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(a) The director of finance is the custodian of the retirement system assets. The director must give bond with such surety and for such periods and in such amount as the board determines. All payments from the retirement system assets must be made by (i) the director of finance, (ii) a designee of the director of finance, or (iii) two (2) persons designated by the board, acting jointly. The board must file a duly attested copy of the resolution of the board designating the two (2) persons, with specimen signatures of those persons, with the director of finance to indicate their authority for making payments.
(b) If the board approves, the director of finance may make written contracts with banks, trust companies, insurance companies or investment companies authorized to do business in any state for the safe custody of investments, banking services, the payment of benefits and expenses and any other function necessary for the management and safeguarding of the assets of the retirement system. The contract may provide that a bank, trust company, insurance company, or investment company may invest assets of the retirement system in:
(1) Money market funds;
(2) A short-term investment fund of a bank, trust company, or insurance company; or
(3) Their substantial equivalent. As soon as possible after all members of the board have accepted the trust, the board must approve a written contract for the investment purposes described in this subsection.
(c) If the board approves, the director of finance may direct the payment of benefits and expenses from a trust account of the board.
(d) Chapter 11B does not apply to the procurement of goods and services for the retirement system by the director of finance. (1987 L.M.C., ch. 29, § 11.)
(a) Authorized. The County must indemnify every member of the Board who is or may become a party to any action, suit, or proceeding, including administrative and investigative proceedings, because of service as a member of the Board, including any action taken to comply with Section 33-60A, subject to the conditions stated in this section.
(b) Standards for indemnification.
(1) The county must indemnify a member of the board:
a. With respect to civil matters, if the member acted in good faith and in a manner that the member reasonably believed to be in the best interest of the retirement system; and
b. With respect to criminal matters, if the member had no reasonable cause to believe that the member's conduct was unlawful.
(2) If the county must indemnify a member of the board under this article, the county must indemnify the member for expenses when the member incurs the expense, including but not limited to:
a. Reasonably attorney fees;
b. Judgments;
c. Damages;
d. Fines; and
e. Settlements.
(c) Effect of termination of any suit or proceeding. The termination of any suit or proceeding does not, by itself, create a presumption that a trustee did not act in good faith and in a manner reasonably believed to be in the best interest of the retirement system. The termination of a criminal action or proceeding does not, by itself, create a presumption that a trustee had reasonable cause to believe that the conduct was unlawful.
(d) Exceptions to indemnification. The county must not indemnify any member of the board if:
(1) The member of the board is found by a court or other tribunal to be liable for gross negligence or willful and wanton misconduct in the performance of a duty to the retirement system; or
(2) Liability arises from action that occurred before the date on which all the trustees have accepted the trust in writing.
(e) Recovery of payments. If the county attorney determines that indemnification payments have been made that are outside the scope of indemnification, the county attorney must take appropriate action, on behalf of the county, to recover the payments.
(f) Insurance provided. The county must provide insurance for each member of the board against any liability asserted against or incurred by the member of the board with respect to service on the board. Premiums for any insurance must not be paid with assets of the retirement system. The county may self-insure for this purpose, wholly or partly. If the county does not provide adequate insurance coverage or indemnification under this section, a member of the board need not pay any amount attributable to liability incurred by serving on the board, and the county must pay any amount due.
(g) Defenses. The county may assert the defense of governmental immunity, or any other defense available to the county, in suits or other actions brought against the county.
(h) County attorney.
(1) The county attorney must make the final determination of eligibility of a member of the board for indemnification with respect to a matter, and of the reasonableness of all fees, expenses, and settlements.
(2) Unless the county attorney approves the settlement, a trustee must not use:
a. County funds;
b. Funds provided by a self-insurance program of the county; or
c. Funds provided under a policy the county has with an insurance company; to settle a claim against the trustee. (1987 L.M.C., ch. 29, § 11; 2008 L.M.C., ch. 2, § 2.)
Editor’s note—See County Attorney opinion dated 11/14/11 regarding the County’s liability for errors in the administration of the pension and retirement funds of employees.
(a) Maintenance of records and accounts. The board must keep accurate and detailed accounts of all investments, receipts, disbursements, and other transactions, including any specific records that are required by law and any additional records it considers necessary. All accounts, books and records are subject to state law on public records.
(b) Annual accounting by board. The fiscal year of the retirement system is the same as the fiscal year of the county. On or before January 1 of each year, the board must file with the chief administrative officer a written account, listing all investments, receipts, disbursements, and other transactions during the preceding fiscal year or during the period from the close of the last preceding fiscal year to any interim date that the board selects. This account must describe all securities and investments bought and sold, with the cost or net proceeds of each purchase or sale, and must list all cash, securities, and other property held at the end of that period. The account must include a list of the retirement system assets and the current fair market value of each asset at the end of that period. If a current fair market value is not available for a particular investment or is not applicable to a particular investment, the board must assign a value to that investment. The board must apply the investment valuation method on a consistent basis. If the board changes the investment valuation method, the board must notify the council of the change.
(c) Reporting and disclosure. The board must prepare for the chief administrative officer any documents required by law. (1987 L.M.C., ch. 29, § 11.)
Editor’s note—See County Attorney Opinion dated 1/7/98 discussing the parameters within which the Board of Investment Trustees may disclose certain employee data to companies providing deferred compensation plans.
A fiduciary must discharge the fiduciary’s duties regarding the retirement systems:
(a) only in the best interest of the participants and their beneficiaries;
(b) only to provide benefits to the participants and their beneficiaries, and defray reasonable expenses of administering the retirement systems;
(c) with the care, skill, prudence, and diligence under the circumstances that a prudent person acting in a similar capacity and familiar with the same matters would use to conduct a similar enterprise with similar purposes;
(d) by diversifying the investments of the retirement systems to minimize the risk of large losses, unless it is clearly not prudent to diversify under the circumstances;
(e) according to a good faith interpretation of the law governing the retirement systems;
(f) according to a good faith interpretation of the documents and instruments governing the retirement systems, if they comply with this Article. (1987 L.M.C., ch. 29, § 11; 1998 L.M.C., ch. 27, § 1.)
Editor’s note—See County Attorney opinion dated 11/14/11 regarding the County’s liability for errors in the administration of the pension and retirement funds of employees.
(a) Members of the board are subject to the provisions of chapter 19A, "Ethics," of the Montgomery County Code.
(b) Except as otherwise provided in this section, members and employees of the board must not:
(1) Be a party to any transaction engaged in by the board or an investment manager involving the assets of the retirement system;
(2) Use the gains or profits of the system for any purpose except to make investments or payments that are authorized by the board;
(3) Deal with the assets of the retirement system for their own interest or account;
(4) Act in any transaction involving the retirement system on behalf of a party whose interests are adverse to the interests of the retirement system or the interests of the members or beneficiaries of the retirement system; or
(5) Become an endorser or surety, or in any manner an obligor, for moneys loaned to or borrowed from the board.
(c) In this section, nothing prohibits a member or employee of the board from:
(1) Being a member of the retirement system;
(2) Receiving a benefit the member or employee of the board is entitled to as a member or beneficiary in the retirement system so long as the benefit is computed and paid on a basis that is consistent with the terms of the retirement system as applied to all other members or beneficiaries; or
(3) Serving as a trustee or employee of the board in addition to being an officer, employee, agent, or other representative of a party in interest. (1987 L.M.C., ch. 29, § 11.)
The elected officials' plan and any related trust agreement, investment advisory agreement, custodial agreement, annuity contract, or similar agreement, may be amended by the county at any time, either prospectively or retroactively, to conform to the provisions of the Internal Revenue Code. However, if the Internal Revenue Service requires an amendment and the amendment reduces a benefit provided by the elected officials' plan, the required reduction must be paid as a separate benefit from a nonqualified supplemental plan to be established by the county. The benefit payable to a member from the elected officials' plan and the related benefit payable from the supplemental plan, when taken together, must equal the benefit promised under the elected officials' plan immediately before the benefit amendment required by the Internal Revenue Service. (1987 L.M.C., ch. 27, § 13; 1987 L.M.C., ch. 44, § 4; 1988 L.M.C., ch. 25, § 1.)
The retirement system and any related trust agreement, investment advisory agreement, custodial agreement, or similar agreement, may be amended by the county at any time, either prospectively or retroactively, to conform to the provisions of the Internal Revenue Code or similar act or amendment thereto or regulations promulgated thereunder. However, if the Internal Revenue Service requires an amendment and the amendment reduces a benefit provided by the retirement system, the required reduction must be paid as a separate benefit from a nonqualified supplemental plan to be established by the county. The benefit payable to a member from the retirement system and the related benefit payable from the supplemental plan, when taken together, must equal the benefit promised under the retirement system immediately before the amendment required by the Internal Revenue Service. (1987 L.M.C., ch. 44, § 5; 1988 L.M.C., ch. 25, § 1.)
(a) Rights upon termination or discontinuance of contributions. Full vesting of all accrued benefits must occur upon termination of the retirement system, or upon complete discontinuance of contributions thereto, to the extent that such accrued benefits are funded.
(b) Provision for allocation of unallocated funds. Upon termination of the retirement system, or complete discontinuance of contributions thereto, any unallocated funds which are not necessary for the satisfaction of liabilities under the retirement system must be returned to the county.
(c) Limitation on the use of certain dividends and credits. Credits or returns under any annuity contract, other than those arising from corrections of errors in records or computations (such as misstated ages or similar corrections), must not be paid to the county prior to permanent discontinuance of contributions or discontinuance of the retirement system. All dividends, experience rating credits, or employer surrender or cancellation credits ascertained prior to permanent discontinuance of contributions or termination of the retirement system must be applied regularly toward the premiums (or required contributions) next due for the purchase of any annuities. Any surrender or cancellation credits made available after discontinuance of contributions or termination of the retirement system, but before all retirement annuities with respect to service prior to such discontinuance or termination have been purchased, must be applied regularly as they are determined to purchase such retirement benefits so as not to discriminate in favor of officers and highly compensated persons. Any dividends, experience credits, surrender credits or cancellation credits made after permanent discontinuance of contributions or termination of the retirement system and after the satisfaction of all liabilities of the retirement system must be paid to the county.
(d) Reversion of surplus assets upon termination of the retirement system or discontinuance of contributions thereto. Upon termination of the retirement system or complete discontinuance of contributions thereto, any assets which are not necessary for the satisfaction of liabilities under the retirement system, must be returned to the county. (1987 L.M.C., ch. 44, § 6; 1988 L.M.C., ch. 25, § 1.)
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