102 KAR 1:178. Investment policies
for insurance trust fund.
TO: KRS 161.430
AUTHORITY: KRS 161.310(1), 161.430(1), 161.677
FUNCTION AND CONFORMITY: KRS 161.310 requires the Teachers' Retirement System
Board of Trustees to promulgate administrative regulations for the
administration of the funds of the retirement system and for the transaction of
business. KRS 161.430(1) requires the board of trustees to promulgate administrative
regulations to establish investment policies and procedures to carry out its
responsibilities and provides that the board of trustees shall have full power
and responsibility for the purchase, sale, exchange, transfer, or other
disposition of the investments and money of the Teachers' Retirement System. KRS
161.677(3) provides that the board of trustees shall manage the Kentucky Teachers’
Retirement System insurance trust fund in the same general manner in which it
administers retirement funds. The administrative regulation establishes
investment policies and procedures to carry out these responsibilities for the
Kentucky Teachers’ Retirement System insurance trust fund.
1. (1)(a) The board of trustees shall appoint an investment committee in
accordance with the provisions of KRS 161.430(1). The trustees shall be named
at the beginning of each fiscal year.
The executive secretary shall act on behalf of the investment committee in
administering the investment policies and procedures established in this
To ensure a timely market transaction, the executive secretary and the chief
investment officer may make a purchase or sale of an investment instrument
without prior board approval if the action conforms to the provisions
established in this administrative regulation.
The staff investment personnel employed by the board under KRS 161.430(1) may
be delegated transaction responsibilities under the supervision of the chief
investment officer and the executive secretary.
Contracts with contracted investment counselors employed under KRS 161.430(1)
shall be on a fiscal year basis for twelve (12) month periods, except that
contracts entered into on or after the start of the fiscal year shall not
extend beyond the end of the fiscal year in which the contract is entered.
The system may invest in either separately managed accounts or commingled
The investment committee shall make recommendations to the board regarding
employment of investment counselors and the renewal or nonrenewal of contracts.
The system may utilize the services of a consultant to advise the investment
committee, as well as to assist in evaluating the effectiveness of investment
A consultant may advise the investment committee with regard to asset class
allocation and the combined effect of the various portfolios on the system's
overall risk and expected long-term return.
Investment counselors shall provide reports documenting their results at least
quarterly and meet with the investment committee if requested.
An annual report on the performance and service of each investment counselor
shall be provided to the board with recommendations from the investment
The following procedures shall be followed with regard to all investment
transactions, whether internally or externally managed:
The board shall be provided a quarterly report reflecting complete record of
each investment transaction that occurred during that quarter;
The investment committee shall be provided a complete record of each investment
transaction or holding;
The staff shall maintain a file of investment directives that indicates the
committee's separate review of each specific long-term investment; and
An "authorization for investment" shall be approved by the executive
secretary or the chief investment officer.
2. Asset Allocation. (1) In order to preserve the assets of the system and
produce the required rate of return while minimizing risk, assets shall be
prudently diversified among various classes of investments.
In determining asset allocation policy, the investment committee and the board
shall be mindful of the system's liquidity and its capability of meeting both
short and long-term obligations. (37 Ky.R. 2303; eff. 6-3-11.)