HB1959ham001 97TH GENERAL ASSEMBLY

Rep. Mike Fortner

Filed: 4/6/2011

09700HB1959ham001 LRB097 06378 JDS 53892 a

AMENDMENT TO HOUSE BILL 1959

AMENDMENT NO. ______. Amend House Bill 1959 by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Pension Code is amended by adding Sections 2-103.1, 2-103.2, 2-117.4, 2-126.2, 18-118.1, 18-118.2, 18-120.2, and 18-133.2 and changing Sections 2-126 and 18-133 as follows:

(40 ILCS 5/2-103.1 new)

Sec. 2-103.1. Reformed benefit package. "Reformed benefit package" means the benefit retirement program maintained by the System for persons who first become participants of the System on or after January 1, 2011. It includes the following benefits for those persons: retirement annuities payable directly from the System, as provided in Sections 2-119, 2-119.01, 2-119.1, and 2-120; survivor's annuities payable directly from the System, as provided in Sections 2-121, 2-121.1, 2-121.2, and 2-121.3; and contribution refunds, as provided in Section 2-123.

(40 ILCS 5/2-103.2 new)

Sec. 2-103.2. Self-managed plan. "Self-managed plan" means the defined contribution retirement program maintained by the System, as described in Section 2-126.2. The self-managed plan does not include retirement annuities or survivor's benefits payable directly from the System, as provided in Sections 2-119, 2-119.01, 2-119.1, 2-120, 2-121, 2-121.1, 2-121.2, and 2-121.3 or contribution refunds, as provided in Section 2-123.

(40 ILCS 5/2-117.4 new)

Sec. 2-117.4. Retirement program elections.

(a) For the purposes of this Section:

"Currently eligible participant" means a person who first becomes a participant under this Article on or after January 1, 2011 and is a participant under this Article before the day on which the System first offers the self-managed plan as an alternative to the reformed benefit package.

"Eligible participant" means either a currently eligible participant or a newly eligible participant of the System.

"Newly eligible participant" means a person who first becomes a participant under this Article on or after the date on which the System first offers the self-managed plan as an alternative to the reformed benefit package.

(b) When the System offers to participants under this Article a self-managed plan as an alternative to the reformed benefit package, each eligible participant shall be given the choice to elect which retirement program he or she wishes to participate in with respect to all periods of covered employment occurring on, before, and after the effective date of the participant's election. The retirement program election made by an eligible participant must be made in writing, in the manner prescribed by the System, and within the time period described in this Section.

If an eligible participant elects the self-managed plan, then that election is irrevocable. If an eligible participant who elected to participate or participated by default in the reformed benefit plan terminates employment under this Article, then the participant, upon his or her subsequent re-employment under this Article, may make an election under this Section.

An eligible participant who fails to make an election under this Section shall, by default, participate in the reformed benefit package.

(c) An eligible participant may elect to participate in the reformed benefit package or the self-managed plan. An eligible participant must make this election within one year after the effective date of the adoption of the self-managed plan under Section 2-126.2 or 60 days after first becoming a participant under this Article, whichever is later, or, in the case of a currently eligible participant who terminates employment under this Article, within one year after his or her re-employment under this Article.

(d) If the eligible participant elects to participate in the self-managed plan, the System shall fund his or her account as stated in subsection (f) of Section 2-126.2.

(e) An eligible participant shall be provided with written information prepared or prescribed by the System that describes the participant's retirement program choices. The eligible participant shall be offered an opportunity to receive counseling from the System before making his or her election. This counseling may consist of videotaped materials, group presentations, individual consultation with an employee or authorized representative of the System in person or by telephone or other electronic means, or any combination of these methods.

(40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)

Sec. 2-126. Contributions by participants.

(a) Each participant shall make contributions towards the retirement benefits payable under the retirement program applicable to the member from contribute toward the cost of his or her retirement annuity a percentage of each payment of salary received by him or her for service as a member as follows: for service between October 31, 1947 and January 1, 1959, 5%; for service between January 1, 1959 and June 30, 1969, 6%; for service between July 1, 1969 and January 10, 1973, 6 1/2%; for service after January 10, 1973, 7%; for service after December 31, 1981, 8 1/2%, unless the member has elected to participate in the self-managed plan created under Section 2-126.2, in which case, the member shall contribute 6 1/2% for service on or after the effective date of that election in order to finance the benefits available under Section 2-126.2.

(b) Beginning August 2, 1949, each male participant, and from July 1, 1971, each female participant shall contribute towards the cost of the survivor's annuity 2% of salary.

A participant who has no eligible survivor's annuity beneficiary may elect to cease making contributions for survivor's annuity under this subsection. A survivor's annuity shall not be payable upon the death of a person who has made this election, unless prior to that death the election has been revoked and the amount of the contributions that would have been paid under this subsection in the absence of the election is paid to the System, together with interest at the rate of 4% per year from the date the contributions would have been made to the date of payment.

Notwithstanding any provision in this subsection (b) to the contrary, in the case of an employee who has elected to participate in the self-managed plan under Section 2-126.2, contributions for a survivor's annuity shall instead be used to finance the benefits available under Section 2-126.2.

(c) Beginning July 1, 1967, each participant shall contribute 1% of salary towards the cost of automatic increase in annuity provided in Section 2-119.1. However, if the member has elected to participate in the self-managed plan created under Section 2-126.2, then he or she shall contribute 1/2 of 1% of salary for service on or after the effective date of that election in order to finance the benefits available under Section 2-126.2. These contributions shall be made concurrently with contributions made for retirement annuity purposes or to the self-managed plan.

(d) In addition, each participant serving as an officer of the General Assembly shall contribute, for the same purposes and at the same rates as are required of a regular participant, on each additional payment received as an officer. If the participant serves as an officer for at least 2 but less than 4 years, he or she shall contribute an amount equal to the amount that would have been contributed had the participant served as an officer for 4 years. Persons who serve as officers in the 87th General Assembly but cannot receive the additional payment to officers because of the ban on increases in salary during their terms may nonetheless make contributions based on those additional payments for the purpose of having the additional payments included in their highest salary for annuity purposes; however, persons electing to make these additional contributions must also pay an amount representing the corresponding employer contributions, as calculated by the System.

(e) Notwithstanding any other provision of this Article, the required contribution of a participant who first becomes a participant on or after January 1, 2011 shall not exceed the contribution that would be due under this Article if that participant's highest salary for annuity purposes were $106,800, plus any increases in that amount under Section 2-108.1.

(Source: P.A. 96-1490, eff. 1-1-11.)

(40 ILCS 5/2-126.2 new)

Sec. 2-126.2. Self-managed plan.

(a) The General Assembly finds that the State should have the flexibility to provide a defined contribution (self-managed) plan for eligible participants. Accordingly, the General Assembly Retirement System is hereby authorized to establish and administer a self-managed plan, which shall offer participants the opportunity to accumulate assets for retirement through a combination of participant and State contributions that may be invested in mutual funds, collective investment funds, or other investment products and used to purchase annuity contracts that are fixed, variable, or a combination of fixed and variable. The plan must be qualified under the Internal Revenue Code of 1986.

(b) The Board shall adopt the self-managed plan established under this Section for participants under this Article. The adoption of the self-managed plan makes available to the eligible participants under this Article the elections described in Section 2-117.4.

The General Assembly Retirement System shall be the plan sponsor for the self-managed plan and shall prepare a plan document and adopt any rules and procedures as are considered necessary or desirable for the administration of the self-managed plan. Consistent with its fiduciary duty to the participants and beneficiaries of the self-managed plan, the Board of Trustees of the System may delegate aspects of plan administration as it sees fit to companies authorized to do business in this State.

(c) The System shall solicit proposals to provide administrative services and funding vehicles for the self-managed plan from insurance and annuity companies and mutual fund companies, banks, trust companies, or other financial institutions authorized to do business in this State. In reviewing the proposals received and approving and contracting with no fewer than 2 and no more than 7 companies, the Board of Trustees of the System shall consider, among other things, the following criteria:

(1) the nature and extent of the benefits that would be provided to the participants;

(2) the reasonableness of the benefits in relation to the premium charged;

(3) the suitability of the benefits to the needs and interests of the participants and the State; and

(4) the ability of the company to provide benefits under the contract and the financial stability of the company.

The System shall periodically review each approved company. A company may continue to provide administrative services and funding vehicles for the self-managed plan only so long as it continues to be an approved company under contract with the Board.

In addition to the companies approved by the System under this subsection (c), the System may offer its participants an investment fund managed by the Illinois State Board of Investment.

(d) Participants in the program must be allowed to direct the transfer of their account balances among the various investment options offered, subject to applicable contractual provisions. The participant shall not be deemed a fiduciary by reason of providing such investment direction. A person who is a fiduciary shall not be liable for any loss resulting from that investment direction and shall not be deemed to have breached any fiduciary duty by acting in accordance with that direction. Neither the System nor the State shall guarantee any of the investments in the participant's account balances.

(e) Eligible participants, as defined in Section 2-117.4, must make a written election to participate in the self-managed plan in accordance with the provisions of Section 2-117.4 and the procedures established by the System. Participation in the self-managed plan shall begin on the first day of the month immediately following the month in which the participant's election is filed with the System, but not sooner than the effective date of the self-managed plan. The System shall make the self-managed plan available under this Article within 6 months after the effective date of this amendatory Act of the 97th General Assembly. A member's participation in the reformed benefit package under this Article shall terminate on the date that participation in the self-managed plan begins.

A member who has elected to participate in the self-managed plan under this Section must continue participation while he or she remains a participant under this Article, and may not participate in the reformed benefit package.

Participation in the self-managed plan under this Section shall constitute participation in the General Assembly Retirement System.

A participant under this Section shall be entitled to the benefits of Article 20 of this Code.

(f) If, at the time a participant elects to participate in the self-managed plan, the participant has rights and credits in the System due to previous participation in the reformed benefit package, the System shall establish for the participant an opening account balance in the self-managed plan, equal to (1) the amount of the contribution refund that the participant would be eligible to receive under Section 2-123 if the participant terminated employment on that date and elected a refund of contributions and (2) an amount equal to the amount of employee contributions, plus interest. The interest used in this subsection (f) shall be calculated using the actual annual rates of return that the System has earned during the time period corresponding to the actual investment of the contributions being transferred. The System shall transfer assets from the reformed benefit package to the self-managed plan, as a tax-free transfer in accordance with Internal Revenue Service guidelines, for purposes of funding the participant's opening account balance.

(g) Notwithstanding any other provision of this Article, a participant may not purchase or receive service or service credit applicable to the reformed benefit package under this Article for any period during which the employee was a participant in the self-managed plan established under this Section.

(h) The self-managed plan shall be funded by contributions from participants in the self-managed plan and State contributions as provided in this Section.

The contribution rate for participants in the self-managed plan under this Section shall be equal to the member contribution rate for other participants in the System, as provided in Section 2-126. This required contribution shall be made as an employer pick-up under Section 414(h) of the Internal Revenue Code of 1986 or any successor Section thereof. Any participant in the System's reformed benefit package before his or her election to participate in the self-managed plan shall continue to have the employer pick up the contributions required under Section 2-126. However, the amounts picked up after the election of the self-managed plan shall be remitted to and treated as assets of the self-managed plan. In no event shall a participant have the option of receiving these amounts in cash. Participants may make additional contributions to the self-managed plan in accordance with procedures prescribed by the System, to the extent permitted under rules adopted by the System.

The program shall provide for State contributions to be credited to each self-managed plan participant at a rate of 7.6% of the participating member's salary. The amounts so credited shall be paid into the participant's self-managed plan accounts in a manner to be prescribed by the System.

The State of Illinois shall make contributions by appropriations to the System for participants in the self-managed plan under this Section. The amount required shall be certified by the Board of Trustees of the System and paid by the State in accordance with Section 2-134. The System shall not be obligated to remit the required State contributions to any of the insurance and annuity companies, mutual fund companies, banks, trust companies, financial institutions, or other sponsors of any of the funding vehicles offered under the self-managed plan until it has received the required State contributions from the State.

(i) A participant in the self-managed plan becomes vested in the State contributions credited to his or her accounts in the self-managed plan on the earliest to occur of the following: (1) attainment of 5 years of service credit; (2) the death of the participating member while employed under this Article, if the member has completed at least 1.5 years of service; or (3) the member's election to retire and apply the reciprocal provisions of Article 20 of this Code.

A participant in the self-managed plan who receives a distribution of his or her vested amounts from the self-managed plan while not yet eligible for retirement under this Article (and Article 20, if applicable) shall forfeit all service credit and accrued rights in the System; if he or she subsequently becomes a participant under this Article again, he or she shall be considered a new participant. If a former participant again becomes a participating member (or becomes employed by a participating system under Article 20 of this Code) and continues as such for at least 2 years, all rights, service credits, and previous status as a participant shall be restored upon repayment of the amount of the distribution, with interest at the actuarially assumed rate from the date of distribution until the date of payment.

(j) If a participant in the self-managed plan who is vested in State contributions terminates employment, the participant shall be entitled to a benefit that is based on the account values attributable to both State and member contributions and any investment return thereon.

If a participant in the self-managed plan who is not vested in State contributions terminates employment, the participant shall be entitled to a benefit based solely on the account values attributable to the participant's contributions and any investment return thereon, and the State contributions and any investment return thereon shall be forfeited. Any State contributions that are forfeited shall be held in escrow by the company investing those contributions and shall be used, as directed by the System, for future allocations of State contributions or for the restoration of amounts previously forfeited by former participants who again become participating members.

(40 ILCS 5/18-118.1 new)

Sec. 18-118.1. Reformed benefit package. "Reformed benefit package" means the defined benefit retirement program maintained by the System for persons who first become participants of the System on or after January 1, 2011. It includes the following benefits for those persons: retirement annuities payable directly from the System, as provided in Sections 18-124, 18-125, and 18-125.1; survivor's annuities payable directly from the System, as provided in Sections 18-128, 18-128.01, 18-128.1, 18-128.1, and 18-128.3; and contribution refunds, as provided in Section 18-129.

(40 ILCS 5/18-118.2 new)

Sec. 18-118.2. Self-managed plan. "Self-managed plan" means the defined contribution retirement program maintained by the System, as described in Section 18-133.2. The self-managed plan does not include retirement annuities or survivor's benefits payable directly from the System, as provided in Sections 18-124, 18-125, 18-125.1, 18-128, 18-128.01, 18-128.1, 18-128.1, and 18-128.3 or contribution refunds, as provided in Section 18-129.

(40 ILCS 5/18-120.2 new)

Sec. 18-120.2. Retirement program elections.

(a) For the purposes of this Section:

"Currently eligible participant" means a person who first becomes a participant under this Article on or after January 1, 2011 and is a participant under this Article before the day on which the System first offers the self-managed plan as an alternative to the reformed benefit package.

"Eligible participant" means either a currently eligible participant or a newly eligible participant of the System.

"Newly eligible participant" means a person who first becomes a participant under this Article on or after the date on which the System first offers the self-managed plan as an alternative to the reformed benefit package.

(b) When the System offers to members under this Article a self-managed plan as an alternative to the reformed benefit package, each eligible participant shall be given the choice to elect which retirement program he or she wishes to participate in with respect to all periods of covered employment occurring on, before, and after the effective date of the participant's election. The retirement program election made by an eligible participant must be made in writing, in the manner prescribed by the System, and within the time period described in this Section.

If an eligible participant elects the self-managed plan, then that election is irrevocable. If an eligible participant who elected to participate or participated by default in the reformed benefit package terminates employment under this Article, then the participant, upon his or her subsequent re-employment under this Article, may make an election under this Section.

An eligible participant who fails to make an election under this Section shall, by default, participate in the reformed benefit package.

(c) An eligible participant may elect to participate in the reformed benefit package or the self-managed plan.

An eligible participant must make this election within one year after the effective date of the adoption of the self-managed plan under Section 18-133.2 or 60 days after first becoming a participant under this Article, whichever is later, or, in the case of a currently eligible participant who terminates employment under this Article, within one year after his or her re-employment under this Article.

(d) If the eligible participant elects to participate in the self-managed plan, the System shall fund his or her account as stated in subsection (f) of Section 18-133.2.

(e) An eligible participant shall be provided with written information prepared or prescribed by the System that describes the participant's retirement program choices. The eligible participant shall be offered an opportunity to receive counseling from the System before making his or her election. This counseling may consist of videotaped materials, group presentations, individual consultation with an employee or authorized representative of the System in person or by telephone or other electronic means, or any combination of these methods.

(40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)

Sec. 18-133. Financing; employee contributions.

(a) Effective July 1, 1967, each participant is required to contribute 7 1/2% of each payment of salary toward the retirement annuity, unless the participant has elected to participate in the self-managed plan created under Section 18-133.2, in which case, the participant shall contribute 6 1/2% for service on or after the effective date of that election in order to finance the benefits available under Section 18-133.2. Such contributions shall continue during the entire time the participant is in service, with the following exceptions:

(1) Contributions for the retirement annuity are not required on salary received after 18 years of service by persons who were participants before January 2, 1954.

(2) A participant who continues to serve as a judge after becoming eligible to receive the maximum rate of annuity may elect, through a written direction filed with the Board, to discontinue contributing to the System. Any such option elected by a judge shall be irrevocable unless prior to January 1, 2000, and while continuing to serve as judge, the judge (A) files with the Board a letter cancelling the direction to discontinue contributing to the System and requesting that such contributing resume, and (B) pays into the System an amount equal to the total of the discontinued contributions plus interest thereon at 5% per annum. Service credits earned in any other "participating system" as defined in Article 20 of this Code shall be considered for purposes of determining a judge's eligibility to discontinue contributions under this subdivision (a)(2).

(3) A participant who (i) has attained age 60, (ii) continues to serve as a judge after becoming eligible to receive the maximum rate of annuity, and (iii) has not elected to discontinue contributing to the System under subdivision (a)(2) of this Section (or has revoked any such election) may elect, through a written direction filed with the Board, to make contributions to the System based only on the amount of the increases in salary received by the judge on or after the date of the election, rather than the total salary received. If a judge who is making contributions to the System on the effective date of this amendatory Act of the 91st General Assembly makes an election to limit contributions under this subdivision (a)(3) within 90 days after that effective date, the election shall be deemed to become effective on that effective date and the judge shall be entitled to receive a refund of any excess contributions paid to the System during that 90-day period; any other election under this subdivision (a)(3) becomes effective on the first of the month following the date of the election. An election to limit contributions under this subdivision (a)(3) is irrevocable. Service credits earned in any other participating system as defined in Article 20 of this Code shall be considered for purposes of determining a judge's eligibility to make an election under this subdivision (a)(3).

(b) Beginning July 1, 1969, each participant is required to contribute 1% of each payment of salary towards the automatic increase in annuity provided in Section 18-125.1. However, if the participant has elected to participate in the self-managed plan created under Section 18-133.2, then he or she shall contribute 1/2 of 1% of salary for service on or after the effective date of that election in order to finance the benefits available under Section 18-133.2. However, such contributions need not be made by any participant who has elected prior to September 15, 1969, not to be subject to the automatic increase in annuity provisions.

(c) Effective July 13, 1953, each married participant subject to the survivor's annuity provisions is required to contribute 2 1/2% of each payment of salary, whether or not he or she is required to make any other contributions under this Section. Such contributions shall be made concurrently with the contributions made for annuity purposes.

Notwithstanding any provision in this subsection (c) to the contrary, in the case of an employee who participates in the self-managed plan under Section 18-133.2, contributions for a survivor's annuity shall instead be used to finance the benefits available under Section 18-133.2.

(d) Notwithstanding any other provision of this Article, the required contributions for a participant who first becomes a participant on or after January 1, 2011 shall not exceed the contributions that would be due under this Article if that participant's highest salary for annuity purposes were $106,800, plus any increase in that amount under Section 18-125.

(Source: P.A. 96-1490, eff. 1-1-11.)

(40 ILCS 5/18-133.2 new)

Sec. 18-133.2. Self-managed plan.

(a) The General Assembly finds that the State should have the flexibility to provide a defined contribution (self-managed) plan for eligible participants. Accordingly, the Judges Retirement System of Illinois is hereby authorized to establish and administer a self-managed plan, which shall offer participants the opportunity to accumulate assets for retirement through a combination of participant and State contributions that may be invested in mutual funds, collective investment funds, or other investment products and used to purchase annuity contracts that are fixed, variable, or a combination of fixed and variable. The plan must be qualified under the Internal Revenue Code of 1986.

(b) The Board shall adopt the self-managed plan established under this Section for participants under this Article. The adoption of the self-managed plan makes available to the eligible participants under this Article the elections described in Section 18-120.2.

The Judges Retirement System of Illinois shall be the plan sponsor for the self-managed plan and shall prepare a plan document and adopt any rules and procedures as are considered necessary or desirable for the administration of the self-managed plan. Consistent with its fiduciary duty to the participants and beneficiaries of the self-managed plan, the Board of Trustees of the System may delegate aspects of plan administration as it sees fit to companies authorized to do business in this State.

(c) The System shall solicit proposals to provide administrative services and funding vehicles for the self-managed plan from insurance and annuity companies and mutual fund companies, banks, trust companies, or other financial institutions authorized to do business in this State. In reviewing the proposals received and approving and contracting with no fewer than 2 and no more than 7 companies, the Board of Trustees of the System shall consider, among other things, the following criteria:

(1) the nature and extent of the benefits that would be provided to the participants;

(2) the reasonableness of the benefits in relation to the premium charged;

(3) the suitability of the benefits to the needs and interests of the participants and the State; and

(4) the ability of the company to provide benefits under the contract and the financial stability of the company.

The System shall periodically review each approved company. A company may continue to provide administrative services and funding vehicles for the self-managed plan only so long as it continues to be an approved company under contract with the Board.

In addition to the companies approved by the System under this subsection (c), the System may offer its participants an investment fund managed by the Illinois State Board of Investment.

(d) Participants in the program must be allowed to direct the transfer of their account balances among the various investment options offered, subject to applicable contractual provisions. The participant shall not be deemed a fiduciary by reason of providing such investment direction. A person who is a fiduciary shall not be liable for any loss resulting from that investment direction and shall not be deemed to have breached any fiduciary duty by acting in accordance with that direction. Neither the System nor the State shall guarantee any of the investments in the participant's account balances.

(e) Eligible participants, as defined in Section 18-120.2, must make a written election to participate in the self-managed plan in accordance with the provisions of Section 18-120.2 and the procedures established by the System. Participation in the self-managed plan shall begin on the first day of the month immediately following the month in which the participant's election is filed with the System, but not sooner than the effective date of the self-managed plan. The System shall make the self-managed plan available under this Article within 6 months after the effective date of this amendatory Act of the 97th General Assembly. A member's participation in the reformed benefit package under this Article shall terminate on the date that participation in the self-managed plan begins.

A member who has elected to participate in the self-managed plan under this Section must continue participation while he or she remains a participant under this Article, and may not participate in the reformed benefit package.

Participation in the self-managed plan under this Section shall constitute participation in the Judges Retirement System of Illinois.

A participant under this Section shall be entitled to the benefits of Article 20 of this Code.

(f) If, at the time a participant elects to participate in the self-managed plan, the participant has rights and credits in the System due to previous participation in the reformed benefit package, the System shall establish for the participant an opening account balance in the self-managed plan, equal to (1) the amount of the contribution refund that the participant would be eligible to receive under Section 18-129 if the participant terminated employment on that date and elected a refund of contributions and (2) an amount equal to the amount of employee contributions, plus interest. The interest used in this subsection (f) shall be calculated using the actual annual rates of return that the System has earned during the time period corresponding to the actual investment of the contributions being transferred. The System shall transfer assets from the reformed benefit package to the self-managed plan, as a tax-free transfer in accordance with Internal Revenue Service guidelines, for purposes of funding the participant's opening account balance.

(g) Notwithstanding any other provision of this Article, a participant may not purchase or receive service or service credit applicable to the reformed benefit package under this Article for any period during which the employee was a participant in the self-managed plan established under this Section.

(h) The self-managed plan shall be funded by contributions from participants in the self-managed plan and State contributions as provided in this Section.

The contribution rate for participants in the self-managed plan under this Section shall be equal to the member contribution rate for other participants in the System, as provided in Section 18-133. This required contribution shall be made as an employer pick-up under Section 414(h) of the Internal Revenue Code of 1986 or any successor Section thereof. Any participant in the System's reformed benefit package before his or her election to participate in the self-managed plan shall continue to have the employer pick up the contributions required under Section 18-133. However, the amounts picked up after the election of the self-managed plan shall be remitted to and treated as assets of the self-managed plan. In no event shall a participant have the option of receiving these amounts in cash. Participants may make additional contributions to the self-managed plan in accordance with procedures prescribed by the System, to the extent permitted under rules adopted by the System.

The program shall provide for State contributions to be credited to each self-managed plan participant at a rate of 7.6% of the participating employee's salary. The amounts so credited shall be paid into the participant's self-managed plan accounts in a manner to be prescribed by the System.

The State of Illinois shall make contributions by appropriations to the System for participants in the self-managed plan under this Section. The amount required shall be certified by the Board of Trustees of the System and paid by the State in accordance with Sections 18-132 and 18-140. The System shall not be obligated to remit the required State contributions to any of the insurance and annuity companies, mutual fund companies, banks, trust companies, financial institutions, or other sponsors of any of the funding vehicles offered under the self-managed plan until it has received the required State contributions from the State.

(i) A participant in the self-managed plan becomes vested in the State contributions credited to his or her accounts in the self-managed plan on the earliest to occur of the following: (1) attainment of 5 years of service credit; (2) the death of the participating member while employed under this Article, if the member has completed at least 1.5 years of service; or (3) the member's election to retire and apply the reciprocal provisions of Article 20 of this Code.

A participant in the self-managed plan who receives a distribution of his or her vested amounts from the self-managed plan while not yet eligible for retirement under this Article (and Article 20, if applicable) shall forfeit all service credit and accrued rights in the System; if he or she subsequently becomes a participant under this Article again, he or she shall be considered a new participant. If a former participant again becomes a participating member (or becomes employed by a participating system under Article 20 of this Code) and continues as such for at least 2 years, all rights, service credits, and previous status as a participant shall be restored upon repayment of the amount of the distribution, with interest at the actuarially assumed rate from the date of distribution until the date of payment.

(j) If a participant in the self-managed plan who is vested in State contributions terminates employment, the participant shall be entitled to a benefit that is based on the account values attributable to both State and member contributions and any investment return thereon.

If a participant in the self-managed plan who is not vested in State contributions terminates employment, the participant shall be entitled to a benefit based solely on the account values attributable to the participant's contributions and any investment return thereon, and the State contributions and any investment return thereon shall be forfeited. Any State contributions that are forfeited shall be held in escrow by the company investing those contributions and shall be used, as directed by the System, for future allocations of State contributions or for the restoration of amounts previously forfeited by former participants who again become participating members.

Section 99. Effective date. This Act takes effect upon becoming law.".