NASRA Standing Resolutions

Resolution 2002-01		Investor Protections
Resolution 2002-02		Bankruptcy Protection for Pension Assets
Resolution 2002-03		Tax Treatment of 457 Plan Employer Contributions
Resolution 2002-04		Proposed Taxation and Regulation of Public Employee Pension Plans
Resolution 2002-05		Age Discrimination in Employment Act
Resolution 2001-01                Annual Contribution and Benefit Limits
Resolution 2001-02                Enhancements to Section 457 Plans
Resolution 2001-03                 Benefit Plan Use of Social Security Numbers
Resolution 2000-01                 Public Pension Systems – Statements of Key Investment Risks and Common Practices to Address those Risks
Resolution 1999-03                Pension Portability
Resolution 1999-04                Disclosure of Soft Dollar Activities
Resolution 1999-05                "Roth" Features For Public Sector Tax Favored Savings Arrangements
Resolution 1999-06                Code of Ethics
Resolution 1999-07                Pay to Play
Resolution 1998-01                States' Rights and Unfunded Mandates
Resolution 1998-02                Support for Defined Benefit Plans
Resolution 1998-03                Social Security Resolution
Resolution 1996-01                Federal Taxation of Public Employee Retirement Systems
Resolution 1996-02                Adequate funding of Public Employee Retirement Systems
Resolution 1996-03                Public Pension Coordinating Council
Resolution 1996-04                Regulation of Public Employee Retirement Systems
Resolution 1996-05                401(k) Plans for Public Sector Employers

Resolution 1996-06                 Retirement System Investment Policy


Archived Resolutions

 Resolution 1999-01                 Annual Contribution and Benefit Limits (Amended by Resolution 2001-1)

 Resolution 1999-02                 Enhancements to Section 457 Plans (Amended by Resolution 2001-2)

 

NASRA
RESOLUTION 2002-01
Investor Protections

WHEREAS, the aftermath of the bankruptcy of Enron in 2001 has substantially eroded the confidence individual and institutional investors have in our corporate structures and the validity of external audits; and,

WHEREAS, such a justified lack of confidence will further adversely impact our financial markets – already suffering from the plethora of negative events during 2001; and,

WHEREAS,   the future viability of the U.S. economy is, in large measure, dependent on (i) investor confidence in corporate structures and leadership, (ii) the reliability of underlying financial information regarding corporate operations, and (iii) transparency in communications between investors, boards of directors, and management; and,

WHEREAS, in keeping with their fiduciary responsibilities, it is incumbent on all public sector and private sector institutional investors to be proactive in the pursuit of reforms designed to provide additional safeguards for investors and prevent reoccurrences of Enron-type situations; and,

WHEREAS, institutional investors have long advocated such reforms, which, if brought to fruition, should dramatically reduce the potential for financial disasters of the type experienced by investors in Enron; and,

WHEREAS, institutional investors have forwarded recommendations for action to Congress and agencies of the federal government, where the ultimate regulatory authority in this area resides; and,

WHEREAS, it is incumbent on Congress and federal regulatory agencies to act quickly and in concert to bolster the economy while protecting the interests of corporate investors.

NOW THEREFORE BE IT RESOLVED, that the National Association of State Retirement Administrators (NASRA) is formally on record in support of efforts to insure a corporate universe characterized by:

(1)                 improved auditor independence standards.

(2)                 improved auditor and accounting industry oversight

(3)                 enhanced disclosure of potential conflicts-of-interest between members of corporate boards, the CEO, and other executives. 

(4)                 listing standards that strengthen board independence and composition.

(5)                 more effective enforcement actions that include holding individuals accountable for their actions and not just corporations’ insurance policies.

(6)                 improved financial disclosure rules that require accurate and understandable financial reports.

 AND BE IT FURTHER RESOLVED, that copies of this resolution are to be distributed to all members of Congress, the President and appropriate officials of the Administration,  Commissioners of the Securities and Exchange Commission, members of the Financial Accounting Standards Board, and members of the Board of Directors of the American Institute of Certified Public Accountants.

Adopted: February 26, 2002

NASRA
RESOLUTION 2002-02

 Bankruptcy Protection for Pension Assets

 

WHEREAS, debtors’ interests in retirement and pension plans which have anti-alienation provisions, including ERISA private sector plans and governmental defined benefit pension plans, are excluded from debtors' bankruptcy estates pursuant to federal case law, and

 

WHEREAS, there haves been inconsistent interpretations as toregarding whether retirement savings arrangements without such provisions, such as governmental 457 plans and IRAs, are afforded the same protections, and

 

WHEREAS, contradictions in the treatment of mandatory public employee pension plan contributions have also arisen as the result of two recently decided cases that departed from the well-established rule that that such mandatory contributions are not “disposable income” and thus not a part of the bankruptcy estate in under Chapter 13, and 

 

WHERAS, plan participants in Chapter 13 bankruptcy are currently unable to re-pay an advance on their retirement assets (often referred to as plan “loan”) while in Chapter 13 bankruptcy, often forcing them to default in repayment and incur significant tax liabilities and penalties on the unpaid balance, and

 

WHEREAS, Congress is currently considering legislation to reform the federal bankruptcy code, which will provide an opportunity to codify existing protections for pension plan assets and extend protections to all tax-favored retirement vehicles, and

 

WHEREAS, a key component of the proposed bankruptcy reform legislation is a means test to require more debtors to endter into Chapter 13 repayment plans rather than giving them the option to choose Chapter 7 liquidation instead, thereby further necessitating clarification of the treatment of mandatory pension plan contributions and repayment of plan loans in Chapter 13,

 NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators supports changes to the federal bankruptcy code that would exclude all governmental plan assets from the bankruptcy estate, and clearly exclude from the bankruptcy estate contributions made by employees to governmental pension plans and amounts required to repay a pension plan loan.

 

Adopted:  August 7, 2002

 

NASRA
RESOLUTION 2002-03

 Tax Treatment of 457 Plan Employer Contributions

 

WHEREAS, many local government employers participate in state operated pension plans; and

 

WHEREAS, many local government employers do not have access to 401(k) plans but offer 457 plans as voluntary deferred compensation arrangements; and

 

WHEREAS, employer contributions have proven to be an effective tool to encourage employees to make voluntary or matching contributions as part of a savings program; and

 

WHEREAS, employer contributions to 401(k), 401(a), and 403(b) plans are not subject to Social Security and Medicare taxes; and

 

WHEREAS, employer contributions to 457 plans are subject to Social Security and Medicare taxes; and

WHEREAS, such taxes act to discourage the employer from creating employer match plans; and

WHEREAS, employer contributions to 401(k), 401(a), and 403(b) plans do not reduce the amount an employee may defer to those plans; and

WHEREAS, employer contributions to 457 plans do reduce the amount an employee may defer to that plan; and

WHEREAS, encouragement of employee savings via a tax-sheltered vehicle is in the best interest of the employer and employee, and

WHEREAS, creation of supplemental 401(a) plans to receive tax-sheltered employer contributions is redundant and inefficient;

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators supports equal Social Security and Medicare tax treatment of employer contributions to governmental 401(k), 401(a), 403(b), and 457 plans by exempting employer contributions to governmental 457 plans from the Social Security and Medicare covered wage definition; and

BE IT FURTHER RESOLVED, that the National Association of State Retirement Administrators supports equal federal income tax treatment of employer contributions to governmental 401(k), 401(a), 403(b), and 457 plans by exempting employer contributions to governmental 457 plans from the maximum amount that may be deferred under the plan for the taxable year.

 

Adopted: August 7, 2002

NASRA
RESOLUTION 2002-04

 Proposed Taxation and Regulation of Public Employee Pension Plans

WHEREAS, there are approximately 2,300 public employee pension plans in the United States, which provide sound and secure benefits to virtually all of their nearly 15 million state and local government workers, and hold over two trillion dollars in assets invested for the exclusive benefit of these employees; and

WHEREAS, over the past decade, there have been numerous efforts to expand federal regulation of public pension funds and benefits and to impose taxes on public plan assets, including proposals to regulate public plans under the Employee Retirement Income Security Act, to tax short-term public pension fund investments and to regulate investment options; and

WHEREAS, during these times, Congress has continued to recognize that, unlike private pension plans that are preempted from State statutes and solely regulated by federal law, public pension plans are subject to vast state and/or local regulation, and have comprehensive laws, set in statute through the legislative process, that provide for rigorous regulation of their retirement plans and strong protections for plan participants and assets; and

WHEREAS, public pension plans are funded on an actuarial basis by annual employee and employer contributions, and are also audited routinely and have comprehensive reporting and disclosure requirements; and

WHEREAS, proposed changes to public plans are subject to the legislative process, which involves vigorous public debate, allowing for complete and open examination of the issues; and

WHEREAS, additional federal regulation is duplicative of state regulation and could preempt the array of strong state and local laws that protect public pension funds and their active and retired members; and

WHEREAS, the National Association of State Retirement Administrators is supportive of Congressional and Administration efforts to address recent corporate accounting abuses and restore the confidence of all investors in the marketplace and has adopted a resolution on Investor Protections; and

WHEREAS, Congress is additionally considering legislation in response to recent corporate bankruptcies to provide protections for employee pension savings and bar company insiders from selling their own stock during periods when rank-and-file employees may not trade shares of company stock, as well as additional requirements regarding investment education, blackout notices and benefit statements; and   

WHEREAS, the unique features that led to private sector workers losing their private pension savings during corporate bankruptcies could not occur in public plans, as most public employees have a guaranteed defined benefit pension as their core benefit—which provides a predictable, secure pension, even in the face of declining investment markets and corporate bankruptcies—and governmental supplemental self-directed plans would not have employer stock to offer as an investment choice; and

WHEREAS, public pension plans are backed by their respective governments, which are permanent institutions that have a strong moral, contractual, and, in some cases, constitutional commitment to back their pension liabilities, and which assure state and local employees and retirees they will receive the pension benefits to which they are entitled; and

WHEREAS, public pension plans already provide comprehensive disclosure, as well as investment education and benefit statements, however, many of the retirement savings protections contained in proposed legislation, as drafted, would nonetheless apply certain redundant provisions to state and local government plans; and

WHEREAS, the application of a monetary penalty or excise tax by the federal government on state and local pension plans for failure to fully comply with these newly proposed federal requirements is both unnecessary and unwarranted; and

WHEREAS, the taxation of public pension plans violates a long-standing and sound component of federal tax policy, which exempts state plans from taxation, and would also reduce the amount of funds available to pay benefits promised to plan members, thereby putting additional fiscal stress on states when state budgets are already stretched thin;

NOW, THEREFORE BE IT RESOLVED, that the National Association of State Retirement Administrators renews its strong opposition to the federal taxation and regulation of state pension and benefits plans as the sovereignty of these plans should be maintained by the states, and calls on federal lawmakers to remove public plans from the purview of such federal legislative proposals.

Adopted:  August 7, 2002

 

NASRA
RESOLUTION 2002-05 

Age Discrimination in Employment Act

WHEREAS, the 3rd U.S. Circuit Court of Appeals has held that the Age Discrimination in Employment Act (ADEA) applies to retirees and their benefits, not just employees and their compensation packages; and

WHEREAS, the 3rd Circuit further found that the ADEA permitted lawsuits against employers who offered lesser benefits to retirees eligible for Medicare than for younger retirees who are not Medicare-eligible, such as those offering extended health care coverage in the form of a Medicare bridge (coverage until Medicare eligibility); and  

WHEREAS, the U.S. Equal Employment Opportunity Commission (EEOC), which had pursued suits enforcing the ADEA against employers who provided lesser health care benefits to Medicare-eligible retirees than to their younger retirees, recently reversed its policy in this area; and

WHEREAS, despite the EEOC’s decision not to pursue suits in this area, retirees may continue to file suits on their own, as there is still no consensus that Medicare can be accepted as a sufficient “safe harbor” for employers offering early retiree packages; and

WHEREAS, the EEOC continues to state its intent to vigorously pursue other types of age discrimination claims involving retirees, such as cash-based early retirement incentives that are reduced or eliminated with advancing age and disability plans that include imputed benefits based on normal retirement age; and

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators supports federal legislative and/or regulatory solutions that are being explored to clarify that extended health care coverage in the form of a Medicare bridge, or voluntary early retirement incentives, or disability plans with benefit limitations based on normal retirement age, offered in conjunction with a defined benefit plan, are not in violation of the ADEA.

Adopted August 7, 2002

 

NASRA
Resolution 2001-3
Benefit Plan Use of Social Security Numbers

WHEREAS, public retirement systems are responsible for the administration of retirement benefits, and in many cases health care and deferred compensation arrangements, for millions of public employees, retirees, and their beneficiaries; and

WHEREAS, many public retirement systems not only cover the employees within state agencies, but also provide benefits to employees of local jurisdictions and districts as well; and

WHEREAS, these pension systems currently use Social Security Numbers (SSNs) in numerous facets of their operations, many of which are required by State and Federal laws and which are aimed at preventing error, fraud and abuse; and

WHEREAS, public retirement systems share national concerns regarding "identity theft" and other fraudulent activity surrounding the misuse of SSNs and have undertaken numerous measures to protect the privacy of plan participants; and

WHEREAS, federal efforts are currently underway to address identity theft and other fraudulent activity often resulting from the illegal use of SSNs, and

WHEREAS, certain federal proposals could potentially undermine state privacy protections, as well as cause administrative disruptions and financial liabilities on state and local governments and their agencies, including state retirement systems;

NOW, THEREFORE, BE IT RESOLVED, that the members National Association of State Retirement Administrators supports the spirit and intent of current federal efforts to enhance measures already taken by State agencies to protect the privacy of plan participants by using the Social Security Numbers for official identification purposes only, but urges federal policy makers and regulators to be mindful of the administrative disruptions and financial liabilities that federal measures to limit the use of the SSN may impose, the state privacy protections that may be undermined, and to seek to limit only those government uses that may directly lead to fraud and abuse.

NASRA
RESOLUTION 1996-01
Federal Taxation of Public Employee Retirement Systems

WHEREAS, public employee retirement systems are designed to provide state and local government employees with a secure savings for retirement, most frequently through a defined benefit plan,  and these retirement systems now provide a significant part of the capital necessary for continuous economic growth in the U.S., and,

WHEREAS, federal taxes on earnings and contributions of retirement systems are being deferred rather than exempted as the employee will pay taxes on these amounts during retirement, and,

WHEREAS, taxation of the earnings, transactions, and contributions to public employee retirement systems is counter productive to the national interests of increasing retirement savings and, further, could result in double taxation as the employees of state and local governments pay taxes on their pension benefit payments after their years of public service, and,

WHEREAS, many public employee retirement systems are legally prohibited from reducing pension benefits and, therefore, the state or local government would need to increase contributions to the plan if any amount were diverted such as to pay federal taxes.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators continues to oppose the taxation of public employee retirement system earnings, transactions, and contributions.

Adopted: August 7, 1996

 

 

NASRA
RESOLUTION 2001-01
Annual Contribution and Benefit Limits

WHEREAS, federal limits on pension benefits and contributions were enacted to cap the federal revenue loss associated with the employer's tax-deductible contributions to the employers' pension fund, an aspect inapplicable to tax-exempt state and local governments; and,

WHEREAS, the imposition and tightening of these limits on retirement plans in recent years have had an adverse effect on the administration of plans, the improvement of benefits, and on the ability of individuals to effectively contribute toward their retirement savings; and

WHEREAS, the limits on maximum annual benefits, maximum annual dollar contributions, and the amount of compensation that may be taken into account in determining benefits have been significantly ratcheted-down; and

WHEREAS, allowable benefits are further curtailed by actuarial reductions in the limit for non-public safety employees retiring before age 62, despite the years of service under the plan and the commensurate benefits to which they are entitled; and

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports federal legislation that would simplify the administration of and stimulate increased savings in retirement plans by:

·        Restoring and indexing for inflation the increased annual dollar limits on benefits for defined benefit plans, contributions under defined contribution plans, and the amount of compensation that may be taken into account under qualified retirement plans;

·        Modifying or eliminating the actuarial lowering of the benefit limitations for non-public safety employees;

Amended Resolution 1999-01 on August 8, 2001

 


 NASRA
RESOLUTION 1996-02
Adequate Funding of Public Employee Retirement Systems

WHEREAS, public employee retirement plans are designed to provide state and local government employees with a secure savings for retirement, most frequently through a defined benefit plan, and it is a fundamental objective of public employee retirement systems to establish and receive contributions which will remain approximately level as a percent of payroll over time, and.

WHEREAS, the importance of adequate funding of public employee retirement systems is recognized as a goal for the pension system to pay future benefits, for the sponsoring governmental entity to minimize future liabilities, and for the Congress to encourage additional savings nationwide, and,

WHEREAS, the funds invested in public employee retirement systems are trust funds dedicated to pay future pension benefits.

NOW, THEREFORE RE, BE IT RESOLVED that the National Association of State Retirement Administrators opposes any effort by a state or local government to divert pension fund dollars to relieve budget shortfalls in other areas of state and local government.

AND, BE IT FURTHER RESOLVED that the National Association of State Retirement Administrators urges the enactment of legislation providing that pension funds be used only for the exclusive benefit of the plan members, retirees and beneficiaries.

Adopted: August 7, 1996

 

NASRA
RESOLUTION 1996-03
Public Pension Coordinating Council

WHEREAS, the federal government continues to encroach into the affairs of state and local pension plans including Congressional threats to tax the assets of public employee retirement systems and limit the benefits that can be paid, and,

WHEREAS, in some cases, state and local jurisdictions are attempting to abuse the actuarial financing of public employee retirement systems, and,

WHEREAS, the best means for the public pension community to impact our destiny is to join forces with other national associations.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports the Public Pension Coordinating Council's (PPCC) national lobbying activities, the Public Pension Principles established by the PPCC, and the coordination of broad-based surveys.

Adopted: August 7, 1996

 

NASRA
RESOLUTION 1996-04
Regulation of Public Employee Retirement Systems

WHEREAS, the sponsoring governmental entity has the primary responsibility for the regulation of public employee retirement systems as well as the sole responsibility for setting benefit levels and for providing long-term funding of these systems, and,

WHEREAS, public employee retirement systems already have in place full disclosure, reporting, accounting, and fiduciary standards set by state and local governments and, further, these systems have significantly improved their funding, disclosure, administration and investment management over the past decade as evidenced by the Public Pension Coordinating Council's data indicating that the majority of these retirement systems are systematically funded and are pursuing actuarially sound methods to fully fund plans, and,

WHEREAS, public employee retirement systems are encouraged to follow stringent standards set by state and local governments, and professional and industry organizations, and,

WHEREAS, federal regulation that would mandate certain standardized reports, actuarial and accounting analyses, and disclosure to plan participants as well as trustees, managers, and other co-fiduciaries would needlessly duplicate what is already required of state and local government retirement systems.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators strongly opposes federal efforts to legislate, regulate, or control state and local government retirement systems and urges that all levels of government consult to continue to protect the rights of plan participants, beneficiaries, fiduciaries, and general taxpayers.

Adopted: August 7, 1996

 

NASRA
RESOLUTION 1996-05
401(k) Plans for Public Sector Employers

 WHEREAS, there is continued emphasis on increasing retirement savings nationwide, and state and local governments have been responsible partners in achieving this goal with the vast majority of state and local workers participating in public employee retirement Systems that provide sound, secure benefits in retirement, and,

WHEREAS, Section 457 plans provide many public sector employees with the opportunity to defer compensation in anticipation of retirement needs, 401(k) plans are also a valuable tool for encouraging retirement savings and recruiting quality employees.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports legislation which would allow state and local governments to create and maintain new Section 401(k) plans while, at the same time, allowing governments to maintain their current Section 457 plans and to create new Section 457 plans depending on the needs of individual governmental entities.


Adopted: August 7, 1996


NASRA
RESOLUTION 2001-02
Enhancements to Section 457 Plans

WHEREAS, there is continued emphasis on increasing retirement savings nationwide, and state and local governments have been responsible partners in achieving this goal with the vast majority of state and local workers participating in public employee retirement systems that provide sound, secure benefits in retirement; and,

WHEREAS, many governmental entities sponsor a Section 457 plan in addition to the general retirement plan to allow participants to defer some portion of their salary in anticipation of retirement needs, and some states provide limited matching contributions to encourage Section 457 plan participation; and,

WHEREAS, federal legislation was recently enacted to simplify participation in and the administration of these governmental 457 arrangements, much of which recognized that 457 arrangements sponsored by governmental entities are unique from those sponsored by other entities; and

WHEREAS, discussions are already underway with regard to possible new legislative initiatives that will affect 457 plans of governmental and tax exempt entities; and

WHEREAS, the U.S. Department of the Treasury is issuing guidance and model amendments with regard to changes in the newly enacted law, in addition to their 457 regulatory project already underway; and

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports continued efforts by the Congress and the federal agencies to simplify the rules applicable to state and local government 457 plans, and encourages federal policy makers and regulators to be mindful of the distinctive characteristics of state and local government 457 arrangements when promulgating regulations or further legislative changes to 457 plans.

 Amended Resolution 1999-2 on August 8, 2001

NASRA
RESOLUTION 1996-06
Retirement System Fiduciary Investment Standards

WHEREAS, state and local public employee retirement systems manage assets to provide retirement income to millions of workers and retirees and those participants rely on the trustees and other fiduciaries to invest these assets for the exclusive benefit of the plan members, retirees. and beneficiaries, and,

WHEREAS, the vast majority of public employee retirement systems follow a prudent investment standard or state statutes, and,

WHEREAS, employers generally bear the cost of investment under-performance in a defined benefit plan. the most popular type of plan in the public sector. and.

WHEREAS, several proposals that have come before Congress have stipulated acceptance of below market rates of return for defined benefit plans, which would violate fiduciary duties, compromise the plans' risk-return standards, and produce less than competitive rates of return.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports strong fiduciary standards set in law by state and local governments and supports investment strategies for which the paramount goal is the financial security of pension fund assets.

AND, BE IT FURTHER RESOLVED that the National Association of State Retirement Administrators opposes any attempt, either implicitly or explicitly, to direct or influence state and local government retirement systems to make investments that circumvent the trustees' fiduciary responsibility.

Adopted: August 7, 1996

 

NASRA
RESOLUTION 1998-01
States' Rights and Unfunded Mandates

WHEREAS, the United States Constitution assigns certain responsibilities to the federal government and reserves the balance to the States; and,

WHEREAS, federal intervention into or preemption of the legitimate role of State authorities would be a drastic departure from the principles of federalism and would be an encroachment on State sovereignty; and,

WHEREAS, new challenges to federalism continue to surface in both the congressional and executive branches of the federal government that either impose unfunded mandates or preempt traditional State and local authority;

NOW, THEREFORE BE IT RESOLVED that the National Association of State Retirement Administrators supports efforts to work with the national government as partners in our federal system, but opposes federal intervention in areas that rightfully belong to the States, efforts of the federal government to unduly limit States’ autonomy, efforts to usurp State governments’ and their political subdivisions’ authority to perform their responsibilities and meet the needs of their citizens, and the imposition of costly or unwarranted federal mandates on States and their political subdivisions.

Adopted: August 12, 1998

 

NASRA
RESOLUTION 1998-02
Support for Defined Benefit Plans

WHEREAS, policy discussions are currently taking place regarding the wholesale conversion of state and local government employee retirement systems from defined benefit to defined contribution plans; and,WHEREAS, state and local government employees traditionally participate in defined benefit plans that provide a guaranteed pension benefit based on years of service and final pay; and,

WHEREAS, many state and local government employees already have the option to participate in a supplementary defined contribution plan, such as a Section 457 deferred compensation plan, a Section 403(b) tax sheltered annuity, or a Section 401(k) plan, in addition to their defined benefit plan; and,

WHEREAS, many state and local government employers have determined that a defined benefit program is the best means to attract and retain high quality employees by providing guaranteed income replacement in retirement for long term workers; and,

WHEREAS, many state and local government employers have found defined benefit programs to be the best means for providing ancillary casualty benefits related to disability and death before retirement; and,

WHEREAS, many state and local governments have ascertained that the pooling of pension fund assets in defined benefit programs will provide an optimum mix of growth potential and risk in investments, while providing lower administrative expenses than will typically be the case in counterpart defined contribution plans; and,

WHEREAS, state and local governments are continuing to expand on the features and options within defined benefit programs, including changes to address the issue of short service employees and to enhance portability, to best accommodate the make-up of their workforce; with the understanding that there is already considerable portability within state retirement plans and also between some state plans, and that most state plans have full vesting within the first five years;

NOW THEREFORE BE IT RESOLVED, that the National Association of State Retirement Administrators supports the prevailing system of retirement benefits in the public sector, namely, a defined benefit program to provide a guaranteed benefit and a voluntary defined contribution plan to serve as a means for employees to supplement their retirement savings;

AND, BE IT FURTHER RESOLVED, that the National Association of State Retirement Administrators supports progressive changes within this prevailing system of retirement benefits in the public sector, either within the defined benefit plan or through supplementary plans, that accommodate a changing workforce and better provide many of the features sought by advocates of wholesale conversion.


Adopted: August 12, 1998

 

NASRA
RESOLUTION 1998-03
Social Security Resolution

WHEREAS, the United States Constitution assigns certain responsibilities to the federal government and reserves the balance to the States; and,

WHEREAS, beginning in the 1930’s when Social Security was established, public employees were excluded from participation; and,

WHEREAS, beginning in the 1950’s, state and local government pension plans were given the option to elect Social Security coverage; and,

WHEREAS, many state and local government pension have elected to complement their own pension programs through coverage under Social Security; and,

WHEREAS, other public pension plans decided not to participate in Social Security but rather provide their own independent programs of retirement benefits; and

WHEREAS, mandatory coverage of newly hired sate and local government employees will seriously disrupt the financial standing of these systems, to include reduction in benefits or increased contributions; and

WHEREAS, there is no evidence to support that mandatory coverage of newly hired public employees will solve the funding problems of the Social Security system; and

WHEREAS, there are serious constitutional and administrative problems with mandatory coverage;

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports the affiliation of public pension plans with Social Security on a voluntary basis; however, opposes mandatory coverage of public employees under Social Security.


Adopted: August 12, 1998

 

NASRA
RESOLUTION 1999-03
Pension Portability

 WHEREAS, over ninety-three percent of public employees are covered by a defined benefit retirement plan; and,

WHEREAS, public defined benefit plans often provide for portability between systems by allowing purchases of service credit for prior periods of employment in other jurisdictions, and,

WHEREAS, some public retirement systems, in efforts to assist employees in preparing for retirement, also allow for the purchase of service credit in order to qualify for retirement or early retirement, for previous employment with private sector entities, for periods of employment not covered by a pension plan, for previous periods of unemployment, or other types of qualifying service, and,

WHEREAS, public sector employees usually purchase service credit through employee contributions sufficient to cover all or part of the long-term cost to the retirement system of providing the increased benefits, and,

WHEREAS, those public employees with access to qualified supplemental plans, such as those who have grandfathered 401(k) plans, are permitted under federal tax law to directly transfer money from the qualified supplemental plan to their defined benefit plan to purchase the service credits, however, those employees with Section 457 and 403(b) supplemental plans are prohibited from such transactions; and,

WHEREAS, employees who do not have the means to make service credit purchases, and do not have access to a qualified supplemental plan, often have to cash-out their supplemental 457 or 403(b) plan and pay for the service credit with what is left after penalties and taxes;

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports legislation that would enhance portability in public sector defined benefit plans by permitting employees to use assets in their deferred compensation and defined contribution plans as a means to purchase permissible service credits. Such legislation would allow trustee-to-trustee transfers from 457 and 403(b) plans to public sector defined benefit plans to purchase service credit as defined in section 415(n)(3)(A), thereby affording these plans transfer capabilities similar to those currently allowed under law between qualified plans.

WHEREAS, public, non-profit and private employment sectors generally offer distinct deferred compensation and/or defined contribution plans to their workers; and,

WHEREAS, current federal tax law prohibits workers to move retirement benefits between and among these different varieties of retirement savings vehicles;

BE IT FURTHER RESOLVED, that the National Association of State Retirement Administrators supports legislation that would allow workers to take their deferred compensation and defined contribution savings with them when they change jobs. Such legislation would permit rollovers between and among 457, 403(b), 401(k) plans and certain types of Individual Retirement Accounts upon separation from service; and would provide that the assets in these accounts would take on the characteristics of and be subject to the rules and requirements of whatever retirement vehicle they are in (or whichever vehicle to which they are rolled)

Adopted: August 11, 1999

 

NASRA
RESOLUTION 1999-04
DISCLOSURE OF SOFT DOLLAR ACTIVITIES

WHEREAS, soft dollar practices have historically resulted in substantial amounts of financial activity going undisclosed to and by plan sponsors; and,

WHEREAS, the accounting standard-setting bodies and governmental agencies have chosen to essentially ignore this area, resulting in the absence of authoritative guidance regarding the type of information to collect and how and to whom such information should be reported; and,

WHEREAS, the clarity and transparency of disclosure of all money management and brokerage arrangements is essential to the responsibilities of plan fiduciaries; and

WHEREAS, plan sponsors and trustees have the power to assert their authority in these matters through their contractual arrangements with the money management, brokerage, and consulting community; and

WHEREAS, the Council of Institutional Investors has developed recommended practices for the collection and distribution of information by trustees to more fully disclose the cost of doing business, and to facilitate assessments of whether or not all assets (which include their soft dollars) are being properly managed and whether or not there are conflicts of interest between their money managers and asset consultants;

NOW, THEREFORE BE IT RESOLVED, that the National Association of State Retirement Administrators endorses the Council of Institutional Investors’ Suggested Disclosures for Trustees to Request of Money Managers, Suggested Disclosures for Trustees to Request of Investment Consultants, and Suggested Disclosures by Trustees to All Interested Parties; and,

BE IT FURTHER RESOLVED, that the National Association of State Retirement Administrators encourages state retirement system plan fiduciaries to consider these recommendations in adopting or revising their own disclosure guidelines, with the aim of furthering the confidence public plan participants have in the financial workings of the state retirement systems on which they rely for an important part of their future financial security.

Adopted: August 11, 1999



NASRA
RESOLUTION 1999-05
"Roth" Features For Public Sector Tax Favored Savings Arrangements

WHEREAS, tax favored savings arrangements available to employees of state and local government are valuable in both increasing the attractiveness of public service as a career and encouraging public employees to play a proactive role in providing for their own future financial security; and,

WHEREAS, it may be advantageous for some employees to save toward their retirement and/or other future financial needs by making post tax contributions to a "Roth" type savings vehicle; and,

WHEREAS, having the ability to save with both pre and post tax dollars through a single plan would dramatically simplify the process and reduce the cost of participating in such savings arrangements; and

WHEREAS, federal legislation was recently enacted to give employees the option to treat elective deferrals to 401(k) and 403(b) arrangements as after-tax contributions;

NOW, THEREFORE BE IT RESOLVED, that the National Association of State Retirement Administrators supports proposals to incorporate "Roth" features in salary reduction arrangements, and encourages Congress to provide such features to all salary reduction plans, including state and local government 457. Such a proposal would provide additional assistance to employees in all sectors of the workforce in meeting their retirement security needs.

Adopted: August 11, 1999

 

 

NASRA
RESOLUTION 1999-06
Code of Ethics

WHEREAS, public pension funds in the United States play a vital role in ensuring the financial security of millions of public servants; and

WHEREAS, the full confidence of public pension system members and beneficiaries in the integrity of decisions affecting their retirement assets and administration of the system is vital to the accomplishment of these systems’ missions; and

WHEREAS, those who are entrusted with the investment and management of public pension assets are vested with the highest legal and moral responsibilities.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators encourages its plan members to adopt a Code of Ethics, including the following standards:

    1. Exclusive Loyalty: Public fund fiduciaries should abide by the highest ethical Standards, making all decisions in the best interest of system participants, placing those interests above all other interests.
    2. Decision Making: Public fund fiduciaries should make decisions in a fair, honest and open manner, sharing information with fellow fiduciaries and all interested parties to enhance the quality of the system’s decision making process.
    3. Personal Conduct: Every public system’s fiduciaries, including those who are under contract to provide services to the system, should take all reasonable steps necessary to ensure a full and accurate understanding of the trust, conflict of interest, financial disclosure and other ethics related laws applicable to the system. When giving or accepting gifts, fiduciaries should be aware of both the legality and appearance of influence that such gifts may create. When seeking or approving administrative expenses for the system, fiduciaries should balance the benefit of the expenditure against any perception of personal benefit to the fiduciary.
    4. Relationships with Others: Every public system’s fiduciaries should carefully review the trust and conflict of interest laws applicable to the system to ensure that the fiduciary’s relationships with other parties are not incompatible with the duties to the system

Adopted: August 11, 1999

 

NASRA
RESOLUTION 1999-07
”Pay-to-Play”

WHEREAS, the members of the National Association of State Retirement Administrators advocate and promote adherence to the highest ethical standards by all public employee retirement plan fiduciary; and

WHEREAS, the appearance of impropriety can reflect negatively on the image of all public employee retirement systems; and

WHEREAS, campaign contributions by present of prospective service providing fiduciaries to elected official who do or may serve as plan governing fiduciaries may result in the appearance of impropriety; and

WHEREAS, the Securities and Exchange Commission has proposed certain rules (Rule 206(4)-5) that are designed to eliminate the ability of investment advisors to use campaign contributions as a means of influencing the award of investment contracts by public employee p l an s (known as "Pay-to-Play"); and

WHEREAS, NASRA has consistently supported the right of individual sovereign states to resolve problems within their own borders; and

WHEREAS, for this issue the potential of a multitude of different and incompatible state legislative solutions to the Pay-to-Play perception could create burdensome compliance responsibilities for the investment advisory market, resulting in higher fees and the distraction by service providing fiduciaries from their core functions.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators:

  1. Generally supports the efforts by the Securities and Exchange Commission to provide uniform regulation in the Pay-to-Play area; and
  2. Urges the Securities and Exchange Commission to acknowledge that state and local retirement systems are organized under vastly different legal structures and have varying investment strategies and philosophies, and thus all must have the flexibility to structure their investment advisory contracts as is consistent with their fiduciary duty; and
  3. Determines that further comment as to the specific impact of the Securities and Exchange Commission’s proposed rules on individual public plans be left to those plans wishing to submit comments. 

Adopted: November 19, 1999

 

 

NASRA
RESOLUTION 2000-01
 Public Pension Systems – Statements of Key Investment Risks and Common Practices to Address those Risks

WHEREAS, public pension systems face an increasing number of risks in undertaking necessary investment activities; and,

WHEREAS, controlling or eliminating these risks has become a topic of great interest as well-publicized errors by investment funds have captured public and professional attention; and,

WHEREAS, in response, a number of organizations have discussed or promulgated risk principles, guidelines, standards, and other directives for various professional organizations, but very few have been specifically oriented to the public pension fund community, or have approached the issue from the perspective of the basic disciplines and purposes of public pension funds; and,

WHEREAS, the public pension community has expressed a desire for general guidance in identifying key investment risks and common practices and procedures used to address those risks; and,

WHEREAS, a number of public pension system chief investment officers and representatives of the Association of Public Pension Fund Auditors (APPFA) have developed a document titled, “Public Pension Systems – Statements of Key Investment Risks and Common Practices to Address those Risks,” that identifies key investment risks associated with public pension funds and common practices to address, manage, and to the extent possible, control those risks, with the understanding that the document is not intended to be an exhaustive checklist of all risks that public pension systems may potentially encounter or a comprehensive checklist of all the procedures a public pension system should incorporate to address the identified risks; and,

WHEREAS, APPFA and several public pension system chief investment officers are officially on record as being in support of the risk management  concepts identified in “Public Pension Systems – Statements of Key Investment Risks and Common Practices to Address those Risks;”

NOW THEREFORE BE IT RESOLVED, that the National Association of State Retirement Administrators endorses “Public Pension Systems – Statements of Key Investment Risks and Common Practices to Address those Risks;” and,

BE IT FURTHER RESOLVED, that the National Association of State Retirement Administrators encourages state retirement system plan fiduciaries to consider these practices in adopting or revising their own investment risks guidelines, with the aim of furthering the confidence public plan participants have in the financial workings of the state retirement systems on which they rely for an important part of their future financial security.

 Adopted: August 9, 2000

 

NASRA
ARCHIVED RESOLUTION 1999-01
Annual Contribution and Benefit Limits

WHEREAS, federal limits on pension benefits and contributions were enacted to cap the federal revenue loss associated with the employer's tax-deductible contributions to the employers' pension fund, an aspect inapplicable to tax-exempt state and local governments; and,

WHEREAS, the imposition and tightening of these limits on retirement plans in recent years have had an adverse effect on the administration of plans, the improvement of benefits, and on the ability of individuals to effectively contribute toward their retirement savings; and

WHEREAS, the limits on maximum annual benefits, maximum annual dollar contributions, and the amount of compensation that may be taken into account in determining benefits have been significantly ratcheted-down; and

WHEREAS, allowable benefits are further curtailed by actuarial reductions in the limit for non-public safety employees retiring before age 62, despite the years of service under the plan and the commensurate benefits to which they are entitled; and

WHEREAS, contribution amounts to retirement plans are further capped by limits based on a percentage of compensation, which unfairly curtail the retirement savings of relatively non-highly paid workers and are burdensome for employers and individuals covered by the arrangements; and

WHEREAS, not all salary reduction plans are permitted to allow catch-up contributions for those individuals approaching retirement, and for those plans with catch-up provisions in place, the value is diminishing as the catch-up amount has never been indexed for inflation;

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports federal legislation that would simplify the administration of and stimulate increased savings in retirement plans by:

·        Restoring and indexing for inflation the increased annual dollar limits on benefits for defined benefit plans, contributions under defined contribution plans, and the amount of compensation that may be taken into account under qualified retirement plans;

·        Modifying or eliminating the actuarial lowering of the benefit limitations for non-public safety employees;

·        Repeal the compensation-based limits on contributions to defined contribution and deferred compensation plans, and increase the dollar amount of elective deferrals to all salary reduction plans; and

·        Increase and index the catch-up contributions under state and local 457 plans, and allow catch-up contributions under all salary reduction plans for anyone age 50 and older.

 Adopted August 11, 1999 (Amended by Resolution 2001-1)

 

 

NASRA
ARCHIVED RESOLUTION 1999-02
Enhancements to Section 457 Plans

WHEREAS, there is continued emphasis on increasing retirement savings nationwide, and state and local governments have been responsible partners in achieving this goal with the vast majority of state and local workers participating in public employee retirement systems that provide sound, secure benefits in retirement; and,

WHEREAS, many governmental entities sponsor a Section 457 plan in addition to the general retirement plan to allow participants to defer some portion of their salary in anticipation of retirement needs, and some states provide limited matching contributions to encourage Section 457 plan participation; and,

WHEREAS, the existing Section 457 contribution limit is lower than the maximum annual deferral allowed for other salary reduction plans, more complex to calculate, and based on a percentage of compensation, which unfairly curtails the retirement savings of relatively non-highly paid workers, and

WHEREAS, the rules regarding 457 distribution payments are more complex and restrictive than those allowed for other salary reduction plans, making it very difficult for 457 plan participants to structure the receipt of their payments to meet changing retirement needs; and

WHEREAS, the catch-up contribution level permitted for individuals approaching retirement has never been indexed for inflation over the 20 years that it has been in place; and,

WHEREAS, Section 457 plan distributions made pursuant to a domestic relations order are not afforded the same tax treatment as similar distributions from qualified governmental plans;

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports legislation which would:

·        Allow greater flexibility in determining the date of first distribution and allow beneficiaries to change their distribution amount and/or pattern once it has begun;

·        Remove the compensation-based limits on these plans and increase contribution levels to those of other salary reduction plans;

·        Increase and index catch-up contribution levels; and

·        Provide Section 457 plan distributions made pursuant to a domestic relations order the same tax treatment as similar distributions from qualified governmental plans

 Adopted: August 11, 1999 (Amended by Resolution 2001-2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


NASRA Resolutions

Resolution #1:   Federal Taxation of Public Employee Retirement Systems

Resolution #2:  Annual Contribution and Benefit Limits

Resolution #3:  Adequate funding of Public Employee Retirement Systems

Resolution #4:  Public Pension Coordinating Council

Resolution #5:  Regulation of Public Employee Retirement Systems

Resolution #6:  401(k) Plans for Public Sector Employers

Resolution #7:  Enhancements to Section 457 Plans

Resolution #8:  Retirement System Investment Policy

Resolution #9:  Pension Portability

Resolution #10:  States' Rights and Unfunded Mandates

Resolution #11:  Support for Defined Benefit Plans

Resolution #12:  Social Security Resolution

Resolution #13:  Disclosure of Soft Dollar Activities

Resolution #14:  "Roth" Features for Public Sector Tax Favored Savings Arrangements

Resolution #15:  Code of Ethics

Resolution #16:  Pay to Play

Resolution #17:  Public Pension Systems – Statements of Key Investment Risks and Common Practices to Address those Risks


NASRA
RESOLUTION #1
Federal Taxation of Public Employee Retirement Systems

WHEREAS, public employee retirement systems are designed to provide state and local government employees with a secure savings for retirement, most frequently through a defined benefit plan, and these retirement systems now provide a significant part of the capital necessary for continuous economic growth in the U.S., and,

 

WHEREAS, federal taxes on earnings and contributions of retirement systems are being deferred rather than exempted as the employee will pay taxes on these amounts during retirement, and,

 

WHEREAS, taxation of the earnings, transactions, and contributions to public employee retirement systems is counter productive to the national interests of increasing retirement savings and, further, could result in double taxation as the employees of state and local governments pay taxes on their pension benefit payments after their years of public service, and,

 

WHEREAS, many public employee retirement systems are legally prohibited from reducing pension benefits and, therefore, the state or local government would need to increase contributions to the plan if any amount were diverted such as to pay federal taxes.

 

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators continues to oppose the taxation of public employee retirement system earnings, transactions, and contributions.

Adopted: August 7, 1996

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NASRA
RESOLUTION #2
Annual Contribution and Benefit Limits

WHEREAS, federal limits on pension benefits and contributions were enacted to cap the federal revenue loss associated with the employer's tax-deductible contributions to the employers' pension fund, an aspect inapplicable to tax-exempt state and local governments; and,

 

WHEREAS, the imposition and tightening of these limits on retirement plans in recent years have had an adverse effect on the administration of plans, the improvement of benefits, and on the ability of individuals to effectively contribute toward their retirement savings; and

 

WHEREAS, the limits on maximum annual benefits, maximum annual dollar contributions, and the amount of compensation that may be taken into account in determining benefits have been significantly ratcheted-down; and

 

WHEREAS, allowable benefits are further curtailed by actuarial reductions in the limit for non-public safety employees retiring before age 62, despite the years of service under the plan and the commensurate benefits to which they are entitled; and

 

WHEREAS, contribution amounts to retirement plans are further capped by limits based on a percentage of compensation, which unfairly curtail the retirement savings of relatively non-highly paid workers and are burdensome for employers and individuals covered by the arrangements; and

 

WHEREAS, not all salary reduction plans are permitted to allow catch-up contributions for those individuals approaching retirement, and for those plans with catch-up provisions in place, the value is diminishing as the catch-up amount has never been indexed for inflation;

 

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports federal legislation that would simplify the administration of and stimulate increased savings in retirement plans by:

Restoring and indexing for inflation the increased annual dollar limits on benefits for defined benefit plans, contributions under defined contribution plans, and the amount of compensation that may be taken into account under qualified retirement plans;

Modifying or eliminating the actuarial lowering of the benefit limitations for non-public safety employees;

Repeal the compensation-based limits on contributions to defined contribution and deferred compensation plans, and increase the dollar amount of elective deferrals to all salary reduction plans; and

Increase and index the catch-up contributions under state and local 457 plans, and allow catch-up contributions under all salary reduction plans for anyone age 50 and older.

Adopted August 11, 1999

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NASRA
RESOLUTION #3
Adequate Funding of Public Employee
Retirement Systems

WHEREAS, public employee retirement plans are designed to provide state and local government employees with a secure savings for retirement, most frequently through a defined benefit plan, and it is a fundamental objective of public employee retirement systems to establish and receive contributions which will remain approximately level as a percent of payroll over time, and.

 

WHEREAS, the importance of adequate funding of public employee retirement systems is recognized as a goal for the pension system to pay future benefits, for the sponsoring governmental entity to minimize future liabilities, and for the Congress to encourage additional savings nationwide, and,

 

WHEREAS, the funds invested in public employee retirement systems are trust funds dedicated to pay future pension benefits.

 

NOW, THEREFORE RE, BE IT RESOLVED that the National Association of State Retirement Administrators opposes any effort by a state or local government to divert pension fund dollars to relieve budget shortfalls in other areas of state and local government.

 

AND, BE IT FURTHER RESOLVED that the National Association of State Retirement Administrators urges the enactment of legislation providing that pension funds be used only for the exclusive benefit of the plan members, retirees and beneficiaries.

Adopted: August 7, 1996

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NASRA
RESOLUTION #4
Public Pension Coordinating Council

WHEREAS, the federal government continues to encroach into the affairs of state and local pension plans including Congressional threats to tax the assets of public employee retirement systems and limit the benefits that can be paid, and,

 

WHEREAS, in some cases, state and local jurisdictions are attempting to abuse the actuarial financing of public employee retirement systems, and,

 

WHEREAS, the best means for the public pension community to impact our destiny is to join forces with other national associations.

 

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports the Public Pension Coordinating Council's (PPCC) national lobbying activities, the Public Pension Principles established by the PPCC, and the coordination of broad-based surveys.


Adopted: August 7, 1996


NASRA
RESOLUTION #5
Regulation of Public Employee Retirement Systems

WHEREAS, the sponsoring governmental entity has the primary responsibility for the regulation of public employee retirement systems as well as the sole responsibility for setting benefit levels and for providing long-term funding of these systems, and,

 

WHEREAS, public employee retirement systems already have in place full disclosure, reporting, accounting, and fiduciary standards set by state and local governments and, further, these systems have significantly improved their funding, disclosure, administration and investment management over the past decade as evidenced by the Public Pension Coordinating Council's data indicating that the majority of these retirement systems are systematically funded and are pursuing actuarially sound methods to fully fund plans, and,

 

WHEREAS, public employee retirement systems are encouraged to follow stringent standards set by state and local governments, and professional and industry organizations, and,

 

WHEREAS, federal regulation that would mandate certain standardized reports, actuarial and accounting analyses, and disclosure to plan participants as well as trustees, managers, and other co-fiduciaries would needlessly duplicate what is already required of state and local government retirement systems.

 

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators strongly opposes federal efforts to legislate, regulate, or control state and local government retirement systems and urges that all levels of government consult to continue to protect the rights of plan participants, beneficiaries, fiduciaries, and general taxpayers.


Adopted: August 7, 1996

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