Management of Funds.
Milwaukee City Charter § 36-09
in effect36-09. Management of Funds.
The funds of the retirement system, which, when taken in the aggregate shall constitute a special trust fund to be held in reserve as provided in this act for the payment of benefits, shall be managed as follows:
1.
INVESTMENT OF FUNDS. The board shall be the trustee of the several funds of the system and shall contract for investment management services. No one shall be selected as investment manager who does not have 5years continuous experience acting as investment manager or investment adviser in recognized fields of investments for retirement systems of comparable stature. The board shall exercise prudence in selecting the investment manager, but the exercise of prudence by the board shall not relieve the board from all liability and responsibility with respect to investment of the funds of the system. The board shall reserve the right to terminate any contract for investment management services upon reasonable notice.
a. The several funds of the system shall be invested in accordance with the requirements of ss. 40.03(1)(n) and 62.63 (3), Wis. Stats. Not more than 25% of the assets of the system as measured by their cost as set forth in the last official report shall be invested in accordance with s. 40.03(1)(n), Wis. Stats. Not more than 70% of total assets as measured by their cost shall be invested in stocks of corporations.
b. The board shall establish written objectives and guidelines which shall govern the investment manager selected by the board. The investment manager shall have authority to purchase legal investments and to sell or exchange legal investments in accordance with the written objectives and guidelines established by the board for this purpose. The board shall evaluate the performance of the investment manager on a systematic and regularly scheduled basis. The board shall have the full power at its sole discretion to contract for an independent performance evaluation of the investment manager.
c. All investments shall be made by the investment manager and nothing contained herein shall prohibit the board from retaining 2 or more investment managers to perform the duties and assume the responsibilities herein provided for and the board may determine the amount of the whole fund to be allocated for investment purposes among such investment managers where more than one investment manager has been selected. However, any investment manager selected shall be required as a condition of his or her selection to meet and satisfy all of the requirements and qualifications specified herein and provided for, for investment manager.
d. Prudent Investor Rule. Except as otherwise specifically provided in this chapter, the board and a person under contract to the employes' retirement system who invests and manages trust assets owes a duty to comply with the prudent investor rule.
d-1. Standard of Care; Portfolio Strategy; Risk and Return Objectives. The board and a person under contract to the employes' retirement system to invest and manage trust assets shall invest and manage assets as a prudent investor would by considering the purposes, terms, distribution requirements and other circumstances of the trust. In satisfying this standard, the board and such person shall exercise reasonable care, skill and caution. Investment and management decisions respecting individual investment assets must be evaluated not in isolation, but in the context of the trust portfolio as a whole and as part of an overall investment strategy having risk and return objectives reasonably suited to the trust. A reasonable effort shall be made to verify facts relevant to the investment and management of trust assets. Assets may be invested in any kind of property or type of investment consistent with the standards of this subd. A board member or a person under contract to the employes' retirement system who invests and manages trust assets who has special skills or expertise or is named in reliance upon his or her representation that he or she has special skills or expertise has a duty to use those special skills or expertise.
d-2. Diversification. The board and person under contract to the employes' retirement system to invest and manage trust assets shall diversify the investment of the trust unless the board reasonably determines that because of the special circumstances, the purposes of the trust are better served without diversifying.
d-3. Loyalty. The board and a person under contract with the employes' retirement system to invest and manage trust assets shall invest and manage the trust assets solely in the interests of the beneficiaries.
d-4. Investment Costs. In investing and managing trust assets, the board and a person under contract to the employes' retirement system to invest and manage trust assets may only incur costs that are appropriate and reasonable in relation to the assets for the purposes of the trust and the skills of the trustee.
d-5. Delegation. The board has a duty to personally perform the responsibilities of trusteeship except as those responsibilities are by this section delegated to others or except as a prudent person might delegate those responsibilities to others. In deciding whether and to whom and in what manner to delegate fiduciary authority in the administration of the trust and thereafter supervising agents, the board is under a duty to the beneficiaries to exercise fiduciary discretion and to act as a prudent person would in similar circumstances. In performing a delegated function, a person under contract to the employes' retirement system to invest or manage funds owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation. The board shall not be liable to the beneficiaries or to the trust for the decisions or actions of a person to whom a function was delegated provided that the board shall have used reasonable care, skill and caution in selecting the person; establishing the scope and terms of the delegation consistent with the purposes and terms of the trust; and periodically reviewing the person's actions in order to monitor performance in compliance with the terms of delegation.
d-6. Reviewing Compliance. Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of the decision or action and not by hindsight.
d-7. The text and comments to the Uniform Prudent Investor Act promulgated by the National Conference of Commissioners on Uniform State Laws (1994) and the Restatement of Trusts 3d: Prudent Investor Rule (1992) are interpretive of the provisions of this par.
d-8. Nothing in this par. prevents the board and the employes' retirement system from requiring indemnification or insurance from a contractor, nor does anything in this par. preclude the board and the employes' retirement system from obtaining indemnification or insurance for their activities.
2.
TRANSFERS OF PROPERTY; REINVESTMENT OF FUNDS. The board shall have full power to make all transfers and conveyances of any securities or property in which it may from time to time invest and reinvest the several funds of the system or any part thereof, and no purchaser or purchasers shall be responsible for the application of the purchase money or other avails received by or for said board.
3.
INTEREST. The board annually shall credit regular interest to the members' accounts and on the mean amount for the preceding year in each of the other funds with the exception of the expense fund. The amounts so allowed shall be due and payable to said funds, and shall be annually credited thereto by the board from interest and other earnings on the moneys of the retirement system. Any additional amount required to meet the interest on the funds of the retirement system shall be paid by the city and city agencies, and any excess of earnings over such amount required shall be deductible from the amounts to be contributed by the city and city agencies except for the firemen and policemen's survivorship fund. Regular interest shall mean such rate, compounded annually, as shall be determined by the board on the basis of interest earnings of the system for the preceding year and of the probable earnings to be made, in the judgment of the board, during the immediate future such rate to be limited to a minimum of 3% and a maximum of 4%.
4.
INTEREST IN OR USE OF FUND. Except as herein provided no member of the board and no employee of the board shall have any interest, direct or indirect, in the gains or profits of any investment made by the board. No member of the board or employee thereof shall directly or indirectly, for himself or as an agent, in any manner use the funds or deposits of the retirement system except to make such current and necessary payments as are authorized by the board; nor shall any member or employee of the board become an endorser or surety or in any manner an obligor for moneys loaned by or borrowed from the board.
5.
EFFECTIVE DATE. Wherever used in this act the term "effective date of the retirement system" shall be construed to mean January 1, 1938, and the term "effective date of the act" shall refer to the effective date when the legislature made such provision effective in the event of legislation enacted by the Wisconsin legislature, and in the event of a charter ordinance the effective date when such amendment came into effect as a result of common council enactment of the charter ordinance.
6.
POWERS AND PRIVILEGES OF RETIREMENT SYSTEM. The retirement system shall have all of the powers and privileges of a corporation, as enumerated in chs. 180 and 182, Wis. Stats., including the power to contract with its members, and shall be known as the "employes' retirement system of the City of Milwaukee," and by such name shall all of its business be transacted. All of its funds shall be invested, or held in the name of the employes' retirement system, except that investment in loans, securities or other investments may be in the name of or transferred to nominees of one or more banks or trust companies under a custodial agreement between the board and each such bank or trust company. The custodial agreement may provide that loans, securities or other investments in the name of or transferred to nominees of one or more banks or trust companies may be loaned by the custodian with suitable collateral in an amount not less than 102% of market value. All its cash and securities and other property shall be held in trust for the purpose for which received. Revenue from security lending shall be used to offset custodial fees and any excess revenue from security lending shall be deposited in the expense fund established under s. 36-08-3. Any incorrect spelling of name of the system shall not be deemed to invalidate any document or affect any transaction of the system and for purposes of action under this act shall be without consequence or effect.
7.
LIMITATIONS. All funds of the system shall be invested prudently and in accordance with the requirements of the law and of this act and no funds whatsoever of the pension system may be either pledged, deposited, or used in any form or in any manner whatsoever to provide either credits or support or act as deposit for or be used as collateral for any banking, financing, borrowing or other related transaction whatsoever. The board may contract for investment or custodial services or both with a state investment board or with a nationally recognized banking or investment institution. It is intended that this provision shall be given its most liberal construction which will prevent and preclude the use of funds for the purposes heretofore enumerated. This provision is deemed to be contractual and a vested right of each and every member and beneficiary of the system.
8.
COMPLIANCE FOR GROUP TRUST PARTICIPATION. a. The board may, unless restricted by law, transfer all or any portion of the assets of the retirement system to a collective or common group trust, as permitted under Revenue Ruling 81-100, Revenue Ruling 2011-1, and Revenue Ruling 2014-24 ,or subsequent guidance, that is operated or maintained exclusively for the commingling and collective investment of monies, provided that the funds in the group trust consist exclusively of trust assets held under plans qualified under s. 401(a) of the Internal Revenue Code, individual retirement accounts that are exempt under s. 408(e) of the Internal Revenue Code, eligible governmental plans that meet the requirements of s. 457(b) of the Internal Revenue Code, and governmental plans under s. 401(a)(24) of the Internal Revenue Code. For this purpose, a trust includes a custodial account or separate tax-favored account maintained by an insurance company that is treated as a trust under s. 401(f) or s. 457(g)(3) of the Internal Revenue Code.
b. Any collective or common group trust to which assets of the retirement system are transferred pursuant to par. a shall be adopted by the board as part of the retirement system by executing appropriate participation, adoption agreements, or trust agreements with the group trust's trustee.
c. The separate account maintained by the group trust for the retirement system pursuant to par. a shall not be used for, or diverted to, any purpose other than for the exclusive benefit of the members and beneficiaries of the retirement system.
d. For purposes of valuation, the value of the separate account maintained by the group trust for the retirement system shall be the fair market value of the portion of the group trust held for the retirement system, determined in accordance with generally recognized valuation procedures. (S. 36-09 am. Ch. Ord. 332, File #67-355-a, July 25, 1967. 36-09-0 am. Ch. Ord. 368, File #70-2757, April 13, 1971. 36-09-1 rc. Ch. Ord. 448, File #77-152, July 26, 1977. 36-09-1-0 am. File #912350, April 15, 1992; eff. July 9, 1992. 36-09-1-a am. File #891732, Jan. 16, 1990; eff. April 4, 1990. 36-09-1-a am. File #950077, July 14, 1995; eff. Sept. 27, 1995. 36-09-1-c am. File #950077, July 14, 1995; eff. Sept. 27, 1995. 36-09-1-d cr. File #950077, July 14, 1995; eff. Sept. 27, 1995. 36-09-3 am. Ch. Ord. 375, File #71-1754, Dec. 7, 1971. 36-09-6 am. Ch. Ord. 537, File #83-2361, June 12, 1984. 36-09-6 am. File #930242, July 6, 1993; eff. Sept. 21, 1993. 36-09-7 cr. Ch. Ord. 361, File #69-990, Nov. 11, 1969. 36-09-8 cr., File #150113, June 2, 2015; eff. August 18, 2015.)
Source: City of Milwaukee Legislative Reference Bureau, Milwaukee City Charter and Code of Ordinances (city.milwaukee.gov master PDFs)URL: https://city.milwaukee.gov/ImageLibrary/Groups/ccClerk/Ordinances/City-Charter/CH36.pdf#page=62Fetched: 10/26/2026