SB2103 102ND GENERAL ASSEMBLY

LRB102 12567 RPS 17905 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2103

Introduced 2/26/2021, by Sen. Robert F. Martwick

SYNOPSIS AS INTRODUCED:

See Index

Amends the Illinois Pension Code. In the State Universities Article, provides that the optional defined contribution plan shall provide for one or more automatic contribution arrangements, at least one of which shall be an eligible automatic contribution arrangement that permits a withdrawal of default elective contributions in accordance with a specified provision of the Internal Revenue Code of 1986. In the Illinois Municipal Retirement Fund (IMRF) Article, provides that the amount of the separation benefit shall include interest credited to the end of the preceding calendar year for contributions made under provisions authorizing employees to make additional contributions for retirement annuity purposes. Provides that employees who first participate in the Fund on or after 6 months after the effective date of the amendatory Act shall automatically contribute 3% of each payment of earnings as additional contributions for retirement annuity purposes. Provides that employees may change such contributions to an amount not to exceed 10% of each payment of earnings at any time. Provides that the Board may limit the number of withdrawals of those additional contributions to an amount not less than once per calendar year and may charge an administrative fee. In the Deferred Compensation Article, provides for automatic enrollment of any employee who is a member under the State Employee, Downstate Teacher, or Chicago Teacher Article, regardless of when the employee first became a member under that Article. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately, except that the changes to the IMRF and Deferred Compensation Articles of the Illinois Pension Code and to the State Mandates Act take effect January 1, 2022.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

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 changing Section 15-202 as follows:

(40 ILCS 5/15-202)

Sec. 15-202. Optional defined contribution plan benefit. As soon as practicable after the effective date of this amendatory Act of the 100th General Assembly, the System shall offer a defined contribution plan benefit to active members of the System. The defined contribution plan benefit shall be an optional benefit to any member who chooses to participate. As soon as practicable after the effective date of this amendatory Act of the 102nd General Assembly, the defined contribution plan shall provide for one or more automatic contribution arrangements, at least one of which shall be an eligible automatic contribution arrangement that permits a withdrawal of default elective contributions in accordance with Section 414(w) of the Internal Revenue Code of 1986, as amended, and United States Department of Treasury regulations promulgated thereunder. The defined contribution plan benefit shall collect optional employee and optional employer contributions into an account and shall offer investment options to the participant. The plan benefit under this Section shall be operated in full compliance with any applicable State and federal laws, and the System shall utilize generally accepted practices in creating and maintaining the plan benefit for the best interest of the participants. The System may use funds from the employee and employer contributions to defray any and all costs of creating and maintaining the plan benefit. The System shall produce an annual report on the participation in the plan benefit and shall make the report public.

(Source: P.A. 100-769, eff. 8-10-18.)

Section 10. The Illinois Pension Code is amended by changing Sections 7-168, 7-173, and 24-105.2 as follows:

(40 ILCS 5/7-168) (from Ch. 108 1/2, par. 7-168)

Sec. 7-168. Separation benefits - Amount. The amount of the separation benefits shall be the sum of the employee's accumulated normal, survivor and additional contributions, plus interest credited to the end of the preceding calendar year for contributions made under paragraph (2) of subsection (a) of Section 7-173, to the extent permitted by the federal Internal Revenue Code of 1986, as now or hereafter amended.

(Source: P.A. 87-740.)

(40 ILCS 5/7-173) (from Ch. 108 1/2, par. 7-173)

Sec. 7-173. Contributions by employees.

(a) Each participating employee shall make contributions to the fund as follows:

1. For retirement annuity purposes, normal contributions of 3 3/4% of earnings.

2. Additional contributions of such percentages of each payment of earnings, as shall be elected by the employee for retirement annuity purposes, but not in excess of 10%. The selected rate shall be applicable to all earnings paid following receipt by the Board of written notice of election to make such contributions. Additional contributions at the selected rate shall be made concurrently with normal contributions.

Employees who first participate in the Fund on or after 6 months after the effective date of this amendatory Act of the 102nd General Assembly shall automatically contribute 3% of each payment of earnings as additional contributions for retirement annuity purposes beginning immediately upon enrollment in the Fund as a participating employee. Employees may change such contributions to an amount not to exceed 10% of each payment of earnings at any time by written notice to the Board.

3. Survivor contributions, by each participating employee, of 3/4% of each payment of earnings.

(b) (Blank).

(c) Contributions shall be deducted from each corresponding payment of earnings paid to each employee and shall be remitted to the board by the participating municipality or participating instrumentality making such payment. The remittance, together with a report of the earnings and contributions shall be made as directed by the board. For township treasurers and employees of township treasurers qualifying as employees hereunder, the contributions herein required as deductions from salary shall be withheld by the school township trustees from funds available for the payment of the compensation of such treasurers and employees as provided in the School Code and remitted to the board.

(d) An employee who has made additional contributions under paragraph (a)2 of this Section may upon retirement or at any time prior thereto, elect to withdraw the total of such additional contributions including interest credited thereon to the end of the preceding calendar year, to the extent permitted by the federal Internal Revenue Code of 1986, as now or hereafter amended. The Board has the ability to limit the number of such withdrawals permitted to an amount not less than once per calendar year and to charge an administrative fee to cover the costs of processing such withdrawals.

(e) Failure to make the deductions for employee contributions provided in paragraph (c) of this Section shall not relieve the employee from liability for such contributions. The amount of such liability may be deducted, with interest charged under Section 7-209, from any annuities or benefits payable hereunder to the employee or any other person receiving an annuity or benefit by reason of such employee's participation.

(f) A participating employee who has at least 40 years of creditable service in the Fund may elect to cease making the contributions required under this Section. The status of the employee under this Article shall be unaffected by this election, except that the employee shall not receive any additional creditable service for the periods of employment following the election. An election under this subsection relieves the employer from making additional employer contributions in relation to that employee.

(Source: P.A. 97-333, eff. 8-12-11; 97-933, eff. 8-10-12; 98-218, eff. 8-9-13.)

(40 ILCS 5/24-105.2)

Sec. 24-105.2. Automatic enrollment for certain members. The Department of Central Management Services shall automatically enroll in the State Employees Deferred Compensation Plan any employee who, on or after July 1, 2020 (6 months after the effective date of Public Act 101-277) this amendatory Act of the 101st General Assembly, first becomes a member or participant of a retirement system created under Article 2, 14, or 18 and shall automatically enroll in the State Employees Deferred Compensation Plan any employee who is a member under a retirement system or pension fund created under Article 14, 16, or 17, regardless of when the employee first became a member under that Article. An employee automatically enrolled under this Section shall have 3% of his or her pre-tax gross compensation for each compensation period deferred into his or her deferred compensation account.

An employee shall have 30 days from the start date of employment to elect to not participate in the deferred compensation plan or to elect to increase or reduce the amount of pre-tax gross compensation deferred. An employee shall be automatically enrolled in the Plan beginning the first day of the pay period following the employee's thirtieth day of employment or the pay period following the effective date of this amendatory Act of the 102nd General Assembly if the employee is a member under Article 14, 16, or 17 on the effective date of this amendatory Act of the 102nd General Assembly. An employee who has been automatically enrolled in the Plan may elect, within 90 days of enrollment, to withdraw from the Plan and receive a refund of amounts deferred. An employee making such an election shall forfeit all employer matching contributions, if any, made prior to the election. Any refunded amount shall be included in the employee's gross income for the taxable year in which the refund is issued.

(Source: P.A. 101-277, eff. 1-1-20.)

Section 90. The State Mandates Act is amended by adding Section 8.45 as follows:

(30 ILCS 805/8.45 new)

Sec. 8.45. Exempt mandate. Notwithstanding Sections 6 and 8 of this Act, no reimbursement by the State is required for the implementation of any mandate created by this amendatory Act of the 102nd General Assembly.

Section 99. Effective date. This Act takes effect upon becoming law, except that Sections 10 and 90 take effect January 1, 2022.