May 24, 2012, Introduced by Senators PAVLOV, COLBECK, MEEKHOF, PROOS, HILDENBRAND, HUNE, EMMONS, KOWALL and BOOHER and referred to the Committee on Appropriations.




     A bill to amend 1965 PA 314, entitled


"Public employee retirement system investment act,"


(MCL 38.1132 to 38.1140m) by amending the title, as amended by 1988


PA 343, and by adding section 39b.






     An act to authorize the investment of assets of public


employee retirement systems or plans and the assets of employees


contributed to retirement systems or plans created and established


by the state or any political subdivision; to provide for the


payment of certain costs and investment expenses; to authorize


investment in variable rate interest loans; to limit employer


liability for certain investment decisions; to define and limit the


investments which may be made by an investment fiduciary with the


assets of a public employee retirement system; and to prescribe the


powers and duties of investment fiduciaries and certain state


departments and officers.


     Sec. 39b. (1) A public employer may deduct from the wages of


an employee an amount for a contribution to an individual account


for each employee's benefit in a plan maintained under section 125,


401(k), 403(b), 408, 408A, or 457 of the internal revenue code of


1986, 26 USC 125, 401, 403, 408, 408A, and 457. The public employer


shall give written notice to a participating employee of the


contribution before the initial deduction is made. The public


employer shall include in the notice a description of the benefit


the contribution provides and the right of the participating


employee to cancel the contribution by instruction to the employer,


including the procedure for giving the instruction.


     (2) A public employer may provide for automatic enrollment of


an employee in a plan described in subsection (1). An employer who


provides automatic enrollment of an employee in a plan as provided


in this subsection or other plan official is not liable for the


actual decisions made by the public employer or other plan official


on behalf of a participating employee with regard to the default


investment of contributions made for that employee to the plan if


all of the following requirements are met:


     (a) The plan allows the participating employee at least


quarterly opportunities to select investments for the employee's


contributions between investment alternatives available under the




     (b) The participating employee is given notice of the


investment decisions that will be made in the absence of


participating employee direction.


     (c) The participating employee is given a description of all


the investment alternatives available for the participating


employee to change investments.


     (d) The participating employee is given notice at least


annually of the actual default investments made by the public


employer on behalf of the participating employee.


     (3) This section does not alter any existing responsibility of


a public employer or other plan official for the selection of


investment funds for participating employees.


     (4) As used in this section:


     (a) "Automatic enrollment" means a plan provision under which


the employee will have a specified contribution made to a plan


described in subsection (1) equal to a compensation reduction that


will be made for the employee unless the employee affirmatively


elects no compensation reduction contributions or a compensation


reduction contribution in another amount.


     (b) "Public employer" means this state or an agency of this


state, a city, county, village, township, school district, or


intermediate school district, or an institution of higher