102 KAR 1:178. Investment policies

for insurance trust fund.

 

      RELATES

TO: KRS 161.430

      STATUTORY

AUTHORITY: KRS 161.310(1), 161.430(1), 161.677

      NECESSITY,

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.

 

      Section

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.

      (b)

The executive secretary shall act on behalf of the investment committee in

administering the investment policies and procedures established in this

administrative regulation.

      (c)

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.

      (2)

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.

      (3)(a)

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.

      (b)

The system may invest in either separately managed accounts or commingled

funds.

      (c)

The investment committee shall make recommendations to the board regarding

employment of investment counselors and the renewal or nonrenewal of contracts.

      (d)1.

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

counselors.

      2.

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.

      (e)

Investment counselors shall provide reports documenting their results at least

quarterly and meet with the investment committee if requested.

      (f)

An annual report on the performance and service of each investment counselor

shall be provided to the board with recommendations from the investment

committee.

      (4)

The following procedures shall be followed with regard to all investment

transactions, whether internally or externally managed:

      (a)

The board shall be provided a quarterly report reflecting complete record of

each investment transaction that occurred during that quarter;

      (b)

The investment committee shall be provided a complete record of each investment

transaction or holding;

      (c)

The staff shall maintain a file of investment directives that indicates the

committee's separate review of each specific long-term investment; and

      (d)

An "authorization for investment" shall be approved by the executive

secretary or the chief investment officer.

 

      Section

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.

      (2)

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.)