Part 4 — RETIREMENT FUND

The "San José federated employees' retirement fund," in the city treasury is continued in existence.

(Prior code § 2904.53.)

The board has exclusive control of the administration and investment of the retirement fund.

(Prior code § 2904.54.)

A.

Except as provided in subsection B., the city director of finance is the sole custodian of the retirement fund, subject to the exclusive control of the board as to administration and investment. All payments from the fund shall be made in the manner required for the disbursement of other public funds, but only upon authorization of the board.

B.

The board may enter into contractual arrangements with California banks or with national banking associations to provide master custody services with respect to the assets of the retirement fund. Such contracts shall be entered into in the name of the board of administration for the federated city employees retirement system.

(Prior code § 2904.55; Ord. 25092.)

The board shall deposit, to the credit of the retirement fund, all amounts received by it under this chapter in the city treasury or in such custodial accounts as are established with the custodian bank.

(Prior code § 2904.57; Ord. 25092.)

Interest earned on any cash deposit in a fund by the treasurer and income on other assets constituting a part of the fund shall be credited to the fund as received. Income of whatever nature earned on the retirement fund during any fiscal year in excess of the interest credited to contributions during that year shall be retained in the fund as a reserve against deficiencies in interest earned in other years, losses under investments, and other contingencies. The board, however, may apply to reduce the book value of securities purchased, or all or part of the excess of the proceeds of the sale of securities over the book value of the securities sold:

A.

If the purchase of securities is made with those proceeds; and

B.

If the terms of both securities from the date of sale or purchase, as the case may be, to the respective dates of maturity do not differ by more than three years.

(Prior code § 2904.56.)

The board shall invest and reinvest the moneys in the retirement fund in accordance with the following standards:

A.

The assets of the retirement plan are trust funds and shall be held for the exclusive purposes of providing benefits to members of the plan and their beneficiaries and defraying reasonable expenses of administering the system.

B.

The board shall discharge its duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, members of the system and their beneficiaries, minimizing city and member contributions to the retirement fund, and defraying reasonable expenses of administering the system. The board's duty to the members and their beneficiaries shall take precedence over any other duty.

C.

The board shall discharge its duties with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of like character and with like aims.

D.

The board shall diversify the investments of the system so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly prudent not to do so.

(Prior code § 2904.58; Ords. 19988, 21144, 21606, 22509, 23559, 25092.)

A.

The retirement board may enter into contractual arrangements with broker-dealers and with banks for such broker-dealers or banks to provide security lending services pursuant to security loan agreements on such conditions, consistent with this section, as the board may determine.

B.

For the purposes of this section, "security loan agreement" and "marketable securities" shall be defined as follows:

"Security loan agreement" means a written contract whereby a legal owner, the lender, agrees to lend specific marketable corporate or government securities for a period not to exceed one year. The lender retains the right to collect from the borrower all dividends, interest, premiums, rights, and any other distributions to which the lender would otherwise have been entitled. The lender waives the right to vote the securities during the term of the loan.

"Marketable securities" means securities that are freely traded on recognized exchanges or market places.

C.

Any contractual arrangements entered into pursuant to this section shall require all of the following:

The lender may terminate the security loan agreement upon not more than five business days' notice as agreed and the borrower may terminate the security loan agreement upon not less than two business days' notice as agreed.

The borrower shall provide collateral to the lender in a form approved by the board, and shall be in an amount equal to at least one hundred two percent of the market value of the loaned securities as agreed.

Daily monitoring of the market value of the loaned securities.

Payment by the borrower of additional collateral on a daily basis, or at such times as the value of the loaned securities increases, to agreed-upon ratios, but in no event shall the amount of the collateral be less than the market value of the loaned securities.

Maintenance of detailed records of all security loans.

Development of controls and reports to monitor the conduct of the transactions.

Publication of the net results of the security loan transactions separate from the results of other investment activities.

(Ords. 21865, 24690.)

Without limiting the authority of the board itself to invest and reinvest the moneys of the retirement fund as provided in Section 3.24.350, the board may adopt an investment resolution or resolutions containing detailed guidelines, consistent with Section 3.24.350. While the resolution or resolutions are in effect, investments consistent with such guidelines may be made by an officer of the board, an officer or employee of the city, or a qualified investment advisor who has entered into a contractual arrangement pursuant to Section 3.24.370, provided that such officer, employee or advisor has been delegated such authority by the board and such officer, employee or advisor has been designated by name in the investment resolution or resolutions. Any transactions made pursuant to the foregoing provisions of this section shall be reported monthly to the board by the person or persons to whom the board has delegated such authority.

(Prior code § 2904.59; Ords. 20116, 21077, 21304, 23559, 25092.)

A.

The board may enter into contractual arrangements with any person or persons or association or associations, who meet the requirements of subsection B. or C., to provide counsel to the board with respect to the board's policies of investing and reinvesting of moneys in the retirement fund. Such contracts shall be entered into in the name of the board of administration for the federated city employees retirement system.

B.

Any person or association who provides services to the board with regard to financial securities:

Shall be a person or association whose principal business consists of investment counseling services; and

Shall be registered as an investment adviser under such laws as may require such registration.

C.

With respect to real estate advisors, the board shall enter into contractual arrangements only with persons or associations whose principal officers are engaged in the business of advising and evaluating commercial, industrial or residential real estate investments, mortgage banking, or property management, and which are duly licensed to perform real estate advisor services in the jurisdiction where the real property is located.

(Prior code § 2904.60a; Ords. 25092, 25641.)

Notwithstanding any provision in this chapter or any other ordinance to the contrary, whenever any check drawn against the retirement fund in payment of accumulated contributions or benefits remains unclaimed, or the claimant cannot be found, the proceeds of such check shall be redeposited in the retirement fund and held for the claimant without further accumulation of interest, and such redeposit shall not operate to reinstate the membership of the claimant in this system. If such proceeds, whether heretofore or hereafter redeposited, are not claimed within four years after the date of redeposit, they shall revert to and become a part of the accumulated contributions of the city, held in the retirement fund to meet the liabilities of the city on account of current services. The board may at any time after reversion of proceeds to the city, and upon receipt of proper information satisfactory to it, return such proceeds so held for the city to the credit of the claimant, to be administered in the manner provided under this system.

(Prior code § 2904.60; Ord. 25092.)