Rep. Nunes submits legislation to create the Rhode Island Pension Prudent Investor Act
STATE HOUSE — In an effort to promote security, stability and accountability in the state retirement system, Rep. Jared R. Nunes (D-Dist. 25, Coventry, West Warwick) has introduced the Rhode Island Pension Prudent Investor Act.
The legislation (2017-H 5877) would guarantee that a trustee, director or retirement system employee must comply with certain prudent investor guidelines including risk and return objectives, diversification, loyalty, investment costs, compliance and delegation of management
“Anyone in state government who is responsible for approving the investment or management of retirement systems assets has a tremendous responsibility not only to the beneficiaries but the people of Rhode Island,” said Representative Nunes. “As such, it is imperative that they comply with the prudent investor rule. It is not too much to expect that retirement systems trustees exercise reasonable care, skill and caution in performance of their actions.”
Under the proposed legislation, a trustee would be required to invest assets as a prudent investor would — by considering the purposes, terms, distribution requirements, and other circumstances of the retirement system. Those actions would be evaluated in the context of the retirement system’s portfolio as a whole and as part of an overall investment strategy, rather than as actions in isolation.
“This legislation would bring the same accountability to the state’s pension system that we’ve already brought to other investments through prudent investor rules” said Representative Nunes. “When investing the assets of the retirement system, we want these trustees to consider overall economic conditions, the effects of inflation and deflation, tax consequences, expected returns, and the role each investment plays in the overall investment strategy.”
The legislation, which is cosponsored by Representatives Joy Hearn (D-Dist. 66, Barrington, East Providence), Robert D. Phillips (D-Dist. 51, Woonsocket, Cumberland), Gregory J. Costantino (D-Dist. 44, Lincoln, Smithfield, Johnston) and Stephen M. Casey (D-Dist. 50, Woonsocket), has been referred to the House Finance Committee.
For more information, contact:
Daniel Trafford, Publicist
State House Room 20
Providence, RI 02903