Georgia Bill Addresses Investment of Retirement Plan Assets

A bill currently before the Georgia legislature would affect the exercise of fiduciary duty regarding the investment of retirement plan assets. The legislation includes a provision that would require a fiduciary to put the interests of participants and their beneficiaries ahead of “nonpecuniary interests” such as social, political, or ideological interests. 

Rep. John Carson (R-Marrietta) introduced HB 481 in the Georgia House of Representatives on Feb. 16; the chamber passed it in a 114-51 vote 10 days later. The bill was sent to the Senate on Feb. 27. 

What the Bill Would Do 

HB 481 would amend the Public Retirement Systems Investment Authority Law so that it sets forth that there is a fiduciary duty to invest retirement assets solely in the financial interest of participants and their beneficiaries.  

Definition of “fiduciary.” The bill would add language that defines “fiduciary” as any retirement system, administration, or person that with respect to any retirement system to which this law applies and that: 

• exercises any discretionary authority or control over the management or disposition of a retirement system’s assets;
• renders investment advice for a fee or other compensation—directly or  indirectly—regarding any money or other property of a retirement system, or has  any authority or responsibility to do so; or  
• has any discretionary authority or control in the management or administration of the retirement system. 

Exercise of fiduciary duty. HB 481 provides that each fiduciary shall discharge its duties only in the interest of plan participants and their beneficiaries and for the exclusive purpose of providing benefits to plan participants and their beneficiaries. It further provides that they: 

• shall only make investments with care, skill, prudence and diligence under the circumstances then prevailing that a prudent expert acting in a like capacity would;
• shall diversify investments to minimize risks of large losses, unless doing so is not prudent; and 
• shall not subordinate the interests of the participants and their beneficiaries or  sacrifice investment returns or accept increased investment risks in the promotion of any nonpecuniary interests. 

Such nonpecuniary interests include furthering any social, political, or ideological interests. 

Investment objectives. HB 481 provides that the investment objectives of a retirement system shall be to provide the greatest possible long-term benefits to its members by maximizing the total rate of return on investment within prudent limits of risk for a retirement fund of its type and consistent with any investment return requirement assumed by the actuaries in determining the present and future soundness of the fund.

Status

HB 481 is currently awaiting action by the Senate Retirement Committee.