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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,
| ||||||||||||||||||||||||||||||||||
3 | represented in the General Assembly:
| ||||||||||||||||||||||||||||||||||
4 | Section 5. The Illinois Pension Code is amended by adding | ||||||||||||||||||||||||||||||||||
5 | Sections 18-105.1, 18-105.2, 18-123.3, 18-133.2, and 18-169.1 | ||||||||||||||||||||||||||||||||||
6 | and changing Section 18-133 as follows:
| ||||||||||||||||||||||||||||||||||
7 | (40 ILCS 5/18-105.1 new)
| ||||||||||||||||||||||||||||||||||
8 | Sec. 18-105.1. Traditional benefit package. "Traditional | ||||||||||||||||||||||||||||||||||
9 | benefit
package" means the defined benefit retirement program | ||||||||||||||||||||||||||||||||||
10 | maintained by the System, which
includes retirement annuities | ||||||||||||||||||||||||||||||||||
11 | payable directly from the System, as provided in
Sections | ||||||||||||||||||||||||||||||||||
12 | 18-124 through 18-125.1; disability
retirement annuities | ||||||||||||||||||||||||||||||||||
13 | payable under Sections 18-126 and 18-126.1; survivor's | ||||||||||||||||||||||||||||||||||
14 | annuities payable directly from the System, as provided in
| ||||||||||||||||||||||||||||||||||
15 | Section 18-123 and Sections 18-128 through 18-128.1 and Section | ||||||||||||||||||||||||||||||||||
16 | 18-128.3; and contribution refunds as provided in Section
| ||||||||||||||||||||||||||||||||||
17 | 18-129.
| ||||||||||||||||||||||||||||||||||
18 | (40 ILCS 5/18-105.2 new)
| ||||||||||||||||||||||||||||||||||
19 | Sec. 18-105.2. Self-managed plan. "Self-managed plan" | ||||||||||||||||||||||||||||||||||
20 | means the defined
contribution retirement program maintained | ||||||||||||||||||||||||||||||||||
21 | by the System, as described in
Section 18-133.2. The | ||||||||||||||||||||||||||||||||||
22 | self-managed plan also includes disability benefits, as
|
| |||||||
| |||||||
1 | provided in Section 18-126.1. The self-managed plan does not
| ||||||
2 | include retirement annuities or survivor's annuities
payable | ||||||
3 | directly from the System, as provided in Section 18-123, | ||||||
4 | Sections 18-124 through 18-126, Sections 18-128 through | ||||||
5 | 18-128.1, and Section 18-128.3 or refunds determined under | ||||||
6 | Section 18-129.
| ||||||
7 | (40 ILCS 5/18-123.3 new)
| ||||||
8 | Sec. 18-123.3. Retirement program elections.
| ||||||
9 | (a) For the purposes of this Section: | ||||||
10 | "Eligible participant" means either a currently eligible | ||||||
11 | participant or a newly eligible
participant. | ||||||
12 | "Currently eligible participant"
means a participant who | ||||||
13 | is employed as a judge on the date on which
the System first | ||||||
14 | offers the
self-managed plan as an alternative to the | ||||||
15 | traditional benefit package. | ||||||
16 | "Newly
eligible participant" means a participant who first | ||||||
17 | becomes employed as a judge
after the date on which the System | ||||||
18 | first offers the self-managed plan as an alternative to the
| ||||||
19 | traditional benefit package.
| ||||||
20 | (b) When the System offers to participants the
self-managed | ||||||
21 | plan as an alternative to the traditional benefit package, each | ||||||
22 | currently eligible participant shall be
given the choice to | ||||||
23 | elect which retirement program he or she wishes to
participate | ||||||
24 | in with respect to all periods of covered employment occurring | ||||||
25 | on
or after the effective date of the participant's election. |
| |||||||
| |||||||
1 | The retirement
program election made by a currently eligible | ||||||
2 | participant must be made in writing, in the
manner prescribed | ||||||
3 | by the System, and within the time period described in
this | ||||||
4 | Section.
| ||||||
5 | If a currently eligible participant elects the | ||||||
6 | self-managed plan, then that election is irrevocable. If a | ||||||
7 | currently eligible participant who elected to participate or | ||||||
8 | participated by default in the traditional benefit plan | ||||||
9 | terminates employment under this Article, then the | ||||||
10 | participant, upon his or her subsequent
re-employment under | ||||||
11 | this Article, may make an election under this Section. | ||||||
12 | A currently eligible participant who fails to make an | ||||||
13 | election under this Section shall, by default,
participate in | ||||||
14 | the traditional benefit package.
| ||||||
15 | (c) A currently eligible participant may elect to
| ||||||
16 | participate in the traditional benefit package
or the | ||||||
17 | self-managed plan.
| ||||||
18 | A currently eligible participant must make this election | ||||||
19 | within 5 years
after the effective date of the employer's | ||||||
20 | adoption of the self-managed plan or, in the case of a | ||||||
21 | currently eligible participant who terminates employment under | ||||||
22 | this Article, within 6 months after his or her re-employment | ||||||
23 | under this Article.
| ||||||
24 | A newly eligible participant is automatically enrolled in | ||||||
25 | the self-managed plan under Section 18-133.2.
| ||||||
26 | (d) If a currently eligible participant elects to |
| |||||||
| |||||||
1 | participate in the self-managed plan, the System shall fund | ||||||
2 | their account as stated in subsection (f) of Section 18-133.2. | ||||||
3 | Employer contributions to the self-managed
plan shall commence | ||||||
4 | as of the first pay period that begins after the System
| ||||||
5 | receives the member's election.
| ||||||
6 | (e) A currently eligible participant shall be provided with | ||||||
7 | written information prepared
or prescribed by the System that | ||||||
8 | describes the participant's retirement program
choices. The | ||||||
9 | eligible participant shall be offered an opportunity to
receive | ||||||
10 | counseling from the System prior to making his or her election. | ||||||
11 | This
counseling may consist of videotaped materials, group | ||||||
12 | presentations, individual
consultation with an employee or | ||||||
13 | authorized representative of the System in
person or by | ||||||
14 | telephone or other electronic means, or any combination of | ||||||
15 | these
methods.
| ||||||
16 | (40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)
| ||||||
17 | Sec. 18-133. Financing; employee contributions.
| ||||||
18 | (a) Effective July 1, 1967, each participant is required to | ||||||
19 | contribute
7 1/2% of each payment of salary toward the | ||||||
20 | retirement annuity. Such
contributions shall continue during | ||||||
21 | the entire time the participant is in
service, with the | ||||||
22 | following exceptions:
| ||||||
23 | (1) Contributions for the retirement annuity are not | ||||||
24 | required on salary
received after 18 years of service by | ||||||
25 | persons who were participants before
January 2, 1954.
|
| |||||||
| |||||||
1 | (2) A participant who continues to serve as a judge | ||||||
2 | after becoming
eligible to receive the maximum rate of | ||||||
3 | annuity may elect, through a written
direction filed with | ||||||
4 | the Board, to discontinue contributing to the System.
Any | ||||||
5 | such option elected by a judge shall be irrevocable unless | ||||||
6 | prior to
January 1, 2000, and while continuing to
serve as | ||||||
7 | judge, the judge (A) files with the Board a letter | ||||||
8 | cancelling the
direction to discontinue contributing to | ||||||
9 | the System and requesting that such
contributing resume, | ||||||
10 | and (B) pays into the System an amount equal to the total
| ||||||
11 | of the discontinued contributions plus interest thereon at | ||||||
12 | 5% per annum.
Service credits earned in any other | ||||||
13 | "participating system" as defined in
Article 20 of this | ||||||
14 | Code shall be considered for purposes of determining a
| ||||||
15 | judge's eligibility to discontinue contributions under | ||||||
16 | this subdivision
(a)(2).
| ||||||
17 | (3) A participant who (i) has attained age 60, (ii) | ||||||
18 | continues to serve
as a judge after becoming eligible to | ||||||
19 | receive the maximum rate of annuity,
and (iii) has not | ||||||
20 | elected to discontinue contributing to the System under
| ||||||
21 | subdivision (a)(2) of this Section (or has revoked any such | ||||||
22 | election) may
elect, through a written direction filed with | ||||||
23 | the Board, to make contributions
to the System based only | ||||||
24 | on the amount of the increases in salary received by
the | ||||||
25 | judge on or after the date of the election, rather than the | ||||||
26 | total salary
received. If a judge who is making |
| |||||||
| |||||||
1 | contributions to the System on the
effective date of this | ||||||
2 | amendatory Act of the 91st General Assembly makes an
| ||||||
3 | election to limit contributions under this subdivision | ||||||
4 | (a)(3) within 90 days
after that effective date, the | ||||||
5 | election shall be deemed to become
effective on that | ||||||
6 | effective date and the judge shall be entitled to receive a
| ||||||
7 | refund of any excess contributions paid to the System | ||||||
8 | during that 90-day
period; any other election under this | ||||||
9 | subdivision (a)(3) becomes effective
on the first of the | ||||||
10 | month following the date of the election. An election to
| ||||||
11 | limit contributions under this subdivision (a)(3) is | ||||||
12 | irrevocable. Service
credits earned in any other | ||||||
13 | participating system as defined in Article 20 of
this Code | ||||||
14 | shall be considered for purposes of determining a judge's | ||||||
15 | eligibility
to make an election under this subdivision | ||||||
16 | (a)(3).
| ||||||
17 | (b) Beginning July 1, 1969, each participant is required to | ||||||
18 | contribute
1% of each payment of salary towards the automatic | ||||||
19 | increase in annuity
provided in Section 18-125.1. However, such | ||||||
20 | contributions need not be made
by any participant who has | ||||||
21 | elected prior to September 15, 1969, not to be
subject to the | ||||||
22 | automatic increase in annuity provisions.
| ||||||
23 | (c) Effective July 13, 1953, each married participant | ||||||
24 | subject to the
survivor's annuity provisions is required to | ||||||
25 | contribute 2 1/2% of each
payment of salary, whether or not he | ||||||
26 | or she is required to make any other
contributions under this |
| |||||||
| |||||||
1 | Section. Such contributions shall be made
concurrently with the | ||||||
2 | contributions made for annuity purposes.
| ||||||
3 | Notwithstanding any provision in this subsection (c) to the | ||||||
4 | contrary, in the case of an employee who participates in the | ||||||
5 | self-managed plan under Section 18-133.2, contributions for | ||||||
6 | survivor's annuity shall be used to fund benefits under Section | ||||||
7 | 18-133.2.
| ||||||
8 | (Source: P.A. 91-653, eff. 12-10-99.)
| ||||||
9 | (40 ILCS 5/18-133.2 new)
| ||||||
10 | Sec. 18-133.2. Self-managed plan.
| ||||||
11 | (a) The General Assembly finds that it is important to be | ||||||
12 | able to attract and retain the most qualified judges
and that | ||||||
13 | in order to attract and retain these judges, the System should | ||||||
14 | have the flexibility to provide a defined contribution
| ||||||
15 | (self-managed) plan for eligible participants.
Accordingly, | ||||||
16 | the Judges Retirement System of Illinois is hereby authorized | ||||||
17 | to
establish and administer a self-managed plan, which shall | ||||||
18 | offer participants the opportunity to accumulate assets for | ||||||
19 | retirement through a
combination of participant and employer | ||||||
20 | contributions that may be invested in
mutual funds, collective | ||||||
21 | investment funds, or other investment products and
used to | ||||||
22 | purchase annuity contracts, either fixed or variable or a | ||||||
23 | combination
thereof. The plan must be qualified under the | ||||||
24 | Internal Revenue Code of 1986.
| ||||||
25 | (b) The Board shall adopt the self-managed plan established |
| |||||||
| |||||||
1 | under this Section. An employer's election to adopt the | ||||||
2 | self-managed
plan makes available to the eligible participants | ||||||
3 | of that employer the elections
described in Section 18-133.2.
| ||||||
4 | The Judges Retirement System of Illinois shall be the plan | ||||||
5 | sponsor for the
self-managed plan and shall prepare a plan | ||||||
6 | document and prescribe such rules
and procedures as are | ||||||
7 | considered necessary or desirable for the administration
of the | ||||||
8 | self-managed plan. Consistent with its fiduciary duty to the
| ||||||
9 | participants and beneficiaries of the self-managed plan, the | ||||||
10 | Board of Trustees
of the System may delegate aspects of plan | ||||||
11 | administration as it sees fit to
companies authorized to do | ||||||
12 | business in this State.
| ||||||
13 | (c) The System shall solicit proposals to provide
| ||||||
14 | administrative services and funding vehicles for the | ||||||
15 | self-managed plan from
insurance and annuity companies and | ||||||
16 | mutual fund companies, banks, trust
companies, or other | ||||||
17 | financial institutions authorized to do business in this
State. | ||||||
18 | In reviewing the proposals received and approving and | ||||||
19 | contracting with
no fewer than 2 and no more than 7 companies, | ||||||
20 | the Board of Trustees of the System shall
consider, among other | ||||||
21 | things, the following criteria:
| ||||||
22 | (1) the nature and extent of the benefits that would be | ||||||
23 | provided
to the participants;
| ||||||
24 | (2) the reasonableness of the benefits in relation to | ||||||
25 | the premium
charged;
| ||||||
26 | (3) the suitability of the benefits to the needs and
|
| |||||||
| |||||||
1 | interests of the participants and the employer;
| ||||||
2 | (4) the ability of the company to provide benefits | ||||||
3 | under the contract and
the financial stability of the | ||||||
4 | company; and
| ||||||
5 | (5) the efficacy of the contract in the recruitment and | ||||||
6 | retention of
judges.
| ||||||
7 | The System shall periodically review
each approved | ||||||
8 | company. A company may continue to provide administrative
| ||||||
9 | services and funding vehicles for the self-managed plan only so | ||||||
10 | long as
it continues to be an approved company under contract | ||||||
11 | with the Board.
| ||||||
12 | In addition to the companies approved by the System under | ||||||
13 | this subsection (c), the System may offer its participants an | ||||||
14 | investment fund managed by the System.
| ||||||
15 | (d) Participants who are under the self-managed plan
must | ||||||
16 | be allowed to direct the transfer of their account balances | ||||||
17 | among the
various investment options offered, subject to | ||||||
18 | applicable contractual
provisions.
The participant shall not | ||||||
19 | be deemed a fiduciary by reason of providing such
investment | ||||||
20 | direction. A person who is a fiduciary shall not be liable for | ||||||
21 | any
loss resulting from such investment direction and shall not | ||||||
22 | be deemed to have
breached any fiduciary duty by acting in | ||||||
23 | accordance with that direction.
Neither the System nor the | ||||||
24 | State guarantees any of the investments in the
participant's | ||||||
25 | account balances.
| ||||||
26 | (e) A currently eligible participant, as defined in Section |
| |||||||
| |||||||
1 | 18-123.3, must make a written election to participate in the
| ||||||
2 | self-managed plan in accordance with the
provisions of Section | ||||||
3 | 18-133.2 and the procedures established by the System.
| ||||||
4 | Participation in the self-managed plan shall begin
on the first | ||||||
5 | day of the month immediately following the month in which the
| ||||||
6 | currently eligible participant's election is filed with the | ||||||
7 | System or when a newly eligible participant, as defined in | ||||||
8 | Section 18-123.3, enters the System, but not sooner than the | ||||||
9 | effective date of
the self-managed
plan. The System shall make | ||||||
10 | the self-managed plan available under this Article by January | ||||||
11 | 1, 2011. A participant's participation in the traditional | ||||||
12 | retirement package under this Article shall terminate on the | ||||||
13 | date that
participation in the self-managed plan begins.
| ||||||
14 | A participant who has elected to participate in the | ||||||
15 | self-managed plan under
this Section must continue | ||||||
16 | participation while employed as a judge, and may not | ||||||
17 | participate in the traditional benefit package administered
by | ||||||
18 | the System under this Article while employed as a judge.
| ||||||
19 | Participation in the self-managed plan under this Section | ||||||
20 | shall constitute
membership in the Judges Retirement System of | ||||||
21 | Illinois.
| ||||||
22 | A participant under this Section shall be entitled to the | ||||||
23 | benefits of
Article 20 of this Code.
| ||||||
24 | (f) If, at the time a participant
elects to participate in | ||||||
25 | the self-managed plan, the participant rights and credits
in | ||||||
26 | the System due to previous participation in the traditional |
| |||||||
| |||||||
1 | benefit package,
the System shall establish for the participant | ||||||
2 | an opening account balance in the
self-managed plan, equal to | ||||||
3 | (i) the amount of the contribution refund that the participant
| ||||||
4 | would be eligible to receive under Section 18-129 if the | ||||||
5 | participant terminated
employment on that date and elected a | ||||||
6 | refund of contributions, plus (ii) an amount equal to the | ||||||
7 | regular employer contribution that would be required to fund | ||||||
8 | the actual regular cost incurred for each year of service | ||||||
9 | credit earned, provided that the total opening account balance | ||||||
10 | does not exceed 7.6% of that participant's salary for that | ||||||
11 | year, plus interest. The interest used in this subsection (f) | ||||||
12 | is calculated as the average annual rate of return that the | ||||||
13 | System has earned over the past 20 fiscal years and is | ||||||
14 | compounded. The System shall transfer assets from the defined | ||||||
15 | benefit
retirement program to the self-managed plan, as a | ||||||
16 | tax-free transfer in
accordance with Internal Revenue Service | ||||||
17 | guidelines, for purposes of funding
the participant's opening | ||||||
18 | account balance.
| ||||||
19 | (g) Notwithstanding any other provision
of this Article, a | ||||||
20 | participant may not purchase or receive service or service
| ||||||
21 | credit applicable to the traditional benefit package
under this | ||||||
22 | Article for any period during which the participant was covered | ||||||
23 | under the self-managed plan established under this Section.
| ||||||
24 | (h) The self-managed plan shall be funded by contributions
| ||||||
25 | from participants participating in the self-managed plan and | ||||||
26 | State
contributions as provided in this Section.
|
| |||||||
| |||||||
1 | The contribution rate for persons participating in the | ||||||
2 | self-managed plan
under this Section shall be equal to the | ||||||
3 | participant contribution rate for other
participants in the | ||||||
4 | System, as provided in Section 18-133. This required | ||||||
5 | contribution shall be made as an employer pick-up under Section | ||||||
6 | 414(h) of the
Internal Revenue Code of 1986 or any successor | ||||||
7 | Section thereof. Any employee
participating in the System's | ||||||
8 | traditional benefit package prior to his or her
election to | ||||||
9 | participate in the self-managed plan shall continue to have the
| ||||||
10 | employer pick up that contribution. However, the
amounts picked | ||||||
11 | up after the election of the self-managed plan shall be | ||||||
12 | remitted
to and treated as assets of the self-managed plan. In | ||||||
13 | no event shall a participant have the option of receiving these | ||||||
14 | amounts in cash. Participants may make
additional | ||||||
15 | contributions to the
self-managed plan in accordance with | ||||||
16 | procedures prescribed by the System, to
the extent permitted | ||||||
17 | under rules prescribed by the System.
| ||||||
18 | The program shall provide for State contributions to be | ||||||
19 | credited to each self-managed plan participant in an amount | ||||||
20 | equal to the regular employer contribution that would be | ||||||
21 | required to fund the actual regular cost incurred for each year | ||||||
22 | of service credit earned had the participant chosen to enroll | ||||||
23 | in the traditional benefit plan.
| ||||||
24 | An amount of participant contribution, not exceeding 1% of | ||||||
25 | the participant's salary, shall be used for the purpose of | ||||||
26 | providing the disability
benefits of the System to the |
| |||||||
| |||||||
1 | employee. Prior to the beginning of each plan
year under the | ||||||
2 | self-managed plan, the Board of Trustees shall determine, as a
| ||||||
3 | percentage of salary, the amount of participant contributions | ||||||
4 | to be allocated
during that plan year for providing disability | ||||||
5 | benefits for participants in the
self-managed plan. The | ||||||
6 | provisions of this paragraph shall be administered in | ||||||
7 | conjunction with the provisions of Section 18-124.
| ||||||
8 | The State of Illinois shall make contributions by | ||||||
9 | appropriations to the
System of the employer contributions | ||||||
10 | required for participants who are covered under the | ||||||
11 | self-managed plan under this Section.
The amount required shall
| ||||||
12 | be certified by the Board of Trustees of the System and paid by | ||||||
13 | the State in
accordance with Section 18-140. The System shall | ||||||
14 | not be obligated to remit the
required employer contributions | ||||||
15 | to any of the insurance and annuity
companies, mutual fund
| ||||||
16 | companies, banks, trust companies, financial institutions, or | ||||||
17 | other sponsors
of any of the funding vehicles offered under the | ||||||
18 | self-managed plan
until it has received the required employer | ||||||
19 | contributions from the State. In
the event of a deficiency in | ||||||
20 | the amount of State contributions, the System
shall implement | ||||||
21 | those procedures described in subsection (b) of Section 18-140
| ||||||
22 | to obtain the required funding from the General Revenue
Fund.
| ||||||
23 | (i) A participant in the
self-managed plan becomes vested | ||||||
24 | in the employer contributions credited to his
or her accounts | ||||||
25 | in the self-managed plan on the earliest to occur of the
| ||||||
26 | following: (1) attainment of 5 years of service credit; (2) the |
| |||||||
| |||||||
1 | death of the participant while employed as a judge, if the | ||||||
2 | participant has completed at
least 1.5 years of service; or (3) | ||||||
3 | the participant's election to retire and
apply the reciprocal | ||||||
4 | provisions of Article 20 of this Code.
| ||||||
5 | A participant in the self-managed plan who receives a | ||||||
6 | distribution of his or
her vested amounts from the self-managed | ||||||
7 | plan
while not yet eligible for retirement under this Article
| ||||||
8 | (and Article 20, if applicable) shall forfeit all service | ||||||
9 | credit
and accrued rights in the System; if subsequently | ||||||
10 | re-employed as a judge, the participant
shall be considered a | ||||||
11 | new
employee. If a former participant again becomes a | ||||||
12 | participating employee (or
becomes employed by a participating | ||||||
13 | system under Article 20 of this Code) and
continues as such for | ||||||
14 | at least 2 years, all such rights, service credits, and
| ||||||
15 | previous status as a participant shall be restored upon | ||||||
16 | repayment of the amount
of the distribution, without interest.
| ||||||
17 | (j) If a participant who is vested in employer
| ||||||
18 | contributions terminates employment, the participant shall be | ||||||
19 | entitled to a
benefit which is based on the
account values | ||||||
20 | attributable to both employer and
participant contributions | ||||||
21 | and any
investment return thereon.
| ||||||
22 | If a participant who is not vested in employer | ||||||
23 | contributions terminates
employment, the participant shall be | ||||||
24 | entitled to a benefit based solely on the
account values | ||||||
25 | attributable to the participant's contributions and any | ||||||
26 | investment
return thereon, and the employer contributions and |
| |||||||
| |||||||
1 | any investment return
thereon shall be forfeited. Any employer | ||||||
2 | contributions which are forfeited
shall be held in escrow by | ||||||
3 | the
company investing those contributions and shall be used, as | ||||||
4 | directed by the
System, for future allocations of employer | ||||||
5 | contributions or for the restoration
of amounts previously | ||||||
6 | forfeited by former participants who again become
| ||||||
7 | participating employees.
| ||||||
8 | (40 ILCS 5/18-169.1 new)
| ||||||
9 | Sec. 18-169.1. New benefit increases. To the extent that | ||||||
10 | the changes made to this Article by this amendatory Act of the | ||||||
11 | 96th General Assembly authorizing the System to offer a | ||||||
12 | self-managed plan are determined to be a new benefit increase | ||||||
13 | within the meaning of Section 18-169, the changes made by this | ||||||
14 | amendatory Act are exempt from the provisions of subsection (d) | ||||||
15 | of Section 18-169.
| ||||||
16 | Section 99. Effective date. This Act takes effect upon | ||||||
17 | becoming law.
|