(a) General.
(1) Except as provided in section 33-47, subsection (a)(2) of this section, and other sections of this chapter, the powers and duties with respect to the administration and the investments of the retirement system are hereby vested in the board of investment trustees. However, the powers and duties of the board must not become effective until all of the trustees have accepted the trust in writing.
(2) (A) The board must invest and reinvest, or cause to be invested or reinvested, as authorized in subsection (c)(1), the principal and income of the retirement system and keep the same invested without distinction between principal and income. The board has the exclusive authority to manage the assets of the retirement system. However, any investment of the retirement system in existence on the day before all members have accepted the trust may remain as an investment until the earlier of:
(i) Its maturity date, if any; or
(ii) The date it is liquidated under the investment policy of the board.
The board must hold the annuities purchased under the Amendment, Settlement and Transfer agreement under Group Annuity Contract #1920 until Aetna Life Insurance Company has completed its performance under that agreement.
(B) At any time the board is selecting a new investment manager, the board may have fewer than 3 investment managers.
(3) Chapter 11B does not apply to procurement of goods and services for the retirement system by the board.
(b) Agents for transfer of property.
(1) The board may register any securities or other property in its own name or in the name of a nominee. The board may hold any security in bearer form. However, the board or its agent must keep records that show that the investments are part of the trust fund.
(2) The board may form a partnership under the laws of Maryland for the purpose of holding or transferring securities as the nominee of the board.
(3) The board may designate in writing a trustee to hold or transfer securities as nominee of the board.
(4) The board must provide that trustees or a partnership that the board designates must act only as agents of the board. The board may set other conditions that the board considers prudent.
(5) The trustees of a partnership the board designates may agree with a bank or other financial institution to:
a. Guarantee the signatures made as nominee of the board; and
b. Conduct settlements and transfers through participation in central security depositories.
(c) Authorized investments.
(1) The board may invest or permit an investment manager to invest the assets of the retirement system fund in any investment it considers prudent within the policies set by the board. The board must use an investment manager except when investing in any pooled investment vehicle, including any combined, common or commingled trust fund, retirement or annuity contract, mutual fund, investment company, association, or business trust. The board also may authorize the Executive Director to make investments in pooled investment vehicles and transition assets from one investment manager to another investment manager as the board specifies.
(2) If an investment through any combined, common or commingled trust fund exists, the declaration of trust of that fund is a part of the retirement system trust under this Article.
(d) Trustee powers. Subject to the limitations under subsection (a)(2) of this section, the board has the power to:
(1) With any cash, purchase or subscribe for any investment, at a premium or discount, and retain the investment.
(2) Sell, exchange, convey, transfer, lease for any period, pledge, mortgage, grant options, contract with respect to, or otherwise encumber or dispose, at public or private sale, for cash or credit or both, any part of the retirement system.
(3) Except as provided in section 33-61A(h)(2), sue, defend, compromise, arbitrate, compound and settle any debt, obligation, claim, suit, or legal proceeding involving the retirement system, and reduce the rate of interest on, extent or otherwise modify, foreclose upon default or otherwise enforce any debt, obligation, or claim.
(4) Retain uninvested that part of the retirement system fund described in subsection (f) without being liable for the payment of interest.
(5) Exercise any option on any investment for conversion into another investment, exercise any rights to subscribe for additional investments, and make all necessary payments.
(6) Join in, consent to, dissent from, oppose, or deposit in connection with the reorganization, recapitalization, consolidation, sale, merger, foreclosure, or readjustment of the finances of any corporation or property in which the assets of the retirement system are invested, or the sale, mortgage, pledge or lease of that property or the property of any such corporation upon such terms and conditions that the board considers prudent; exercise any options, make any agreements or subscriptions, pay any expenses, assessments, or subscriptions, and take any other action in connection with these transactions that the board considers prudent; and accept and hold any investment that may be issued in or as a result of any such proceeding.
(7) Vote, in person or by any proxy, at any election of any corporation in whose stock the assets of the retirement system are invested, and exercise, personally or by any power of attorney, any right appurtenant to any investment held in the retirement system; and give general or specific proxies or powers of attorney with or without power of substitution.
(8) Sell, either at public or private sale, option to sell, mortgage, lease for a term of years less than or continuing beyond the possible date of the termination of the trust, partition or exchange any real property for such prices and upon such terms as the board considers prudent, and execute and deliver deeds of conveyance and all assignments, transfers, and other legal instruments for passing the ownership to the purchaser, free and discharged of all liens.
(9) Renew or extend any mortgage, upon such terms that the board considers prudent, and increase or reduce the rate of interest on any mortgage or modify the terms of any mortgage or of any guarantee as the board considers prudent to protect the retirement system or preserve the value of the investment; waive any default or enforce any default in a manner that the board considers prudent; exercise and enforce any right of foreclosure, bid on property in foreclosure, take a deed in lieu of foreclosure with or without paying a consideration, and release the obligation on the bond secured by the mortgage; and exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect to any mortgage or guarantee.
(10) Form a corporation or corporations under the laws of any jurisdiction or acquire an interest in or otherwise make use of any corporation already formed to invest in and hold title to any property.
(11) For the purpose of investing in and holding title to real or personal property or part interests therein, as described in subsection (c)(1)h., including equipment pertaining thereto, leaseholds, and mortgages, to take any action it considers prudent.
(12) Incur and pay expenses for agents, financial advisors, actuaries, accountants and counsel, if those expenses are incurred solely to perform the board's duties under this article.
(13) Borrow, raise or lend moneys, for the purposes of the retirement system, in such amounts and upon such terms and conditions as the board in its discretion considers prudent; for any money borrowed, issue a promissory note and secure the repayment of this note by pledging or mortgaging all or any part of the retirement system.
(14) Hold, buy, transfer, surrender, and exercise all other incidents of ownership of any annuity contract.
(15) If payments to a member or beneficiary are to be made in the form of an annuity based upon one (1) or more lives or life expectancies, buy from any legal reserve life insurance company a single premium, nontransferable annuity contract providing for the payment of the benefits.
(16) Pool all or any of the assets of the trust, from time to time, with assets belonging to any other retirement plan trust or retiree health benefit trust created by the County, and any subtrust thereof, and commingle such assets and make joint or common investments and carry joint accounts on behalf of this trust, such other trust or trusts, or subtrusts, allocating undivided shares or interests in such investments or accounts or in any pooled assets to the two or more trusts or subtrusts in accordance with their respective interests. Any such trusts or subtrusts may be unitized for investment purposes. Consistent with its investment authority in this Article, the Board or its delegate may also buy or sell any assets or undivided interests in this trust or in any other trust with which the assets of this trust may be pooled, to or from this trust or such other trusts at such prices or valuations as the Board or its delegate may determine in reasonable good faith. For the avoidance of doubt, the Board must determine that it is consistent with its fiduciary duties to participate in a pooled investment that permits the sale or purchase of its units as an investment option under another retirement plan or retiree health benefit trust created by the County.
(17) Do all acts which it considers necessary and exercise any and all powers of this article with respect to the management of the retirement system, and in general, exercise all powers in the management of the assets which an individual could exercise in the management of property owned in the individual’s own right except for making an individual investment selection.
(e) Prohibited transactions. The board must not engage in any transaction between the trust and the county or any entity controlled by the county in which the board:
(1) Lends any part of its income or corpus, without receiving adequate security and a reasonable rate of interest;
(2) Pays any compensation, more than a reasonable allowance for salaries or other compensation or personal services actually rendered;
(3) Makes any part of its services available on a preferential basis;
(4) Makes any substantial purchase of securities or other property, for more than adequate consideration which, for avoidance of doubt, does not include a transfer conducted on the terms described in Section 33-170(i) between employee benefit plan trusts or a subtrust;
(5) Sells any substantial part of its securities or other property, for less than adequate consideration which, for avoidance of doubt, does not include a transfer conducted on the terms described in Section 33-170(i) between employee benefit plan trusts or a subtrust; or
(6) Engages in any transaction which results in a substantial diversion of its income or corpus.
(f) Available cash. The board may keep cash available in an amount it considers prudent to pay benefits, expenses and other payments. The board may keep cash on deposit in one (1) or more banks or trust companies organized under the laws of any state, or of the United States, but the sum on deposit in any one (1) bank or trust company must not exceed twenty-five (25) percent of the paid-in capital and surplus of that bank or trust company.
(g) Investment management agreements.
(1) Appointment of investment manager. Except as permitted under subsection (c)(1), the board must appoint investment managers to manage, acquire, or dispose of all or some of the assets of the retirement system. The board may dismiss any manager the board appoints. The fees charged by any manager are expenses of the retirement system.
(2) Investment contract. Any contract must provide that when the investment manager is making individual investment selections, the investment manager must make the individual investment selections subject to the written policies of the board. In any contract, the board must identify the assets that are the subject to the contract. In any contract, the board may give an investment manager the right to invest the assets of the retirement system specified in the contract without prior notice to or approval by the board. In any contract, the board may limit the investment of a specified portion of the retirement system to a certain type of property, such as but not limited to common stocks, bonds, or real estate. If a contract only applies to a portion of the assets of the retirement system and specifies the type of property to be invested in, the manager must achieve diversification within the specified category of property, but is not responsible for diversification of investments of the entire retirement system. In any contract, the board may delegate to the investment manager any power or discretion conferred on the board under this Article and may provide that the investment manager must have custody and control of certain assets of the retirement system.
(3) Monitoring of investment manager. The board must monitor the performance of the managers and may terminate any appointment. Monitoring may include any tests or analyses that the board considers prudent in the circumstances to ensure the stability and growth of the retirement system.
(h) (1) Except as provided in subsection (d)(12), the board must pay all benefits and expenses of the retirement system as directed by the chief administrative officer.
(2) If the board approves a contract for delegation of the custodial functions as provided in section 33-61, the board must coordinate the payment of benefits and must monitor the timeliness and accuracy of such benefit payments.
(3) The board is entitled to rely on the decision of the chief administrative officer as to the proper recipient of benefit payments.
(i) Delegation of duties. The Board may delegate its duties to the Executive Director or a similarly situated County employee as it deems appropriate and consistent with its fiduciary duties in a written policy and procedure. If the Board has prudently delegated its duties and monitored the delegation, the trustees must not be liable for an act or omission made by its delegate. (1987 L.M.C., ch. 29, § 11; CY 1991 L.M.C., ch. 17, § 1; 1992 L.M.C., ch. 11, § 1; 1993 L.M.C., ch. 45, § 1; 1998 L.M.C., ch. 27, § 1; 2007 L.M.C., ch. 19, § 1; 2012 L.M.C., ch. 21, § 1; 2014 L.M.C., ch. 3, § 1; 2017 L.M.C., ch. 14, §1; 2021 L.M.C., ch. 16, §1.)