HOUSE AMENDMENT
    565-192AXA-06                               Bill No. CS/HB 347
    Amendment No. 1 (for drafter's use only)
                            CHAMBER ACTION
              Senate                               House
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 5                                           ORIGINAL STAMP BELOW
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11  Representative(s) Fasano offered the following:
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13         Amendment (with title amendment) 
14  Remove from the bill:  Everything after the enacting clause
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16  and insert in lieu thereof:  
17         Section 1.  Subsection (1), paragraph (a) of subsection
18  (2), paragraph (e) of subsection (4), paragraph (b) of
19  subsection (8), and paragraphs (a) and (b) of subsection (9)
20  of section 121.4501, Florida Statutes, are amended, and
21  paragraph (f) is added to subsection (9) of said section, to
22  read:
23         121.4501  Public Employee Optional Retirement
24  Program.--
25         (1)  The Trustees of the State Board of Administration
26  shall establish an optional defined contribution retirement
27  program for members of the Florida Retirement System under
28  which retirement benefits will be provided for eligible
29  employees who elect to participate in the program. The
30  benefits to be provided for or on behalf of participants in
31  such optional retirement program shall be provided through
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    File original & 9 copies    04/24/01                          
    hbd0002                     10:24 am         00347-0045-143317

HOUSE AMENDMENT 565-192AXA-06 Bill No. CS/HB 347 Amendment No. 1 (for drafter's use only) 1 employee-directed investments, in accordance with s. 401(a) of 2 the Internal Revenue Code and its related regulations. The 3 employers shall contribute, as provided in this section and s. 4 121.571, to the Public Employee Optional Retirement Program 5 Trust Fund toward the funding of such optional benefits. 6 (2) DEFINITIONS.--As used in this section, the term: 7 (a) "Approved provider" or "provider" means a private 8 sector company that is selected and approved by the state 9 board to offer one or more investment products or services to 10 the Public Employee Optional Retirement Program, including a 11 "bundled provider" that offers participants a range of 12 individually allocated or unallocated investment products and 13 may offer a range of administrative and customer services, 14 which may include accounting and administration of individual 15 participant benefits and contributions; individual participant 16 recordkeeping; asset purchase, control, and safekeeping; 17 direct execution of the participant's instructions as to asset 18 and contribution allocation; calculation of daily net asset 19 values; direct access to participant account information; 20 periodic reporting to participants, at least quarterly, on 21 account balances and transactions; direct advice and guidance 22 on its investments options; a broad array of distribution 23 options; and asset allocation and retirement counseling and 24 education. Private sector companies include investment 25 management companies, insurance companies, depositories, and 26 mutual fund companies. 27 (4) PARTICIPATION; ENROLLMENT.-- 28 (e) After the period during which an eligible employee 29 had the choice to elect the defined benefit program or the 30 Public Employee Optional Retirement Program, the employee 31 shall have one opportunity, that is, a second election, at the 2 File original & 9 copies 04/24/01 hbd0002 10:24 am 00347-0045-143317
HOUSE AMENDMENT 565-192AXA-06 Bill No. CS/HB 347 Amendment No. 1 (for drafter's use only) 1 employee's discretion, to choose to move from the defined 2 benefit program to the Public Employee Optional Retirement 3 Program or from the Public Employee Optional Retirement 4 Program to the defined benefit program. This paragraph shall 5 be contingent upon approval from the Internal Revenue Service 6 for including the choice described herein within the programs 7 offered by the Florida Retirement System. 8 1. If the employee chooses to move to the Public 9 Employee Optional Retirement Program, the applicable 10 provisions of this section shall govern the transfer. 11 2. If the employee chooses to move from the Public 12 Employee Optional Retirement Program to the defined benefit 13 program, the employee must transfer from his or her optional 14 program Public Employee Optional Retirement Program account 15 and from other employee moneys as necessary, a sum 16 representing all contributions that would have been made to 17 the defined benefit plan for that employee and the actual 18 return that would have been earned on those contributions had 19 they been invested in the defined benefit program. 20 21 If, at the time of a member's election to transfer to the 22 defined benefit program, the member's optional program account 23 does not contain the total amount required to be transferred 24 to the defined benefit program, the member must pay the 25 remaining balance. If the member's optional program account 26 contains more than the amount required to be transferred to 27 the defined benefit program, such additional amount shall 28 remain in the member's optional program account. 29 (8) ADMINISTRATION OF PROGRAM.-- 30 (b)1. The state board shall select and contract with 31 one third-party administrator to provide administrative 3 File original & 9 copies 04/24/01 hbd0002 10:24 am 00347-0045-143317
HOUSE AMENDMENT 565-192AXA-06 Bill No. CS/HB 347 Amendment No. 1 (for drafter's use only) 1 services, where those services do not duplicate services 2 provided by the Division of Retirement within the Department 3 of Management Services. With the approval of the state board, 4 the third-party administrator may subcontract with other 5 organizations or individuals to provide components of the 6 administrative services. As a cost of administration, the 7 board may compensate any such contractor for its services, in 8 accordance with the terms of the contract, as is deemed 9 necessary or proper by the board. The third-party 10 administrator may not be an approved provider or be affiliated 11 with an approved provider. 12 2. These administrative services may include, but are 13 not limited to, enrollment of eligible employees, collection 14 of employer contributions, disbursement of such contributions 15 to approved providers in accordance with the allocation 16 directions of participants; services relating to consolidated 17 billing; individual and collective recordkeeping and 18 accounting; asset purchase, control, and safekeeping; and 19 direct disbursement of funds to and from the third-party 20 administrator, the division, the board, employers, 21 participants, approved providers, and beneficiaries. Nothing 22 in this section shall prevent or prohibit a bundled provider 23 from providing any administrative or customer service, 24 including accounting and administration of individual 25 participant benefits and contributions; individual participant 26 recordkeeping; asset purchase, control, and safekeeping; 27 direct execution of the participant's instructions as to asset 28 and contribution allocation; calculation of daily net asset 29 values; direct access to participant account information; 30 periodic reporting to participants, at least quarterly, on 31 account balances and transactions. 4 File original & 9 copies 04/24/01 hbd0002 10:24 am 00347-0045-143317
HOUSE AMENDMENT 565-192AXA-06 Bill No. CS/HB 347 Amendment No. 1 (for drafter's use only) 1 3. The state board shall select and contract with one 2 or more organizations to provide educational services. With 3 approval of the board, the organizations may subcontract with 4 other organizations or individuals to provide components of 5 the educational services. As a cost of administration, the 6 board may compensate any such contractor for its services in 7 accordance with the terms of the contract, as is deemed 8 necessary or proper by the board. The education organization 9 may not be an approved provider or be affiliated with an 10 approved provider. 11 4. Educational services shall be designed by the board 12 and department to assist employers, eligible employees, 13 participants, and beneficiaries in order to maintain 14 compliance with United States Department of Labor regulations 15 under s. 404(c) of the Employee Retirement Income Security Act 16 of 1974 and to assist employees in their choice of defined 17 benefit or defined contribution retirement alternatives. 18 Educational services include, but are not limited to, 19 disseminating educational materials; providing retirement 20 planning education; explaining the differences between the 21 defined benefit retirement plan and the defined contribution 22 retirement plan; and offering financial planning guidance on 23 matters such as investment diversification, investment risks, 24 investment costs, and asset allocation. An approved provider 25 may also provide educational information, including retirement 26 planning and investment allocation information concerning its 27 products and services. 28 (9) INVESTMENT OPTIONS OR PRODUCTS; PERFORMANCE 29 REVIEW.-- 30 (a) The board shall develop policy and procedures for 31 selecting, evaluating, and monitoring the performance of 5 File original & 9 copies 04/24/01 hbd0002 10:24 am 00347-0045-143317
HOUSE AMENDMENT 565-192AXA-06 Bill No. CS/HB 347 Amendment No. 1 (for drafter's use only) 1 approved providers and investment products to which employees 2 may direct retirement contributions under the program. In 3 accordance with such policy and procedures, the board shall 4 designate and contract for a number of investment products as 5 determined by the board. The board shall also select one or 6 more bundled providers, each of whom who offer nine multiple 7 investment options and related services products when such an 8 approach is determined by the board to afford value to the 9 participants otherwise not available through individual 10 investment products. Each approved bundled provider may offer 11 investment options that provide participants with the 12 opportunity to invest in each of the following asset classes, 13 to be composed of individual options that represent either a 14 single asset class or a combination thereof: money markets, 15 U.S. fixed income, U.S. equities, and foreign stock. The board 16 shall review and manage all educational materials, contract 17 terms, fee schedules, and other aspects of the approved 18 provider relationships to ensure that no provider is unduly 19 favored or penalized by virtue of its status within the plan. 20 (b) The board shall consider investment options or 21 products it considers appropriate to give participants the 22 opportunity to accumulate retirement benefits, subject to the 23 following: 24 1. The Public Employee Optional Retirement Program 25 must offer a diversified mix of low-cost investment products 26 that span the risk-return spectrum, and may include a 27 guaranteed account as well as investment products such as 28 individually allocated guaranteed and variable annuities, that 29 meet the requirements of this subsection and that combine the 30 ability to accumulate investment returns with the option of 31 receiving lifetime income consistent with the long-term 6 File original & 9 copies 04/24/01 hbd0002 10:24 am 00347-0045-143317
HOUSE AMENDMENT 565-192AXA-06 Bill No. CS/HB 347 Amendment No. 1 (for drafter's use only) 1 retirement security of a pension plan and similar to the 2 lifetime income benefit provided by the Florida Retirement 3 System. 4 2. Investment options or products offered by the group 5 of approved providers may include mutual funds, group annuity 6 contracts, individual retirement annuities, interests in 7 trusts, collective trusts, separate accounts, and other such 8 financial instruments, and shall include products that give 9 participants the option of committing their contributions for 10 an extended time period in an effort to obtain higher returns 11 than could be obtained from investment products offering full 12 liquidity. 13 3. The board shall not contract with any provider that 14 imposes a front-end, back-end, contingent, or deferred sales 15 charge, or any other fee that limits or restricts the ability 16 of participants to select any investment product available in 17 the optional program. This prohibition shall not apply to fees 18 or charges that are imposed on withdrawals from products that 19 give participants the option of committing their contributions 20 for an extended time period in an effort to obtain higher 21 returns than could be obtained from investment products 22 offering full liquidity, provided that the product in 23 question, net of all fees and charges, produces material 24 benefits relative to other comparable products in the program 25 offering full liquidity. 26 4. Fees or charges for insurance features, such as 27 mortality and expense risk charges, shall be reasonable 28 relative to the benefits provided. 29 (f)1. An approved provider shall comply with all 30 applicable federal and state securities and insurance laws and 31 regulations, as well as the applicable rules and guidelines of 7 File original & 9 copies 04/24/01 hbd0002 10:24 am 00347-0045-143317
HOUSE AMENDMENT 565-192AXA-06 Bill No. CS/HB 347 Amendment No. 1 (for drafter's use only) 1 the National Association of Securities Dealers (NASD) 2 governing the ethical marketing of investment products. In 3 furtherance of this mandate, an approved provider must agree 4 in its contract with the board to establish and maintain a 5 compliance education and monitoring system to supervise the 6 activities of all personnel who directly communicate with 7 individual participants and recommend investment products, 8 which system is consistent with National Association of 9 Security Dealers rules. 10 2. Approved provider personnel who directly 11 communicate with individual participants and who recommend 12 investment products shall make an independent and unbiased 13 determination as to whether an investment product is suitable 14 for a particular participant. 15 3. The board shall develop procedures to receive and 16 resolve participant complaints against a provider or approved 17 provider personnel, and, when appropriate, refer such 18 complaints to the appropriate regulatory agency. 19 4. Approved providers are prohibited from selling or 20 in any way distributing any customer list or participant 21 identification information generated through their offering of 22 products or services through the optional retirement program. 23 Section 2. The appointment of the executive director 24 of the State Board of Administration shall be subject to the 25 approval by a majority vote of the Board of Trustees of the 26 State Board of Administration and the Governor must vote on 27 the prevailing side. Such appointment must be reaffirmed in 28 the same manner by the Board of Trustees on an annual basis. 29 Section 3. This act shall take effect upon becoming a 30 law. 31 8 File original & 9 copies 04/24/01 hbd0002 10:24 am 00347-0045-143317
HOUSE AMENDMENT 565-192AXA-06 Bill No. CS/HB 347 Amendment No. 1 (for drafter's use only) 1 ================ T I T L E A M E N D M E N T =============== 2 And the title is amended as follows: 3 remove from the title of the bill: the entire title 4 5 and insert in lieu thereof: 6 A bill to be entitled 7 An act relating to the Public Employee Optional 8 Retirement Program; amending s. 121.4501, F.S.; 9 redefining the term "approved provider"; 10 providing requirements for the State Board of 11 Administration in carrying out its duties under 12 the program; providing requirements for 13 approved providers regarding federal and state 14 laws and regulations, and for communications 15 with participants; providing requirements for 16 the appointment of the executive director of 17 the State Board of Administration; providing an 18 effective date. 19 20 21 22 23 24 25 26 27 28 29 30 31 9 File original & 9 copies 04/24/01 hbd0002 10:24 am 00347-0045-143317