Legislation will be introduced in the lame-duck session of the Michigan Legislature within a week to establish a defined contribution plan for all state employees hired after March 31 and for teachers hired after July 1.
If they choose, existing employees will remain covered by the $25 billion Public School Employees' Retirement System and the $8 billion State Employees' Retirement System. Both defined benefit plans are now managed and administered by the Department of Treasury, Lansing.
The state has not begun to issue RFPs for the 401(a) plan, although the proposal calls for the plan to be operational by March 31.
The state is reviewing RFPs for the outsourcing of its $1.5 billion 457 plan and will apply its findings to the RFP for the proposed 401(a) plan. State Treasurer Douglas B. Roberts said the same vendor might be used.
An undetermined number of mutual funds from multiple fund families will be used in the new 401(a) plan, including lifestyle funds, he said.
The District of Columbia Retirement Board, Washington, with $3.6 billion in assets, filed suit late yesterday against Morgan Guaranty Trust, J.P. Morgan Investment Management and Silverstein Properties for allegedly losing more than $4 million in real estate investments.
The DCRB's charges include fraud, breach of fiduciary duty, negligent misrepresentation and breach of contract.
The lawsuit alleges the managers invested $5.3 million in a combination warehouse/office property in New York as part of a $25 million investment trust without getting a current appraisal and without getting 10- and 15-year financial projections, which were required by the DCRB.
The board says its investment is now valued at $1.1 million.
Calls to Morgan Guaranty and J.P. Morgan were not returned.