whichever is less,
8.12if the pension plan's participation is limited to 50 percent of a single offering of the debt
8.13obligations, and if the pension plan's participation is limited to 25 percent of an issuer's
8.14debt obligations that are not rated in the top four quality categories.
8.15(b) In addition to other authorized real estate investments, an association may also
8.16invest funds in Minnesota situs nonfarm real estate ownership interests or loans secured
8.17by mortgages or deeds of trust. The board may also certify assets for investment by the
8.18State Board of Investment as provided under section
11A.17.
8.19EFFECTIVE DATE.This section is effective the day following final enactment.
8.20 Sec. 5. Minnesota Statutes 2010, section 356A.06, subdivision 6, is amended to read:
8.21 Subd. 6. Limited list of authorized investment securities. (a)Except to the
8.22extent otherwise authorized by law, Authority. This subdivision specifies the investment
8.23authority for a limited list plan. A limited list plan is a covered pension planmay invest its
8.24assets only in investment securities authorized by this subdivision if the plan that does not:
8.25 (1) have assets with abook market value in excess of $1,000,000;
8.26 (2) use the services of an investment advisor registered with the Securities and
8.27Exchange Commission in accordance with the Investment Advisers Act of 1940, or
8.28registered as an investment advisor in accordance with sections80A.58 , and
80A.60 , for
8.29the investment of at least 60 percent of its assets, calculated onbook market value;
8.30 (3) use the services of the State Board of Investment for the investment of at least 60
8.31percent of its assets, calculated onbook market value; or
8.32 (4) use a combination of the services of an investment advisor meeting the
8.33requirements of clause (2) and the services of the State Board of Investment for the
8.34investment of at least 75 percent of its assets, calculated onbook market value.
9.1 (b) Investment agency appointment authority.securities authorized for The
9.2governing board of a covered pension plancovered by this subdivision are: may select
9.3and appoint investment agencies to act for or on its behalf.
9.4(c) Savings accounts; similar vehicles. A limited list plan is authorized to invest in:
9.5 (1) certificates of deposit issued, to the extent of available insurance or
9.6collateralization, by a financial institution that is a member of the Federal Deposit
9.7Insurance Corporation or the Federal Savings and Loan Insurance Corporation, that is
9.8insured by the National Credit Union Administration, or that is authorized to do business
9.9in this state and has deposited with the chief administrative officer of the plan a sufficient
9.10amount of marketable securities as collateral in accordance with section118A.03 ;
9.11 (2) guaranteed investment contracts, limited to those issued by insurance companies
9.12or banks rated in the top four quality categories by a nationally-recognized rating agency
9.13or to alternative guaranteed investment contracts where the underlying assets comply
9.14with the requirements of this paragraph; and
9.15(3) savings accounts,to the extent of available insurance, with a financial institution
9.16that is a member of the Federal Deposit Insurance Corporation or the Federal Savings and
9.17Loan Insurance Corporation; limited to those fully insured by federal agencies.
9.18(3) (d) Government-backed obligations. A limited list plan is authorized to invest
9.19in governmental obligations as further specified in this paragraph, including bonds, notes,
9.20bills,or other fixed obligations, issued by the United States, an agency or instrumentality
9.21of the United States, an organization established and regulated by an act of Congress or by
9.22a state, state agency or instrumentality, municipality, or other governmental or political
9.23subdivision that mortgages, and other evidences of indebtedness, if the issue is backed
9.24by the full faith and credit of the issuer or if the issue is rated among the top four quality
9.25rating categories by a nationally-recognized rating agency. The obligations in which plans
9.26are authorized to invest under this paragraph are guaranteed or insured issues of:
9.27(i) for the obligation in question, issues an obligation that equals or exceeds the
9.28stated investment yield of debt securities not exempt from federal income taxation and of
9.29comparable quality;
9.30(ii) for an obligation that is a revenue bond, has been completely self-supporting
9.31for the last five years; and
9.32(iii) for an obligation other than a revenue bond, has issued an obligation backed by
9.33the full faith and credit of the applicable taxing jurisdiction and has not been in default on
9.34the payment of principal or interest on the obligation in question or any other nonrevenue
9.35bond obligation during the preceding ten years;
10.1(1) the United States, one of its agencies, one of its instrumentalities, or an
10.2organization created and regulated by an act of Congress;
10.3(2) the Dominion of Canada or one of its provinces if the principal and interest are
10.4payable in United States dollars;
10.5(3) a state or one of its municipalities, political subdivisions, agencies, or
10.6instrumentalities; or
10.7(4) any United States government-sponsored organization of which the United States
10.8is a member if the principal and interest are payable in United States dollars.
10.9(4) (e) Corporate obligations. A limited list plan is authorized to invest in corporate
10.10obligations, including bonds, notes, debentures,or other regularly issued and readily
10.11marketable evidences of indebtedness issued by a corporation organized under the laws
10.12of any state that during the preceding five years has had on average annual net pretax
10.13earnings at least 50 percent greater than the annual interest charges and principal payments
10.14on the total issued debt of the corporation during that period and that, for the obligation
10.15in question, has issued an obligation rated in one of the top three quality categories by
10.16Moody's Investors Service, Incorporated, or Standard and Poor's Corporation; and
10.17(5) shares in an open-end investment company registered under the federal
10.18Investment Company Act of 1940, if the portfolio investments of the company are limited
10.19to investments that meet the requirements of clauses (1) to (4). transportation equipment
10.20obligations, or any other longer-term evidences of indebtedness issued or guaranteed by
10.21a corporation organized under the laws of the United States or any of its states, or the
10.22Dominion of Canada or any of its provinces if:
10.23(1) the principal and interest are payable in United States dollars; and
10.24(2) the obligations are rated among the top four quality categories by a
10.25nationally-recognized rating agency.
10.26(f) Mutual fund authority, limited list authorized assets. Securities authorized
10.27under paragraphs (c) to (e) may be owned directly or through shares in exchange-traded
10.28funds, or through open-end mutual funds, or as units of commingled trusts.
10.29(g) Extended mutual fund authority. Notwithstanding restrictions in other
10.30paragraphs of this subdivision, a limited list plan is authorized to invest the assets of
10.31the special fund in exchange-traded funds and open-end mutual funds, if their portfolio
10.32investments comply with the type of securities authorized for investment under section
10.33356A.06, subdivision 7, paragraphs (c) to (g). Investments under this paragraph must not
10.34exceed 75 percent of the assets of the special fund, not including any money market
10.35investments through mutual or exchange-traded funds.
11.1(h) Supplemental fund authority. The governing body of a limited list plan may
11.2certify special fund assets to the State Board of Investment for investment under section
11.311A.17.
11.4(i) Assets mix restrictions. A limited list plan must conform to the asset mix
11.5limitations specified in section 356A.06, subdivision 7.
11.6EFFECTIVE DATE.This section is effective the day following final enactment.
11.7 Sec. 6. Minnesota Statutes 2010, section 356A.06, subdivision 7, is amended to read:
11.8 Subd. 7. Expanded list of authorized investment securities. (a) Authority.
11.9Except to the extent otherwise authorized by law, A covered pension plan not described by
11.10subdivision 6, paragraph (a), is an expanded list plan and shall invest its assetsonly in
11.11accordance with as specified in this subdivision. The governing board of an expanded list
11.12plan may select and appoint investment agencies to act for or on its behalf.
11.13 (b) Securities generally; investment forms.The covered pension An expanded list
11.14planhas the authority is authorized to purchase, sell, lend, or and exchange the investment
11.15securitiesspecified in paragraphs (c) to (i) authorized under this subdivision, including
11.16puts and call options and future contracts traded on a contract market regulated by a
11.17governmental agency or by a financial institution regulated by a governmental agency.
11.18These securities may be owned directly or through shares in exchange-traded or mutual
11.19funds, or as units in commingled trusts that own the securities described in paragraphs (c)
11.20to (i), including real estate investment trusts and insurance company commingled accounts,
11.21including separate accounts, subject to any limitations specified in this subdivision.
11.22 (c) Government obligations.The covered pension An expanded list plan may
11.23is authorized to invest funds in governmental bonds, notes, bills, mortgages, and other
11.24evidences of indebtedness if the issue is backed by the full faith and credit of the issuer or
11.25the issue is rated among the top four quality rating categories by a nationally recognized
11.26rating agency. The obligations in which funds may be invested under this paragraph
11.27include are guaranteed or insured issues of:
11.28(1) the United States, one of its agencies, one of its instrumentalities, ororganizations
11.29an organization created and regulated by an act of Congress;
11.30(2) the Dominion of Canadaand or one of its provinces, provided if the principal
11.31and interestis are payable in United States dollars;
11.32(3)the states and their a state or one of its municipalities, political subdivisions,
11.33agencies, or instrumentalities; and
11.34(4)the International Bank for Reconstruction and Development, the Inter-American
11.35Development Bank, the Asian Development Bank, the African Development Bank, or
12.1any other a United States government sponsored government-sponsored organization of
12.2which the United States is a member, provided if the principal and interest is are payable
12.3in United States dollars.
12.4 (d) Investment-grade corporate obligations.The covered pension An expanded
12.5list planmay is authorized to invest funds in bonds, notes, debentures, transportation
12.6equipment obligations, or any other longer term evidences of indebtedness issued or
12.7guaranteed by a corporation organized under the laws of the United States or anystate
12.8thereof of its states, or the Dominion of Canada or any province thereof of its provinces if
12.9they conform to the following provisions:
12.10 (1) the principal and interestof obligations of corporations incorporated or organized
12.11under the laws of the Dominion of Canada or any province thereof must be are payable in
12.12United States dollars; and
12.13 (2) the obligationsmust be are rated among the top four quality categories by a
12.14nationally recognized rating agency.
12.15(e) Below-investment-grade corporate obligations. An expanded list plan is
12.16authorized to invest in unrated corporate obligations or in corporate obligations that are
12.17not rated among the top four quality categories if:
12.18(1) the aggregate value of these obligations does not exceed five percent of the
12.19covered pension plan's market value;
12.20(2) the covered pension plan's participation is limited to 50 percent of a single
12.21offering subject to this paragraph; and
12.22(3) the covered pension plan's participation is limited to 25 percent of an issuer's
12.23obligations subject to this paragraph.
12.24(e) (f) Other obligations. (1) The covered pension An expanded list plan may is
12.25authorized to invest funds in bankers acceptances, certificates of deposit, deposit notes,
12.26commercial paper, mortgage participation certificates and pools, asset backed securities,
12.27repurchase agreements and reverse repurchase agreements, guaranteed investment
12.28contracts, savings accounts, and guaranty fund certificates, surplus notes, or debentures of
12.29domestic mutual insurance companies if they conform to the following provisions:
12.30 (i) bankers acceptances and deposit notesof United States banks are limited to those
12.31if issued bybanks a United States bank that is rated in the highest four quality categories
12.32by a nationally recognized rating agency;
12.33 (ii) certificates of depositare limited to those if issued by (A) a United States
12.34banks and bank or savings institutions that are institution rated in the highest four quality
12.35categories by a nationally recognized rating agency or whose certificates of deposit are
12.36fully insured by federal agencies;, or (B) if issued by a credit unions union in amounts
13.1up to an amount within the limit of the insurance coverage provided by the National
13.2Credit Union Administration;
13.3 (iii) commercial paperis limited to those if issued by a United States corporations
13.4corporation ortheir its Canadian subsidiaries subsidiary and if rated in the highest two
13.5quality categories by a nationally recognized rating agency;
13.6 (iv) mortgageparticipation or pass through certificates evidencing interests in pools
13.7of first mortgages or trust deeds on improved real estate located in the United States where
13.8the loan to value ratio for each loan as calculated in accordance with section
61A.28,
13.9subdivision 3
, does not exceed 80 percent for fully amortizable residential properties and
13.10in all other respects meets the requirements of section
61A.28, subdivision 3
13.11and asset-backed securities if rated in the top four quality categories by a nationally
13.12recognized rating agency;
13.13 (v)collateral for repurchase agreements and reverse repurchase agreements is
13.14limited to if collateralized with letters of credit and or securities authorized in this section;
13.15 (vi) guaranteed investment contractsare limited to those if issued by an insurance
13.16companies company or banks a bank that is rated in the top four quality categories by a
13.17nationally recognized rating agency orto alternative guaranteed investment contracts
13.18where if the underlying assets comply with the requirements of this subdivision;
13.19 (vii) savings accountsare limited to those if fully insured by a federal agencies
13.20agency; and
13.21 (viii)asset backed securities must be rated in the top four quality categories by a
13.22nationally recognized rating agency guaranty fund certificates, surplus notes, or debentures
13.23if issued by a domestic mutual insurance company.
13.24 (2) Sections16A.58 ,
16C.03, subdivision 4 , and
16C.05 do not apply to certificates
13.25of deposit and collateralization agreements executed by the covered pension plan under
13.26clause (1), item (ii).
13.27 (3) In addition to investments authorized by clause (1), item (iv),the covered pension
13.28an expanded list planmay is authorized to purchase from the Minnesota Housing Finance
13.29Agency all or any part of a pool of residential mortgages, not in default, that has previously
13.30been financed by the issuance of bonds or notes of the agency. The covered pension plan
13.31may also enter into a commitment with the agency, at the time of any issue of bonds or
13.32notes, to purchase at a specified future date, not exceeding 12 years from the date of the
13.33issue, the amount of mortgage loans then outstanding and not in default that have been
13.34made or purchased from the proceeds of the bonds or notes. The covered pension plan may
13.35charge reasonable fees for any such commitment and may agree to purchase the mortgage
13.36loans at a price sufficient to produce a yield to the covered pension plan comparable, in
14.1its judgment, to the yield available on similar mortgage loans at the date of the bonds or
14.2notes. The covered pension plan may also enter into agreements with the agency for the
14.3investment of any portion of the funds of the agency. The agreement must cover the period
14.4of the investment, withdrawal privileges, and any guaranteed rate of return.
14.5(f) (g) Corporate stocks. The covered pension An expanded list plan may is
14.6authorized to investfunds in stocks or convertible issues of any corporation organized
14.7under the laws of the United States orthe any of its states thereof, any corporation
14.8organized under the laws of the Dominion of Canada or any of its provinces, or any
14.9corporation listed on an exchange that is regulated by an agency of the United States or of
14.10the Canadian national government, if they conform to the following provisions:.
14.11(1) the aggregate value of investments under this paragraph, plus paragraphs (g) and
14.12(k), plus equity investments under paragraphs (h), (i), and (j), as adjusted for realized
14.13gains and losses, must not exceed 85 percent of the market or book value, whichever is
14.14less, of a fund; and
14.15(2) investments An investment in any corporation must not exceed five percent of
14.16the total outstanding shares ofany one that corporation, except that an expanded list plan
14.17may hold up to 20 percent of the shares of a real estate investment trust and up to 20
14.18percent of the shares of a closed mutual fund.
14.19(g) Developed market foreign stocks investments. In addition to investments
14.20authorized under paragraph (f), the covered pension fund may invest in foreign stock sold
14.21on an exchange in any developed market country that is included in the Europe, Australia,
14.22and Far East Index.
14.23(h) Commingled or mutual investments. The covered pension plan may invest
14.24in index funds or mutual funds, including index mutual funds, through bank-sponsored
14.25collective funds and shares of open-end investment companies registered under the
14.26Federal Investment Company Act of 1940, to the extent that these funds comply with
14.27paragraphs (c) to (j).
14.28(i) Real estate investment trust; related investments. The covered pension plan
14.29may invest in real estate investment trusts secured by mortgages or deeds of trust and
14.30sold on an exchange, and insurance company commingled accounts, including separate
14.31accounts, of a debt or equity nature.
14.32(j) Exchange traded funds. The covered pension plan may invest funds in exchange
14.33traded funds, subject to the maximums, the requirements, and the limitations set forth in
14.34paragraphs (c) to (i), as applicable.
15.1(k) (h) Other investments. (1) In addition to the investments authorized in
15.2paragraphs (b) to(j) (g), and subject to the provisions in clause (2), the covered pension
15.3an expanded list planmay is authorized to invest funds in:
15.4 (i)venture capital equity and debt investment businesses through participation in
15.5limited partnerships, trusts, private placements, limited liability corporations, limited
15.6liability companies, limited liability partnerships, and corporations;
15.7 (ii) real estate ownership interests or loans secured by mortgages or deeds of trust or
15.8shares of real estate investment trusts, through investment in limited partnershipsor bank
15.9sponsored, bank-sponsored collective funds, trusts, mortgage participation agreements,
15.10and insurance company commingled accounts, including separate accounts;
15.11(iii) regional and mutual funds through bank sponsored collective funds and
15.12open-end investment companies registered under the Federal Investment Company Act of
15.131940 to the extent that a fund or a portion of a fund does not qualify under paragraph (h);
15.14(iv) (iii) resource investments through limited partnerships, trusts, private
15.15placements, limited liability corporations, limited liability companies, limited liability
15.16partnerships, and corporations; and
15.17(v) (iv) international debt securities and emerging market equity securities.
15.18 (2) The investments authorized in clause (1) must conform to the following
15.19provisions:
15.20 (i) the aggregate value of all investments madeaccording to under clause (1),
15.21including allocated amounts of index and mutual funds items (i), (ii), and (iii), may not
15.22exceed20 35 percent of the market value of the fund for which the covered pension
15.23expanded list plan is investing;
15.24 (ii) there must be at least four unrelated owners of the investment other than the
15.25covered pension expanded list plan for investments made under clause (1), item (i), (ii),
15.26or (iii), or (iv);
15.27 (iii)covered pension plan the expanded list plan's participation in an investment
15.28vehicle is limited to 20 percent thereof for investments made under clause (1), item (i),
15.29(ii), or (iii), or (iv); and
15.30 (iv)covered pension plan the expanded list plan's participation in a limited
15.31partnership does not include a general partnership interest or other interest involving
15.32general liability. Thecovered pension expanded list plan may not engage in any activity
15.33as a limited partner which creates general liability.; and
15.34(v) for volunteer firefighter relief associations, emerging market equity and
15.35international debt investments must not exceed 15 percent of the association's special
15.36fund market value.
16.1(i) Supplemental plan investments. The governing body of an expanded list plan
16.2may certify assets to the State Board of Investment for investment under section 11A.17.
16.3(j) Asset mix limitations. The aggregate value of an expanded list plan's
16.4investments under paragraphs (g) and (h) and equity investments under paragraph (i),
16.5regardless of the form in which these investments are held, must not exceed 85 percent of
16.6the covered plan's market value.
16.7EFFECTIVE DATE.This section is effective the day following final enactment.
16.8 Sec. 7. INVESTMENT AUTHORITY TRANSITION PROVISION.
16.9If any investment by the State Board of Investment or any covered pension plan fund
16.10was an authorized investment under law in effect immediately before the effective date
16.11of applicable sections of this act, but is not authorized by this act, the applicable assets
16.12must be liquidated before June 30, 2013.
16.13EFFECTIVE DATE.This section is effective the day following final enactment.
1.3authority provisions; amending Minnesota Statutes 2010, sections 11A.24; 69.77,
1.4subdivision 9; 69.775; 354A.08; 356A.06, subdivisions 6, 7.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 11A.24, is amended to read:
1.711A.24 AUTHORIZED INVESTMENTS.
1.8 Subdivision 1. Securities generally. (a) The state board
1.9authorized to purchase, sell, lend
1.10section, for funds or accounts specifically made subject to this section, including puts and
1.11call options and future contracts traded on a contract market regulated by a governmental
1.12agency or by a financial institution regulated by a governmental agency. These securities
1.13may be owned directly or through shares in exchange-traded or mutual funds, or as units
1.14in commingled trusts
1.15any limitations as specified in this section.
1.16(b) Any agreement to lend securities must be concurrently collateralized with cash
1.17or securities with a market value of not less than 100 percent of the market value of the
1.18loaned securities at the time of the agreement. Any agreement for put and call options
1.19and futures contracts may only be entered into with a fully offsetting amount of cash or
1.20securities. Only securities authorized by this section, excluding those under subdivision 6,
1.21paragraph (a), clauses (1) to
1.22 Subd. 2. Government obligations. The state board
1.23funds in governmental bonds, notes, bills, mortgages, and other evidences of indebtedness
1.24
2.1is rated among the top four quality rating categories by a nationally recognized rating
2.2agency. The obligations in which the board may invest under this subdivision
2.3guaranteed or insured issues of
2.4(1) the United States, its agencies, its instrumentalities, or organizations created
2.5and regulated by an act of Congress;
2.6(2) the Dominion of Canada
2.7interest
2.8(3) any of the states
2.9agencies or instrumentalities;
2.10
2.11
2.12(4) any
2.13States is a member,
2.14dollars.
2.15 Subd. 3. Corporate obligations. (a) The state board
2.16funds in bonds, notes, debentures, transportation equipment obligations,
2.17longer term evidences of indebtedness issued or guaranteed by a corporation organized
2.18under the laws of the United States or any state
2.19Dominion of Canada or any Canadian province
2.20(1) the principal and interest of obligations of corporations incorporated or organized
2.21under the laws of the Dominion of Canada or any Canadian province
2.22are payable in United States dollars; and
2.23(2) the obligations
2.24nationally recognized rating agency.
2.25(b) The state board may invest in unrated corporate obligations or in corporate
2.26obligations that are not rated among the top four quality categories as provided in
2.27paragraph (a), clause (2),
2.28(1) the aggregate value of these obligations
2.29market
2.30(2) the state board's participation is limited to 50 percent of a single offering subject
2.31to this paragraph; and
2.32(3) the state board's participation is limited to 25 percent of an issuer's obligations
2.33subject to this paragraph.
2.34 Subd. 4. Other obligations. (a) The state board
2.35
2.36
3.1
3.2
3.3
3.4(1) bankers acceptances and deposit notes
3.5if issued by
3.6by a nationally recognized rating agency;
3.7(2) certificates of deposit
3.8
3.9quality categories by a nationally recognized rating agency or whose certificates of deposit
3.10are fully insured by federal agencies
3.11
3.12provided by the National Credit Union Administration;
3.13(3) commercial paper
3.14corporation or
3.15quality categories by a nationally recognized rating agency;
3.16(4) mortgage securities
3.17quality categories by a nationally recognized rating agency;
3.18(5)
3.19
3.20(6) guaranteed investment contracts
3.21
3.22nationally recognized rating agency or
3.23
3.24(7) savings accounts
3.25agency; and
3.26(8)
3.27
3.28if issued by a domestic mutual insurance company.
3.29(b) Sections
3.30of deposit and collateralization agreements executed by the state board under paragraph
3.31(a), clause (2).
3.32(c) In addition to investments authorized by paragraph (a), clause (4), the state board
3.33
3.34part of a pool of residential mortgages, not in default, that has previously been financed
3.35by the issuance of bonds or notes of the agency. The state board may also enter into a
3.36commitment with the agency, at the time of any issue of bonds or notes, to purchase at
4.1a specified future date, not exceeding 12 years from the date of the issue, the amount of
4.2mortgage loans then outstanding and not in default that have been made or purchased from
4.3the proceeds of the bonds or notes. The state board may charge reasonable fees for any
4.4such commitment and may agree to purchase the mortgage loans at a price sufficient to
4.5produce a yield to the state board comparable, in its judgment, to the yield available on
4.6similar mortgage loans at the date of the bonds or notes. The state board may also enter
4.7into agreements with the agency for the investment of any portion of the funds of the
4.8agency. The agreement must cover the period of the investment, withdrawal privileges,
4.9and any guaranteed rate of return.
4.10 Subd. 5. Corporate stocks. The state board
4.11stocks or convertible issues of any corporation organized under the laws of the United
4.12States or
4.13any corporation listed on an exchange that is regulated by an agency of the United States
4.14or of the Canadian national government
4.15
4.16
4.17
4.18
4.19of the total outstanding shares of
4.20hold up to 20 percent of the shares of a real estate investment trust and up to 20 percent
4.21of the shares of a closed-end mutual fund.
4.22 Subd. 5a. Asset mix limitations. The aggregate value of investments under
4.23subdivision 5, plus the aggregate value of all investments under subdivision 6, must not
4.24exceed 85 percent of the market value of a fund.
4.25 Subd. 6. Other investments. (a) In addition to the investments authorized in
4.26subdivisions 1 to 5, and subject to the provisions in paragraph (b), the state board
4.27is authorized to invest funds in:
4.28(1)
4.29limited partnerships, trusts, private placements, limited liability corporations, limited
4.30liability companies, limited liability partnerships, and corporations;
4.31(2) real estate ownership interests or loans secured by mortgages or deeds of trust or
4.32shares of real estate investment trusts through investment in limited partnerships,
4.33
4.34and insurance company commingled accounts, including separate accounts;
5.1
5.2
5.3
5.4
5.5limited liability corporations, limited liability companies, limited liability partnerships,
5.6and corporations; and
5.7
5.8(b) The investments authorized in paragraph (a) must conform to the following
5.9provisions:
5.10(1) the aggregate value of all investments made
5.11clauses (1) to
5.12which the state board is investing;
5.13(2) there must be at least four unrelated owners of the investment other than the state
5.14board for investments made under paragraph (a), clause (1), (2), or (3)
5.15(3) state board participation in an investment vehicle is limited to 20 percent thereof
5.16for investments made under paragraph (a), clause (1), (2), or (3)
5.17(4) state board participation in a limited partnership does not include a general
5.18partnership interest or other interest involving general liability. The state board may not
5.19engage in any activity as a limited partner which creates general liability.
5.20(c) All financial, business, or proprietary data collected, created, received, or
5.21maintained by the state board in connection with investments authorized by paragraph (a),
5.22clause (1), (2), or
5.23in this paragraph, "financial, business, or proprietary data" means data, as determined by
5.24the responsible authority for the state board, that is of a financial, business, or proprietary
5.25nature, the release of which could cause competitive harm to the state board, the legal
5.26entity in which the state board has invested or has considered an investment, the managing
5.27entity of an investment, or a portfolio company in which the legal entity holds an interest.
5.28As used in this section, "business data" is data described in section
5.29Regardless of whether they could be considered financial, business, or proprietary data, the
5.30following data received, prepared, used, or retained by the state board in connection with
5.31investments authorized by paragraph (a), clause (1), (2), or
5.32(1) the name and industry group classification of the legal entity in which the state
5.33board has invested or in which the state board has considered an investment;
5.34(2) the state board commitment amount, if any;
5.35(3) the funded amount of the state board's commitment to date, if any;
5.36(4) the market value of the investment by the state board;
6.1(5) the state board's internal rate of return for the investment, including expenditures
6.2and receipts used in the calculation of the investment's internal rate of return; and
6.3(6) the age of the investment in years.
6.4 Subd. 7. Appropriation. There is annually appropriated to the state board, from
6.5the assets of the funds for which the state board invests
6.6investments under subdivision 6,
6.7the management of these
6.8EFFECTIVE DATE.This section is effective the day following final enactment.
6.9 Sec. 2. Minnesota Statutes 2010, section 69.77, subdivision 9, is amended to read:
6.10 Subd. 9. Local police and paid fire relief association investment authority.
6.11(a) The
6.12authorized investments under section
6.13
6.14
6.15
6.16
6.17
6.18
6.19
6.20
6.21
6.22
6.23
6.24
6.25
6.26
6.27
6.28(b)
6.29
6.30
6.31
6.32
6.33
6.34the association may select and appoint a qualified private firm to measure management
7.1performance and return on investment, and the firm
7.2developed by the state board under section
7.3(c) The governing board of the association may certify general fund assets of the
7.4relief association for investment by the State Board of Investment in fixed income pools
7.5or in a separately managed account at the discretion of the State Board of Investment
7.6as provided in section 11A.14.
7.7EFFECTIVE DATE.This section is effective the day following final enactment.
7.8 Sec. 3. Minnesota Statutes 2010, section 69.775, is amended to read:
7.969.775 INVESTMENTS.
7.10(a) The special fund assets of a relief association governed by sections
7.13
7.14
7.15
7.16
7.17
7.18
7.19
7.20
7.21
7.22
7.23
7.24
7.25
7.26
7.27
7.28
7.29private firm to measure management performance and return on investment, and the
7.30firm
7.32EFFECTIVE DATE.This section is effective the day following final enactment.
8.1 Sec. 4. Minnesota Statutes 2010, section 354A.08, is amended to read:
8.2354A.08 AUTHORIZED INVESTMENTS.
8.3
8.4teachers retirement fund association may receive, hold, and dispose of
8.5
8.6purchase
8.7articles of incorporation
8.8
8.9
8.10
8.11
8.12
8.13
8.14
8.15
8.16
8.17
8.18
8.19EFFECTIVE DATE.This section is effective the day following final enactment.
8.20 Sec. 5. Minnesota Statutes 2010, section 356A.06, subdivision 6, is amended to read:
8.21 Subd. 6. Limited list of authorized investment securities. (a)
8.22
8.23authority for a limited list plan. A limited list plan is a covered pension plan
8.24
8.25 (1) have assets with a
8.26 (2) use the services of an investment advisor registered with the Securities and
8.27Exchange Commission in accordance with the Investment Advisers Act of 1940, or
8.28registered as an investment advisor in accordance with sections
8.29the investment of at least 60 percent of its assets, calculated on
8.30 (3) use the services of the State Board of Investment for the investment of at least 60
8.31percent of its assets, calculated on
8.32 (4) use a combination of the services of an investment advisor meeting the
8.33requirements of clause (2) and the services of the State Board of Investment for the
8.34investment of at least 75 percent of its assets, calculated on
9.1 (b) Investment agency appointment authority.
9.2governing board of a covered pension plan
9.3and appoint investment agencies to act for or on its behalf.
9.4(c) Savings accounts; similar vehicles. A limited list plan is authorized to invest in:
9.5 (1) certificates of deposit issued, to the extent of available insurance or
9.6collateralization, by a financial institution that is a member of the Federal Deposit
9.7Insurance Corporation or the Federal Savings and Loan Insurance Corporation, that is
9.8insured by the National Credit Union Administration, or that is authorized to do business
9.9in this state and has deposited with the chief administrative officer of the plan a sufficient
9.10amount of marketable securities as collateral in accordance with section
9.11 (2) guaranteed investment contracts, limited to those issued by insurance companies
9.12or banks rated in the top four quality categories by a nationally-recognized rating agency
9.13or to alternative guaranteed investment contracts where the underlying assets comply
9.14with the requirements of this paragraph; and
9.15(3) savings accounts,
9.16
9.17
9.18
9.19in governmental obligations as further specified in this paragraph, including bonds, notes,
9.20bills,
9.21
9.22
9.23
9.24by the full faith and credit of the issuer or if the issue is rated among the top four quality
9.25rating categories by a nationally-recognized rating agency. The obligations in which plans
9.26are authorized to invest under this paragraph are guaranteed or insured issues of:
9.27
9.28
9.29
9.30
9.31
9.32
9.33
9.34
9.35
10.1(1) the United States, one of its agencies, one of its instrumentalities, or an
10.2organization created and regulated by an act of Congress;
10.3(2) the Dominion of Canada or one of its provinces if the principal and interest are
10.4payable in United States dollars;
10.5(3) a state or one of its municipalities, political subdivisions, agencies, or
10.6instrumentalities; or
10.7(4) any United States government-sponsored organization of which the United States
10.8is a member if the principal and interest are payable in United States dollars.
10.9
10.10obligations, including bonds, notes, debentures,
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20obligations, or any other longer-term evidences of indebtedness issued or guaranteed by
10.21a corporation organized under the laws of the United States or any of its states, or the
10.22Dominion of Canada or any of its provinces if:
10.23(1) the principal and interest are payable in United States dollars; and
10.24(2) the obligations are rated among the top four quality categories by a
10.25nationally-recognized rating agency.
10.26(f) Mutual fund authority, limited list authorized assets. Securities authorized
10.27under paragraphs (c) to (e) may be owned directly or through shares in exchange-traded
10.28funds, or through open-end mutual funds, or as units of commingled trusts.
10.29(g) Extended mutual fund authority. Notwithstanding restrictions in other
10.30paragraphs of this subdivision, a limited list plan is authorized to invest the assets of
10.31the special fund in exchange-traded funds and open-end mutual funds, if their portfolio
10.32investments comply with the type of securities authorized for investment under section
10.33356A.06, subdivision 7, paragraphs (c) to (g). Investments under this paragraph must not
10.34exceed 75 percent of the assets of the special fund, not including any money market
10.35investments through mutual or exchange-traded funds.
11.1(h) Supplemental fund authority. The governing body of a limited list plan may
11.2certify special fund assets to the State Board of Investment for investment under section
11.311A.17.
11.4(i) Assets mix restrictions. A limited list plan must conform to the asset mix
11.5limitations specified in section 356A.06, subdivision 7.
11.6EFFECTIVE DATE.This section is effective the day following final enactment.
11.7 Sec. 6. Minnesota Statutes 2010, section 356A.06, subdivision 7, is amended to read:
11.8 Subd. 7. Expanded list of authorized investment securities. (a) Authority.
11.9
11.10subdivision 6, paragraph (a), is an expanded list plan and shall invest its assets
11.11
11.12plan may select and appoint investment agencies to act for or on its behalf.
11.13 (b) Securities generally; investment forms.
11.14plan
11.15securities
11.16puts and call options and future contracts traded on a contract market regulated by a
11.17governmental agency or by a financial institution regulated by a governmental agency.
11.18These securities may be owned directly or through shares in exchange-traded or mutual
11.19funds, or as units in commingled trusts
11.20
11.21
11.22 (c) Government obligations.
11.23is authorized to invest funds in governmental bonds, notes, bills, mortgages, and other
11.24evidences of indebtedness if the issue is backed by the full faith and credit of the issuer or
11.25the issue is rated among the top four quality rating categories by a nationally recognized
11.26rating agency. The obligations in which funds may be invested under this paragraph
11.27
11.28(1) the United States, one of its agencies, one of its instrumentalities, or
11.29an organization created and regulated by an act of Congress;
11.30(2) the Dominion of Canada
11.31and interest
11.32(3)
11.33agencies, or instrumentalities; and
11.34(4)
11.35
12.1
12.2which the United States is a member
12.3in United States dollars.
12.4 (d) Investment-grade corporate obligations.
12.5list plan
12.6equipment obligations, or any other longer term evidences of indebtedness issued or
12.7guaranteed by a corporation organized under the laws of the United States or any
12.8
12.9
12.10 (1) the principal and interest
12.11
12.12United States dollars; and
12.13 (2) the obligations
12.14nationally recognized rating agency.
12.15(e) Below-investment-grade corporate obligations. An expanded list plan is
12.16authorized to invest in unrated corporate obligations or in corporate obligations that are
12.17not rated among the top four quality categories if:
12.18(1) the aggregate value of these obligations does not exceed five percent of the
12.19covered pension plan's market value;
12.20(2) the covered pension plan's participation is limited to 50 percent of a single
12.21offering subject to this paragraph; and
12.22(3) the covered pension plan's participation is limited to 25 percent of an issuer's
12.23obligations subject to this paragraph.
12.24
12.25authorized to invest funds in
12.26
12.27
12.28
12.29
12.30 (i) bankers acceptances and deposit notes
12.31if issued by
12.32by a nationally recognized rating agency;
12.33 (ii) certificates of deposit
12.34
12.35categories by a nationally recognized rating agency or whose certificates of deposit are
12.36fully insured by federal agencies
13.1
13.2Credit Union Administration;
13.3 (iii) commercial paper
13.4corporation or
13.5quality categories by a nationally recognized rating agency;
13.6 (iv) mortgage
13.7
13.8
13.9
13.10
13.11and asset-backed securities if rated in the top four quality categories by a nationally
13.12recognized rating agency;
13.13 (v)
13.14
13.15 (vi) guaranteed investment contracts
13.16
13.17nationally recognized rating agency or
13.18
13.19 (vii) savings accounts
13.20agency; and
13.21 (viii)
13.22
13.23if issued by a domestic mutual insurance company.
13.24 (2) Sections
13.25of deposit and collateralization agreements executed by the covered pension plan under
13.26clause (1), item (ii).
13.27 (3) In addition to investments authorized by clause (1), item (iv),
13.28an expanded list plan
13.29Agency all or any part of a pool of residential mortgages, not in default, that has previously
13.30been financed by the issuance of bonds or notes of the agency. The covered pension plan
13.31may also enter into a commitment with the agency, at the time of any issue of bonds or
13.32notes, to purchase at a specified future date, not exceeding 12 years from the date of the
13.33issue, the amount of mortgage loans then outstanding and not in default that have been
13.34made or purchased from the proceeds of the bonds or notes. The covered pension plan may
13.35charge reasonable fees for any such commitment and may agree to purchase the mortgage
13.36loans at a price sufficient to produce a yield to the covered pension plan comparable, in
14.1its judgment, to the yield available on similar mortgage loans at the date of the bonds or
14.2notes. The covered pension plan may also enter into agreements with the agency for the
14.3investment of any portion of the funds of the agency. The agreement must cover the period
14.4of the investment, withdrawal privileges, and any guaranteed rate of return.
14.5
14.6authorized to invest
14.7under the laws of the United States or
14.8organized under the laws of the Dominion of Canada or any of its provinces, or any
14.9corporation listed on an exchange that is regulated by an agency of the United States or of
14.10the Canadian national government
14.11
14.12
14.13
14.14
14.15
14.16the total outstanding shares of
14.17may hold up to 20 percent of the shares of a real estate investment trust and up to 20
14.18percent of the shares of a closed mutual fund.
14.19
14.20
14.21
14.22
14.23
14.24
14.25
14.26
14.27
14.28
14.29
14.30
14.31
14.32
14.33
14.34
15.1
15.2paragraphs (b) to
15.3an expanded list plan
15.4 (i)
15.5limited partnerships, trusts, private placements, limited liability corporations, limited
15.6liability companies, limited liability partnerships, and corporations;
15.7 (ii) real estate ownership interests or loans secured by mortgages or deeds of trust or
15.8shares of real estate investment trusts, through investment in limited partnerships
15.9
15.10and insurance company commingled accounts, including separate accounts;
15.11
15.12
15.13
15.14
15.15placements, limited liability corporations, limited liability companies, limited liability
15.16partnerships, and corporations; and
15.17
15.18 (2) The investments authorized in clause (1) must conform to the following
15.19provisions:
15.20 (i) the aggregate value of all investments made
15.21
15.22exceed
15.23expanded list plan is investing;
15.24 (ii) there must be at least four unrelated owners of the investment other than the
15.25
15.26or (iii)
15.27 (iii)
15.28vehicle is limited to 20 percent thereof for investments made under clause (1), item (i),
15.29(ii), or (iii)
15.30 (iv)
15.31partnership does not include a general partnership interest or other interest involving
15.32general liability. The
15.33as a limited partner which creates general liability
15.34(v) for volunteer firefighter relief associations, emerging market equity and
15.35international debt investments must not exceed 15 percent of the association's special
15.36fund market value.
16.1(i) Supplemental plan investments. The governing body of an expanded list plan
16.2may certify assets to the State Board of Investment for investment under section 11A.17.
16.3(j) Asset mix limitations. The aggregate value of an expanded list plan's
16.4investments under paragraphs (g) and (h) and equity investments under paragraph (i),
16.5regardless of the form in which these investments are held, must not exceed 85 percent of
16.6the covered plan's market value.
16.7EFFECTIVE DATE.This section is effective the day following final enactment.
16.8 Sec. 7. INVESTMENT AUTHORITY TRANSITION PROVISION.
16.9If any investment by the State Board of Investment or any covered pension plan fund
16.10was an authorized investment under law in effect immediately before the effective date
16.11of applicable sections of this act, but is not authorized by this act, the applicable assets
16.12must be liquidated before June 30, 2013.
16.13EFFECTIVE DATE.This section is effective the day following final enactment.
