Public Employee Retirement Plans Generally

Ark. Code Ann. tit. 24, ch. 2

in effect

Ark. Code Ann. § 24-2-201 Permissible investments of political subdivision retirement funds.

(a) The board of trustees of any public employee retirement system of any political subdivision of the State of Arkansas shall, from time to time, as funds are available for investment purposes, invest in obligations set out in this section. (b) The boards of trustees of public employees retirement systems of political subdivisions of the state shall have the power to invest and reinvest the moneys in their respective funds and to hold, purchase, sell, assign, transfer, and dispose of any securities and investments held in the funds, except that the investments and reinvestments shall be limited to the following: (1) Direct general obligations of the United States Government; (2) Bonds, notes, debentures, or other obligations issued by an agency of the United States Government, the principal and interest of which are guaranteed in full by the United States Government; (3)(A) Direct general obligations of the State of Arkansas; (B) Capital notes issued pursuant to § 23-32-215 [repealed] by banks and trust companies organized or operated under the laws of this state and subordinated debt securities of savings and loan associations in this state whose deposits are secured by the Federal Savings and Loan Insurance Corporation [abolished]; (C) Certificates of deposit of any bank in Arkansas if the bank is insured by the Federal Deposit Insurance Corporation; (4) Revenue bonds issued by the University of Arkansas and by the other respective state-supported institutions of higher learning; (5) Ad valorem tax bonds of counties issued under the authority of the Arkansas Constitution, Amendments 10; (6) Ad valorem tax bonds of cities of the first and cities of the second class issued under the authority of the Arkansas Constitution, Amendments 10; (7) Valid warrants of local school districts of the State of Arkansas, but the warrants may be purchased only from the local school district board and only during the fiscal year in which issued; (8) Revolving loan bonds and revolving loan certificates of indebtedness held in the Revolving Loan Fund in the State Treasury under the jurisdiction of the State Board of Education; (9) Bonds of local school districts, sometimes referred to as “commercial bonds”, whereof a continuing ad valorem tax levy of a given number of mills on each dollar of the assessed valuation of all taxable real and personal property within the bounds of the district shall have been voted for the specific primary purpose of paying the principal of, and interest on, the bonds, as distinguished from the excess collections of taxes derived through levies made to pay other issues of bonds of the district; (10) First lien serial coupon bonds of local industrial development corporations organized under the authority of the Arkansas Industrial Development Act, § 15-4-101 et seq., but the bonds may be purchased only from the State Board of Finance; (11)(A)(i) Obligations consisting of notes, bonds, or debentures which are direct obligations of an industrial corporation, or a corporation engaged primarily in the production, transportation, distribution, or sale of electricity, gas, or water or the operation of telephone or telegraph systems, or any combination of them. (ii) The obligor corporation shall be incorporated under the laws of the United States, any state, or the District of Columbia. (iii) These obligations shall, at the time of purchase, be rated within the three (3) highest classifications by at least two (2) standard rating services. (B)(i) Funds of the system may not be used in the purchase of common or preferred stocks, or of other equity capital, by whatever name called. (ii) No such obligations as may be owned by the system may ever be exchanged for any stock or other equity capital; and (12)(A) Notes secured by: (i) Mortgages on real estate, which are guaranteed as to payment of principal and interest either by the United States Government or an agency thereof; or (ii) A corporation, approved by the Insurance Commissioner, which is licensed to do business in the State of Arkansas as an insurer. (B)(i)(a) Notes or obligations securing loans to Arkansas businesses made by banks and savings and loan associations pursuant to the Small Business Act, 15 U.S.C. § 631 et seq., only to the extent that both principal and interest are guaranteed by the United States Government. (b) The applicant bank or savings and loan association shall be required to enter into an indemnity agreement, which meets the approval of the board of trustees, to pay off the investments, together with interest and any unpaid costs and expenses in connection therewith, in the event the United States Government refuses to honor its guarantee. (ii) The board of trustees may enter into conventional agreements for the servicing of the loans and the administration of receipts therefrom. (iii) Any servicing agreement may contain such reasonable and customary provisions as the board of trustees may deem advisable and as may be agreed upon.

Ark. Code Ann. § 24-2-202 Procedure for purchase or sale of securities.

(a) All securities purchased or sold by the board of trustees shall be upon sealed offers after publication of notice of proposal to purchase or sell, except securities provided for in § 24-2-201(b)(1), (2), (7), (8), (10), (11), and (12). (b)(1)(A) Not fewer than seven (7) days nor more than fourteen (14) days prior to the date set for the purchase of securities, the board of trustees shall cause a notice to be published by one (1) insertion, in one (1) or more newspapers of general circulation throughout the state and in such other newspapers or financial journals as to it may appear desirable. (B) This notice shall request offers to sell such obligations to the system and state the approximate amount of funds proposed to be made available for the purpose and the time and place that the offers will be received. (2) On the date and on and after the time so fixed, the board of trustees, or a duly designated subcommittee thereof, shall open, read aloud, tabulate, and compare all the offers received; then, or within twenty-four (24) hours after the date and time so fixed, the board of trustees shall purchase or contract for the purchase of such of the obligations as, in its opinion, will serve the best interest of the retirement system. (3) All obligations of a particular type shall be purchased on the basis of the highest annual interest yield to the retirement system. (4) The board of trustees may reject any or all offers received and may waive informalities. (c) All obligations of a particular issue which are purchased by the board of trustees upon sealed offers shall be accompanied at the time of delivery and payment, by the opinion of recognized bond counsel acceptable to the board of trustees approving without qualification the validity of the issue of which the obligations are a part. (d) Direct general obligations of the United States and obligations of instrumentalities thereof may be purchased from the issuers from their duly designated fiscal agents or in the open market either with or without giving prior notice by publication of intention to purchase, all as, in the opinion of the board of trustees, will serve the best interest of the system.

Ark. Code Ann. § 24-2-203 First lien serial coupon bonds of local industrial development corporations.

(a) Whenever mutually agreeable to the respective boards of trustees, the State Board of Finance may sell and the retirement systems may purchase first lien serial coupon bonds of local industrial development corporations. (b) Payment under any sale and purchase agreement may be effected in the State Treasury by charging the proper retirement fund with the purchase price thereof and by delivery of the securities to the custodian of the system. (c) In the event of default in payment of the principal of or interest on bonds of industrial development corporations, the State Board of Finance shall repurchase the obligations immediately after being called upon to do so by the system. The transaction may be effected in the State Treasury by crediting the retirement system fund with the purchase price thereof and by delivery of the securities to the custodian of securities for the State Board of Finance for credit of the par value thereof to the Securities Account. (d) The amount of the accrued interest due upon any repurchase or original sale shall be charged or credited, as the case may be, to the Securities Reserve Fund. (e) The sale and purchase price, and the resale and repurchase price, of first lien serial coupon bonds of industrial development corporations shall be the par value of those obligations, plus accrued interest.

Ark. Code Ann. § 24-2-204 Default in payment of principal or interest.

(a) In the event of default in payment of the principal of or interest on bonds or other obligations held in the respective retirement funds, if the issuer of the obligations is a state-supported institution of higher learning, a county, a municipal corporation, including boards, commissions, or other authorities thereof, or a school district, the Treasurer of State shall withhold the amount of the default from any moneys in the State Treasury derived from general revenues on hand to the credit of, or held for the benefit of, the issuer and credit that amount, by transfer, to the retirement fund holding the obligations. (b)(1) The State Treasury fund from which any transfer may be made shall be charged with the amount of the transfer. (2)(A) The Treasurer of State shall furnish notification of the transfer, in writing, to the disbursing officer of the fund from which the transfer shall have been made. (B) Notification shall set forth the name of the issuer, the date, amount, and purpose of the charge. (3) The Treasurer of State shall thereafter cancel and deliver the obligations so retired to the designated paying agent. (c) No transfers may be made from moneys in any State Treasury fund which are derived from revenue either specifically or generally pledged to the payment of any issued and outstanding bonds.

Ark. Code Ann. § 24-2-205 Purchase of obligations not cancellation — Trust.

(a) All obligations purchased or received shall be held in trust for the use and benefit of the system, which trust shall be subject only to the right of the board of trustees to sell or otherwise dispose of the obligations as provided in the various plans. (b) No purchase or receipt of obligations by a board of trustees shall ever be construed as a cancellation of the obligations so purchased or received.

Ark. Code Ann. § 24-2-206 Jurisdiction and custodianship of funds — Interest.

(a)(1) The various retirement system funds, as established in the State Treasury, are created and constituted trust funds. (2) All assets of the various funds, both cash and securities, shall be under the exclusive jurisdiction of the respective boards of trustees and shall be held by the Treasurer of State as custodian, subject to the orders and direction of the boards of trustees. (b) The interest received on all investments made from the trust funds shall be considered as trust fund income and shall be deposited into the State Treasury to the credit of the retirement system fund from which the investments were made.

Ark. Code Ann. § 24-2-207 Assets and income for retirement systems.

All assets and income of any retirement system of a city or other political subdivision of the State of Arkansas shall be held, invested, or disbursed for the exclusive purpose of providing for benefits, investment management, and administrative expenses and shall not be encumbered for or diverted to any other purposes.

Ark. Code Ann. § 24-2-301 Definitions.

As used in this subchapter, unless the context otherwise requires: (1) “Eligible retirement system” means the retirement system in which the employee is eligible for membership; (2) “Employer” means an employing state agency or an employing school district; and (3) “Retirement system of record” means the system that holds an erroneous membership.

Ark. Code Ann. § 24-2-302 Classification of members.

Except as otherwise specifically provided in this subchapter, all employees of the State of Arkansas or any of its political subdivisions who are members or become members of a state retirement system shall be members of the retirement system indicated in this section as follows: (1) All eligible employees of the Arkansas Department of Transportation shall be members of the Arkansas State Highway Employees' Retirement System; (2) All eligible employees of the Division of Arkansas State Police shall be members of the State Police Retirement System; (3) The following persons shall be members of the Arkansas Teacher Retirement System: (A) Any person employed by a school for the purpose of giving instruction and whose employment requires state certification; (B) Any other person employed by a school in a regular or special position; (C) Any person employed by any of the following organizations or agencies: (i) Arkansas School for the Blind; (ii) Arkansas School for the Deaf; (iii) Arkansas Activities Association; (iv) A local school board; (v) State Board of Education; (vi) Regional education service cooperatives; and (vii) Arkansas Teacher Retirement System; (D) Any person employed in a position requiring professional training or certification with an area vocational-technical school or employed by the Arkansas Educational Television Commission, except that employees of area vocational-technical schools and the Division of Career and Technical Education, the Adult Education Section, and the Office of Skills Development, who have elected to participate in an alternate retirement plan established by § 24-7-901 et seq. shall be active members of the alternate retirement plan; and (E)(i) Any person employed in a position requiring professional training or certification with Arkansas Rehabilitation Services, the Division of State Services for the Blind, or the Division of Youth Services except those employees who have elected coverage under § 24-4-101 et seq. (ii) Membership of employees of Arkansas Rehabilitation Services and the Division of State Services for the Blind shall be subject to the following conditions: (a) Those employees who were employed before January 1, 1985, and who were members of the Arkansas Teacher Retirement System on that date shall continue to be members of the Arkansas Teacher Retirement System, except that in the event the time limit for those employees to change to the noncontributory plan of the Arkansas Public Employees' Retirement System under § 24-4-522 is extended beyond January 1, 1985, those employees shall have the maximum time allowed by law to elect to make the change; (b) Those employees who were employed before January 1, 1985, and who are members of the noncontributory plan of the Arkansas Public Employees' Retirement System on that date shall continue to be members of the Arkansas Public Employees' Retirement System; and (c) Persons whose initial employment by either Arkansas Rehabilitation Services or the Division of State Services for the Blind is on or after January 1, 1985, shall be members of the noncontributory plan of the Arkansas Public Employees' Retirement System; and (4) All eligible employees of the State of Arkansas or any of its political subdivisions except those who are members of another legally established state retirement plan shall be members of the Arkansas Public Employees' Retirement System.

Ark. Code Ann. § 24-2-303 Erroneous enrollment before January 1, 1979.

(a) Any employee who was erroneously enrolled in a state retirement system before January 1, 1979, and whose contributions have not been refunded prior to March 26, 1979, shall continue to be a member of the retirement system of record. (b) The member shall receive service credit for all paid membership service in the retirement system, shall be entitled to any free service which was credited to the member prior to March 26, 1979, or which is creditable to the member under existing laws, and shall also be entitled to reciprocal service credits as provided by §§ 24-2-401 — 24-2-405 and 24-2-407.

Ark. Code Ann. § 24-2-304 Erroneous enrollment on or after January 1, 1979.

(a)(1) When it is discovered by an employee, employer, or a state retirement system that an employee became erroneously enrolled in a state retirement system on or after January 1, 1979, the employee may elect to remain a member of the retirement system of record or may become a member of the eligible retirement system. (2) Subsections (b)-(d) of this section shall apply if the member chooses to become a member of the eligible retirement system. (b) The retirement system of record shall refund to the employer all contributions, both employee and employer, that were made in behalf of the employee in question. (c)(1) The employer shall retain the contributions of both the employee and the employer that are refunded under subsection (b) of this section until the member is enrolled in the eligible retirement system. (2) Upon receipt of the refunded contributions, the employer shall file with the eligible retirement system an application for membership by the employee and a history of covered employment and wages, including service refunded by the retirement system of record. (d)(1) The eligible retirement system shall furnish to both the employee and the employer a statement of the amount of contributions necessary to establish service credit in the eligible retirement system for the service refunded by the retirement system of record. (2) In computing the cost of that service, the eligible retirement system shall include both employee and employer contribution rates in its computation. (3) In paying the cost of establishing credit for the service in the eligible retirement system, the employer shall first use the employee refund from the retirement system of record and then as much of the employer refund as may be necessary. However, if all of the employer refund is not required to establish service credit, the remaining amount shall be paid into the General Education Fund. (4) In the event the cost of establishing the service credit is in excess of both the employee and the employer contributions refunded by the retirement system of record, the excess amount shall be paid by the employee.

Ark. Code Ann. § 24-2-305 Effect of promotion of nonteacher school employee.

Other provisions of this subchapter to the contrary notwithstanding, a school janitor, bus driver, or cafeteria worker who is enrolled in one (1) of those positions as a member of the Arkansas Public Employees' Retirement System and later is promoted to a position as school maintenance worker or supervisor, as bus mechanic or as transportation supervisor, or as cafeteria manager, respectively, shall continue to be a member of the Arkansas Public Employees' Retirement System as long as he or she is employed in one (1) of those respective capacities.

Ark. Code Ann. § 24-2-306 Erroneous enrollment because of concurrent membership.

Any member of the Arkansas Public Employees' Retirement System who is erroneously enrolled in the Arkansas Public Employees' Retirement System because of concurrent enrollment in another state-funded or state-authorized retirement system, other than Social Security, due to separate and distinct service for a public school or a municipality, may elect to remain a member of the Arkansas Public Employees' Retirement System subject to the following conditions: (1) The other system will allow the member to forfeit the concurrent service by refunding all employer and employee contributions respectively; and (2) The member notifies both the Arkansas Public Employees' Retirement System and the other system that the member will remain in the Arkansas Public Employees' Retirement System and forfeit service and accrued benefits in the other system.

Ark. Code Ann. § 24-2-401 Definitions.

As used in this subchapter: (1) “Deferred retirement option plan” means an option for retirement under a reciprocal system whereby the retirement system members, in lieu of terminating employment, can continue with employment with covered employers and can accept a service retirement benefit pursuant to deferred retirement option plan provisions in § 24-7-1301 et seq. for the Arkansas Teacher Retirement System or for any other deferred retirement option plan which might be created by, or authorized for creation by, law under a reciprocal system; (2) “Public safety service covered by the Arkansas Public Employees' Retirement System” means service as a public safety member as defined in § 24-4-101(34); (3) “Reciprocal system” means: (A) The Arkansas Teacher Retirement System in operation June 30, 1957, and continued by §§ 24-7-202 — 24-7-205, 24-7-301 — 24-7-305, 24-7-401 — 24-7-411, 24-7-501, 24-7-502, 24-7-601 — 24-7-604, 24-7-606, 24-7-701, 24-7-702, 24-7-704 — 24-7-713, 24-7-715, and 24-7-716; (B) The Arkansas State Highway Employees' Retirement System, established by § 24-5-103; (C) The Arkansas Public Employees' Retirement System, established by § 24-4-103; (D) The State Police Retirement System, established by § 24-6-203; (E) The Arkansas Judicial Retirement System, established by § 24-8-201 et seq.; (F) An alternate retirement plan as defined in § 24-7-202; or (G) The Arkansas Local Police and Fire Retirement System provided for under § 24-10-101 et seq.; and (4) “State employer” means: (A) The public employer whose employees are covered under: (i) The Arkansas Teacher Retirement System; (ii) The Arkansas State Highway Employees' Retirement System; (iii) The Arkansas Public Employees' Retirement System; or (iv) The State Police Retirement System; (B) The public employer whose employees are circuit court judges, judges of the Court of Appeals, and justices of the Supreme Court, whether elected or appointed to office, covered under the Arkansas Judicial Retirement System; (C) The public employer whose employees are district court judges, whether elected or appointed to office, covered under the Arkansas Public Employees' Retirement System; or (D) A public employer that has an alternate retirement plan as defined in § 24-7-202; (5) "Member" means an employee of a state-retirement-plan- covered employer as defined under the plan of the retirement system; (6)(A) "Retirement benefit" means a benefit that is offered to a retired member in accordance with the law applicable to the retirement system and includes without limitation a: (i) Monthly retirement benefit; and (ii) Deferred retirement plan benefit or annuity, if available. (B) "Retirement benefit" does not exclusively mean a monthly retirement benefit that is offered to a retired member in accordance with the law applicable to the retirement system; and (7) "Service credit" means retirement credit earned by a member for time worked that is used as a factor that is applied to a retirement benefit formula under the law applicable to the retirement system in order to determine the monthly retirement benefit of the member.

Ark. Code Ann. § 24-2-402 Retirement eligibility — Calculation of reciprocal service using deferred service credit.

(a)(1) A member who maintains deferred service credit in one (1) or more reciprocal systems may combine the deferred service credit with service credit earned under a reciprocal system to meet the separate eligibility requirements for receiving a monthly retirement benefit under each reciprocal system. (2) The combined service credit calculated under subdivision (a)(1) of this section shall: (A) Be used for the purpose of establishing the eligibility of a member to receive a retirement benefit from a retirement system; and (B) Not be used to calculate the monthly retirement benefit for service credit earned by a member under each retirement system. (b)(1) To establish the eligibility of a member to receive a monthly retirement benefit from each retirement system, the credited service under all reciprocal systems shall be totaled, and the total credited service shall be used to determine the eligibility of a member to receive a retirement benefit from each retirement system according to the eligibility requirements of that retirement system. (2)(A) The separate retirement system's eligibility requirements for receiving a monthly retirement benefit, the calculation of a monthly retirement benefit, or a deferred retirement option plan, if available, under one (1) retirement system shall not apply to the eligibility requirements for receiving a monthly retirement benefit or a deferred retirement option plan, if available, under a reciprocal system. (B) Any interest credited to the deferred retirement account shall be paid to the member's account under the deferred retirement option benefit program in effect for that retirement system. (c)(1) Once a member meets the eligibility requirements to receive a retirement benefit, the monthly retirement benefit received by the member from a reciprocal system shall be limited to the member's service credit under the reciprocal system and calculated separately under the retirement benefit formula of that reciprocal system. (2) A retirement system shall not use a member's service credit from a reciprocal system to calculate or increase the monthly retirement benefit of the member. (d)(1) Service credit earned by a member under a retirement system shall not be combined with service credit earned by the member under a reciprocal system if the member withdraws his or her employee contributions from either the retirement system or the reciprocal systems. (2) Service credit may be combined under this section if: (A) A member withdraws his or her employee contributions from a retirement system; and (B) After the withdrawal of his or her employee contributions from the retirement system, the member reestablishes service credit by depositing the amount required in accordance with the law applicable to the retirement system from which the employee contributions were withdrawn. (e)(1) The final average compensation used to determine a monthly retirement benefit payable to a member by a reciprocal system shall be the final average compensation calculated for credited service under the reciprocal system as provided by the law applicable to the reciprocal system. (2)(A) A retirement system is not required to calculate a monthly retirement benefit based on the final highest salary or final average compensation under the reciprocal system in which the member has service credit. (B) If a retirement system uses the highest final average compensation of the reciprocal system to determine a monthly benefit payable to a member, the final average compensation shall be computed as prescribed by the law of the reciprocal system. (3) Compensation and salary earned in the Arkansas Judicial Retirement System shall not be used to determine the final highest salary of a member who has service credit in both the Arkansas Judicial Retirement System and a reciprocal system under this section. (4)(A) A member who has earned service credit in more than one (1) reciprocal system on or before June 30, 2021, shall have his or her monthly benefit calculated by using the highest final average compensation the member has earned from any reciprocal system, excepting compensation and salary earned under subdivision (e)(3) of this section. (B) The final average compensation under subdivision (e)(4)(A) of this section shall be computed as prescribed by the law of each reciprocal system at the time of the member’s retirement. (f) Each reciprocal system that has a minimum benefit provision in the plan of the reciprocal system shall pay only a proportionate share of the minimum benefit amount based on the ratio of service credit in the reciprocal system to the total service in all reciprocal systems. (g)(1) I This section does not prohibit providing the same death- in-service benefits to a member that would have been payable had the member died while an active member of a reciprocal system. (2) A member who dies in service while a member of one (1) reciprocal system shall be considered as currently employed by all reciprocal systems in which the member retains credited service. (3) If a member has accrued credited service under the provisions of this subchapter but dies before retirement or before becoming eligible to retire, then the benefits payable shall be those provided by the reciprocal system in which the member has deferred service, with the reciprocal system being responsible for the payment of the death-in-service benefits provided by the applicable provisions of the reciprocal system's retirement laws. (4) If death-in-service benefits are payable by more than one (1) reciprocal system to eligible survivors of a deceased member, the survivors shall not receive more, as a percentage of the deceased member's final pay or as a minimum dollar amount, than the largest amount payable by any single reciprocal system. (5) Each reciprocal system that has a minimum benefit provision in its plan shall pay only a proportionate share of that minimum amount based on the ratio of service in that reciprocal system to the total service in all reciprocal systems. (6) If the reciprocal system is an alternate retirement plan as defined in § 24-7-202, death-in-service benefits shall be contingent on death-in-service benefits having been provided by the alternate retirement plan and having been selected by the member as a benefit. (h)(1) Both service in the Arkansas Public Employees' Retirement System as a member of the General Assembly and service in another reciprocal system during the same period of time may be counted to meet the service requirements for benefits from the reciprocal system . (2) The benefit payable by a reciprocal system shall be based on the credited service in the reciprocal system and the final average compensation under the reciprocal system. (i)(1) If the reciprocal system is the Arkansas Judicial Retirement System and the member's benefits are determined under § 24-8-201 et seq., the benefit payable by the Arkansas Judicial Retirement System shall be determined by multiplying the benefit provided by § 24-8-218 by the following fraction: (A) The numerator shall be the number of the actual years of service credited in the Arkansas Judicial Retirement System as a justice of the Supreme Court or judge of the circuit or chancery courts or the Court of Appeals; and (B) The denominator shall be fourteen (14) years. (2) In no instance shall the benefit payable by the Arkansas Judicial Retirement System exceed the benefit provided by § 24-8-218. (j)(1) In accordance with the law applicable to a retirement system, the board of trustees of each retirement system shall establish the eligibility requirements for a member to receive a monthly retirement benefit or deferred retirement option plan, if available, for service credit earned under their respective retirement system. (2) The board of trustees of each reciprocal system shall promulgate rules necessary to coordinate the retirement benefits of the reciprocal system with any other reciprocal system. (k) If the reciprocal system is an alternate retirement plan as defined in § 24-7-202, the benefits payable shall be in accordance with terms specified in the written alternate retirement plan document for purchasing the insurance policies or annuity contracts, both fixed and variable in nature, for the participants.

Ark. Code Ann. § 24-2-403 Date of annuity payment.

(a) The date a member's annuity, if any, becomes payable by each reciprocal system shall be determined by those provisions in force for each reciprocal system. (b) In no case shall any annuity become payable nor be paid prior to the date the member retires from, and ceases to be, in the employ of an employer covered by a reciprocal system as defined in § 24-2-401(3).

Ark. Code Ann. § 24-2-404 Disbursement of annuities.

(a) The boards of trustees of the reciprocal systems may enter into an agreement whereby the reciprocal system from which a member retires shall be the disbursing system for his or her annuities payable, as provided in this subchapter, by the other reciprocal systems. (b) The agreement shall provide, but shall not be limited to, the manner and frequency with which the disbursing system shall be reimbursed for the annuities payable by the other reciprocal systems. (c) Except for provisions of this section regarding the deferred retirement option plan under § 24-7-1301 et seq. for the Arkansas Teacher Retirement System, the provisions of this section shall not apply to retirants in the Arkansas Teacher Retirement System.

Ark. Code Ann. § 24-2-405 Disability benefits.

(a) A member of a reciprocal system with five (5) or more years of credited service in two (2) or more reciprocal systems shall be eligible to apply for disability benefits from each reciprocal system in which he or she has credited service. (b) Each reciprocal system shall make the determination under its respective rules as to whether the member is eligible for disability benefits. (c) The member shall be eligible for a refund of his or her accumulated contributions plus interest, if any, from any reciprocal system in which he or she does not qualify for disability benefits. This refund shall not alter his or her eligibility for benefits from any other reciprocal system.

Ark. Code Ann. § 24-2-407 Benefit enhancements — Restrictions.

(a) No benefit enhancement provided for by this subchapter shall be implemented if it would cause the publicly supported retirement system's unfunded actuarial accrued liabilities to exceed a thirty-year amortization. (b) No benefit enhancement provided for by this subchapter shall be implemented by any publicly supported system which has unfunded actuarial accrued liabilities being amortized over a period exceeding thirty (30) years until the unfunded actuarial accrued liability is reduced to a level less than the standards prescribed by § 24-1-101 et seq.

Ark. Code Ann. § 24-2-408 Concurrence prohibited.

In establishing credited service under this subchapter, persons who receive credited service pursuant to § 24-4-101(17)(B)(xiii) for dual full-time employment in the Arkansas Public Employees' Retirement System and the Arkansas Local Police and Fire Retirement System under the provisions of this act may count periods of credited service covering the same calendar time only once (1) time.

Ark. Code Ann. § 24-2-501 Free credited service.

(a)(1) Any member of the Arkansas Judicial Retirement System established by § 24-8-201 et seq. shall be entitled to receive free credited service in the system for a period of not to exceed two (2) years for service rendered by him or her in the United States Armed Forces during World War I, World War II, the Korean Conflict, or the Vietnam Conflict. (2) Notwithstanding § 24-2-502 or any other law to the contrary, any member of the system may also purchase credited service in the system not to exceed five (5) years for service rendered by him or her in the United States Armed Forces and to be purchased in accordance with the procedures in § 24-2-502. (b) Any person entitled to receive free credited service in the system under the provisions of this section shall be granted credited service under the system for service in the armed forces during World War I, World War II, the Korean Conflict, or the Vietnam Conflict upon: (1) Making application therefor to the Board of Trustees of the Arkansas Judicial Retirement System; and (2) Providing proof satisfactory to the board of that person's military service. (c) The provisions of this section shall be supplemental to any other laws relating to state-supported retirement systems in this state. Nothing in this section shall be construed to diminish the right of any member of a state-supported retirement system to obtain credited service in the system for military service. (d) This section shall not apply to the Tier Two Actual Judicial Service Benefit Plan of the Arkansas Judicial Retirement System provided for in § 24-8-701 et seq.

Ark. Code Ann. § 24-2-502 Purchased credited service.

(a) Any person who is or was a member of a state-supported retirement system in this state and who was not receiving benefits under the system on July 9, 1975, shall be entitled to purchase credited service in the system for a period not to exceed five (5) years for service rendered by the member in the United States Armed Forces prior to the member's employment in a position covered by a state-supported retirement system, but only if the person: (1) Has five (5) years of actual service with the retirement system; (2) Received an honorable discharge from the armed forces; and (3)(A) For the first three (3) years of credited service, contributes to the members' deposit account a sum of money equal to the amount he or she would have contributed to the account had he or she been a member during his or her term of military service. This amount shall be based upon his or her monthly contributions at the time he or she first became a member of the retirement system and interest thereon at the rate of six percent (6%), together with an amount equal to the employer's matching contribution and interest thereon at the rate of six percent (6%), which interest shall commence January 1, 1976, or six (6) months after eligibility, whichever is later. (B) For the fourth and fifth year of credited service, contributes to the members' deposit account a sum of money equal to the amount he or she would have contributed to the account had he or she been a member during his or her term of military service. This amount shall be based upon: (i) His or her salary at the time he or she first became a member of the retirement system; (ii) The employer's contribution in effect at the time he or she first became eligible to purchase the military service; and (iii) Interest thereon on both the employee's and employer's contributions at the rate of six percent (6%), which interest shall commence January 1, 1976, or six (6) months after eligibility, whichever is later. (b) The benefit program to be applicable to the credited service for members of the Arkansas Public Employees' Retirement System, the State Police Retirement System, or the Arkansas Teacher Retirement System shall be: (1) The benefit program of § 24-4-101 et seq. for members of the Arkansas Public Employees' Retirement System; (2) The benefit program based on § 24-6-101 et seq. for members of the State Police Retirement System; or (3) The benefit program based on § 24-7-101 et seq. for members of the Arkansas Teacher Retirement System. (c) The provisions of this section shall be supplemental to any other laws relating to state-supported retirement systems in this state. Nothing in this section shall be construed to repeal or modify any existing provisions of any state-supported retirement system law providing for credited service in the system for military service, nor to diminish the right of any member of a state-supported retirement system to obtain credited service in the system for military service under the provisions of existing laws, but in no event shall any member of a state-supported retirement system be entitled to or receive in excess of five (5) years of credited service for military service rendered by the member. No member shall be eligible for credited military service in more than one (1) state-supported retirement system. (d) When the applicant can obtain military service credit under this section and also under other laws relating to state-supported retirement systems in this state, then service credit shall be granted under the provisions of the laws in chronological order beginning with the earliest law. However, the laws may not be used to allow duplicate service credit.

Ark. Code Ann. § 24-2-504 Return to covered employment by military personnel.

(a) An active member of the state retirement system who is called to active military duty or state active military duty shall be afforded all employment protections as provided in the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. § 4301 et seq., as in effect on January 1, 2009. (b) Employer contributions shall be paid for the state retirement system member's period of active military duty by the member's last retirement system employer immediately before the member's active duty in accordance with the Uniformed Services Employment and Reemployment Rights Act, as in effect on January 1, 2009. (c) In order to receive retirement credit in the state retirement system for the time spent in active duty, a member covered by the contributory provisions of the member's state retirement system who returns from active military duty to either the same or a different covered employer shall pay into the state retirement system the employee contributions that would have otherwise been paid into the state retirement system by the member as though the member had never left covered service.

Ark. Code Ann. § 24-2-505 Compliance with Heroes Earnings Assistance and Relief Tax Act of 2008.

(a)(1) In the case of a member who dies while performing qualified military service, including state active military duty, on or after January 1, 2011, and who otherwise would have been entitled to reemployment rights under the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. § 4301 et seq., as in effect on January 1, 2011, the survivors of that member are entitled to any additional benefits that would have been provided under the public employee retirement plan had the member resumed employment with a covered employer on the day preceding his or her death and then terminated employment on the actual date of death. (2) Subdivision (a)(1) of this section does not apply to benefit accruals relating to the period of qualified military service. (3) The member's qualified military service shall be counted for purposes of determining whether the individual in issue was vested with the public employee retirement plan. (b) In the case of a member who becomes disabled while performing qualified military service, including state active military duty, on or after January 1, 2011, and who otherwise would have been entitled to reemployment rights under the federal Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. § 4301 et seq., as in effect on January 1, 2011, that member is considered to have resumed employment with a covered employer on the day preceding the onset of his or her disability and then terminated employment on the actual date he or she became disabled. (c) A member who dies or becomes disabled while performing qualified military service, including state active military duty, is deemed to have made employee contributions for the purpose of determining benefits other than benefit accruals that are contingent on those contributions for the period of qualified military service. (d) This section applies to each public retirement system unless the system has a specific provision regarding the Heroes Earnings Assistance and Relief Tax Act of 2008, Pub. L. No. 110-245, already in its law.

Ark. Code Ann. § 24-2-601 Investment authority and limitations generally.

(a) All investments of the retirement systems covered by this subchapter shall be in strict compliance with the provisions of this subchapter. (b) The term “trust” as used in this subchapter refers to the following Arkansas retirement systems: (1) The State Police Retirement System; (2) The Arkansas Public Employees' Retirement System; (3) The Arkansas Teacher Retirement System; (4) The Arkansas State Highway Employees' Retirement System; and (5) The Arkansas Judicial Retirement System. (c) The term “trustees” as used in this subchapter refers to boards of trustees of the systems referenced in subsection (b) of this section.

Ark. Code Ann. § 24-2-602 Investment authority and limitations — Permissible investments.

(a) The boards of trustees of the State Police Retirement System, the Arkansas Public Employees' Retirement System, the Arkansas Teacher Retirement System, the Arkansas State Highway Employees' Retirement System, and the Arkansas Judicial Retirement System shall have full power to invest and reinvest the moneys of the respective systems and to hold, purchase, sell, assign, transfer, or dispose of any of the investments so made as well as the proceeds of the investments and moneys. (b) However, the investments and reinvestments shall only be made in accordance with the prudent investor rule set forth in §§ 24-2-610 — 24-2-619.

Ark. Code Ann. § 24-2-603 Investment authority and limitations — Default setoff.

(a) In the event of default in payment of the principal or interest of any investment obligation held by any state retirement system where the issuer of the obligation receives moneys from the state, the default shall be certified by the board of the respective system to the Treasurer of State. (b) The Treasurer of State shall withhold all moneys due the issuer from the state until the default, together with regular interest thereon, is satisfied.

Ark. Code Ann. § 24-2-604 Investment authority and limitations — Conflict of interest.

Except as to the rights of a member, retirant, or beneficiary, no trustee and no officer or employee of the board of any state retirement system shall have any interest, directly or indirectly, in the gains or profits of any investment made by the respective board. Nor shall any retirement system trustee, officer, or employee, directly or indirectly for himself or herself or as an agent, in any manner use the assets of the systems except to make such current and necessary payments as are authorized by the respective boards, nor shall any of them become an endorser or surety or, in any manner, an obligor for moneys loaned by or borrowed from any of the respective systems.

Ark. Code Ann. § 24-2-605 Investment authority and limitations — Fidelity bonds.

(a) The boards of trustees of the respective retirement systems shall provide for a blanket fidelity bond of one million dollars ($1,000,000) covering the employees of the systems or such others as may be responsible for administering the funds. (b) The boards may pay the premiums for the bond from funds of the systems.

Ark. Code Ann. § 24-2-606 Investment authority and limitations — Custodianship of assets.

(a) The Treasurer of State shall be the legal custodian of the securities of the respective retirement systems. However, the systems may deposit with the Treasurer of State, in lieu of securities, safekeeping receipts or evidence of federal bookkeeping entries. (b) The financial institution or depository issuing the safekeeping receipts, unless issued by an agency of the federal government, shall have on file with the Treasurer of State a letter of the issuer's bonding or insurance company, stating the amount of insurance currently in force covering loss or theft of the securities. (c) In addition, the boards of trustees of the respective retirement systems, if deemed necessary to facilitate particular investment transactions, the settlement of security transactions, redemption of particular securities, or collection of investment income, may select and designate such banks, trust companies, or central depositories as may be appropriate to act as legal custodian of their securities.

Ark. Code Ann. § 24-2-607 Investment authority and limitations — Trust account.

(a) In addition to the various retirement systems funds established as trust funds in the State Treasury, a bank trust fund or funds may be established and maintained in such depository bank or banks as may be designated by the boards of trustees of the respective retirement systems. (b) Each bank fund shall consist of and there may be deposited in the fund: (1) All employer contributions, including any interest; (2) All employee contributions, including any interest; (3) Interest, dividend, and other incomes realized from investments and reinvestments; (4) Interest earned upon any moneys in the fund; and (5) Such other proceeds as may be derived from the sale, exchange, redemption, transfer, or disposition of any securities or investments. (c) The following disbursements may be made from the bank funds: (1) Payments for all securities and investments, the purchase of which is authorized by law, which may include principal, accrued interest, commission, taxes, and fees; (2) Payments for money manager and custodian bank fees; (3) The deposit to the appropriate State Treasury fund for the payment of annuities and refunds as authorized by law that are paid on vouchers issued by the respective retirement systems and on warrants issued thereon by the Auditor of State; (4) The payment of annuities and refunds as authorized by law that are paid on cash fund vouchers issued by the respective retirement systems and on checks or wire transfers issued from bank funds; and (5) The deposit to the appropriate State Treasury fund for the payments of salaries, maintenance, and operating expenses of the retirement systems supported from investment earnings.

Ark. Code Ann. § 24-2-608 Investment authority and limitations — Arkansas-related investments.

(a) In acquiring, investing, reinvesting, exchanging, retaining, selling, and managing funds held by each of the trusts, fiduciaries administering the systems shall manage the funds so as to favorably impact the economic condition of and maximize capital investment in the State of Arkansas when appropriate investment alternatives are available. (b) It is the intention of the General Assembly that, as assets become available for investment, the systems shall seek to invest not less than five percent (5%) nor more than ten percent (10%) of their portfolios in Arkansas-related investments. (c) In calculating the percentage of Arkansas-related investments, the systems shall not include Federal National Mortgage Association investments nor Government National Mortgage Association investments. (d) Nothing in this section shall in any way limit or impair the responsibility of a fiduciary to invest in accordance with the prudent investor rule set forth in §§ 24-2-610 — 24-2-619.

Ark. Code Ann. § 24-2-609 Registration of securities in name of nominee — Powers and duties of nominee.

(a) The boards of trustees of the various state retirement systems are authorized to register stocks, bonds, notes, and other securities held by and for the systems in the name of a designated nominee. (b) Such action as is necessary to establish a nominee and a nominee agreement may be taken. (c) The nominee agreement shall specify that the nominee shall not have or claim any beneficial interest whatsoever in any stocks, bonds, notes, and other securities held in the name of the nominee. That is, all beneficial interest in the stocks, bonds, notes, and other securities and in the interest, dividends, and capital gains derived therefrom shall be vested in the respective state retirement systems. (d) The nominee shall have no power to undertake any obligation on behalf of the nominee, except upon the direction of the particular state retirement system. (e) The nominee may endorse securities and take other necessary actions in the purchase, registration, and sale of stocks, bonds, notes, and other securities, subject always to the provisions of this section.

Ark. Code Ann. § 24-2-610 Prudent investor rule.

(a) Except as otherwise provided in subsection (b) of this section, trustees who invest and manage trust assets owe a duty to the beneficiaries of the trust to comply with the prudent investor rule set forth in §§ 24-2-610 — 24-2-619. (b)(1) The prudent investor rule, a default rule, may be expanded, restricted, eliminated, or otherwise altered by the provisions of a trust. (2) Trustees are not liable to a beneficiary to the extent that the trustees acted in reasonable reliance on the provisions of the trust.

Ark. Code Ann. § 24-2-611 Standard of care — Portfolio strategy — Risk and return objectives.

(a) Trustees shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustees shall exercise reasonable care, skill, and caution. (b) The trustees' investment and management decisions respecting individual assets must be evaluated not in isolation but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust. (c) Among circumstances that trustees shall consider in investing and managing trust assets are such of the following as are relevant to the trust or its beneficiaries: (1) General economic conditions; (2) The possible effect of inflation or deflation; (3) The expected tax consequences of investment decisions or strategies; (4) The role that each investment or course of action plays within the overall trust portfolio, which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property; (5) The expected total return from income and the appreciation of capital; (6) Other resources of the beneficiaries; (7) Needs for liquidity, regularity of income, and preservation or appreciation of capital; and (8) An asset's special relationship or special value, if any, to the purposes of the trust or to one (1) or more of the beneficiaries. (d) Trustees shall make a reasonable effort to verify facts relevant to the investment and management of trust assets. (e) Trustees may invest in any kind of property or type of investment consistent with the standards of this subchapter. (f) Trustees who have special skills or expertise, or who are named trustees in reliance upon the trustees' representation that the trustees have special skills or expertise, have a duty to use their special skills or expertise.

Ark. Code Ann. § 24-2-612 Diversification.

Trustees shall diversify the investments of the trust unless the trustees reasonably determine that, because of special circumstances, the purposes of the trust are better served without diversifying.

Ark. Code Ann. § 24-2-613 Duties at inception of trusteeship.

(a) Within a reasonable time after accepting a trusteeship or receiving trust assets, trustees shall review the trust assets and make and implement decisions concerning the retention and disposition of assets in order to bring the trust portfolio into compliance with the purposes, terms, distribution requirements, and other circumstances of the trust and with the requirements of this subchapter. (b)(1) Trustees shall develop an investment policy. This policy shall be a written statement of goals for the fund and rules to be followed to achieve those goals. (2) Trustees shall measure performance of the fund and shall measure each manager's performance against benchmarks jointly agreed upon by the trustees and managers.

Ark. Code Ann. § 24-2-614 Loyalty.

Trustees shall invest and manage the trust assets solely in the interest of the members and benefit recipients of the trust.

Ark. Code Ann. § 24-2-615 Impartiality.

If a trust has two (2) or more beneficiaries, the trustees shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries.

Ark. Code Ann. § 24-2-616 Investment costs — Limitations on investment authority.

(a) In investing and managing trust assets, trustees may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trustee. (b) Trustees may delegate investment functions to an agent that a prudent trustee of comparable skills could properly delegate as provided in § 24-2-618.

Ark. Code Ann. § 24-2-617 Reviewing compliance.

Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of the trustees' decisions or actions and is not determined by hindsight.

Ark. Code Ann. § 24-2-618 Delegation of investment and management functions.

(a) Trustees may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustees shall exercise reasonable care, skill, and caution in: (1) Selecting an agent; (2) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust; and (3) Reviewing periodically the agent's actions in order to monitor the agent's performance and compliance with the terms of the delegation. (b) In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation. (c) Trustees who complied with the requirements of subsection (a) of this section are not liable to the beneficiaries or to the trust for the decisions or actions of the agent to whom the function was delegated. (d) By accepting the delegation of a trust function from the trustees of a trust that is subject to the law of this state, an agent submits to the jurisdiction of the courts of this state. (e) Single agent or exclusive agency delegations by the trustees shall be discouraged. Trustees shall delegate investment and management functions to a single agent or an exclusive agency arrangement only after the trustee has determined that the exclusive agency arrangement is in the best interest of the trust, has exercised extraordinary care and caution in selecting the exclusive agent, and has arranged to periodically review in detail the agent's actions to monitor the agent's performance and compliance with the terms of the delegation. (f)(1) Notwithstanding the Arkansas Procurement Law, § 19-61-101 et seq., the boards of trustees of the respective state retirement systems shall promptly implement their investment directives consistent with the duty of care required of a fiduciary under the prudent investor rules in this chapter. (2) If in the capacity as fiduciary, the trustees deem it appropriate to immediately retain an investment manager or to alter the terms of an existing agreement with an investment manager, the trustees shall: (A) Pass a resolution stating the reason for the immediate retention of the investment manager; (B) State the anticipated date of implementation; and (C) Provide the Office of State Procurement and the staff of the Review Subcommittee of the Legislative Council the information contained in subdivisions (f)(2)(A) and (B) of this section within five (5) business days. (3) As required by the Review Subcommittee of the Legislative Council, a member of the board of trustees or the director of the respective retirement system fund shall appear before the next occurring meeting of that body to explain the details of the professional services contracts in question. (g)(1) The length of a contract or other investment agreement and any renewal or extension of the contract or other investment agreement may be agreed upon by a state retirement system and the other party to the contract or other investment agreement and is exempt from the mandatory expiration provisions under the Arkansas Procurement Law, § 19-61-101 et seq., if the contract or other investment agreement is procured under the Arkansas Procurement Law, § 19-61-101 et seq., and the purpose of the contract or other investment agreement is to: (A) Invest and manage a system's trust assets under § 24-2-610; (B) Provide actuarial services to determine the liabilities and financial status of a state retirement plan; (C) Retain custody of a system's trust assets; or (D) Protect and recover trust assets of a system. (2) The board of trustees of a state retirement system shall determine the duration of the contract or other investment agreement and any renewal or extension of the contract or other investment agreement by negotiating with the other party to the contract or other investment agreement for the most favorable rates and terms for the state retirement system based on: (A) Market competition; (B) Experience of the other party to the contract or other investment agreement; (C) Knowledge of the state retirement system's need; and (D) Compliance with the prudent investor rule set forth in §§ 24-2-610 -- 24-2-619. (3) The board of trustees of a state retirement system shall submit information requested by the Legislative Council concerning a contract or other investment agreement procured under the Arkansas Procurement Law, § 19-61-101 et seq. (4) A partial equity ownership agreement between a state retirement system and another party shall be reviewed under § 19-69-101 et seq. (5) If a contract with a consultant to provide a state retirement system consulting services, to recommend investment managers and investment funds, or for the investment of trust funds of the state retirement system under this subsection is extended, an amendment, acknowledged by the consultant in writing, shall be added to the contract extension that: (A) States that the State of Arkansas and the state retirement system have a statutory goal to recruit and hire emerging managers and emerging investment funds consistent with the prudent investor rule; (B)(i) Requires the consultant to submit a report to the state public retirement system that describes the plan or process the consultant will use to recruit and hire emerging managers and emerging investment funds. (ii) The consultant shall provide an emerging manager update on the progress made in the previous fiscal year to the state retirement system no later than sixty (60) days after the end of the fiscal year that details the consultant's processes in locating, analyzing, evaluating, and performing due diligence activity on emerging managers; and (C)(i) Allows a state retirement system to refer or recommend a specific emerging manager or emerging investment fund to the consultant. (ii) A state retirement system that makes a referral may request a report concerning the outcome of a referral from the consultant. (6) At the request of the Joint Committee on Public Retirement and Social Security Programs or the Legislative Council, a state retirement system shall appear and make a presentation concerning the recruitment and hiring of emerging managers and emerging investment funds.

Ark. Code Ann. § 24-2-619 Language invoking standard of subchapter.

The following terms or comparable language in the provisions of a trust, unless otherwise limited or modified, authorizes any investment or strategy permitted under this subchapter: (1) “Investments permissible by law for investment of trust funds”; (2) “Legal investments”; (3) “Authorized investments”; (4) “Using the judgment and care under the circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital”; (5) “Prudent man rule”; (6) “Prudent trustee rule”; (7) “Prudent person rule”; and (8) “Prudent investor rule”.

Ark. Code Ann. § 24-2-701 Financial objectives and actuarial valuation.

(a) The general financial objective of each Arkansas public employee retirement plan shall be to establish and receive contributions that, expressed as percentages of active member payroll, will remain approximately level from generation to generation of state citizens. More specifically, contributions received each year shall be sufficient both: (1) To fully cover the costs of benefit commitments being made to members for their service being rendered in that year; and (2)(A) To make a level payment that if paid annually over a reasonable period of future years will fully cover the unfunded costs of benefit commitments for service previously rendered. (B) Alternatively, if the costs of benefit commitments for service previously rendered are overfunded, the plan may deduct a level payment that if deducted annually over a reasonable period of future years will fully liquidate the overfunded portion of such costs. (b) Each state public employee retirement plan shall cause an actuarial valuation of the plan or fund to be made at least biennially, and preferably annually, to determine how well the plan is meeting the objectives set forth in subsection (a) of this section. (c) The employer contribution rates to the retirement systems shall be as follows: (1)(A) For the Arkansas Teacher Retirement System, the Board of Trustees of the Arkansas Teacher Retirement System shall establish employer contribution rates prospectively each year. (B) The employer contribution rates shall be based on the actuary's determination of the rate required to fund the plan as necessary to meet the general financial objective set forth in subsection (a) of this section. (C) The employer contribution rates shall be the rates determined by the Board of Trustees of the Arkansas Teacher Retirement System under § 24-7-401(c) and based on the annual actuarial valuation of the Arkansas Teacher Retirement System; (2) For the State Police Retirement System, twenty-six percent (26%); and (3)(A) For the Arkansas Public Employees' Retirement System, the Board of Trustees of the Arkansas Public Employees' Retirement System shall establish employer contribution rates prospectively each year, and the rates shall be based on the actuary's determination of the rate required to fund the plan in accordance with the objectives set forth in subsection (a) of this section. (B) The employer contribution rates shall be the rates determined by the annual actuarial valuation. (d) Subsection (c) of this section shall not be construed as affecting in any way the existing methods of determining the years of credited service for computing benefits or determining retirement eligibility.

Ark. Code Ann. § 24-2-702 Reports.

(a) Each Arkansas public employees' retirement system shall have an annual financial audit performed by Arkansas Legislative Audit and prepared in accordance with the financial accounting and reporting standards set forth for public pension plans by the Governmental Accounting Standards Board. (b)(1) In addition, if approved by the board of trustees of an Arkansas public employees' retirement system, a system may also select another independent auditor to perform a separate financial audit of the respective system. (2) Prior to entering the contract for the additional audit, the public employees' retirement system shall provide the Legislative Joint Auditing Committee the reasons, in writing, for the need of the additional financial audit. (3) All contracts for audits shall be in compliance with the state's fiscal laws and rules. (4) A copy of each audit report prepared by another independent auditor shall be provided to the Legislative Joint Auditing Committee, the Legislative Council, and the Governor.

Ark. Code Ann. § 24-2-703 Tax exemptions.

(a) The assets of the Arkansas Public Employees' Retirement System, the State Police Retirement System, the Arkansas Judicial Retirement System, the Arkansas State Highway Employees' Retirement System, and the Arkansas Teacher Retirement System are exempt from taxes by the state or any political subdivision or agency thereof. (b)(1) It is the purpose of this section to provide equitable tax treatment to persons receiving benefits from alternate publicly supported retirement or annuity plans of the state's colleges and universities and the Division of Higher Education. (2) It is not the intent of this section to reduce the income tax exemption provided by law to any person in regard to retirement or survivor benefits.

Ark. Code Ann. § 24-2-704 Retirement in event of government reorganization.

(a) In the event of any structural reorganization of state government operations, all current employees, appointees, trustees, and commissioners of any affected agency, board, or commission shall remain associated with the state-supported retirement system that existed for them as of the date immediately prior to the reorganization. (b)(1) Member employers and employees of any state-supported retirement system shall remain covered by their respective systems. (2) The transition of any state agency or other political subdivision of the state from one state-supported retirement system to another shall be accomplished through enabling legislation in the Eighty-fifth General Assembly. (3) In the event of a retirement coverage transition, there shall be no transfer of service from one retirement system to another. Instead, the provisions of §§ 24-2-402 — 24-2-405, 24-2-407, and 24-2-408 shall be in full force and effect.

Ark. Code Ann. § 24-2-801 Title.

This subchapter shall be known and may be cited as the "State Government Employee Retirement Protection Act".

Ark. Code Ann. § 24-2-802 Definitions.

As used in this subchapter: (1) "Fiduciary" means a person who, with respect to a pension benefit plan: (A) Exercises any discretionary authority or discretionary control regarding the management of the pension benefit plan or exercises an authority or control regarding the management or disposition of the pension benefit plan's assets; (B) Has any discretionary authority or discretionary responsibility in the administration of the pension benefit plan, including making recommendations or voting on or for a plan's shares or proxies; (2)(A) "Material", when used to qualify a financial risk or financial return, means a financial risk or financial return in which there is a substantial likelihood that a reasonable investor would attach importance when: (i) Evaluating the potential financial risks or returns of an existing or prospective investment; or (ii) Exercising, or declining to exercise, any rights appurtenant to securities. (B) "Material", when used to qualify a financial risk or financial return, does not include: (i) Furthering nonpecuniary, environmental, social, political, ideological, or other goals or objectives; or (ii) Any portion of a financial risk or financial return that primarily relates to events that: (a) Involve a high degree of uncertainty regarding what may occur in the long-term future; and (b) Are systemic, general, or not investment- specific in nature; (3) "Pension benefit plan" means any plan, fund, or program, other than an individually directed defined contribution plan, that is established, maintained, or offered by the State of Arkansas or any subdivision, county, municipality, agency, or instrumentality of the State of Arkansas, or any school, college, university, administration, authority, or other enterprise operated by the State of Arkansas to the extent that, by its terms or as a result of prevailing circumstances, the plan, fund, or program: (A) Provides retirement income or other retirement benefits to employees or former employees; or (B) Results in a deferral of income by employees for a period of time extending to or beyond the termination of the covered employment; (4)(A) "Pecuniary factor" means a factor that has a material effect on the financial risk or financial return, or both, of an investment based on appropriate investment horizons consistent with the pension benefit plan's investment objectives and the funding policy. (B) "Pecuniary factor" does not include a nonpecuniary factor; and (5) "Nonpecuniary" means any action taken or factor considered by a fiduciary with any purpose to further environmental, social, political, or ideological goals.

Ark. Code Ann. § 24-2-803 Standard of care — Sole interest and prudent person.

(a) A fiduciary shall discharge his or her duties with respect to a pension benefit plan: (1) Solely in the pecuniary interest of the participants and beneficiaries and for the exclusive purpose of: (A) Providing pecuniary benefits to participants and their beneficiaries; and (B) Defraying reasonable expenses of administering the plan; (2) With the care, skill, prudence, and diligence under the prevailing circumstances that a prudent person acting in a similar capacity and familiar with such matters would use in the conduct of an enterprise of a similar character and with similar aims; (3) By diversifying the investments of the pension benefit plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (4) In accordance with the documents and instruments governing the pension benefit plan insofar as the documents and instruments are consistent with the provisions of this subchapter.

Ark. Code Ann. § 24-2-804 Consideration of nonpecuniary factors prohibited.

(a) A fiduciary's evaluation of an investment, or evaluation or exercise of any right appurtenant to an investment, shall take into account only pecuniary factors. (b) A fiduciary shall not promote a nonpecuniary benefit or any other nonpecuniary goals. (c)(1) An environmental, social, corporate governance, or other similarly oriented consideration is a pecuniary factor only if it presents an economic risk or opportunity that a qualified investment professional would treat as a material economic consideration under generally accepted investment theories. (2) The weight given to any factor listed in subdivision (c)(1) of this section should reflect solely a prudent assessment of its impact on financial risk and financial return. (3) A fiduciary considering an environmental, social, corporate governance, or other similarly oriented factor as a pecuniary factor is also required to examine the level of diversification, degree of liquidity, and the potential financial risk and financial return in comparison with other available alternative investments that would play a similar role in the pension benefit plan portfolio. (4) Any pecuniary consideration of an environmental, social, or governance factor must include an evaluation of whether a greater return can be achieved through investments that rank poorly on that factor.

Ark. Code Ann. § 24-2-805 Voting ownership interests.

(a)(1) All shares held directly or indirectly by or on behalf of a pension benefit plan or its beneficiaries, or both, shall be voted upon solely in the pecuniary interest of the pension benefit plan participants. (2) Voting to further a nonpecuniary, environmental, social, political, ideological, or other benefit or goal is prohibited. (b) Unless no economically practicable alternative is available: (1) A fiduciary shall not adopt a practice of following the recommendations of a proxy advisory firm or other service provider unless the firm or service provider has a practice of following proxy voting guidelines that are consistent with the fiduciary's obligation to act based only upon pecuniary factors and makes a written commitment to do so; and (2) Plan assets shall not be entrusted to a fiduciary unless that fiduciary has a practice of following guidelines when engaging with portfolio companies and voting shares or proxies that match the obligation of the pension benefit plan to act based only upon pecuniary factors and makes a written commitment to do so. (c) Authority to vote upon shares as discussed in this section shall be in the hands of the existing state official or board who is politically accountable to the people of the State of Arkansas for each pension benefit plan. (d) All voting authority shall reside with the appropriate state official or board, except that the state official or board may delegate that authority to a person who has a practice of following guidelines that match the governmental entity's obligation to act based only on pecuniary factors and makes a written commitment to do so. (e)(1) All proxy votes shall be tabulated and reported annually to the each pension benefit plan's board of trustees. (2)(A) For each vote, the report shall contain a vote caption, the plan's vote, the recommendation of company management and, if applicable, the proxy advisor's recommendation. (B) These reports shall be posted on a publicly available webpage on each applicable board of trustees' website.

Ark. Code Ann. § 24-2-806 Enforcement.

(a) This subchapter may be enforced by the Attorney General. (b) If the Attorney General has reasonable cause to believe that a person has engaged in or is engaging in a violation of this subchapter, the Attorney General may: (1) Require the person to file on forms the Attorney General prescribes a statement or report in writing, under oath, as to all the facts and circumstances concerning the violation, as well as other data and information the Attorney General deems necessary; (2) Examine under oath any person in connection with the violation; (3) Examine any record, book, document, account, or paper the Attorney General deems necessary; and (4) Pursuant to an order of a circuit court with jurisdiction, impound any record, book, document, account, paper, sample, or material relating to the practice and retain the same in the Attorney General's possession until the completion of all proceedings undertaken under this subchapter or in the court.

Source: Public.Resource.Org / UniCourt, Official Code of Arkansas Annotated, Release 78 (2020) (unicourt.github.io/cic-code-ar)URL: https://unicourt.github.io/cic-code-ar/transforms/ar/ocar/r78/gov.ar.code.title.24.htmlFetched: 11/8/2026