Illinois General Assembly - Full Text of HB2360
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Full Text of HB2360  100th General Assembly

HB2360enr 100TH GENERAL ASSEMBLY

  
  
  

 


 
HB2360 EnrolledLRB100 09674 JLS 19843 b

1    AN ACT concerning employment.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Secure Choice Savings Program Act
5is amended by changing Sections 15, 30, 55, and 60 as follows:
 
6    (820 ILCS 80/15)
7    Sec. 15. Illinois Secure Choice Savings Program Fund.
8    (a) The Illinois Secure Choice Savings Program Fund is
9hereby established as a trust outside of the State treasury,
10with the Board created in Section 20 as its trustee. The Fund
11shall include the individual retirement accounts of enrollees,
12which shall be accounted for as individual accounts. Moneys in
13the Fund shall consist of moneys received from enrollees and
14participating employers pursuant to automatic payroll
15deductions and contributions to savings made under this Act.
16The Fund shall be operated in a manner determined by the Board,
17provided that the Fund is operated so that the accounts of
18enrollees established under the Program meet the requirements
19for IRAs under the Internal Revenue Code.
20    (b) The amounts deposited in the Fund shall not constitute
21property of the State and the Fund shall not be construed to be
22a department, institution, or agency of the State. Amounts on
23deposit in the Fund shall not be commingled with State funds

 

 

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1and the State shall have no claim to or against, or interest
2in, such funds.
3    (c) The Illinois Secure Choice Savings Program Fund is an
4instrumentality of the State, and as such, is exempt from
5Sections 2a, 5, 6 and 7 of the Illinois Securities Law of 1953.
6(Source: P.A. 98-1150, eff. 6-1-15.)
 
7    (820 ILCS 80/30)
8    Sec. 30. Duties of the Board. In addition to the other
9duties and responsibilities stated in this Act, the Board
10shall:
11    (a) Cause the Program to be designed, established and
12operated in a manner that:
13        (1) accords with best practices for retirement savings
14    vehicles;
15        (2) maximizes participation, savings, and sound
16    investment practices;
17        (3) maximizes simplicity, including ease of
18    administration for participating employers and enrollees;
19        (4) provides an efficient product to enrollees by
20    pooling investment funds;
21        (5) ensures the portability of benefits; and
22        (6) provides for the deaccumulation of enrollee assets
23    in a manner that maximizes financial security in
24    retirement.
25    (b) Appoint a trustee to the IRA Fund in compliance with

 

 

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1Section 408 of the Internal Revenue Code.
2    (c) Explore and establish investment options, subject to
3Section 45 of this Act, that offer employees returns on
4contributions and the conversion of individual retirement
5savings account balances to secure retirement income without
6incurring debt or liabilities to the State.
7    (d) Establish the process by which interest, investment
8earnings, and investment losses are allocated to individual
9program accounts on a pro rata basis and are computed at the
10interest rate on the balance of an individual's account.
11    (e) Make and enter into contracts necessary for the
12administration of the Program and Fund, including, but not
13limited to, retaining and contracting with investment
14managers, private financial institutions, other financial and
15service providers, consultants, actuaries, counsel, auditors,
16third-party administrators, and other professionals as
17necessary.
18    (e-5) Conduct a review of the performance of any investment
19vendors every 4 years, including, but not limited to, a review
20of returns, fees, and customer service. A copy of reviews
21conducted under this subsection (e-5) shall be posted to the
22Board's Internet website.
23    (f) Determine the number and duties of staff members needed
24to administer the Program and assemble such a staff, including,
25as needed, employing staff, appointing a Program
26administrator, and entering into contracts with the State

 

 

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1Treasurer to make employees of the State Treasurer's Office
2available to administer the Program.
3    (g) Cause moneys in the Fund to be held and invested as
4pooled investments described in Section 45 of this Act, with a
5view to achieving cost savings through efficiencies and
6economies of scale.
7    (h) Evaluate and establish the process by which an enrollee
8is able to contribute a portion of his or her wages to the
9Program for automatic deposit of those contributions and the
10process by which the participating employer provides a payroll
11deposit retirement savings arrangement to forward those
12contributions and related information to the Program,
13including, but not limited to, contracting with financial
14service companies and third-party administrators with the
15capability to receive and process employee information and
16contributions for payroll deposit retirement savings
17arrangements or similar arrangements.
18    (i) Design and establish the process for enrollment under
19Section 60 of this Act, including the process by which an
20employee can opt not to participate in the Program, select a
21contribution level, select an investment option, and terminate
22participation in the Program.
23    (j) Evaluate and establish the process by which an
24individual may voluntarily enroll in and make contributions to
25the Program.
26    (k) Accept any grants, appropriations, or other moneys from

 

 

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1the State, any unit of federal, State, or local government, or
2any other person, firm, partnership, or corporation solely for
3deposit into the Fund, whether for investment or administrative
4purposes.
5    (l) Evaluate the need for, and procure as needed, insurance
6against any and all loss in connection with the property,
7assets, or activities of the Program, and indemnify as needed
8each member of the Board from personal loss or liability
9resulting from a member's action or inaction as a member of the
10Board.
11    (m) Make provisions for the payment of administrative costs
12and expenses for the creation, management, and operation of the
13Program, including the costs associated with subsection (b) of
14Section 20 of this Act, subsections (e), (f), (h), and (l) of
15this Section, subsection (b) of Section 45 of this Act,
16subsection (a) of Section 80 of this Act, and subsection (n) of
17Section 85 of this Act. Subject to appropriation, the State may
18pay administrative costs associated with the creation and
19management of the Program until sufficient assets are available
20in the Fund for that purpose. Thereafter, all administrative
21costs of the Fund, including repayment of any start-up funds
22provided by the State, shall be paid only out of moneys on
23deposit therein. However, private funds or federal funding
24received under subsection (k) of Section 30 of this Act in
25order to implement the Program until the Fund is
26self-sustaining shall not be repaid unless those funds were

 

 

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1offered contingent upon the promise of such repayment. The
2Board shall keep total annual expenses as low as possible, but
3in no event shall they exceed 0.75% of the total trust balance.
4    (n) Allocate administrative fees to individual retirement
5accounts in the Program on a pro rata basis.
6    (o) Set minimum and maximum contribution levels in
7accordance with limits established for IRAs by the Internal
8Revenue Code.
9    (o-5) Select a default contribution rate for Program
10participants within the range of 3% to 6% of an enrollee's
11wages.
12    (p) Facilitate education and outreach to employers and
13employees.
14    (q) Facilitate compliance by the Program with all
15applicable requirements for the Program under the Internal
16Revenue Code, including tax qualification requirements or any
17other applicable law and accounting requirements.
18    (r) Carry out the duties and obligations of the Program in
19an effective, efficient, and low-cost manner.
20    (s) Exercise any and all other powers reasonably necessary
21for the effectuation of the purposes, objectives, and
22provisions of this Act pertaining to the Program.
23    (t) Deposit into the Illinois Secure Choice Administrative
24Fund all grants, gifts, donations, fees, and earnings from
25investments from the Illinois Secure Choice Savings Program
26Fund that are used to recover administrative costs. All

 

 

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1expenses of the Board shall be paid from the Illinois Secure
2Choice Administrative Fund.
3(Source: P.A. 98-1150, eff. 6-1-15; 99-571, eff. 7-15-16.)
 
4    (820 ILCS 80/55)
5    Sec. 55. Employer and employee information packets and
6disclosure forms.
7    (a) Prior to the opening of the Program for enrollment, the
8Board shall design and disseminate to all employers an employer
9information packet and an employee information packet, which
10shall include background information on the Program,
11appropriate disclosures for employees, and information
12regarding the vendor Internet website described in subsection
13(i) of Section 60 of this Act.
14    (b) The Board shall provide for the contents of both the
15employee information packet and the employer information
16packet.
17    (c) The employee information packet shall include a
18disclosure form. The disclosure form shall explain, but not be
19limited to, all of the following:
20        (1) the benefits and risks associated with making
21    contributions to the Program;
22        (2) the mechanics of how to make contributions to the
23    Program;
24        (3) how to opt out of the Program;
25        (4) how to participate in the Program with a level of

 

 

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1    employee contributions other than the default contribution
2    rate 3%;
3        (5) the process for withdrawal of retirement savings;
4        (6) how to obtain additional information about the
5    Program;
6        (7) that employees seeking financial advice should
7    contact financial advisors, that participating employers
8    are not in a position to provide financial advice, and that
9    participating employers are not liable for decisions
10    employees make pursuant to this Act;
11        (8) that the Program is not an employer-sponsored
12    retirement plan; and
13        (9) that the Program Fund is not guaranteed by the
14    State.
15    (d) The employee information packet shall also include a
16form for an employee to note his or her decision to opt out of
17participation in the Program or elect to participate with a
18level of employee contributions other than the default
19contribution rate 3%.
20    (e) Participating employers shall supply the employee
21information packet to employees upon launch of the Program.
22Participating employers shall supply the employee information
23packet to new employees at the time of hiring, and new
24employees may opt out of participation in the Program or elect
25to participate with a level of employee contributions other
26than the default contribution rate 3% at that time.

 

 

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1(Source: P.A. 98-1150, eff. 6-1-15.)
 
2    (820 ILCS 80/60)
3    Sec. 60. Program implementation and enrollment. Except as
4otherwise provided in Section 93 of this Act, the Program shall
5be implemented, and enrollment of employees shall begin in
62018 , within 24 months after the effective date of this Act.
7The Board shall establish an implementation timeline under
8which employers shall enroll their employees into the Program.
9The timeline shall include the date by which an employer must
10begin enrollment of its employees into the Program and the date
11by which enrollment must be complete. The Board shall adopt the
12implementation timeline at a public meeting of the Board and
13shall publicize the implementation timeline. The Board shall
14provide advance notice to employers of their enrollment date
15and the amount of time to complete enrollment. The Board's
16implementation timeline shall ensure that all employees are
17required to be enrolled into the Program by December 31, 2020.
18The provisions of this Section shall be in force after the
19Board opens the Program for enrollment.
20    (a) Each employer shall establish a payroll deposit
21retirement savings arrangement to allow each employee to
22participate in the Program within the timeline set by at most
23nine months after the Board after opens the Program opens for
24enrollment.
25    (b) Employers shall automatically enroll in the Program

 

 

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1each of their employees who has not opted out of participation
2in the Program using the form described in subsection (c) of
3Section 55 of this Act and shall provide payroll deduction
4retirement savings arrangements for such employees and
5deposit, on behalf of such employees, these funds into the
6Program. Small employers may, but are not required to, provide
7payroll deduction retirement savings arrangements for each
8employee who elects to participate in the Program. Small
9employers' use of automatic enrollment for employees is subject
10to final rules from the United States Department of Labor.
11Utilization of automatic enrollment by small employers may be
12allowed only if it does not create employer liability under the
13federal Employee Retirement Income Security Act.
14    (c) Enrollees shall have the ability to select a
15contribution level into the Fund. This level may be expressed
16as a percentage of wages or as a dollar amount up to the
17deductible amount for the enrollee's taxable year under Section
18219(b)(1)(A) of the Internal Revenue Code. Enrollees may change
19their contribution level at any time, subject to rules
20promulgated by the Board. If an enrollee fails to select a
21contribution level using the form described in subsection (c)
22of Section 55 of this Act, then he or she shall contribute the
23default contribution rate 3% of his or her wages to the
24Program, provided that such contributions shall not cause the
25enrollee's total contributions to IRAs for the year to exceed
26the deductible amount for the enrollee's taxable year under

 

 

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1Section 219(b)(1)(A) of the Internal Revenue Code.
2    (d) Enrollees may select an investment option from the
3permitted investment options listed in Section 45 of this Act.
4Enrollees may change their investment option at any time,
5subject to rules promulgated by the Board. In the event that an
6enrollee fails to select an investment option, that enrollee
7shall be placed in the investment option selected by the Board
8as the default under subsection (c) of Section 45 of this Act.
9If the Board has not selected a default investment option under
10subsection (c) of Section 45 of this Act, then an enrollee who
11fails to select an investment option shall be placed in the
12life-cycle fund investment option.
13    (e) Following initial implementation of the Program
14pursuant to this Section, at least once every year,
15participating employers shall designate an open enrollment
16period during which employees who previously opted out of the
17Program may enroll in the Program.
18    (f) An employee who opts out of the Program who
19subsequently wants to participate through the participating
20employer's payroll deposit retirement savings arrangement may
21only enroll during the participating employer's designated
22open enrollment period or if permitted by the participating
23employer at an earlier time.
24    (g) Employers shall retain the option at all times to set
25up any type of employer-sponsored retirement plan, such as a
26defined benefit plan or a 401(k), Simplified Employee Pension

 

 

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1(SEP) plan, or Savings Incentive Match Plan for Employees
2(SIMPLE) plan, or to offer an automatic enrollment payroll
3deduction IRA, instead of having a payroll deposit retirement
4savings arrangement to allow employee participation in the
5Program.
6    (h) An employee may terminate his or her participation in
7the Program at any time in a manner prescribed by the Board.
8    (i) The Board shall establish and maintain an Internet
9website designed to assist employers in identifying private
10sector providers of retirement arrangements that can be set up
11by the employer rather than allowing employee participation in
12the Program under this Act; however, the Board shall only
13establish and maintain an Internet website under this
14subsection if there is sufficient interest in such an Internet
15website by private sector providers and if the private sector
16providers furnish the funding necessary to establish and
17maintain the Internet website. The Board must provide public
18notice of the availability of and the process for inclusion on
19the Internet website before it becomes publicly available. This
20Internet website must be available to the public before the
21Board opens the Program for enrollment, and the Internet
22website address must be included on any Internet website
23posting or other materials regarding the Program offered to the
24public by the Board.
25(Source: P.A. 98-1150, eff. 6-1-15; 99-571, eff. 7-15-16.)
 
26    Section 99. Effective date. This Act takes effect upon

 

 

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1becoming law.