[14869]
July 3, 2002
TO: PENSION MEMBERS No. 31-02
PENSION OPERATIONS ADVISORY COMMITTEE No. 44-02
RE: INSTITUTE LETTER CONCERNING CALIFORNIA 403(b) LEGISLATION
The California Senate is currently considering the attached legislation, Assembly Bill
2506, which would require the California Teachers’ Retirement Board, the manager of the State
Teachers’ Retirement System, to establish a registration process for vendors seeking to offer
retirement products under section 403(b) of the Internal Revenue Code to employees of local
school districts, community college districts and county offices of education. The information
obtained through this registration process would be posted on an impartial information bank
maintained by the Board on an Internet website. The costs of the creation and maintenance of
the information bank would be borne by registered vendors.
The Institute has sent the attached letter to the sponsor of the bill, Assemblymember
Steinberg, to express its concerns about certain aspects of the bill. As a preliminary matter, the
letter notes that the information that would be provided on the information bank is readily
available today to potential investors of mutual funds through their prospectuses. The letter
also raises the industry’s specific concerns about the assessing of fees, the open-ended nature of
these fees, and the bill’s specific requirement that a vendor must describe in its registration its
“willingness to negotiate reasonable indemnification agreements.”
Kathy D. Ireland
Associate Counsel
Attachments
Note: Not all recipients receive the attachments. To obtain copies of the attachments, please visit our members
website (http://members.ici.org) and search for memo 14869, or call the ICI Library at (202) 326-8304 and request the
attachments for memo 14869.
Attachment no. 1 (in .pdf format)