SB2282 104TH GENERAL ASSEMBLY

LRB104 09619 BAB 19684 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB2282

Introduced 2/7/2025, by Sen. Robert F. Martwick

SYNOPSIS AS INTRODUCED:

New Act

Creates the Fiduciary Oversight Agency Act. Establishes the Fiduciary Oversight Agency within the Department of Insurance. Provides that the Agency shall be responsible for monitoring the operations of all public sector retirement plans in Illinois, including pensions and supplemental retirement plans, to ensure compliance with State laws and fiduciary standards. Grants the Agency the authority to enforce compliance with fiduciary standards and Illinois laws relating to public sector retirement plans through administrative sanctions, penalties, and corrective orders; conduct audits, investigations, and reviews of retirement plans, plan administrators, and other fiduciaries to ensure compliance with State laws and fiduciary standards; and initiate civil or administrative proceedings to address violations of fiduciary standards and enforce corrective actions or penalties as appropriate. Establishes reporting requirements for the Agency.

A BILL FOR

AN ACT concerning regulation.

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

Section 1. Short title. This Act may be cited as the Fiduciary Oversight Agency Act.

Section 5. Findings. The General Assembly finds that:

(1) Public sector pensions and retirement plans are critical to the financial security of a significant portion of the State's population. Numerous Illinois residents depend on public sector retirement plans, including pensions and supplemental plans, for their retirement security.

(2) The State's public pension system holds hundreds of billions of dollars in assets, which must be carefully managed to ensure long-term stability. The Illinois pension system is one of the largest in the nation, with an estimated $400,000,000,000 in unfunded liabilities, underscoring the importance of sound fiduciary management and oversight.

(3) Staying compliant with State laws and up-to-date with evolving regulations is crucial to safeguarding the integrity and trust of these retirement plans. Ensuring that public sector retirement plans adhere to fiduciary standards and legal requirements promotes transparency, prevents mismanagement, and protects the interests of plan beneficiaries.

Section 10. Purpose. The purpose of this Act is to establish a Fiduciary Oversight Agency tasked with monitoring and reviewing public sector retirement plans, including both pension and supplemental plans (such as 457 plans), to ensure compliance with State laws and fiduciary standards. The Agency shall also have enforcement authority to address any noncompliance with applicable laws and standards.

Section 15. Definitions. As used in this Act:

"Fiduciary Oversight Agency" or "the Agency" means the agency established by this Act within the Department of Insurance with responsibility for overseeing compliance with fiduciary standards in public sector retirement plans.

"Public sector retirement plans" means retirement plans for public employees, including, but not limited to, pensions and supplemental plans (such as 457 plans).

"Fiduciary standards" means the legal and ethical obligations under Illinois law requiring those who manage or control public sector retirement plans to act in the best interests of plan participants and beneficiaries, including adhering to prudent investment standards, disclosure, and reporting requirements.

Section 20. Agency and duties.

(a) The Fiduciary Oversight Agency is hereby established within the Department of Insurance.

(b) The Agency shall be responsible for monitoring the operations of all public sector retirement plans in Illinois, including pensions and supplemental retirement plans (such as 457 plans), to ensure compliance with State laws and fiduciary standards.

(c) The Agency shall:

(1) Regularly review the operations of public sector retirement plans, including plans administered by the State, local governments, and other public entities, to ensure compliance with State laws and fiduciary standards.

(2) Investigate complaints or reports of noncompliance with fiduciary standards or applicable laws related to public sector retirement plans.

(3) Provide guidance, training, and educational resources to public sector retirement plan administrators, fiduciaries, and other stakeholders on legal and fiduciary obligations under Illinois law.

(4) Issue reports and recommendations on improvements to public sector retirement plans to enhance compliance, transparency, and overall plan health.

(5) Collaborate with other State agencies, local governments, and retirement plan administrators to implement corrective actions when violations of fiduciary standards or laws are identified.

(d) The Agency shall have the authority to:

(1) enforce compliance with fiduciary standards and Illinois laws relating to public sector retirement plans through administrative sanctions, penalties, and corrective orders;

(2) conduct audits, investigations, and reviews of retirement plans, plan administrators, and other fiduciaries to ensure compliance with State laws and fiduciary standards; and

(3) initiate civil or administrative proceedings to address violations of fiduciary standards and enforce corrective actions or penalties as appropriate.

Section 25. Reporting.

(a) The Fiduciary Oversight Agency shall submit an annual report to the Governor and General Assembly detailing the Agency's activities, findings, enforcement actions, and recommendations for improvements in public sector retirement plans.

(b) The report shall include a summary of compliance status across public sector retirement plans in Illinois, an analysis of trends, and recommendations for legislative or policy changes to improve oversight and plan administration.