Pension Fundamentals – Session #2 Investment of Plan Assets

Investment of Plan Assets

 

OBJECTIVE

To provide retirement system trustees and plan administrators a general overview regarding the investment of public plan assets.

OUTLINE

I. YOUR ROLE AS A TRUSTEE “FIDUCIARY RESPONSIBILITY”

WHO IS A “FIDUCIARY”?

The term “fiduciary” is derived from early Roman law and means “a person having the character of a trustee; one who has a duty to act for another’s benefit.” Those who have discretionary authority in connection with the administration of employee benefit plans, whether they are designated administrators or trustees, or simply members of the governing boards, committees or commissions, are “fiduciaries” and are charged with fiduciary responsibilities.

WHAT LAWS ESTABLISH FIDUCIARY RESPONSIBILITIES?

The laws encompassing fiduciary responsibility are a complex network of federal and state statutes and case law, all of which define and delineate the parameters and rules within which a trustee must operate.

Trustees of public employee retirement systems in the State of Michigan must comply with the fiduciary duties as provided by the Public Employee Retirement System Investment Act, Public Act 314 of 1965, as amended (“Act 314”).

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Pension Fundamentals – Session #1 Fiduciary Responsibility

Fiduciary Responsibility – Your Role as a Trustee

 

INTRODUCTION

The following is intended to serve as a general overview of fiduciary responsibilities relating to the administration of public employee retirement systems.

WHO IS A “FIDUCIARY”?

The term “fiduciary” is derived from early Roman law and means “a person having the character of a trustee; one who has a duty to act for another’s benefit”. Those who have discretionary authority in connection with the administration of employee benefit plans, whether they are designated administrators or trustees, or simply members of the governing boards, committees or commissions, are “fiduciaries” and are charged with fiduciary responsibilities.

WHAT LAWS ESTABLISH FIDUCIARY RESPONSIBILITIES?

The law encompassing fiduciary responsibility is a complex network of federal and state statutes and case law, all of which define and delineate the parameters and rules within which a trustee must operate.

In the private sector, fiduciaries must comport with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) which defines a “fiduciary” as any person who:

(1) exercises any discretionary authority or control over the plan assets;

(2) renders investment advice for a fee; or’

(3) exercises discretionary authority or responsibility for plan administration.

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