(a)  The state or any city, town, or other political subdivision may, by contract, agree with any employee to defer, in whole or in part, any portion of that employee’s compensation, and may subsequently contract with financial institutions for the purchase of government securities or with other financial entities for the purchase of mutual funds, and procure a fixed or variable life insurance or annuity contract for the purpose of providing funds to meet its obligations under a deferred compensation program for the employees from any financial institutions or from any life underwriters duly licensed by this state who represents an insurance company licensed to contract business in this state.

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(b)  In the administration of a deferred compensation plan for employees in the state plan authorized under this chapter, after October 1, 1998, the state shall engage three companies (“Authorized Companies”) to administer such deferred compensation plans. After October 1, 1998, only such Authorized Companies shall be entitled to enroll employees in the state deferred compensation plans in accordance with the following guidelines:

(1)  Employees must have the option of purchasing or investing in alternative financial products referred to herein which have been approved by the State Investment Commission;

(2)  The alternative financial products shall include, without limitation, a variable product and a fixed product;

(3)  The Authorized Companies (or an entity related thereto) must:

(i)  Be selected in accordance with the provisions of this chapter,

(ii)  Covenant that all employees covered under any plan authorized under this chapter shall, at all times, be granted the unfettered right to cancel, change, liquidate, amend or interchange any investment contract or product purchased in any such plan without such employees incurring a financial penalty or fee of any kind or nature imposed by contract, and

(iii)  Be granted equal access to all eligible employees;

(4)  Procedures shall be established to ensure that personalized information regarding employees shall not be provided to third parties by the Authorized Companies. “Personalized Information” shall include, without limitation, social security numbers, home addresses, telephone numbers, amounts invested, medical or disability information; and

(5)  The Authorized Companies shall be permitted to offer any financial product referred to herein which shall have been approved by the State Investment Commission. Notwithstanding any other provisions of this subsection (b), if the department of administration determines that less than three companies are qualified to be engaged as Authorized Companies because of (a) insufficient experience in the administration of deferred compensation plans or (b) a failure to assure adherence to the guidelines set forth herein, the state may engage less than three Authorized Companies.

(6)  If any provision of this section or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect other provisions or applications of the section which can be given effect without the invalid provision or application, and to this end the provisions of this section are declared to be severable.

(c)  Effective January 1, 2024, any participating municipality as defined in § 45-21-2 may elect to offer to its municipal employees the deferred compensation plans offered by the state. The account of any municipal employee who participates in the state deferred compensation plan shall be subject to the same administration, charges, costs, rules, and regulations as are applicable and applied to the accounts of employees in the state deferred compensation plan.