1. (A) The commission shall provide the chief investment officer with a statement of general investment objectives. The commission shall also provide the chief investment officer with a statement of actuarial assumptions developed by the system's actuary and approved by the board. The commission shall review the statement of general investment objectives annually for the purpose of affirming or changing it and advise the chief investment officer of its actions. The retirement system shall provide the commission and its chief investment officer that data or other information needed to prepare the annual investment plan.

2. (B) The annual investment plan must be consistent with actions taken by the commission pursuant to subsection (A) and must include, but is not limited to, the following components:

   1. (1) general operational and investment policies;
   2. (2) investment objectives and performance standards;
   3. (3) investment strategies, which may include indexed or enhanced indexed strategies as the preferred or exclusive strategies for equity investing, and an explanation of the reasons for the selection of each strategy;
   4. (4) industry sector, market sector, issuer, and other allocations of assets that provide diversification in accordance with prudent investment standards, including desired rates of return and acceptable levels of risks for each asset class;
   5. (5) policies and procedures providing flexibility in responding to market contingencies;
   6. (6) procedures and policies for selecting, monitoring, compensating, and terminating investment consultants, equity investment managers, and other necessary professional service providers; and
   7. (7) methods for managing the costs of the investment activities.

3. (C) In developing the annual investment plan, the chief investment officer shall:

   1. (1) diversify the investments of the retirement systems, unless the commission reasonably determines that, because of special circumstances, it is clearly not prudent to do so; and
   2. (2) make a reasonable effort to verify facts relevant to the investment of assets of the retirement systems.

HISTORY: 1998 Act No. 371, Section 2, eff May 26, 1998; 2005 Act No. 153, Pt IV, Section 3, eff July 1, 2005.

Effect of Amendment

The 2005 amendment rewrote subsection (A), substituting "commission" and "chief investment officer" for "panel" and adding the fourth sentence relating to information for the annual investment plan; in subsection (B), in the introductory paragraph and in paragraph (C)(1), substituted "commission" for "panel" and in subsection (C), in the introductory paragraph substituted "chief investment officer" for "panel".