HB2977 102ND GENERAL ASSEMBLY

LRB102 14892 RPS 20245 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB2977

Introduced 2/19/2021, by Rep. Thomas Morrison

SYNOPSIS AS INTRODUCED:

See Index

Amends the General Assembly, State Employee, State Universities, Downstate Teachers, and Judges Articles of the Illinois Pension Code. Requires the Board of each System to establish and maintain a voluntary defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. Provides that the contribution rate shall be established by the Board. Provides that the plan shall exist and serve in addition to other retirement, pension, and benefit plans established under the Code. Provides that any Tier 2 participant who first becomes a participant on or after establishment of the plan shall automatically be enrolled, unless he or she opts out within 60 days after first becoming a participant. Authorizes Tier 1 participants and Tier 2 participants who first became participants before the plan was established to enroll in the plan. Contains provisions concerning investment options, qualified plan status, and distribution requirements. Defines terms and repeals a definition added by Public Act 98-599, which has been held unconstitutional. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning public employee benefits.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Pension Code is amended by adding Sections 2-105.3, 2-165.5, 14-103.43, 14-155.5, 15-200.5, 16-106.42, 16-205.5, 18-110.1, 18-110.2, and 18-121.5 as follows:

(40 ILCS 5/2-105.3 new)

Sec. 2-105.3. Tier 1 participant; Tier 2 participant. "Tier 1 participant": A participant who first became a participant before January 1, 2011.

"Tier 2 participant": A participant who first became a participant on or after January 1, 2011.

(40 ILCS 5/2-165.5 new)

Sec. 2-165.5. Defined contribution plan.

(a) Authority. No later than one year after the effective date of this amendatory Act of the 102nd General Assembly, the Board shall establish and maintain a defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. The plan shall be designed as a qualified tax-deferred savings plan under the Internal Revenue Code of 1986, as amended. The plan shall exist and serve in addition to other retirement, pension, and benefit plans established under this Code. All assets and income of the plan shall be held in trust for the exclusive benefit of participants and their beneficiaries.

(b) Enrollment. Tier 1 participants and Tier 2 participants who first became participants before the defined contribution plan was established shall have the opportunity to voluntarily elect to enroll in the plan. Each Tier 2 participant who becomes a participant on or after the establishment of the defined contribution plan shall be automatically enrolled in the plan at a contribution rate that is established by the Board, unless he or she opts out within 60 days after the date that he or she becomes a participant.

(c) Investments. The plan shall be designed to enable participants to generate a stream of income to replace their pre-retirement income in retirement. The Board shall establish a default investment option in which employees are automatically invested upon initial enrollment in the plan or upon re-enrollment in the plan and absent direction by the participant to the contrary. Such investment in a default investment option shall be deemed to have been made by participant direction so long as the Board has provided reasonable notice and description of the default investment option and the participant's right to select other investment options.

(d) Distributions. The plan shall provide a variety of options for distributions to participants and their beneficiaries and shall meet the relevant requirements of the Internal Revenue Code of 1986, as amended. The manner and timing of benefit distributions shall meet the distribution requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended. Distributions upon the death of the participant shall meet the requirements of Section 401(a)(37) of the Internal Revenue Code of 1986, as amended.

(40 ILCS 5/14-103.43 new)

Sec. 14-103.43. Tier 2 member. "Tier 2 member": A member of this System who first becomes a member under this Article on or after January 1, 2011 and who is not a Tier 1 member.

(40 ILCS 5/14-155.5 new)

Sec. 14-155.5. Defined contribution plan.

(a) Authority. No later than one year after the effective date of this amendatory Act of the 102nd General Assembly, the Board shall establish and maintain a defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. The plan shall be designed as a qualified tax-deferred savings plan under the Internal Revenue Code of 1986, as amended. The plan shall exist and serve in addition to other retirement, pension, and benefit plans established under this Code. All assets and income of the plan shall be held in trust for the exclusive benefit of participants and their beneficiaries.

(b) Enrollment. Tier 1 members and Tier 2 members who first became participants before the defined contribution plan was established shall have the opportunity to voluntarily elect to enroll in the plan. Each Tier 2 member who becomes a participant on or after the establishment of the defined contribution plan shall be automatically enrolled in the plan at a contribution rate that is established by the Board, unless he or she opts out within 60 days after the date that he or she becomes a participant.

(c) Investments. The plan shall be designed to enable participants to generate a stream of income to replace their pre-retirement income in retirement. The Board shall establish a default investment option in which employees are automatically invested upon initial enrollment in the plan or upon re-enrollment in the plan and absent direction by the participant to the contrary. Such investment in a default investment option shall be deemed to have been made by participant direction so long as the Board has provided reasonable notice and description of the default investment option and the participant's right to select other investment options.

(d) Distributions. The plan shall provide a variety of options for distributions to participants and their beneficiaries and shall meet the relevant requirements of the Internal Revenue Code of 1986, as amended. The manner and timing of benefit distributions shall meet the distribution requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended. Distributions upon the death of the participant shall meet the requirements of Section 401(a)(37) of the Internal Revenue Code of 1986, as amended.

(40 ILCS 5/15-200.5 new)

Sec. 15-200.5. Defined contribution plan.

(a) Authority. No later than one year after the effective date of this amendatory Act of the 102nd General Assembly, the Board shall establish and maintain a defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. The plan shall be designed as a qualified tax-deferred savings plan under the Internal Revenue Code of 1986, as amended. The plan shall exist and serve in addition to other retirement, pension, and benefit plans established under this Code. All assets and income of the plan shall be held in trust for the exclusive benefit of participants and their beneficiaries.

(b) Enrollment. Tier 1 participants and Tier 2 participants who first became participants before the defined contribution plan was established shall have the opportunity to voluntarily elect to enroll in the plan. Each Tier 2 participant who becomes a participant on or after the establishment of the defined contribution plan shall be automatically enrolled in the plan at a contribution rate that is established by the Board, unless he or she opts out within 60 days after the date that he or she becomes a participant.

(c) Investments. The plan shall be designed to enable participants to generate a stream of income to replace their pre-retirement income in retirement. The Board shall establish a default investment option in which employees are automatically invested upon initial enrollment in the plan or upon re-enrollment in the plan and absent direction by the participant to the contrary. Such investment in a default investment option shall be deemed to have been made by participant direction so long as the Board has provided reasonable notice and description of the default investment option and the participant's right to select other investment options.

(d) Distributions. The plan shall provide a variety of options for distributions to participants and their beneficiaries and shall meet the relevant requirements of the Internal Revenue Code of 1986, as amended. The manner and timing of benefit distributions shall meet the distribution requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended. Distributions upon the death of the participant shall meet the requirements of Section 401(a)(37) of the Internal Revenue Code of 1986, as amended.

(40 ILCS 5/16-106.42 new)

Sec. 16-106.42. Tier 2 member. "Tier 2 member": A member of the System who first becomes a member under this Article on or after January 1, 2011 and who is not a Tier 1 member.

(40 ILCS 5/16-205.5 new)

Sec. 16-205.5. Defined contribution plan.

(a) Authority. No later than one year after the effective date of this amendatory Act of the 102nd General Assembly, the Board shall establish and maintain a defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. The plan shall be designed as a qualified tax-deferred savings plan under the Internal Revenue Code of 1986, as amended. The plan shall exist and serve in addition to other retirement, pension, and benefit plans established under this Code. All assets and income of the plan shall be held in trust for the exclusive benefit of participants and their beneficiaries.

(b) Enrollment. Tier 1 members and Tier 2 members who first became participants before the defined contribution plan was established shall have the opportunity to voluntarily elect to enroll in the plan. Each Tier 2 member who becomes a participant on or after the establishment of the defined contribution plan shall be automatically enrolled in the plan at a contribution rate that is established by the Board, unless he or she opts out within 60 days after the date that he or she becomes a participant.

(c) Investments. The plan shall be designed to enable participants to generate a stream of income to replace their pre-retirement income in retirement. The Board shall establish a default investment option in which employees are automatically invested upon initial enrollment in the plan or upon subsequent re-enrollment and absent direction by the participant to the contrary. Such investment in a default investment option shall be deemed to have been made by participant direction so long as the Board has provided reasonable notice and description of the default investment option and the participant's right to select other investment options.

(d) Distributions. The plan shall provide a variety of options for distributions to participants and their beneficiaries and shall meet the relevant requirements of the Internal Revenue Code of 1986, as amended. The manner and timing of benefit distributions shall meet the distribution requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended. Distributions upon the death of the participant shall meet the requirements of Section 401(a)(37) of the Internal Revenue Code of 1986, as amended.

(40 ILCS 5/18-110.1 new)

Sec. 18-110.1. Tier 1 participant. "Tier 1 participant": A participant who first became a participant of this System before January 1, 2011.

(40 ILCS 5/18-110.2 new)

Sec. 18-110.2. Tier 2 participant. "Tier 2 participant": A participant who first becomes a participant of this System on or after January 1, 2011.

(40 ILCS 5/18-121.5 new)

Sec. 18-121.5. Defined contribution plan.

(a) Authority. No later than one year after the effective date of this amendatory Act of the 102nd General Assembly, the Board shall establish and maintain a defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. The plan shall be designed as a qualified tax-deferred savings plan under the Internal Revenue Code of 1986, as amended. The plan shall exist and serve in addition to other retirement, pension, and benefit plans established under this Code. All assets and income of the plan shall be held in trust for the exclusive benefit of participants and their beneficiaries.

(b) Enrollment. Tier 1 participants and Tier 2 participants who first became participants before the defined contribution plan was established shall have the opportunity to voluntarily elect to enroll in the plan. Each Tier 2 participant who becomes a participant on or after the establishment of the defined contribution plan shall be automatically enrolled in the plan at a contribution rate that is established by the Board, unless he or she opts out within 60 days after the date that he or she becomes a participant.

(c) Investments. The plan shall be designed to enable participants to generate a stream of income to replace their pre-retirement income in retirement. The Board shall establish a default investment option in which employees are automatically invested upon initial enrollment in the plan or upon subsequent re-enrollment and absent direction by the participant to the contrary. Such investment in a default investment option shall be deemed to have been made by participant direction so long as the Board has provided reasonable notice and description of the default investment option and the participant's right to select other investment options.

(d) Distributions. The plan shall provide a variety of options for distributions to participants and their beneficiaries and shall meet the relevant requirements of the Internal Revenue Code of 1986, as amended. The manner and timing of benefit distributions shall meet the distribution requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended. Distributions upon the death of the participant shall meet the requirements of Section 401(a)(37) of the Internal Revenue Code of 1986, as amended.

(40 ILCS 5/2-105.1 rep.)

Section 10. The Illinois Pension Code is amended by repealing Section 2-105.1.

Section 99. Effective date. This Act takes effect upon becoming law.