HB396 Alabama 2014 Session

Summary

Primary Sponsor

Allen TreadawayRepresentative

Republican

Session

Regular Session 2014

Title

Birmingham, Retirement System board, limit on investment power, Act 929, 1951 Reg. Sess., am'd.

Summary

HB396 requires the Birmingham Retirement and Relief System Board to maintain at least 25% of the fund in fixed income securities.

What This Bill Does

It amends Section 9 of Act 929 to set a minimum fixed-income allocation for the system. The board retains broad power to invest in many asset classes, but must ensure fixed income investments comprise at least 25% of the fund's value. It also updates custody, bonding, and governance provisions to oversee investments and protect fund assets, and it reinforces fiduciary duties and restrictions on personal use of fund assets.

Who It Affects

• Board of Managers of the Birmingham Retirement and Relief System – must maintain a minimum 25% fixed-income allocation and oversee a broad range of authorized investments under added safeguards.
• Members/beneficiaries of the Birmingham Retirement and Relief System – potential changes to risk and return due to the fixed-income floor and the fund's investment governance.

Key Provisions

• Minimum fixed-income allocation: not less than 25% of the fund's fair market value must be invested in fixed income securities.
• Broad investment authority: the board may invest in bonds, mortgages, stocks, mutual funds, REITs, international and domestic options, and other approved assets, with prudent oversight.
• Stock investment limits: common or preferred stocks may be purchased only if listed on U.S. exchanges (including NASDAQ) or meet specified trading criteria (e.g., Rule 144A).
• Single-entity limit on fixed income: no more than 10% of the fixed income allocation can be in securities from any single non-guaranteed agency or entity at purchase.
• Valuation and custody: fair market value is determined by pricing sources acceptable to the custodian; the city director of finance serves as custodian with a bond up to $50,000.
• Sub-custodian provisions: the board may select a sub-custodian to handle securities; bond requirements may be waived if the sub-custodian's net worth is at least 1.5 times the securities value.
• Gifts and donations: the board may accept gifts, donations, or legacies and manage them as directed.
• Fiduciary safeguards: board members and employees cannot misuse fund assets or become personal guarantors for loans to the fund.
• Duty of care: the board must act with care, skill, prudence, and diligence in investing the fund.
• Effective date and severability: the act becomes law immediately after governor's approval, and the provisions are severable if any part is invalid.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Birmingham