HB 4338 Summary

• Requires the department to administer Tier 2 of the Public School Employees Retirement System through a third-party administrator beginning July 1, 2016, with the administrator selected through a competitive proposal process and meeting strict conflict-of-interest and regulatory disclosure requirements.

• Allows reporting units to select one or more alternate investment vendors from a department-designated list of 3-8 vendors to provide investment options for their employees, with each alternate vendor required to provide at least 1 hour of financial literacy education per school year.

• Establishes that the third-party administrator must not be affiliated with any entity providing investment services to the retirement system and must publish a website listing available alternate investment vendors and authorized investment advisers for each reporting unit.

• Permits in-plan transfers of account balances across Tier 2 contracts and account plans between default and alternate investment vendors, and clarifies that participating employers are considered to have adopted Tier 2 provisions and procedures.

• Requires investment vendors to meet specific standards including offering varied investment options (mutual funds, index funds, target date funds, guaranteed accounts), complying with federal disclosure requirements (17 CFR 230.262, 29 CFR 2550.404a-5), and providing authorized investment advisers to customers.