HB-4964, As Passed House, March 12, 2014

SUBSTITUTE FOR

HOUSE BILL NO. 4964

     A bill to amend 1965 PA 314, entitled

"Public employee retirement system investment act,"

(MCL 38.1132 to 38.1141) by amending the title, as amended by 1988

PA 343, and by adding section 19b.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

     An act to authorize the investment of assets of public

employee retirement systems or plans and the contributions made by

employees 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 and plan

official 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. 19b. (1) A public employer may deduct from the

compensation of an employee an amount for contribution to an

individual account for the 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. A public employer may provide for automatic enrollment of an

employee in a plan described in this subsection.

     (2) Except as otherwise provided in this subsection, the

public employer shall give written notice to a participating

employee of any automatic enrollment 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. This subsection does not apply to a public employer

for the purposes of a participating employee's participation in a

plan established under section 1 of 1976 PA 306, MCL 38.1151, that

provides for automatic contributions as provided under the internal

revenue code of 1986.

     (3) A public employer or plan official may provide investment

alternatives for participating employees, including 1 or more

default investment alternatives, for any contributions made to a

plan described in subsection (1). A public employer or plan

official is not liable for the actual decisions made by the

employee with regard to the investment of any contribution under

the plan or for the decisions made by the public employer or plan

official on behalf of a participating employee with regard to the

default investment of any 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 any contributions

made for that employee between investment alternatives available

under the plan.

     (b) For any type of default investment of any contributions

for an employee, the default investment is comparable to the types

of investment alternatives identified by the United States

department of labor as qualified default investment alternatives.

     (c) The participating employee is given notice of the default

investment decisions that will be made in the absence of

participating employee direction.

     (d) The participating employee is given a description of all

the investment alternatives available for the participating

employee.

     (e) The participating employee is given notice at least

annually of all of the following:

     (i) The actual default investments made by the public employer

on behalf of the participating employee.

     (ii) The right of a participating employee to cancel his or her

continued participation in the plan.

     (4) This section does not alter any existing responsibility of

a public employer or other plan official for the selection of

investment alternatives available for participating employees.

     (5) 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

education.