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1 | AN ACT concerning public employee benefits.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Pension Code is amended by changing | ||||||||||||||||||||||||||||||||||||||||
5 | Sections 1-113, 1-113.1, 1-113.2, 1-113.3, 1-113.4, 1-113.5, | ||||||||||||||||||||||||||||||||||||||||
6 | 1-113.8, and 1-113.12 as follows:
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7 | (40 ILCS 5/1-113) (from Ch. 108 1/2, par. 1-113)
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8 | Sec. 1-113. Investment authority of certain pension funds, | ||||||||||||||||||||||||||||||||||||||||
9 | not including
those established under Article 3 or 4 . The | ||||||||||||||||||||||||||||||||||||||||
10 | investment authority of a board
of trustees of a retirement | ||||||||||||||||||||||||||||||||||||||||
11 | system or pension fund established under this
Code shall, if so | ||||||||||||||||||||||||||||||||||||||||
12 | provided in the Article establishing such retirement system
or | ||||||||||||||||||||||||||||||||||||||||
13 | pension fund, embrace the following investments:
| ||||||||||||||||||||||||||||||||||||||||
14 | (1) Bonds, notes and other direct obligations of the United | ||||||||||||||||||||||||||||||||||||||||
15 | States
Government; bonds, notes and other obligations of any | ||||||||||||||||||||||||||||||||||||||||
16 | United States
Government agency or instrumentality, whether or | ||||||||||||||||||||||||||||||||||||||||
17 | not guaranteed; and
obligations the principal and interest of | ||||||||||||||||||||||||||||||||||||||||
18 | which are guaranteed
unconditionally by the United States | ||||||||||||||||||||||||||||||||||||||||
19 | Government or by an agency or
instrumentality thereof.
| ||||||||||||||||||||||||||||||||||||||||
20 | (2) Obligations of the Inter-American Development Bank, | ||||||||||||||||||||||||||||||||||||||||
21 | the
International Bank for Reconstruction and Development, the | ||||||||||||||||||||||||||||||||||||||||
22 | African
Development Bank, the International Finance | ||||||||||||||||||||||||||||||||||||||||
23 | Corporation, and the Asian
Development Bank.
|
| |||||||
| |||||||
1 | (3) Obligations of any state, or of any political | ||||||
2 | subdivision in
Illinois, or of any county or city in any other | ||||||
3 | state having a
population as shown by the last federal census | ||||||
4 | of not less than 30,000
inhabitants provided that such | ||||||
5 | political subdivision is not permitted by
law to become | ||||||
6 | indebted in excess of 10% of the assessed valuation of
property | ||||||
7 | therein and has not defaulted for a period longer than 30 days
| ||||||
8 | in the payment of interest and principal on any of its general
| ||||||
9 | obligations or indebtedness during a period of 10 calendar | ||||||
10 | years
immediately preceding such investment.
| ||||||
11 | (4) Nonconvertible bonds, debentures, notes and other | ||||||
12 | corporate
obligations of any corporation created or existing | ||||||
13 | under the laws of the
United States or any state, district or | ||||||
14 | territory thereof, provided
there has been no default on the | ||||||
15 | obligations of the corporation or its
predecessor(s) during the | ||||||
16 | 5 calendar years immediately preceding the
purchase. Up to 5% | ||||||
17 | of the assets of
a pension fund established under Article 9 of | ||||||
18 | this Code may be
invested in nonconvertible bonds, debentures, | ||||||
19 | notes, and other corporate
obligations of corporations created | ||||||
20 | or existing under the laws of a foreign
country, provided there | ||||||
21 | has been no default on the obligations of the
corporation or | ||||||
22 | its predecessors during the 5 calendar years immediately
| ||||||
23 | preceding the date of purchase.
| ||||||
24 | (5) Obligations guaranteed by the Government of Canada, or | ||||||
25 | by any
Province of Canada, or by any Canadian city with a | ||||||
26 | population of not
less than 150,000 inhabitants, provided (a) |
| |||||||
| |||||||
1 | they are payable in United
States currency and are exempt from | ||||||
2 | any Canadian withholding tax; (b)
the investment in any one | ||||||
3 | issue of bonds shall not exceed 10% of the
amount outstanding; | ||||||
4 | and (c) the total investments at book value in
Canadian | ||||||
5 | securities shall be limited to 5% of the total investment
| ||||||
6 | account of the board at book value.
| ||||||
7 | (5.1) Direct obligations of the State of Israel for the | ||||||
8 | payment of
money, or obligations for the payment of money which | ||||||
9 | are guaranteed as
to the payment of principal and interest by | ||||||
10 | the State of Israel, or common
or preferred stock or notes | ||||||
11 | issued by a bank owned or controlled in whole
or in part by the | ||||||
12 | State of Israel, on the following conditions:
| ||||||
13 | (a) The total investments in such obligations shall not | ||||||
14 | exceed 5% of
the book value of the aggregate investments | ||||||
15 | owned by the board;
| ||||||
16 | (b) The State of Israel shall not be in default in the | ||||||
17 | payment of
principal or interest on any of its direct | ||||||
18 | general obligations on the
date of such investment;
| ||||||
19 | (c) The bonds, stock or notes, and interest thereon | ||||||
20 | shall be payable
in currency of the United States;
| ||||||
21 | (d) The bonds shall (1) contain an option for the | ||||||
22 | redemption thereof
after 90 days from date of purchase or | ||||||
23 | (2) either become due 5 years from
the date of their | ||||||
24 | purchase or be subject to redemption 120 days after the
| ||||||
25 | date of notice for redemption;
| ||||||
26 | (e) The investment in these obligations has been |
| |||||||
| |||||||
1 | approved in writing
by investment counsel employed by the | ||||||
2 | board, which counsel shall be a
national or state bank or | ||||||
3 | trust company authorized to do a trust
business in the | ||||||
4 | State of Illinois, or an investment advisor qualified
under | ||||||
5 | the Federal Investment Advisors Act of 1940 and registered | ||||||
6 | under
the Illinois Securities Act of 1953;
| ||||||
7 | (f) The fund or system making the investment shall have | ||||||
8 | at least
$5,000,000 of net present assets.
| ||||||
9 | (6) Notes secured by mortgages under Sections 203, 207, 220 | ||||||
10 | and 221 of
the National Housing Act which are insured by the | ||||||
11 | Federal Housing Commissioner,
or his successor assigns, or | ||||||
12 | debentures issued by such Commissioner, which
are guaranteed as | ||||||
13 | to principal and interest by the Federal Housing
| ||||||
14 | Administration, or agency of the United States Government, | ||||||
15 | provided the
aggregate investment shall not exceed 20% of the | ||||||
16 | total investment account
of the board at book value, and | ||||||
17 | provided further that the investment in
such notes under | ||||||
18 | Sections 220 and 221 shall in no event exceed one-half of
the | ||||||
19 | maximum investment in notes under this paragraph.
| ||||||
20 | (7) Loans to veterans guaranteed in whole or part by the | ||||||
21 | United
States Government pursuant to Title III of the Act of | ||||||
22 | Congress known as
the "Servicemen's Readjustment Act of 1944," | ||||||
23 | 58 Stat. 284, 38 U.S.C.
693, as amended or supplemented from | ||||||
24 | time to time, provided such
guaranteed loans are liens upon | ||||||
25 | real estate.
| ||||||
26 | (8) Common and preferred stocks and convertible debt |
| |||||||
| |||||||
1 | securities
authorized for investment of trust funds under the | ||||||
2 | laws of the State of
Illinois, provided:
| ||||||
3 | (a) the common stocks, except as provided in | ||||||
4 | subparagraph (g), are
listed on a national securities | ||||||
5 | exchange or board of trade, as defined in the
federal | ||||||
6 | Securities Exchange Act of 1934, or quoted in the National | ||||||
7 | Association
of Securities Dealers Automated Quotation | ||||||
8 | System (NASDAQ);
| ||||||
9 | (b) the securities are of a corporation created or | ||||||
10 | existing under
the laws of the United States or any state, | ||||||
11 | district or territory thereof,
except that up to 5% of the | ||||||
12 | assets of a pension fund established under Article
9 of | ||||||
13 | this Code may be invested in securities issued by | ||||||
14 | corporations created or
existing under the laws of a | ||||||
15 | foreign country, if those securities are otherwise
in | ||||||
16 | conformance with this paragraph (8);
| ||||||
17 | (c) the corporation is not in arrears on payment of | ||||||
18 | dividends on its
preferred stock;
| ||||||
19 | (d) the total book value of all stocks and convertible | ||||||
20 | debt owned by any
pension fund or retirement system shall | ||||||
21 | not exceed 40% of the aggregate
book value of all | ||||||
22 | investments of such pension fund or retirement system,
| ||||||
23 | except for a pension fund or retirement system governed by | ||||||
24 | Article
9 or 17, where the total of all stocks and | ||||||
25 | convertible debt shall
not exceed 50% of the aggregate book | ||||||
26 | value of all fund investments, and
except for a pension |
| |||||||
| |||||||
1 | fund or retirement system governed by Article 13,
where the | ||||||
2 | total market value of all stocks and convertible debt shall | ||||||
3 | not
exceed 65% of the aggregate market value of all fund | ||||||
4 | investments;
| ||||||
5 | (e) the book value of stock and convertible debt | ||||||
6 | investments in any
one corporation shall not exceed 5% of | ||||||
7 | the total investment account at book
value in which such | ||||||
8 | securities are held, determined as of the date of the
| ||||||
9 | investment, and the investments in the stock of any one | ||||||
10 | corporation shall
not exceed 5% of the total outstanding | ||||||
11 | stock of such corporation, and the
investments in the | ||||||
12 | convertible debt of any one corporation shall not exceed
5% | ||||||
13 | of the total amount of such debt that may be outstanding;
| ||||||
14 | (f) the straight preferred stocks or convertible | ||||||
15 | preferred
stocks and convertible debt securities are | ||||||
16 | issued or guaranteed by a
corporation whose common stock | ||||||
17 | qualifies for investment by the board;
and
| ||||||
18 | (g) that any common stocks not listed or quoted as
| ||||||
19 | provided in subdivision 8(a) above be limited to the | ||||||
20 | following
types of institutions: (a) any bank which is a | ||||||
21 | member of the Federal
Deposit Insurance Corporation having | ||||||
22 | capital funds represented by
capital stock, surplus and | ||||||
23 | undivided profits of at least $20,000,000;
(b) any life | ||||||
24 | insurance company having capital funds represented by
| ||||||
25 | capital stock, special surplus funds and unassigned | ||||||
26 | surplus totalling at
least $50,000,000; and (c) any fire or |
| |||||||
| |||||||
1 | casualty insurance company, or a
combination thereof, | ||||||
2 | having capital funds represented by capital stock,
net | ||||||
3 | surplus and voluntary reserves of at least $50,000,000.
| ||||||
4 | (9) Withdrawable accounts of State chartered and federal | ||||||
5 | chartered
savings and loan associations insured by the Federal | ||||||
6 | Savings and Loan
Insurance Corporation; deposits or | ||||||
7 | certificates of deposit in State
and national banks insured by | ||||||
8 | the Federal Deposit Insurance Corporation;
and share accounts | ||||||
9 | or share certificate accounts in a State or federal credit
| ||||||
10 | union, the accounts of which are insured as required by the | ||||||
11 | Illinois Credit
Union Act or the Federal Credit Union Act, as | ||||||
12 | applicable.
| ||||||
13 | No bank or savings and loan association shall receive | ||||||
14 | investment funds
as permitted by this subsection (9), unless it | ||||||
15 | has complied with the
requirements established pursuant to | ||||||
16 | Section 6 of the Public Funds
Investment Act.
| ||||||
17 | (10) Trading, purchase or sale of listed options on | ||||||
18 | underlying
securities owned by the board.
| ||||||
19 | (11) Contracts and agreements supplemental thereto | ||||||
20 | providing for
investments in the general account of a life | ||||||
21 | insurance company authorized
to do business in Illinois.
| ||||||
22 | (12) Conventional mortgage pass-through securities which | ||||||
23 | are evidenced
by interests in Illinois owner-occupied | ||||||
24 | residential mortgages, having not
less than an "A" rating from | ||||||
25 | at least one national securities
rating service. Such mortgages | ||||||
26 | may have loan-to-value ratios up to 95%,
provided that any |
| |||||||
| |||||||
1 | amount over 80% is insured by private mortgage insurance.
The | ||||||
2 | pool of such mortgages shall be insured by mortgage guaranty or | ||||||
3 | equivalent
insurance, in accordance with industry standards.
| ||||||
4 | (13) Pooled or commingled funds managed by a national or | ||||||
5 | State bank
which is authorized to do a trust business in the | ||||||
6 | State of Illinois, shares
of registered investment companies as | ||||||
7 | defined in the federal Investment
Company Act of 1940 which are | ||||||
8 | registered under that Act, and
separate accounts of a life | ||||||
9 | insurance company authorized to do business
in Illinois, where | ||||||
10 | such pooled or commingled funds, shares, or separate
accounts | ||||||
11 | are comprised of common or preferred stocks, bonds, or money | ||||||
12 | market
instruments.
| ||||||
13 | (14) Pooled or commingled funds managed by a national or | ||||||
14 | state
bank which is authorized to do a trust business in the | ||||||
15 | State of Illinois,
separate accounts managed by a life | ||||||
16 | insurance company authorized to
do business in Illinois, and | ||||||
17 | commingled group trusts managed by an investment
adviser | ||||||
18 | registered under the federal Investment Advisors Act of 1940 | ||||||
19 | (15
U.S.C. 80b-1 et seq.) and under the Illinois Securities Law | ||||||
20 | of 1953, where
such pooled or commingled funds, separate | ||||||
21 | accounts or commingled group
trusts are comprised of real | ||||||
22 | estate or loans upon real estate secured by
first or second | ||||||
23 | mortgages. The total investment in such pooled or
commingled | ||||||
24 | funds, commingled group trusts and separate accounts shall not
| ||||||
25 | exceed 10% of the aggregate book value of all investments owned | ||||||
26 | by the fund.
|
| |||||||
| |||||||
1 | (15) Investment companies which (a) are registered as such | ||||||
2 | under the
Investment Company Act of 1940, (b) are diversified, | ||||||
3 | open-end management
investment companies and (c) invest only in | ||||||
4 | money market instruments.
| ||||||
5 | (16) Up to 10% of the assets of the fund may be invested in | ||||||
6 | investments
not included in paragraphs (1) through (15) of this | ||||||
7 | Section, provided that
such investments comply with the | ||||||
8 | requirements and restrictions set forth in
Sections 1-109, | ||||||
9 | 1-109.1, 1-109.2, 1-110 and 1-111 of this Code.
| ||||||
10 | The board shall have the authority to enter into such | ||||||
11 | agreements and to
execute such documents as it determines to be | ||||||
12 | necessary to complete any
investment transaction.
| ||||||
13 | Any limitations herein set forth shall be applicable only | ||||||
14 | at the time
of purchase and shall not require the liquidation | ||||||
15 | of any investment at
any time.
| ||||||
16 | All investments shall be clearly held and accounted for to | ||||||
17 | indicate
ownership by such board. Such board may direct the | ||||||
18 | registration of
securities in its own name or in the name of a | ||||||
19 | nominee created for the
express purpose of registration of | ||||||
20 | securities by a national or state
bank or trust company | ||||||
21 | authorized to conduct a trust business
in the State of | ||||||
22 | Illinois.
| ||||||
23 | Investments shall be carried at cost or at a value | ||||||
24 | determined in accordance
with
generally accepted accounting | ||||||
25 | principles and accounting procedures
approved by such board.
| ||||||
26 | (Source: P.A. 92-53, eff. 7-12-01.)
|
| |||||||
| |||||||
1 | (40 ILCS 5/1-113.1)
| ||||||
2 | Sec. 1-113.1. Investment authority of pension funds | ||||||
3 | established under
Article 3 or 4 . The board of trustees of a | ||||||
4 | police pension fund established
under Article 3 of this Code or | ||||||
5 | firefighter pension fund established under
Article 4 of this | ||||||
6 | Code shall draw pension funds from the treasurer of the
| ||||||
7 | municipality and, beginning January 1, 1998, invest any part | ||||||
8 | thereof in the
name of the board in the items listed in | ||||||
9 | Sections 1-113.2 through 1-113.4
according to the limitations | ||||||
10 | and requirements of this Article. These
investments shall be | ||||||
11 | made with the care, skill, prudence, and diligence that a
| ||||||
12 | prudent person acting in like capacity and familiar with such | ||||||
13 | matters would use
in the conduct of an enterprise of like | ||||||
14 | character with like aims.
| ||||||
15 | Interest and any other income from the investments shall be | ||||||
16 | credited to the
pension fund.
| ||||||
17 | For the purposes of Sections 1-113.2 through 1-113.11, the | ||||||
18 | "net assets" of a
pension fund include both the cash and | ||||||
19 | invested assets of the pension fund.
| ||||||
20 | (Source: P.A. 90-507, eff. 8-22-97.)
| ||||||
21 | (40 ILCS 5/1-113.2)
| ||||||
22 | Sec. 1-113.2. List of permitted investments for all Article | ||||||
23 | 3 or 4 pension
funds. Any pension fund established under | ||||||
24 | Article 3 or 4 may invest in the
following items:
|
| |||||||
| |||||||
1 | (1) Interest bearing direct obligations of the United | ||||||
2 | States of America.
| ||||||
3 | (2) Interest bearing obligations to the extent that they | ||||||
4 | are fully
guaranteed or insured as to payment of principal and | ||||||
5 | interest by the United
States of America.
| ||||||
6 | (3) Interest bearing bonds, notes, debentures, or other | ||||||
7 | similar obligations
of agencies of the United States of | ||||||
8 | America. For the purposes of this Section,
"agencies of the | ||||||
9 | United States of America" includes: (i) the Federal National
| ||||||
10 | Mortgage Association and the Student Loan Marketing | ||||||
11 | Association; (ii) federal
land banks, federal intermediate | ||||||
12 | credit banks,
federal farm credit banks, and any other entity | ||||||
13 | authorized to
issue direct debt obligations of the United | ||||||
14 | States of America under the Farm
Credit Act of 1971 or | ||||||
15 | amendments to that Act; (iii) federal home loan banks and
the | ||||||
16 | Federal Home Loan Mortgage Corporation; and (iv) any agency | ||||||
17 | created
by Act of Congress that is authorized to issue direct | ||||||
18 | debt obligations of the
United States of America.
| ||||||
19 | (4) Interest bearing savings accounts or certificates of | ||||||
20 | deposit, issued by
federally chartered banks or savings and | ||||||
21 | loan associations, to the extent that
the deposits are insured | ||||||
22 | by agencies or instrumentalities of the federal
government.
| ||||||
23 | (5) Interest bearing savings accounts or certificates of | ||||||
24 | deposit, issued by
State of Illinois chartered banks or savings | ||||||
25 | and loan associations, to the
extent that the deposits are | ||||||
26 | insured by agencies or instrumentalities of the
federal |
| |||||||
| |||||||
1 | government.
| ||||||
2 | (6) Investments in credit unions, to the extent that the | ||||||
3 | investments are
insured by agencies or instrumentalities of the | ||||||
4 | federal government.
| ||||||
5 | (7) Interest bearing bonds of the State of Illinois.
| ||||||
6 | (8) Pooled interest bearing accounts managed by the | ||||||
7 | Illinois Public
Treasurer's Investment Pool in accordance with | ||||||
8 | the Deposit of State Moneys Act
and interest bearing funds or | ||||||
9 | pooled accounts managed, operated, and
administered by banks, | ||||||
10 | subsidiaries of banks, or subsidiaries of bank holding
| ||||||
11 | companies in accordance with the laws of the State of Illinois.
| ||||||
12 | (9) Interest bearing bonds or tax anticipation warrants of | ||||||
13 | any county,
township, or municipal corporation of the State of | ||||||
14 | Illinois.
| ||||||
15 | (10) Direct obligations of the State of Israel, subject to | ||||||
16 | the conditions
and limitations of item (5.1) of Section 1-113.
| ||||||
17 | (11) Money market mutual funds managed by investment | ||||||
18 | companies that are
registered under the federal Investment | ||||||
19 | Company Act of 1940 and the Illinois
Securities Law of 1953 and | ||||||
20 | are diversified, open-ended management investment
companies; | ||||||
21 | provided that the portfolio of the money market mutual fund is
| ||||||
22 | limited to the following:
| ||||||
23 | (i) bonds, notes, certificates of indebtedness, | ||||||
24 | treasury bills, or other
securities that are guaranteed by | ||||||
25 | the full faith and credit of the United
States of America | ||||||
26 | as to principal and interest;
|
| |||||||
| |||||||
1 | (ii) bonds, notes, debentures, or other similar | ||||||
2 | obligations of the United
States of America or its | ||||||
3 | agencies; and
| ||||||
4 | (iii) short term obligations of corporations organized | ||||||
5 | in the United
States with assets exceeding $400,000,000, | ||||||
6 | provided that (A) the obligations
mature no later than 180 | ||||||
7 | days from the date of purchase, (B) at the time of
| ||||||
8 | purchase, the obligations are rated by at least 2 standard | ||||||
9 | national rating
services at one of their 3 highest | ||||||
10 | classifications, and (C) the obligations
held by the mutual | ||||||
11 | fund do not exceed 10% of the corporation's outstanding
| ||||||
12 | obligations.
| ||||||
13 | (12) General accounts of life insurance companies | ||||||
14 | authorized to transact
business in Illinois.
| ||||||
15 | (13) Any combination of the following, not to exceed 10% of | ||||||
16 | the pension
fund's net assets:
| ||||||
17 | (i) separate accounts that are managed by life | ||||||
18 | insurance companies
authorized to transact business in | ||||||
19 | Illinois and are comprised of diversified
portfolios | ||||||
20 | consisting of common or preferred stocks, bonds, or money | ||||||
21 | market
instruments;
| ||||||
22 | (ii) separate accounts that are managed by insurance | ||||||
23 | companies authorized
to transact business in Illinois, and | ||||||
24 | are comprised of real estate
or loans upon real estate | ||||||
25 | secured by first or second mortgages; and
| ||||||
26 | (iii) mutual funds that meet the following |
| |||||||
| |||||||
1 | requirements:
| ||||||
2 | (A) the mutual fund is managed by an investment | ||||||
3 | company as defined and
registered under the federal | ||||||
4 | Investment Company Act of 1940 and registered
under the | ||||||
5 | Illinois Securities Law of 1953;
| ||||||
6 | (B) the mutual fund has been in operation for at | ||||||
7 | least 5 years;
| ||||||
8 | (C) the mutual fund has total net assets of $250 | ||||||
9 | million or more; and
| ||||||
10 | (D) the mutual fund is comprised of diversified | ||||||
11 | portfolios of
common or preferred stocks, bonds, or | ||||||
12 | money market instruments.
| ||||||
13 | (Source: P.A. 90-507, eff. 8-22-97; 91-887, eff. 7-6-00.)
| ||||||
14 | (40 ILCS 5/1-113.3)
| ||||||
15 | Sec. 1-113.3. List of additional permitted investments for | ||||||
16 | pension funds
with net assets of $2,500,000 or more.
| ||||||
17 | (a) In addition to the items in Section
3-113.2, a pension | ||||||
18 | fund established under Article 3 or 4 that has net assets of
at | ||||||
19 | least $2,500,000 may invest a portion of its net assets in the | ||||||
20 | following
items:
| ||||||
21 | (1) Separate accounts that are managed by life | ||||||
22 | insurance companies
authorized to transact business in | ||||||
23 | Illinois and are comprised of diversified
portfolios | ||||||
24 | consisting of common or preferred stocks, bonds, or money | ||||||
25 | market
instruments.
|
| |||||||
| |||||||
1 | (2) Mutual funds that meet the following requirements:
| ||||||
2 | (i) the mutual fund is managed by an investment | ||||||
3 | company as defined and
registered under the federal | ||||||
4 | Investment Company Act of 1940 and registered
under the | ||||||
5 | Illinois Securities Law of 1953;
| ||||||
6 | (ii) the mutual fund has been in operation for at | ||||||
7 | least 5 years;
| ||||||
8 | (iii) the mutual fund has total net assets of $250 | ||||||
9 | million or more; and
| ||||||
10 | (iv) the mutual fund is comprised of diversified | ||||||
11 | portfolios of common or
preferred stocks, bonds, or | ||||||
12 | money market instruments.
| ||||||
13 | (b) A pension fund's total investment in the items | ||||||
14 | authorized under this
Section shall not exceed 35% of the | ||||||
15 | market value of the pension fund's net
present assets stated in | ||||||
16 | its most recent annual report on file with the
Illinois | ||||||
17 | Department of Insurance.
| ||||||
18 | (Source: P.A. 90-507, eff. 8-22-97.)
| ||||||
19 | (40 ILCS 5/1-113.4)
| ||||||
20 | Sec. 1-113.4. List of additional permitted investments for | ||||||
21 | pension funds
with net assets of $5,000,000 or more. | ||||||
22 | (a) In addition to the items in Sections 1-113.2 and | ||||||
23 | 1-113.3, a pension fund
established under Article 3 or 4 that | ||||||
24 | has net assets of at least $5,000,000 and
has appointed an | ||||||
25 | investment adviser under Section 1-113.5 may, through that
|
| |||||||
| |||||||
1 | investment adviser, invest a portion of its assets in common | ||||||
2 | and preferred
stocks authorized for investments of trust funds | ||||||
3 | under the laws of the State
of Illinois. The stocks must meet | ||||||
4 | all of the following requirements:
| ||||||
5 | (1) The common stocks are listed on a national | ||||||
6 | securities exchange or
board of trade (as defined in the | ||||||
7 | federal Securities Exchange Act of 1934 and
set forth in | ||||||
8 | Section 3.G of the Illinois Securities Law of 1953) or | ||||||
9 | quoted in
the National Association of Securities Dealers | ||||||
10 | Automated Quotation System
National Market System (NASDAQ | ||||||
11 | NMS).
| ||||||
12 | (2) The securities are of a corporation created or | ||||||
13 | existing under the laws
of the United States or any state, | ||||||
14 | district, or territory thereof and the
corporation has been | ||||||
15 | in existence for at least 5 years.
| ||||||
16 | (3) The corporation has not been in arrears on payment | ||||||
17 | of dividends on its
preferred stock during the preceding 5 | ||||||
18 | years.
| ||||||
19 | (4) The market value of stock in any one corporation | ||||||
20 | does not exceed 5% of
the cash and invested assets of the | ||||||
21 | pension fund, and the investments in the
stock of any one | ||||||
22 | corporation do not exceed 5% of the total outstanding stock | ||||||
23 | of
that corporation.
| ||||||
24 | (5) The straight preferred stocks or convertible | ||||||
25 | preferred stocks are
issued or guaranteed by a corporation | ||||||
26 | whose common stock qualifies for
investment by the board.
|
| |||||||
| |||||||
1 | (6) The issuer of the stocks has been subject to the | ||||||
2 | requirements of
Section 12 of the federal Securities | ||||||
3 | Exchange Act of 1934 and has been current
with the filing | ||||||
4 | requirements of Sections 13 and 14 of that Act during the
| ||||||
5 | preceding 3 years.
| ||||||
6 | (b) A pension fund's total investment in the items | ||||||
7 | authorized under this
Section and Section 1-113.3 shall not | ||||||
8 | exceed 35% of the market value of the
pension fund's net | ||||||
9 | present assets stated in its most recent annual report on
file | ||||||
10 | with the Illinois Department of Insurance.
| ||||||
11 | (c) A pension fund that invests funds under this Section | ||||||
12 | shall
electronically file with the Division any reports of its | ||||||
13 | investment activities
that the Division may require, at the | ||||||
14 | times and in the format required by the
Division.
| ||||||
15 | (Source: P.A. 90-507, eff. 8-22-97.)
| ||||||
16 | (40 ILCS 5/1-113.5)
| ||||||
17 | Sec. 1-113.5. Investment advisers and investment services.
| ||||||
18 | (a) The board of trustees of a pension fund established | ||||||
19 | under Article 3 may appoint investment advisers
as defined in | ||||||
20 | Section 1-101.4. The board of trustees of a pension fund | ||||||
21 | established under Article 4 must appoint investment advisers as | ||||||
22 | defined in Section 1-101.4. The board of any pension fund | ||||||
23 | investing in
common or preferred stock under Section 1-113.4 | ||||||
24 | shall appoint an investment
adviser before making such | ||||||
25 | investments.
|
| |||||||
| |||||||
1 | The investment adviser shall be a fiduciary, as defined in | ||||||
2 | Section 1-101.2,
with respect to the pension fund and shall be | ||||||
3 | one of the following:
| ||||||
4 | (1) an investment adviser registered under the federal | ||||||
5 | Investment Advisers
Act of 1940 and the Illinois Securities | ||||||
6 | Law of 1953;
| ||||||
7 | (2) a bank or trust company authorized to conduct a | ||||||
8 | trust business in
Illinois;
| ||||||
9 | (3) a life insurance company authorized to transact | ||||||
10 | business in Illinois;
or
| ||||||
11 | (4) an investment company as defined and registered | ||||||
12 | under the federal
Investment Company Act of 1940 and | ||||||
13 | registered under the Illinois Securities Law
of 1953.
| ||||||
14 | (b) All investment advice and services provided by an | ||||||
15 | investment adviser
appointed under this Section shall be | ||||||
16 | rendered pursuant to a written contract
between the investment | ||||||
17 | adviser and the board, and in accordance with the
board's | ||||||
18 | investment policy.
| ||||||
19 | The contract shall include all of the following:
| ||||||
20 | (1) acknowledgement in writing by the investment | ||||||
21 | adviser that he or she
is a fiduciary with respect to the | ||||||
22 | pension fund;
| ||||||
23 | (2) the board's investment policy;
| ||||||
24 | (3) full disclosure of direct and indirect fees, | ||||||
25 | commissions, penalties,
and any other compensation that | ||||||
26 | may be received by the investment adviser,
including |
| |||||||
| |||||||
1 | reimbursement for expenses; and
| ||||||
2 | (4) a requirement that the investment adviser submit | ||||||
3 | periodic written
reports, on at least a quarterly basis, | ||||||
4 | for the board's review at its regularly
scheduled meetings. | ||||||
5 | All returns on investment shall be reported as net returns
| ||||||
6 | after payment of all fees, commissions, and any other | ||||||
7 | compensation.
| ||||||
8 | (c) Within 30 days after appointing an investment adviser, | ||||||
9 | the board shall
submit a copy of the contract to the Department | ||||||
10 | of Insurance.
| ||||||
11 | (d) Investment services provided by a person other than an | ||||||
12 | investment
adviser appointed under this Section, including but | ||||||
13 | not limited to services
provided by the kinds of persons listed | ||||||
14 | in items (1) through (4) of subsection
(a), shall be rendered | ||||||
15 | only after full written disclosure of direct and
indirect fees, | ||||||
16 | commissions, penalties, and any other compensation that shall | ||||||
17 | or
may be received by the person rendering those services.
| ||||||
18 | (e) The board of trustees of each pension fund shall retain | ||||||
19 | records of
investment transactions in accordance with the rules | ||||||
20 | of the Department of
Insurance.
| ||||||
21 | (Source: P.A. 90-507, eff. 8-22-97.)
| ||||||
22 | (40 ILCS 5/1-113.8)
| ||||||
23 | Sec. 1-113.8. Limitations on banks and savings and loan | ||||||
24 | associations. A
bank or savings and loan association shall not | ||||||
25 | receive investment funds from
a pension fund established under |
| |||||||
| |||||||
1 | Article 3 or 4 of this Code, unless it has
complied with the | ||||||
2 | requirements established under Section 6 of the Public Funds
| ||||||
3 | Investment Act. The limitations set forth in that Section 6 are | ||||||
4 | applicable
only at the time of investment and do not require | ||||||
5 | the liquidation of any
investment at any time.
| ||||||
6 | (Source: P.A. 90-507, eff. 8-22-97.)
| ||||||
7 | (40 ILCS 5/1-113.12)
| ||||||
8 | Sec. 1-113.12. Application. Sections 1-113.1 through | ||||||
9 | 1-113.4, 1-113.8, and 1-113.11 1-113.10 apply only
to pension | ||||||
10 | funds established under Article 3 or 4 of this Code. Sections | ||||||
11 | 1-113.5, 1-113.6, 1-113.7, 1-113.9, and 1-113.10 apply only to | ||||||
12 | pension funds established under Article 3 or 4 of this Code.
| ||||||
13 | (Source: P.A. 90-507, eff. 8-22-97.)
| ||||||
14 | Section 90. The State Mandates Act is amended by adding | ||||||
15 | Section 8.32 as follows: | ||||||
16 | (30 ILCS 805/8.32 new) | ||||||
17 | Sec. 8.32. Exempt mandate. Notwithstanding Sections 6 and 8 | ||||||
18 | of this Act, no reimbursement by the State is required for the | ||||||
19 | implementation of any mandate created by this amendatory Act of | ||||||
20 | the 95th General Assembly.
|