EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
Italics indicate opposite chamber/conference committee amendments.
*hb1028*
HOUSE BILL 1028
P6 (5lr2376)
ENROLLED BILL
— Appropriations/Budget and Taxation —
Introduced by Delegate Forbes (Chair, Joint Committee on Pensions)
Read and Examined by Proofreaders:
_______________________________________________
Proofreader.
_______________________________________________
Proofreader.
Sealed with the Great Seal and presented to the Governor, for his approval this
_______ day of _______________ at ________________________ o’clock, ________M.
______________________________________________
Speaker.
CHAPTER ______
AN ACT concerning 1
Board of Trustees for the State Retirement and Pension System – Investment 2
Division – Compensation and Staffing Committee 3
FOR the purpose of clarifying that the Board of Trustees for the State Retirement and 4
Pension System shall pay certain incentive compensation to the Chief Investment 5
Officer for the State Retirement and Pension System if the Chief Investment Officer 6
retires from the Investment Division of the State Retirement Agency in a certain 7
manner; clarifying that the Board of Trustees shall pa y certain incentive 8
compensation to certain employees of the Investment Division if the employees retire 9
from the Investment Division in a certain manner; repealing the Objective Criteria 10
Committee of the Board of Trustees for the State Retirement and Pension System 11
and establishing a Compensation and Staffing Committee of the Board of Trustees; 12
providing for the membership of the Committee; clarifying the Board of Trustees’ 13
authority to determine the qualifications and compensation of and the type and 14
number of positions necessary for carrying out the professional investment functions 15 2 HOUSE BILL 1028
of the Investment Division of the State Retirement Agency; requiring the Committee 1
to make certain recommendations to the Board of Trustees regarding the objective 2
criteria to be used in setting compensation and awarding financial incentives to 3
certain employees in the Investment Division; requiring the Board of Trustees to 4
consider certain recommendations of the Committee; clarifying the requirements for 5
the Board of Trustees to enter into an agreement with a consultant to provide certain 6
services to the Committee; and generally relating to the operations of the Board of 7
Trustees for the State Retirement and Pension System. 8
BY repealing and reenacting, with amendments, 9
Article – State Personnel and Pensions 10
Section 21–108(b), 21–118.1(a), (b), (c), and (d)(1)(i), and 21–122(f) and (g) 11
Annotated Code of Maryland 12
(2024 Replacement Volume and 2024 Supplement) 13
BY repealing and reenacting, without amendments, 14
Article – State Personnel and Pensions 15
Section 21–122(a)(1) through (3) 16
Annotated Code of Maryland 17
(2024 Replacement Volume and 2024 Supplement) 18
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
That the Laws of Maryland read as follows: 20
Article – State Personnel and Pensions 21
21–108. 22
(b) In addition to the Investment Committee established under § 21–114 of this 23
subtitle AND THE COMPENSATION AND STAFFING COMMITTEE ESTABLISHED UNDER 24
§ 21–122 OF THIS SUBTITLE , the Board of Trustees may establish other committees. 25
21–118.1. 26
(a) (1) Notwithstanding any other provision of law, on the recommendation of 27
the Executive Director and the [Investment] COMPENSATION AND STAFFING 28
Committee, the Board of Trustees shall determine the qualifications and appointment, as 29
well as compensation and leave, for the Chief Investment Officer who shall be the head of 30
the Investment Division. 31
(2) THE COMPENSATION AND STAFFING COMMITTEE SHALL ASSIST 32
THE EXECUTIVE DIRECTOR AND THE INVESTMENT COMMITTEE IN RECOMMEN DING 33
QUALIFICATIONS , COMPENSATION , AND LEAVE FOR THE CHIEF INVESTMENT 34
OFFICER, INCLUDING ANY SALARY CHANGES FOR THE CHIEF INVESTMENT OFFICER. 35
HOUSE BILL 1028 3
(b) (1) In making RECOMMENDATIONS , determinations, and appointments 1
under this section, the Executive Director and the [Investment] BOARD OF TRUSTEES, 2
EXECUTIVE DIRECTOR, INVESTMENT COMMITTEE, AND COMPENSATION AND 3
STAFFING Committee shall consider the comparative qualifications, compensation, and 4
leave of employees serving in similar positions and discharging similar duties at 5
comparable public pension funds. 6
(2) (i) 1. The Board of Trustees shall adopt objective criteria for 7
setting the qualifications and compensation of the Chief Investment Officer. 8
2. The Board shall consider the recommendations of the 9
[Objective Criteria] COMPENSATION AND STAFFING Committee under § 21–122(g) of 10
this subtitle before adopting objective criteria for setting compensation. 11
(ii) The criteria adopted under subparagraph (i) of this paragraph 12
shall include objective benchmarks of investment performance that shall be met or 13
exceeded for the Chief Investment Officer to be eligible for an increase in compensation. 14
(iii) The Board may not grant any increases in compensation to the 15
Chief Investment Officer in a fiscal year in which State employees are subject to a furlough. 16
(iv) The Chief Investment Officer’s compensation may not be 17
adjusted in accordance with cost–of–living adjustments and merit increases available to 18
State employees. 19
(c) (1) In addition to the Board of Trustees setting the compensation of the Chief 20
Investment Officer under subsection (a) of this section, the Board of Trustees may also award 21
financial incentives to the Chief Investment Officer in accordance with this subsection and 22
subsection (d) of this section. 23
(2) (i) Any financial incentives paid shall be paid over multiple fiscal 24
years in equal installments. 25
(ii) The dates on which financial incentives awarded under this 26
section shall be paid shall be set by the Board of Trustees at the time the financial incentives 27
are determined. 28
(iii) The dates set under subparagraph (ii) of this paragraph may not 29
be changed after being set. 30
(3) (i) Except as provided in subparagraph (ii) of this paragraph, if the 31
Chief Investment Officer separates from employment, the Board of Trustees may not pay out 32
any remaining financial incentives due to be paid after the date of separation from 33
employment. 34
4 HOUSE BILL 1028
(ii) The Board of Trustees may pa y any remaining [earned] 1
AWARDED financial incentives after the date of separation from employment if the Chief 2
Investment Officer retires directly from the Investment Division on or within 30 days after 3
the date of separation from employment. 4
(4) (i) The Board of Trustees may not pay financial incentives in a fiscal 5
year in which State employees are subject to a furlough. 6
(ii) [The] EXCEPT AS PROVIDED IN SUBPARAGRAPH (III) OF THIS 7
PARAGRAPH , THE Board of Trustees shall pay out any financial incentives not paid in 8
accordance with subparagraph (i) of this paragraph only: 9
1. after the furlough period has ended; and 10
2. if the Chief Investment Officer is currently employed as the 11
Chief Investment Officer. 12
(III) AFTER A FURLOUGH PERI OD HAS ENDED, THE BOARD OF 13
TRUSTEES SHALL PAY OU T ANY REMAINING AWAR DED FINANCIAL INCENT IVES NOT 14
PAID TO THE CHIEF INVESTMENT OFFICER IN ACCORDANCE WITH SUBPARAGRAPH 15
(I) OF THIS PARAGRAPH IF : 16
1. THE CHIEF INVESTMENT OFFICER SEPARATES FRO M 17
EMPLOYMENT WITH THE INVESTMENT DIVISION DURING THE F URLOUGH PERIOD ; 18
AND 19
2. AFTER THE DATE OF SE PARATION FROM 20
EMPLOYMENT , THE CHIEF INVESTMENT OFFICER RETIRES DIREC TLY FROM THE 21
INVESTMENT DIVISION OR WITHIN 30 DAYS AFTER THE DATE OF SEPARATION FROM 22
EMPLOYMENT . 23
(d) (1) (i) 1. On the recommendation of the [Investment] 24
COMPENSATION AND STAFFING Committee, the Board of Trustees shall establish 25
objective criteria for awarding financial incentives to the Chief Investment Officer. 26
2. The Board shall consider the recommendations of the 27
[Objective Criteria] COMPENSATION AND STAFFING Committee under § 21–122(g) of 28
this subtitle before adopting objective criteria for awarding financial incentives. 29
21–122. 30
(a) (1) There is an Investment Division in the State Retirement Agency. 31
HOUSE BILL 1028 5
(2) Subject to subsection (f) of this section, the Board of Trustees shall 1
determine the qualifications and compensation for positions within the Investment 2
Division. 3
(3) The Board of Trustees: 4
(i) may determine and create the type and number of positions 5
necessary for carrying out the professional investment functions of the Investment 6
Division; and 7
(ii) shall adopt objective criteria to be followed when exercising its 8
authority under item (i) of this paragraph and paragraph (2) of this subsection. 9
(f) (1) (i) 1. The Board of Trustees shall adopt objective criteria for 10
setting the qualifications and compensation of positions under subsection (a) of this section. 11
2. The Board shall consider the recommendations of the 12
[Objective Criteria] COMPENSATION AND STAFFING Committee under subsection (g) of 13
this section before adopting objective criteria for setting compensation. 14
(ii) The criteria adopted under subparagraph (i) of this paragraph 15
shall include: 16
1. consideration of the comparative qualifications and 17
compensation of employees serving in similar positions and discharging similar duties at 18
comparable public pension funds; 19
2. limitations on the amount by which the compensation for 20
a position may be increased each fiscal year, not to exceed 10%; and 21
3. objective benchmarks of investment performance that 22
shall be met or exceeded by an individual to be eligible for an increase in compensation. 23
(iii) The Board of Trustees may not grant any increases in 24
compensation in a fiscal year in which State employees are subject to a furlough. 25
(iv) For positions that do not involve discretion over 26
investment–related decisions, the Board of Trustees may not set compensation that exceeds 27
compensation for providing comparable services in other State employment. 28
(v) Except for positions under subparagraph (iv) of this paragraph, 29
the compensation of an employee may not be adjusted in accordance with cost–of–living 30
adjustments and merit increases available to State employees. 31
6 HOUSE BILL 1028
(VI) BASED ON THE RECOMMEN DATIONS OF THE 1
COMPENSATION AND STAFFING COMMITTEE UNDER SUBSE CTION (G) OF THIS 2
SECTION, THE BOARD OF TRUSTEES SHALL APPROV E: 3
1. THE TYPE AND NUMBER OF POSITIONS IN THE 4
INVESTMENT DIVISION; 5
2. THE QUALIFICATIONS F OR EACH POSITION IN THE 6
INVESTMENT DIVISION, AS APPROVED UNDER IT EM 1 OF THIS SUBPARAGRAPH ; AND 7
3. ANY COMPENSATION AND FINANCIAL INCENTIVES 8
FOR THE CHIEF INVESTMENT OFFICER AND INVESTMENT DIVISION STAFF, 9
INCLUDING SALARY INC REASES OR DECREASES RECOMMENDED FOR THE CHIEF 10
INVESTMENT OFFICER AND EMPLOYEES OF THE INVESTMENT DIVISION; AND 11
4. IN ACCORDANCE WITH § 21–118.1 OF THIS SUBTITLE , 12
ANY COMPENSATION AND FINANCIAL INCENTIVES FOR THE CHIEF INVESTMENT 13
OFFICER, INCLUDING SALARY INC REASES OR DECREASES RECOMMENDED FOR THE 14
CHIEF INVESTMENT OFFICER. 15
(2) (i) 1. The Board of Trustees shall adopt objective criteria for 16
awarding financial incentives under subsection (a) of this section. 17
2. The Board shall consider the recommendations of the 18
[Objective Criteria] COMPENSATION AND STAFFING Committee under subsection (g) of 19
this section before adopting objective criteria for awarding financial incentives. 20
(ii) Financial incentives may only be awarded based on the objective 21
criteria adopted in accordance with subparagraph (i) of this paragraph. 22
(iii) The criteria adopted under subparagraph (i) of this paragraph 23
shall include: 24
1. limitations on the amount of financial incentives for a 25
position in a fiscal year, not to exceed 33% of a position’s compensation, exclusive of 26
financial incentives; and 27
2. objective benchmarks of investment performance that 28
shall be met or exceeded by an individual to be eligible for financial incentives, including 29
benchmarks for the asset class in which investments are under the direction of the 30
individual. 31
(iv) 1. Any financial incentives paid shall be paid over multiple 32
fiscal years in equal installments. 33
HOUSE BILL 1028 7
2. The dates on which financial incentives awarded under 1
this section shall be paid shall be set by the Board of Trustees at the time the financial 2
incentives are determined. 3
3. The dates set under subsubparagraph 2 of this 4
subparagraph may not be changed after being set. 5
(v) Except as provided in subparagraph (vi) of this paragraph, if an 6
individual who has earned BEEN AWARDED financial incentives separates from 7
employment in the Investment Division, the Board of Trustees may not pay out any 8
remaining financial incentives due to be paid after the date of separation from employment. 9
(vi) The Board of Trustees may pay any remaining earned AWARDED 10
financial incentives after the date of separation from employment if the individual retires 11
directly from the Investment Division on or 30 days after the date of separation. 12
(vii) The Board of Trustees may not award financial incentives for 13
positions that do not involve discretion over investment–related decisions. 14
(viii) 1. The Board of Trustees may not pay out financial 15
incentives in a fiscal year in which State employees are subject to a furlough. 16
2. The EXCEPT AS PROVIDED IN SUBSUBPARAGRAPH 3 17
OF THIS SUBPARAGRAPH , THE Board of Trustees shall pay out any financial incentives 18
not paid to an individual in accordance with subsubparagraph 1 of this subparagraph only: 19
A. after the furlough period has ended; and 20
B. if the individual is currently employed in the Investment 21
Division. 22
3. AFTER A FURLOUGH PERI OD HAS ENDED , THE BOARD 23
OF TRUSTEES SHALL PAY OUT ANY REMAININ G AWARDED FINANCIAL INCENTIVES 24
NOT PAID TO AN INDIV IDUAL IN ACCORDANCE WITH SUBSUBPARAGRAPH 1 OF THIS 25
SUBPARAGRAPH IF : 26
A. THE INDIVIDUAL SEPAR ATES FROM EMPLOYMENT 27
WITH THE INVESTMENT DIVISION DURING THE F URLOUGH PERIOD ; AND 28
B. AFTER THE DATE OF SE PARATION FROM 29
EMPLOYMENT , THE INDIVIDUAL RETIR ES DIRECTLY FROM THE INVESTMENT 30
DIVISION OR WITHIN 30 DAYS AFTER THE DATE OF SEPARATION FROM E MPLOYMENT . 31
(3) (i) On or before October 1 each year, the Board of Trustees shall 32
submit to the Senate Budget and Taxation Committee, the House Appropriations 33
Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State 34 8 HOUSE BILL 1028
Government Article, a copy of the most recent criteria adopted under this subsection, 1
INCLUDING ANY CHANGE S TO COMPENSATION AN D INCENTIVES FOR THE CHIEF 2
INVESTMENT OFFICER AND INVESTMENT DIVISION STAFF. 3
(ii) In addition to the report required under subparagraph (i) of this 4
paragraph, the Board of Trustees shall submit, within 30 days of adoption by the Board of 5
Trustees, a copy of any changes adopted to the criteria established under this subsection to 6
the Senate Budget and Taxation Committee, the House Appropriations Committee, and the 7
Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article. 8
(4) On or before October 1, January 1, March 1, and July 1 each year, the 9
Board of Trustees shall submit to the Senate Budget and Taxation Committee, the House 10
Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 11
2–1257 of the State Government Article, a report on system investment returns for the 12
preceding fiscal quarter, including: 13
(i) investment performance by asset class, including performance 14
relative to asset class benchmarks; and 15
(ii) investment performance of assets under the direction of each 16
Investment Division employee. 17
(g) (1) There is [an Objective Criteria] A COMPENSATION AND STAFFING 18
Committee of the Board of Trustees. 19
(2) (I) The [Committee consists of the] following members SHALL BE 20
INCLUDED ON THE COMMITTEE: 21
[(i) one member of the Senate of Maryland serving on the Joint 22
Committee on Pensions, appointed by the President of the Senate; 23
(ii) one member of the House of Delegates serving on the Joint 24
Committee on Pensions, appointed by the Speaker of the House; 25
(iii) the State Treasurer or the State Treasurer’s designee; 26
(iv)] 1. the Secretary of Budget and Management or the 27
Secretary’s designee; 28
[(v)] 2. one [member] OR MORE MEMBERS of the Board of 29
Trustees under § 21–104(a)(4)(i), (ii), (iii), (iv), or (v) of this subtitle, appointed by the 30
Chairman of the Board of Trustees; AND 31
3. ONE OR MORE MEMBERS OF THE BOARD OF TRUSTEES 32
UNDER § 21–104(A)(4)(VI) OR (VII) OF THIS SUBTITLE , APPOINTED BY THE 33
CHAIRMAN OF THE BOARD OF TRUSTEES; AND 34 HOUSE BILL 1028 9
[(vi)] 3. 4. one [member] OR MORE MEMBERS of the Board of 1
Trustees under § 21–104(a)(4)(viii) of this subtitle, appointed by the Chairman of the Board 2
of Trustees[; and 3
(vii) a member of the public with financial industry experience, 4
appointed jointly by the presiding officers of the General Assembly]. 5
(II) THE FOLLOWING MEMBERS MAY BE APPOINTED TO THE 6
COMMITTEE BY THE CHAIRMAN OF THE BOARD OF TRUSTEES: 7
1. THE STATE TREASURER, OR THE STATE 8
TREASURER’S DESIGNEE; AND 9
2. THE COMPTROLLER , OR THE COMPTROLLER ’S 10
DESIGNEE. 11
(3) (i) The Chairman of the Board of Trustees shall appoint the Chair 12
of the Committee. 13
(ii) The Chairman of the Board of Trustees may not serve as the 14
Chair of the Committee. 15
(4) [On or before December 31, 2018, and at least once every 5 years 16
thereafter, the] THE Committee shall make recommendations to the Board of Trustees 17
regarding: 18
(i) objective criteria under § 21–118.1(b)(2) and (d) of this subtitle 19
for the compensation and financial incentives for the Chief Investment Officer; and 20
(ii) objective criteria under subsections (a) and (f) of this section for 21
the compensation and financial incentives for the positions in the Investment Division. 22
(5) (i) The Board of Trustees shall enter into an agreement with a 23
consultant to assist the Committee AND THE BOARD regarding objective criteria under 24
this subsection AND THE BOARD’S RESPONSIBILITIES F OR COMPENSATION AND 25
STAFFING. 26
(ii) 1. The EXCEPT AS PROVIDED IN SUBSUBPARAGRAPH 2 27
OF THIS SUBPARAGRAPH , THE Board of Trustees may not enter into an agreement with 28
a consultant under subparagraph (i) of this paragraph if that consultant is actively 29
providing consulting services for the Board of Trustees [and] OR the staff of the Investment 30
Division. 31
10 HOUSE BILL 1028
2. THE BOARD OF TRUSTEES MAY ENTER IN TO AN 1
AGREEMENT WITH A CONSULTANT SE LECTED UNDER SUBPARA GRAPH (I) OF THIS 2
PARAGRAPH TO PROVIDE EXECUTIVE SEARCH SER VICES FOR THE BOARD OF 3
TRUSTEES OR THE EXECUTIVE DIRECTOR. 4
(III) THE CHIEF INVESTMENT OFFICER MAY NOT SEPAR ATELY 5
RETAIN THE CONSULTAN T HIRED UNDER SUBPA RAGRAPH (I) OF THIS PARAGRAPH 6
FOR ANY SERVICES . 7
(6) (i) The [Chief Investment Officer] EXECUTIVE DIRECTOR shall 8
serve in an advisory capacity to the Committee REGARDING COMPENSATI ON AND 9
INCENTIVE COMPENSATI ON FOR THE CHIEF INVESTMENT OFFICER AND 10
INVESTMENT DIVISION STAFF. 11
(ii) The Chief Investment Officer may not participate in any 12
deliberations regarding the criteria for compensation and financial incentives for the Chief 13
Investment Officer OR INVESTMENT DIVISION STAFF. 14
(III) THE CHIEF INVESTMENT OFFICER SHALL SERVE I N AN 15
ADVISORY CAPACITY RE GARDING THE TYPE OF , NUMBER OF, AND QUALIFICATIONS 16
FOR POSITIONS IN THE INVESTMENT DIVISION. 17
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 18
1, 2025. 19
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.