161.430 Investment of funds.
(1) The board of trustees shall be the trustee of the funds of the retirement system and
shall have full power and responsibility for the purchase, sale, exchange, transfer, or <br>other disposition of the investments and moneys of the retirement system. The <br>board shall, by administrative regulation, establish investment policies and <br>procedures to carry out their responsibilities. The board shall employ experienced <br>competent investment counselors to advise it on all matters pertaining to <br>investment, except the board may employ qualified investment personnel to advise <br>it on investment matters not to exceed fifty percent (50%) of the book value of the <br>system's assets. All individuals associated with the investment and management of <br>retirement system assets, whether contracted investment advisors or staff <br>employees, shall adhere to "The Code of Ethics" and "The Standards of Professional <br>Conduct" promulgated by the Association for Investment Management and <br>Research. Effective July 1, 1991, no investment counselor shall manage more than <br>forty percent (40%) of the funds of the retirement system. The board may appoint an <br>investment committee consisting of the executive secretary and two (2) trustees to <br>act for the board in all matters of investment, subject to the approval of the board of <br>trustees. The board of trustees, in keeping with their responsibilities as trustees and <br>wherever consistent with their fiduciary responsibilities, shall give priority to the <br>investment of funds in obligations calculated to improve the industrial development <br>and enhance the economic welfare of the Commonwealth. Toward this end, the <br>board shall develop procedures for informing the business community of the <br>potential for in-state investments by the retirement fund, accepting and evaluating <br>applications for the in-state investment of funds, and working with members of the <br>business community in executing in-state investments which are consistent with the <br>board's fiduciary responsibilities. The board shall include in the criteria it uses to <br>evaluate in-state investments their potential for creating new employment <br>opportunities and adding to the total job pool in Kentucky. The board may <br>cooperate with the board of trustees of Kentucky Retirement Systems in developing <br>its program and procedures, and shall report to the Legislative Research <br>Commission annually on its progress in placing in-state investments. The first <br>report shall be submitted by October 1, 1991, and subsequent reports shall be <br>submitted by October 1 of each year thereafter. The report shall include the number <br>of applications for in-state investment received, the nature of the investments <br>proposed, the amount requested, the amount invested, and the percentage of <br>applications which resulted in investments.
(2) The board members and investment counselor shall discharge their duties with
respect to the assets of the system solely in the interests of the active contributing <br>members and annuitants and: <br>(a) For the exclusive purpose of providing benefits to members and annuitants
and defraying reasonable expenses of administering the system;
(b) With the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with
these matters would use in the conduct of an enterprise of a like character and <br>with like aims;
(c) By diversifying the investments of the plan so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent not to do so; and
(d) In accordance with the laws, administrative regulations, and other instruments
governing the system.
(3) (a) In choosing and contracting for professional investment management services
the board must do so prudently and in the interest of the members and <br>annuitants. Any contract that the board makes with an investment counselor <br>shall set forth policies and guidelines of the board with reference to standard <br>rating services and specific criteria for determining the quality of investments. <br>Expenses directly related to investment management services shall be <br>financed from the guarantee fund in amounts approved by the board.
(b) An investment counselor appointed under this section shall acknowledge in
writing his fiduciary responsibilities to the fund. To be eligible for <br>appointment, an investment counselor must be: <br>1.
Registered under the Federal Investment Advisors Act of 1940; or
2.
A bank as defined by that Act; or
3.
An insurance company qualified to perform investment services under <br>the laws of more than one (1) state.
(4) No investment or disbursement of funds shall be made unless authorized by the
board of trustees, except that the board, in order to ensure timely market <br>transactions, shall establish investment guidelines, by administrative regulation, and <br>may permit its staff and investment counselors employed pursuant to this section to <br>execute purchases and sales of investment instruments within those guidelines <br>without prior board approval.
(5) In discharging his or her administrative duties under this section, a trustee shall
strive to administer the retirement system in an efficient and cost-effective manner <br>for the taxpayers of the Commonwealth of Kentucky.
Effective: June 27, 2008 <br>History: Amended 2008 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 32, effective June 27,
2008. -- Amended 2004 Ky. Acts ch. 121, sec. 5, effective July 1, 2004. -- Amended <br>2002 Ky. Acts ch. 275, sec. 9, effective July 1, 2002. -- Amended 1994 Ky. Acts <br>ch. 369, sec. 5, effective July 1, 1994. Amended 1992 Ky. Acts ch. 192, sec. 4, <br>effective July 1, 1992. -- Amended 1990 Ky. Acts ch. 442, sec. 18, effective July 1, <br>1990; and ch. 476, Pt. V, sec. 499, effective July 13, 1990. -- Amended 1988 Ky. <br>Acts ch. 363, sec. 4, effective July 1, 1988. -- Amended 1984 Ky. Acts ch. 253, <br>sec. 7, effective July 1, 1984. -- Amended 1980 Ky. Acts ch. 246, sec. 10, effective <br>July 15, 1980. -- Amended 1978 Ky. Acts ch. 152, sec. 4, effective March 28, 1978. -<br>- Amended 1972 Ky. Acts ch. 82, sec. 8. -- Amended 1968 Ky. Acts ch. 136, sec. 3. -<br>- Amended 1966 Ky. Acts ch. 16, sec. 2. -- Amended 1964 Ky. Acts ch. 43, sec. 5. -- <br>Amended 1962 Ky. Acts ch. 64, sec. 4. -- Amended 1960 Ky. Acts ch. 44, sec. 7. -- <br>Amended 1958 Ky. Acts ch. 8, sec. 2. -- Amended 1954 Ky. Acts ch. 215, sec. 1. -- <br>Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. <br>sec. 4506b-21.
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