January 24, 2008
No. 4A
STATE OF
WEB SITE ADDRESS:
www.gencourt.state.nh.us
Legislative
SENATE
CALENDAR
ADDENDUM
REPORT,
AMENDMENT, AND MEETINGS
REPORT
EXECUTIVE DEPARTMENTS AND ADMINISTRATION
SB 463, establishing
an investment committee in the
Ought to pass with amendment, Vote 6-0
Senator Downing for the committee.
AMENDMENT
Senate Executive Departments and Administration
January 28, 2008
2008-0259s
10/09
Amendment to SB 463
Amend the title of the bill by replacing it with the following:
AN ACT establishing an investment committee and an
audit committee in the
Amend the bill by replacing all after the enacting clause with the following:
1 Retirement System; Management of Funds; Investment Committee; Audit Committee. Amend RSA 100-A:15 to read as follows:
100-A:15 Management of Funds.
I. The members of
the board of trustees shall be the trustees of the several funds created hereby
and shall
set all policies relative to investment of those funds. The trustees shall appoint
and oversee an investment committee that shall have full power to invest and reinvest
such funds[, and] in accordance with the policies set by the
board. The members of the investment
committee shall serve at the pleasure of the board of trustees. The board of trustees shall have the
powers, privileges, and immunities of a corporation. The members of the board of trustees shall [also
have the power] authorize the investment committee to invest and reinvest such
funds in participation units in the public deposit investment pool established
pursuant to RSA 383:22. Said [trustees]
investment committee shall have full power to hold, purchase, sell,
assign, transfer, and dispose of any of the securities and investments in which
any of the funds created hereby have been invested, as well as the proceeds of
such investments. All of the assets and
proceeds, and income therefrom, of the New Hampshire retirement system, and all
contributions and payments made thereto, shall be held, invested or disbursed
in trust solely in the interest of the members and beneficiaries of the system
for the exclusive purpose of providing those benefits and defraying those
reasonable administrative expenses provided for under this chapter. In the management, investment,
and reinvestment of system assets so held in trust hereunder, the system’s
board of trustees and investment committee shall exercise the judgment and care under
the circumstances then prevailing, which persons of prudence, discretion,
and intelligence, acting in a like capacity and familiar with such matters,
would use in the conduct of a pension plan of like character and with like aims
as the system, and by diversifying investments of the system so as to minimize
the risk of large losses to the trust fund.
II. The board of
trustees shall[:
(a) Have
the authority to empower an investment committee of its members to make
investments and deposits between meetings of the board.] appoint
an investment committee to make investments and deposits on behalf of the
board. The investment committee shall
consist of 5 members, 3 of whom shall be experienced in the field of
institutional investment, and 2 of whom shall be members of the board. The investment committee shall:
[(b)] (a) Have the [further] authority to hire
investment counsel. The compensation for
investment counsel services and the compensation for actuarial services
required by the board of trustees in performing the duties required by RSA
100-A:14 shall be a charge upon the funds of the
[(c)] (b) Appoint and employ a custodian of the several
funds of the retirement system, and such custodian, as an agent of the board and
the investment committee, shall be compensated and such compensation
shall be a charge upon the funds of the retirement system.
[(d)] (c) Have the full power and authority to delegate
to any agent, within or without the state, who may or may not be the custodian
of stocks and securities, the power and discretion to make decisions with
regard to the purchase or sale of any legal object of investment and to take
any action necessary to effect decisions by or on behalf of the New Hampshire
retirement system with the same legal effect as if performed by the investment
committee or the board of trustees of the New Hampshire retirement
system. The [board of trustees]
investment committee shall have the power to authorize the payment of
compensation to an agent or agents for management services.
(d) Report to the board of trustees at least
quarterly on the management, investment, and reinvestment activities of the
investment committee.
II-a.
The board of trustees shall appoint and oversee an audit committee to undertake
audit and reporting requirements under paragraph VI of this section. The audit committee shall consist of 5 members,
3 of whom shall be experienced in the field, and 2 of whom shall be members of
the board. The members of the audit
committee shall serve at the pleasure of the board of trustees.
III. Except as otherwise provided in this section, no trustee, no investment committee member, audit committee member, and no employee of the board of trustees shall have any personal interest in the gains or profits of any investment made by the board; nor shall any trustee, investment committee member, audit committee member, or employee of the board, directly or indirectly, for himself or herself or as an agent, in any manner use the same except to make such current and necessary payments as are authorized by the board; nor shall any trustee, investment committee member, audit committee member, or employee of the board become an endorser or surety, or in any manner an obligor, for money loaned to or borrowed from the board.
IV. The board of
trustees is authorized to engage the services of legal counsel for [special
investment,] federal[,] and tax matters, and to engage outside
counsel for other matters. The payment
for services provided in this paragraph shall be a charge upon the funds of the
V. The board of
trustees shall adopt rules pursuant to RSA 541-A relative to procedures to be
followed in establishing and modifying investment objectives and guidelines[,
and in selecting investment managers, investment products and investment
participations]. The
investment policies shall not be subject to rulemaking under RSA 541-A.
VI.(a)
The funds of the board
of trustees] audit committee shall complete, not later than 120 days after
the close of the fiscal year[, unless the fiscal committee and the governor
and council for good cause shall extend such period], a comprehensive
annual financial report concerning the preceding fiscal year that details the
financial condition and operation of the system during that period in a manner
consistent with generally accepted accounting principles. The fiscal committee and the governor and
council for good cause may extend such period. Said report subsequently shall be audited by
the legislative budget assistant who may designate a certified public
accountant not employed in the state service to conduct the annual audit and
may accept the findings and report of the certified public accountant as
fulfilling the provisions of this paragraph, provided that in either case said
audit shall be conducted in accordance with prevailing standards and practices
of governmental auditing specified by authoritative national standard setting
bodies.
(b)
The audit committee shall cause a performance audit not less frequently
than every 3 years.
(c) Copies of all audits and reports shall be
forwarded to the governor, the senate president, and the speaker of the house
of representatives. The cost of [such
audit] all audits and reports shall be a charge upon the funds of the
VII. The board of trustees shall complete a comprehensive annual investment report at the same time that the annual financial report under paragraph VI is completed. The investment report shall be submitted to the president of the senate, the speaker of the house, and the governor. The report shall include, but shall not be limited to:
(a) A description of the board’s philosophy for investing the assets of the system, including an analysis of any significant changes in philosophy which have occurred from the prior annual report.
(b) An analysis of the return on investment, by investment category.
(c) [Anticipated future uses of and approaches
to the management, investment, and reinvestment of system assets under the
principles of paragraph I.] An annual investment policy statement which
shall incorporate the following:
(1) A clear statement of investment objectives
including the adoption of a reasonable and sound average annual rate of return
the retirement system is attempting to earn. The rate of return utilized for the statement of investment objectives
shall be same as the assumed rate of return set by the trustees for the
biennial actuarial calculation.
(2) A detailed breakdown of the asset structure
most likely to enable the fund to reach its long range objective within
appropriate risk parameters. The details
should include all relevant subcategories among equities, debt, and alternative
investments and identify the appropriate benchmarks for each performance
analysis. The policy should establish an
acceptable range for each allocation as well as a specific target allocation.
(3) Identification of how outcomes are measured
and benchmarks are developed and who is responsible for the various decision
levels in the investment process between the board of trustees, the investment
committee, the retirement system’s staff, investment consultants, and portfolio
managers. The policy statement should
specify the minimum frequency to review outcomes and responsibilities, in order
to determine whether decisions as to asset mix and manager selection added
value to the fund. Investment managers
should be under constant review by the retirement system.
(d) Any suggested changes in legislation which the board may seek in order to better serve the members of the system. This is not intended to preclude the board of trustees from seeking additional legislation as needs arise between annual reports.
VIII. The management, investment, and reinvestment practices for the assets held in trust by the board pursuant to this section shall be subject to review by the legislature.
IX. All
non-trustee members of the audit and investment committees shall be afforded
the same liability insurance and indemnification as board members.
X. Not later than January 1, 2010, the board of
trustees shall report to the governor, the senate president, and the speaker of
the house of representatives on the operation of the audit and investment
committees.
2 Effective Date. This act shall take effect 60 days after its passage.
2008-0259s
AMENDED ANALYSIS
This bill requires the appointment of an investment committee
and an audit committee in the
MEETINGS
FRIDAY, FEBRUARY 1, 2008
JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON COSTING AN ADEQUATE EDUCATION (RSA 193-E:2-d)
10:00 a.m. Room 100, SH Regular Meeting
MONDAY, FEBRUARY 4, 2008
HEALTH AND HUMAN SERVICES OVERSIGHT COMMITTEE (RSA 126-A:13)
1:00 p.m. Room 103, SH Regular Meeting