Investment of the assets of any local retirement system or plan must be consistent with a written investmentpolicy adopted by the board. Such policiesshall be structured to maximize the financial return to the retirement system or plan consistent with the risks incumbent in each investment and shall be structured to establish and maintain an appropriate diversification of the retirement system or plan’s assets.
The investmentpolicyshall describe the level of prudence and ethical standards to be followed by the board in carrying out its investment activities with respect to funds described in this section. The board in performing its investment duties shall comply with the fiduciary standards set forth in the Employee Retirement Income Security Act of 1974 at 29 U.S.C. s. 1104(a)(1)(A)-(C). Except as provided in s. 112.662, in case of conflict with other provisions of law authorizing investments, the investment and fiduciary standards set forth in this section prevail.
(5) AUTHORIZED INVESTMENTS
(a) The investmentpolicyshall list investments authorized by the board. Investments not listed in the investmentpolicy are prohibited. Unless otherwise authorized by law or ordinance, the investment of the assets of any local retirement system or plan covered by this part shall be subject to the limitations and conditions set forth in s. 215.47(1)-(6), (8), (9), (11) and (17).
(b) If a local retirement system or plan has investments that, on October 1, 2000, either exceed the applicable limit or do not satisfy the applicable investment standard, such excess or investment not in compliance with the policy may be continued until such time as it is economically feasible to dispose of such investment. However, no additional investment may be made in the investment category which exceeds the applicable limit, unless authorized by law or ordinance.
The investmentpolicyshall provide for appropriate diversification of the investmentportfolio. Investments held should be diversified to the extent practicable to control the risk of loss resulting from overconcentration of assets in a specific maturity, issuer, instrument, dealer, or bank through which financial instruments are bought and sold. Diversification strategies within the established guidelines shall be reviewed and revised periodically, as deemed necessary by the board.
(9) EXPECTED ANNUAL RATE OF RETURN
The investmentpolicyshall require that, for each actuarial valuation, the board determine the total expected annual rate of return for the current year, for each of the next several years, and for the long term thereafter. This determination must be filed promptly with the Department of Management Services and with the plan’s sponsor and the consulting actuary. The department shalluse this determination only to notify the board, the plan’s sponsor, and consulting actuary of material differences between the total expected annual rate of return and the actuarial assumed rate of return.
The investmentpolicyshall require all approved institutions and dealers transacting repurchase agreements to execute and perform as stated in the Master Repurchase Agreement. All repurchase agreementtransactionsshall adhere to the requirements of the Master Repurchase Agreement.
(12) BID REQUIREMENT
The investmentpolicyshall provide that the board determine the approximate maturity date based on cash-flow needs and market conditions, analyze and select one or more optimal types of investment, and competitively bid the security in question when feasible and appropriate. Except as otherwise required by law, the most economically advantageous bid must be selected.
(13) INTERNAL CONTROLS
The investmentpolicyshall provide for a system of internal controls and operational procedures. The board shall establish a system of internal controls which shall be in writing and made a part of the board’s operational procedures. The policyshall provide for review of such controls by independent certified public accountants as part of any financial audit periodically required of the board’s unit of local government. The internal controls should be designed to prevent losses of funds which might arise from fraud, error, misrepresentation by third parties, or imprudent actions by the board or employees of the unit of local government.
(14) CONTINUING EDUCATION
The investmentpolicyshall provide for the continuing education of the board members in matters relating to investments and the board’s responsibilities.
Upon adoption by the board, the investmentpolicyshall be promptly filed with the Department of Management Services and the plan’s sponsor and consulting actuary. The effective date of the investmentpolicy, and any amendment thereto, shall be the 31st calendar day following the filing date with the plan sponsor.
(17) VALUATION OF ILLIQUID INVESTMENTS
The investmentpolicyshall provide for the valuation of illiquid investments for which a generally recognized market is not available or for which there is no consistent or generally accepted pricing mechanism. If those investments are utilized, the investmentpolicy must include the criteria set forth in s. 215.47(6), except that submission to the Investment Advisory Council is not required. The investmentpolicyshall require that, for each actuarial valuation, the board must verify the determination of the fair market value for those investments and ascertain that the determination complies with all applicable state and federal requirements. The investmentpolicyshall require that the board disclose to the Department of Management Services and the plan’s sponsor each such investment for which the fair market value is not provided.
Congratulations! You're now froogled up on §112.661 of the Florida Statutes!
Feel free to use it throughout your financial/insurance life.
