It is enacted by the General Assembly as follows:

SECTION 1. Sections 36-13-1 and 36-13-5 of the General Laws in Chapter 36-13 entitled "Deferred Compensation Plans" is hereby amended to read as follows:

{ADD 36-13-1. Deferred compensation plans authorized. -- ADD} 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 {ADD or with other financial entities for the purchase of mutual funds ADD} , or 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 represent an insurance company licensed to contract business in this state.

{ADD 36-13-2. Entering into agreements. -- ADD} * * *

{ADD 36-13-3. Administration of program. -- ADD} * * *

{ADD 36-13-4. "Employee" defined. -- ADD} * * *

{ADD 36-13-5. Annuity and insurance contracts. -- ADD} Notwithstanding any other provision of law to the contrary, those persons designated to administer the deferred compensation program are hereby authorized to make payment {ADD s ADD} {DEL of premiums DEL} for the purchase of government securities, {ADD mutual funds, ADD} fixed or variable life insurance, or annuity contracts under the deferred compensation program. The payments shall not be construed to be a prohibited use of the general assets of the state, county, city, or other political subdivision.

SECTION 2. Chapter 36-13 of the General Laws entitled "Deferred Compensation Plans" is hereby amended by adding thereto the following section:

{ADD 36-13-1.1. State investment commission. -- ADD} {ADD The state investment commission shall, from time to time, select the financial institutions and/or entities in which the state shall invest the funds under the deferred compensation plan for state employees. ADD}

SECTION 3. Severability. -- If any provision of this chapter or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the chapter, which can be given effect without the invalid provisions or application, and to this end the provisions of this chapter are declared to be severable.

SECTION 4. This act shall take effect upon passage.