May 24, 2012, Introduced by Senators PAVLOV, COLBECK, MEEKHOF, PROOS, HILDENBRAND, HUNE, EMMONS, KOWALL and BOOHER and referred to the Committee on Appropriations.
A bill to amend 1965 PA 314, entitled
"Public employee retirement system investment act,"
(MCL 38.1132 to 38.1140m) by amending the title, as amended by 1988
PA 343, and by adding section 39b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
An act to authorize the investment of assets of public
employee retirement systems or plans and the assets of employees
contributed to retirement systems or plans created and established
by the state or any political subdivision; to provide for the
payment of certain costs and investment expenses; to authorize
investment in variable rate interest loans; to limit employer
liability for certain investment decisions; to define and limit the
investments which may be made by an investment fiduciary with the
assets of a public employee retirement system; and to prescribe the
powers and duties of investment fiduciaries and certain state
departments and officers.
Sec. 39b. (1) A public employer may deduct from the wages of
an employee an amount for a contribution to an individual account
for each employee's benefit in a plan maintained under section 125,
401(k), 403(b), 408, 408A, or 457 of the internal revenue code of
1986, 26 USC 125, 401, 403, 408, 408A, and 457. The public employer
shall give written notice to a participating employee of the
contribution before the initial deduction is made. The public
employer shall include in the notice a description of the benefit
the contribution provides and the right of the participating
employee to cancel the contribution by instruction to the employer,
including the procedure for giving the instruction.
(2) A public employer may provide for automatic enrollment of
an employee in a plan described in subsection (1). An employer who
provides automatic enrollment of an employee in a plan as provided
in this subsection or other plan official is not liable for the
actual decisions made by the public employer or other plan official
on behalf of a participating employee with regard to the default
investment of contributions made for that employee to the plan if
all of the following requirements are met:
(a) The plan allows the participating employee at least
quarterly opportunities to select investments for the employee's
contributions between investment alternatives available under the
(b) The participating employee is given notice of the
investment decisions that will be made in the absence of
participating employee direction.
(c) The participating employee is given a description of all
the investment alternatives available for the participating
employee to change investments.
(d) The participating employee is given notice at least
annually of the actual default investments made by the public
employer on behalf of the participating employee.
(3) This section does not alter any existing responsibility of
a public employer or other plan official for the selection of
investment funds for participating employees.
(4) As used in this section:
(a) "Automatic enrollment" means a plan provision under which
the employee will have a specified contribution made to a plan
described in subsection (1) equal to a compensation reduction that
will be made for the employee unless the employee affirmatively
elects no compensation reduction contributions or a compensation
reduction contribution in another amount.
(b) "Public employer" means this state or an agency of this
state, a city, county, village, township, school district, or
intermediate school district, or an institution of higher