The Vermont Statutes Online

Title 3: Executive

Chapter 017: Vermont Pension Investment Commission

• §§ 501-520. Repealed. 1971, No. 231 (Adj. Sess.), § 5.

• § 521. Definitions

  As used in this chapter:

  (1) “Commission” means the Vermont Pension Investment Commission.

  (2) “Financial expert” means an individual with material expertise and experience in institutional fund management or other significant pension or other relevant financial expertise.

  (3) “Independent” means an individual who does not have a direct or indirect material interest in the Plans.

  (A) An individual has a direct or indirect material interest in the Plans if:

  (i) the individual or the individual’s spouse is a beneficiary of any of the Plans; or

  (ii) the individual or the individual’s spouse, parent, child, sibling, or in-law is or has been within the past five years an employee, director, owner, officer, consultant, or manager or had another material role with an entity servicing the Plans.

  (B) An individual is considered an owner of a publicly traded company if the individual owns, directly or indirectly, five percent or more of a class of the company’s equity securities registered under the Securities Exchange Act of 1934 (15 U.S.C. § 78 et seq.), as amended.

  (4) “Plans” means the Vermont State Teachers’ Retirement System, the Vermont State Employees’ Retirement System, and the Vermont Municipal Employees’ Retirement System pursuant to section 472 of this title, 16 V.S.A. § 1943, and 24 V.S.A. § 5063. (Added 2005, No. 50, § 2; amended 2007, No. 100 (Adj. Sess.), § 1; 2021, No. 75, § 1, eff. June 8, 2021.)

• § 522. Vermont Pension Investment Commission

  (a) Members. There is created the Vermont Pension Investment Commission, an independent commission, to comprise nine members as follows:

  (1) one member and one alternate, elected by the employee and retiree members of the Board of the Vermont State Employees’ Retirement System;

  (2) one member and one alternate, elected by the employee and retiree members of the Board of the Vermont State Teachers’ Retirement System;

  (3) one member and one alternate, elected by the municipal employee and municipal official members of the Board of the Vermont Municipal Employees’ Retirement System;

  (4) two members and one alternate, who shall each be a financial expert and independent, appointed by the Governor;

  (5) the State Treasurer or designee, an ex-officio voting member;

  (6) one member, appointed by the other eight members of the Commission, who shall serve as Chair of the Commission and at the pleasure of the Commission;

  (7) one member representing a municipal employer, appointed by the Executive Director of the Vermont League of Cities and Towns; and

  (8) one member representing a school employer, appointed by the Vermont School Boards Association.

  (b) Training. Members and alternates of the Commission shall be required to participate in onboarding and ongoing periodic training in investments, securities, and fiduciary responsibilities as directed by the Commission. The Commission shall provide an annual report to the respective authorities responsible for electing and appointing members and alternates regarding attendance at Commission meetings and relevant educational programs attended.

  (c) Member terms.

  (1) Except as provided in subdivision (2) of this section and for the ex-officio members of the Commission, all members and alternates of the Commission shall serve staggered four-year terms. A vacancy created before the expiration of a term shall be filled in the same manner as the original appointment for the unexpired portion of the term. A member or alternate appointed to fill a vacancy created before the expiration of a term shall not be deemed to have served a term for the purpose of this subsection. Members and alternates of the Commission shall be eligible for reappointment and shall serve not more than three terms; provided, however, that a single term served as an alternate shall not be used to calculate a member’s total term limit. Members and alternates of the Commission may be removed only for cause. The Commission shall adopt rules pursuant to chapter 25 of this title to define the basis and process for removal.

  (2) The Chair shall serve not more than 20 years on the Commission as a chair or Commission member. If the Chair is unable to perform his or her duties, the Commission shall elect an interim chair who shall be a financial expert and independent.

  (3) Terms shall end on June 30 with new terms beginning on July 1.

  (4) Notwithstanding subdivision (3) of this subsection, members and alternates shall serve until their successors are appointed subject to the term limits provided in this subsection.

  (d) Chair and vice chair.

  (1)(A) The Chair of the Vermont Pension Investment Commission shall have the financial, investment, leadership, and governance expertise as required by policies adopted by the Commission.

  (B) The Chair shall be a nonvoting member, except in the case of a tie vote.

  (2) The Vermont Pension Investment Commission shall elect a vice chair from among its members.

  (e) Eligibility. No legislator who is currently serving in the General Assembly shall serve on the Commission.

  (f) Meetings.

  (1) Five members of the Commission shall constitute a quorum.

  (2) If a member is not in attendance, the alternate of that member shall be eligible to act as a member of the Commission during the absence of the member.

  (3) Five concurring votes shall be necessary for a decision of the Commission at any meeting of the Commission, except that any decision of the Commission relating to setting actuarial assumptions pursuant to subdivision 523(b)(1) of this title shall require six concurring votes.

  (g) Leave time. Public employee members and alternates shall be granted reasonable leave time by their employers to attend Commission meetings and Commission-related educational programs.

  (h) Compensation and reimbursements. Members and alternates of the Commission who are not public employees shall be entitled to per diem compensation as permitted in 32 V.S.A. § 1010 and reimbursement for all necessary expenses that they may incur through service on the Commission from the funds of the retirement systems. The Chair of the Commission may be compensated from the funds at a level as recommended by the other members of the Commission and approved through the State budget process.

  (i) Assistance and expenses.

  (1) The Commission may collect proportionally from the funds of the three retirement systems and any individual municipalities that have been allowed to invest their retirement funds pursuant to subsection 523(a) of this title, any expenses incurred that are associated with carrying out its duties, and any expenses incurred by the Treasurer’s office in support of the Commission.

  (2) The Attorney General shall serve as legal advisor to the Commission. (Added 2005, No. 50, § 2; amended 2007, No. 100 (Adj. Sess.), § 2; 2009, No. 139 (Adj. Sess.), § 3; 2021, No. 75, § 1, eff. June 8, 2021; 2021, No. 185 (Adj. Sess.), § E.134.1, eff. July 1, 2022; 2023, No. 53, § 4, eff. June 8, 2023.)

• § 523. Vermont Pension Investment Commission; duties

  (a) General. The Vermont Pension Investment Commission shall be responsible for the investment of the assets of the Vermont State Teachers’ Retirement System, the Vermont State Employees’ Retirement System, and the Vermont Municipal Employees’ Retirement System pursuant to section 472 of this title, 16 V.S.A. § 1943, and 24 V.S.A. § 5063. The Commission shall strive to maximize total return on investment, within acceptable levels of risk for public retirement systems, in accordance with the standards of care established by the prudent investor rule under 14A V.S.A. § 902. The Commission may, in its discretion, subject to approval by the Attorney General, also enter into agreements with municipalities administering their own retirement systems to invest retirement funds for those municipal pension plans. The State Treasurer shall serve as the custodian of the funds of all three retirement systems. The Commission may, in its discretion, also enter into agreements with the State Treasurer to invest the State Employees’ Postemployment Benefits Trust Fund, established in section 479a of this title, and the Retired Teachers’ Health and Medical Benefits Fund, established in 16 V.S.A. § 1944b.

  (b) Powers and duties. The Commission shall have the following duties:

  (1) Set the following actuarial assumptions:

  (A) the investment rate of return;

  (B) the inflation rate; and

  (C) the smoothing rate method used for the actuarial valuation of assets and returns.

  (2) Not more than 180 days after the end of each fiscal year, conduct an asset allocation study that reviews the expected return of each fund, including a risk analysis using best practices methodologies to estimate potential risks to the fund’s asset values over a five-, 10-, and 20-year period and the remainder of the statutory amortization period. The study shall be submitted to the House Committee on Government Operations and Military Affairs and the Senate Committee on Government Operations and the Office of the Governor and made publicly available within 10 days of completion.

  (c) Recordkeeping. The Commission shall keep a record of all its proceedings, which shall be open for public inspection.

  (d) Policies. The Commission shall formulate policies and procedures deemed necessary and appropriate to carry out its functions, including a written statement of the responsibilities of and expectations for the Chair of the Commission and standards of conduct for members and employees of the Commission in order to maintain and promote public confidence in the integrity of the Commission. The standard of conduct policies shall prohibit members and employees from receiving or soliciting any gift, including meals, alcoholic beverages, travel fare, room and board, or any other thing of value, tangible or intangible, from any vendor or potential vendor of investment services, management services, brokerage services, and other services to the Commission.

  (e) Contracts. Contracts approved by the Commission and related documents may be executed by the Chair or, in the Chair’s absence, the Vice Chair.

  (f) Asset and liability study. Beginning on July 1, 2023, and every three years thereafter, based on the most recent actuarial valuations of each Plan, the Commission shall study the assets and liabilities of each Plan over a 20-year period. The study shall:

  (1) project the expected path of the key indicators of each Plan’s financial health based on all current actuarial and investment assumptions; current contribution and benefit policies, including the Plans’ mark-to-market funded ratio; actuarially required contributions by source; payout ratio; and related liquidity obligations; and

  (2) project the effect on each Plan’s financial health resulting from:

  (A) possible material deviations from Plan assumptions in investment assumptions, including returns versus those expected and embedded in the actuary’s estimate of actuarially required contributions and any material changes in capital markets volatility; and

  (B) possible material deviations from key plan actuarial assumptions, including retiree longevity, potential benefit increases, and inflation.

  (g) Changes to actuarial rate of return. Any changes to the actuarial rate of return shall be made by the Commission.

  (h) Annual reports.

  (1) Beginning on January 15, 2022, and every year thereafter, the Commission shall submit to the House Committee on Government Operations and Military Affairs and the Senate Committee on Government Operations:

  (A) a report on the performance of each Plan versus its demographic investment and other actuarial assumptions over a three-, five-, seven-, and 10-year period and the funding ratio of each Plan to each Plan beneficiary at the end of each fiscal year; and

  (B) a report on the status of the funding and investment performance of each Plan and any relevant information from the asset liability and scenario testing completed during the prior fiscal year.

  (2) The Commission shall send to each participant or beneficiary of each Plan a written or electronic copy of the report described in subdivision (1) of this subsection, in the format authorized by the participant or beneficiary. The report shall be consolidated with any other reports required to be sent by the Commission to the participants or beneficiaries of each Plan. (Added 2005, No. 50, § 2; amended 2005, No. 215 (Adj. Sess.), § 277b; 2007, No. 100 (Adj. Sess.), § 3; 2007, No. 176 (Adj. Sess.), § 18, May 28, 2008; 2009, No. 139 (Adj. Sess.), § 4; 2019, No. 120 (Adj. Sess.), § A.13, eff. June 30, 2020; 2021, No. 75, § 1, eff. June 8, 2021; 2021, No. 114 (Adj. Sess.), § 16, eff. July 1, 2022.)

• § 524. Vermont Pension Investment Commission Special Fund

  (a) Creation. There is hereby created the Vermont Pension Investment Commission Special Fund, administered by the Vermont Pension Investment Commission, for the purpose of receiving funds transferred to the Commission pursuant to subsection 522(i) of this title. Monies in the Fund shall be used to pay expenses associated with carrying out the Commission’s duties.

  (b) Funds. The Fund shall consist of:

  (1) any amounts collected and transferred by the three retirement systems and any individual municipalities that have been allowed to invest their retirement funds pursuant to subsection 523(a) of this title;

  (2) any amounts transferred or appropriated to it by the General Assembly; and

  (3) any interest earned by the Fund. (Added 2021, No. 185 (Adj. Sess.), § E.134.2, eff. July 1, 2022; amended 2023, No. 3, § 106a, eff. March 20, 2023.)