Rep. Elizabeth Coulson
Filed: 3/22/2010
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1 | AMENDMENT TO HOUSE BILL 5576
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2 | AMENDMENT NO. ______. Amend House Bill 5576 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 5. The Illinois Pension Code is amended by | ||||||
5 | changing Section 3-109.3 and by adding Sections 4-118.3 and | ||||||
6 | 7-173.3 as follows: | ||||||
7 | (40 ILCS 5/3-109.3)
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8 | Sec. 3-109.3. Self-managed plan.
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9 | (a) Purpose. The General Assembly finds that it is
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10 | important for municipalities to be able to attract and retain | ||||||
11 | the most
qualified police officers and that in order to attract | ||||||
12 | and retain these police
officers, municipalities should have | ||||||
13 | the flexibility to provide a defined
contribution plan as an | ||||||
14 | alternative for eligible employees who elect not
to participate | ||||||
15 | in a defined benefit retirement program provided under this
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16 | Article. Accordingly, a self-managed plan shall be provided, |
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1 | which shall offer
participating employees the opportunity to | ||||||
2 | accumulate assets for retirement
through a combination of | ||||||
3 | employee and employer contributions that may be
invested in | ||||||
4 | mutual funds, collective investment funds, or other investment
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5 | products and used to purchase annuity contracts, either fixed | ||||||
6 | or variable,
or a combination thereof. The plan must be | ||||||
7 | qualified under the Internal
Revenue Code of 1986.
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8 | (b) Study by Commission; Adoption of plan.
The Illinois | ||||||
9 | Pension Laws Commission (or its successor, the Commission on | ||||||
10 | Government Forecasting and Accountability) shall study
and | ||||||
11 | evaluate the creation
of a statewide self-managed plan for | ||||||
12 | eligible employees under this Article.
The Commission shall | ||||||
13 | report its findings and recommendations to the General
Assembly | ||||||
14 | no later than January 1, 2002.
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15 | In accordance with the recommendations of the Commission | ||||||
16 | and any action
taken by the General Assembly in response to | ||||||
17 | those recommendations, a statewide
self-managed plan shall be | ||||||
18 | adopted for eligible employees under this Article.
The | ||||||
19 | self-managed plan shall take effect as specified in the plan, | ||||||
20 | but in no
event earlier than July 1, 2002 or the date of its | ||||||
21 | approval by the U.S.
Internal Revenue Service, whichever occurs | ||||||
22 | later.
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23 | The self-managed plan shall include a plan document and | ||||||
24 | shall provide for the
adoption of such rules and procedures as | ||||||
25 | are necessary or desirable for the
administration of the | ||||||
26 | self-managed plan. Consistent with fiduciary duty to the
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1 | participants and beneficiaries of the self-managed plan, it may | ||||||
2 | provide for
delegation of suitable aspects of plan | ||||||
3 | administration to companies authorized
to do business in this | ||||||
4 | State.
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5 | (c) Selection of service providers and funding vehicles. | ||||||
6 | The principal
administrator of the self-managed plan shall | ||||||
7 | solicit proposals to provide
administrative services and | ||||||
8 | funding vehicles for the self-managed plan from
insurance and | ||||||
9 | annuity companies and mutual fund companies, banks, trust
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10 | companies, or other financial institutions authorized to do | ||||||
11 | business in this
State. In reviewing the proposals received and | ||||||
12 | approving and contracting with
no fewer than 2 and no more than | ||||||
13 | 7 companies, the principal administrator shall
consider, among | ||||||
14 | other things, the following criteria:
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15 | (1) the nature and extent of the
benefits that would be | ||||||
16 | provided to the participants;
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17 | (2) the reasonableness of the benefits in relation to | ||||||
18 | the premium
charged;
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19 | (3) the suitability of the benefits to the needs and | ||||||
20 | interests of the
participating employees and the employer;
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21 | (4) the ability of the company to provide benefits | ||||||
22 | under the contract
and the financial stability of the | ||||||
23 | company; and
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24 | (5) the efficacy of the contract in the recruitment and | ||||||
25 | retention of
employees.
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26 | The principal administrator shall periodically review each |
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1 | approved company.
A company may continue to provide | ||||||
2 | administrative services and funding vehicles
for the | ||||||
3 | self-managed plan only so long as it continues to be an | ||||||
4 | approved
company under contract with the principal | ||||||
5 | administrator.
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6 | (d) Employee Direction. Employees who are participating in | ||||||
7 | the
program must be allowed to direct the transfer of their | ||||||
8 | account balances among
the various investment options offered, | ||||||
9 | subject to applicable contractual
provisions. The participant | ||||||
10 | shall not be deemed a fiduciary by reason of
providing such | ||||||
11 | investment direction. A person who is a fiduciary shall not be
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12 | liable for any loss resulting from such investment direction | ||||||
13 | and shall not be
deemed to have breached any fiduciary duty by | ||||||
14 | acting in accordance with that
direction. The self-managed plan | ||||||
15 | does not guarantee any of the investments in
the employee's | ||||||
16 | account balances.
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17 | (e) Participation. An eligible employee must make a written | ||||||
18 | election in
accordance with the provisions of Section 3-109.2 | ||||||
19 | and the procedures
established under the self-managed plan. | ||||||
20 | Participation in the self-managed
plan by an eligible employee | ||||||
21 | who elects to participate in the self-managed plan
shall begin | ||||||
22 | on the first day of the first pay period following the later of | ||||||
23 | the
date the employee's election is filed with the fund or the | ||||||
24 | employer, but in no
event sooner than the effective date of the | ||||||
25 | self-managed plan.
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26 | A police officer who has elected to participate in the |
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1 | self-managed plan
under this Section must continue | ||||||
2 | participation while employed in an eligible
position, and may | ||||||
3 | not participate in any other retirement program administered
by | ||||||
4 | the municipality while employed as a police officer by that | ||||||
5 | municipality.
Participation in the self-managed plan under | ||||||
6 | this Section shall constitute
membership in an Article 3 | ||||||
7 | pension fund.
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8 | Notwithstanding any other provision of this Article, a | ||||||
9 | municipality may require that any police officer who first | ||||||
10 | becomes a police officer for that municipality on or after | ||||||
11 | January 1, 2011 participate in the self-managed plan under this | ||||||
12 | Section. | ||||||
13 | (f) No Duplication of Service Credit. Notwithstanding any | ||||||
14 | other provision
of this Article, a police officer may not | ||||||
15 | purchase or receive service or
service credit applicable to any | ||||||
16 | other retirement program administered by a
fund under this | ||||||
17 | Article for any period during which the police officer was a
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18 | participant in the self-managed plan established under this | ||||||
19 | Section.
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20 | (g) Contributions. The self-managed plan shall be funded by | ||||||
21 | contributions
from participants in the self-managed plan and | ||||||
22 | employer contributions as
provided in this Section.
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23 | The contribution rate for a participant in the self-managed | ||||||
24 | plan under
this Section shall be a minimum of 10% of his or her | ||||||
25 | salary. This required
contribution shall be made as an | ||||||
26 | "employer pick-up" under Section 414(h) of
the Internal Revenue |
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1 | Code of 1986 or any successor Section thereof. An
employee may | ||||||
2 | make additional contributions to the self-managed plan in
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3 | accordance with the terms of the plan.
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4 | The self-managed plan shall provide for employer | ||||||
5 | contributions to be credited
to each self-managed plan | ||||||
6 | participant at a rate of 10% of the participating
employee's | ||||||
7 | salary, less the amount of the employer contribution used to | ||||||
8 | provide
disability benefits for the employee. The amounts so | ||||||
9 | credited shall be paid
into the participant's self-managed plan | ||||||
10 | accounts in the manner prescribed by
the plan.
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11 | An amount of employer contribution, not exceeding 1.5% of | ||||||
12 | the participating
employee's salary, shall be used for the | ||||||
13 | purpose of providing disability
benefits to the participating | ||||||
14 | employee. Prior to the beginning of each plan
year under the | ||||||
15 | self-managed plan, the principal administrator shall | ||||||
16 | determine,
as a percentage of salary, the amount of employer | ||||||
17 | contributions to be allocated
during that plan year for | ||||||
18 | providing disability benefits for employees in the
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19 | self-managed plan.
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20 | (h) Vesting; Withdrawal; Return to Service. A participant | ||||||
21 | in the
self-managed plan becomes fully vested in the employer | ||||||
22 | contributions credited
to his or her account in the | ||||||
23 | self-managed plan on the earliest to occur of the
following:
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24 | (1) completion of 6 years of service with the | ||||||
25 | municipality; or
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26 | (2) the death of the participating employee while
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1 | employed by the municipality, if the participant
has | ||||||
2 | completed at least 1.5 years of service.
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3 | A participant in the self-managed plan who receives a | ||||||
4 | distribution of his or
her vested amounts from the self-managed | ||||||
5 | plan upon or after termination of
employment shall forfeit all | ||||||
6 | service credit and accrued rights in the fund of
his or her | ||||||
7 | employer; if subsequently re-employed, the participant shall | ||||||
8 | be
considered a new employee. If a former participant again | ||||||
9 | becomes a
participating employee and continues as such for at | ||||||
10 | least 2 years, all such
rights, service credit, and previous | ||||||
11 | status as a participant shall be restored
upon repayment of the | ||||||
12 | amount of the distribution without interest.
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13 | (i) Benefit amounts. If a participating employee who is | ||||||
14 | fully vested in
employer contributions terminates employment, | ||||||
15 | the participating employee shall
be entitled to a benefit which | ||||||
16 | is based on the account values attributable to
both employer | ||||||
17 | and employee contributions and any investment return thereon.
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18 | If a participating employee who is not fully vested in | ||||||
19 | employer contributions
terminates employment, the employee | ||||||
20 | shall be entitled to a benefit based on the
account values | ||||||
21 | attributable to the employee's contributions and any | ||||||
22 | investment
return thereon, plus the following percentage of | ||||||
23 | employer contributions and any
investment return thereon: 20% | ||||||
24 | after the second year; 40% after the third year;
60% after the | ||||||
25 | fourth year; 80% after the fifth year; and 100% after the sixth
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26 | year. The remainder of employer contributions and investment |
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1 | return thereon
shall be forfeited. Any employer contributions
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2 | that are forfeited shall be held in escrow by the company | ||||||
3 | investing those
contributions and shall be used as directed by | ||||||
4 | the municipality 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.
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8 | (Source: P.A. 93-632, eff. 2-1-04; 93-1067, eff. 1-15-05.)
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9 | (40 ILCS 5/4-118.3 new) | ||||||
10 | Sec. 4-118.3. Self-managed plan. A municipality may | ||||||
11 | require that any firefighter who first becomes a firefighter | ||||||
12 | for that municipality on or after January 1, 2011 participate | ||||||
13 | in a self-managed plan established by the municipality. A | ||||||
14 | self-managed plan established under this Section must be | ||||||
15 | qualified under the Internal
Revenue Code of 1986. | ||||||
16 | For the purposes of this Section, "self-managed plan" means | ||||||
17 | a plan that offers
firefighters the opportunity to accumulate | ||||||
18 | assets for retirement
through a combination of employee and | ||||||
19 | employer contributions that may be
invested in mutual funds, | ||||||
20 | collective investment funds, or other investment
products and | ||||||
21 | used to purchase annuity contracts, either fixed or variable,
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22 | or a combination thereof. | ||||||
23 | (40 ILCS 5/7-173.3 new) | ||||||
24 | Sec. 7-173.3. Self-managed plan. A participating |
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1 | municipality or participating instrumentality may require that | ||||||
2 | any employee who first becomes an employee for that | ||||||
3 | participating municipality or participating instrumentality on | ||||||
4 | or after January 1, 2011 participate in a self-managed plan | ||||||
5 | established by the participating municipality or participating | ||||||
6 | instrumentality. A self-managed plan established under this | ||||||
7 | Section must be qualified under the Internal
Revenue Code of | ||||||
8 | 1986. | ||||||
9 | For the purposes of this Section, "self-managed plan" means | ||||||
10 | a plan that offers
employees the opportunity to accumulate | ||||||
11 | assets for retirement
through a combination of employee and | ||||||
12 | employer contributions that may be
invested in mutual funds, | ||||||
13 | collective investment funds, or other investment
products and | ||||||
14 | used to purchase annuity contracts, either fixed or variable,
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15 | or a combination thereof.
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16 | Section 99. Effective date. This Act takes effect upon | ||||||
17 | becoming law.".
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