Public employees' retirement: investments: security loans.

The Public Employees' Retirement Law (PERL) creates the Public Employees' Retirement System (PERS) for the provision of pension benefits to members. PERL grants the Board of Administration of PERS exclusive control of and fiduciary responsibility for the investment of the Public Employees' Retirement Fund, and authorizes the board to enter into specific types of security loan agreements, whereby a legal owner (the lender) agrees to lend specific marketable corporate or government securities for no more than one year, and the lender retains the right to collect from the borrower all dividends, interest, premiums, rights, and other distributions. Existing law grants the board the authority to enter into these agreements pursuant to specific provisions covering security loan agreements by state agencies. This bill would delete the above reference to the security loan provisions for state agencies, thereby providing the board with separate authority to enter into security loan agreements. The bill would require a borrower to provide the board with collateral in the form of cash, United States government debt securities, or other specified forms of collateral, and would require that the amount of the collateral be at least 102% of the market value of the loaned securities or an amount consistent with market practice, whichever is greater. The bill would require the board to revalue the collateral to current market value on each business day or as frequently as industry practices require. The bill would prohibit the total market value of the loaned securities collateralized by marketable public equities and marketable international government bonds from exceeding 25% of the assets of the retirement fund.