97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB2929

 

Introduced 2/23/2011, by Rep. Darlene J. Senger

 

SYNOPSIS AS INTRODUCED:
 
5 ILCS 315/15  from Ch. 48, par. 1615
40 ILCS 5/2-124  from Ch. 108 1/2, par. 2-124
40 ILCS 5/2-126  from Ch. 108 1/2, par. 2-126
40 ILCS 5/2-163 new
40 ILCS 5/2-164 new
40 ILCS 5/2-165 new

    Amends the General Assembly Article of the Illinois Pension Code. Requires current participants in the General Assembly Retirement System to make a one-time, irrevocable election of one of the following: (i) the traditional benefit package, (ii) the benefit package made available under P.A. 96-889, or (iii) a self-managed plan. Authorizes persons who first became (or become) participants on or after January 1, 2011 to irrevocably elect either: (i) the benefit package made available under P.A. 96-889 or (ii) the self-managed plan. Sets forth the requirements for the self-managed plan and provides that it is the default plan if a participant fails to make an election. Provides that, beginning in fiscal year 2013, the State's required contribution is the greater of 6% of the applicable payroll or one-half of the actuarially-determined normal cost of the benefit package for new hires and that the required employee contribution will be based on the benefit package elected by the participant. Amends the Illinois Public Labor Relations Act to provide that the changes to the Code made by the amendatory Act control when there is a conflict with the Illinois Public Labor Relations Act. Effective immediately.


LRB097 10787 JDS 51222 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2929LRB097 10787 JDS 51222 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Public Labor Relations Act is
5amended by changing Section 15 as follows:
 
6    (5 ILCS 315/15)  (from Ch. 48, par. 1615)
7    Sec. 15. Act Takes Precedence.
8    (a) In case of any conflict between the provisions of this
9Act and any other law (other than Section 5 of the State
10Employees Group Insurance Act of 1971 and other than the
11changes made to the Illinois Pension Code by this amendatory
12Act of the 96th General Assembly or by this amendatory Act of
13the 97th General Assembly), executive order or administrative
14regulation relating to wages, hours and conditions of
15employment and employment relations, the provisions of this Act
16or any collective bargaining agreement negotiated thereunder
17shall prevail and control. Nothing in this Act shall be
18construed to replace or diminish the rights of employees
19established by Sections 28 and 28a of the Metropolitan Transit
20Authority Act, Sections 2.15 through 2.19 of the Regional
21Transportation Authority Act. The provisions of this Act are
22subject to Section 5 of the State Employees Group Insurance Act
23of 1971. Nothing in this Act shall be construed to replace the

 

 

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1necessity of complaints against a sworn peace officer, as
2defined in Section 2(a) of the Uniform Peace Officer
3Disciplinary Act, from having a complaint supported by a sworn
4affidavit.
5    (b) Except as provided in subsection (a) above, any
6collective bargaining contract between a public employer and a
7labor organization executed pursuant to this Act shall
8supersede any contrary statutes, charters, ordinances, rules
9or regulations relating to wages, hours and conditions of
10employment and employment relations adopted by the public
11employer or its agents. Any collective bargaining agreement
12entered into prior to the effective date of this Act shall
13remain in full force during its duration.
14    (c) It is the public policy of this State, pursuant to
15paragraphs (h) and (i) of Section 6 of Article VII of the
16Illinois Constitution, that the provisions of this Act are the
17exclusive exercise by the State of powers and functions which
18might otherwise be exercised by home rule units. Such powers
19and functions may not be exercised concurrently, either
20directly or indirectly, by any unit of local government,
21including any home rule unit, except as otherwise authorized by
22this Act.
23(Source: P.A. 95-331, eff. 8-21-07; 96-889, eff. 1-1-11.)
 
24    Section 10. The Illinois Pension Code is amended by
25changing Sections 2-124 and 2-126 and by adding Sections 2-163,

 

 

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12-164, and 2-165 as follows:
 
2    (40 ILCS 5/2-124)  (from Ch. 108 1/2, par. 2-124)
3    Sec. 2-124. Contributions by State.
4    (a) The State shall make contributions to the System by
5appropriations of amounts which, together with the
6contributions of participants, interest earned on investments,
7and other income will meet the cost of maintaining and
8administering the System on a 90% funded basis in accordance
9with actuarial recommendations.
10    (b) The Board shall determine the amount of State
11contributions required for each fiscal year on the basis of the
12actuarial tables and other assumptions adopted by the Board and
13the prescribed rate of interest, using the formula in
14subsection (c).
15    (c) For purposes of this Article:
16        (1) Notwithstanding any other provision of this
17    Section, the minimum required State contribution with
18    respect to benefit accruals occurring in years after fiscal
19    year 2012 shall be 6% of the applicable payroll or one-half
20    of the actuarially-determined normal cost of the revised
21    defined benefit package provided under paragraph (2) of
22    subsection (a) of Section 2-163 of this Code, whichever is
23    greater. This contribution amount shall apply with respect
24    to each participant in the System, regardless of whether
25    the participant has elected the traditional benefit

 

 

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1    package provided under paragraph (1) of subsection (a)
2    Section 2-163 of this Code, the revised benefit package
3    provided under paragraph (2) of subsection (a) of Section
4    2-163 of this Code, or the self-managed plan provided under
5    paragraph (3) of subsection (a) Section 2-163 of this Code.
6        (2) In addition to the amounts contributed under
7    paragraph (1) of this subsection (c), for State fiscal
8    years 2013 through 2045, the State shall make an additional
9    contribution to the System of an amount that is actuarially
10    determined to be sufficient to fund, by the end of State
11    fiscal year 2045, the System's unfunded liability
12    attributable to service completed by the end of fiscal year
13    2012, calculated using fiscal year 2012 wage levels. In
14    calculating the contributions under this paragraph (2),
15    the required State contribution shall be calculated each
16    year as a level dollar amount over the years remaining to
17    and including fiscal year 2045.
18        (3) Subject to the provisions of paragraphs (1) and (2)
19    of this subsection (c):
20         For State fiscal years 2011 through 2045, the minimum
21    contribution to the System to be made by the State for each
22    fiscal year shall be an amount determined by the System to
23    be sufficient to bring the total assets of the System up to
24    90% of the total actuarial liabilities of the System by the
25    end of State fiscal year 2045. In making these
26    determinations, the required State contribution shall be

 

 

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1    calculated each year as a level percentage of payroll over
2    the years remaining to and including fiscal year 2045 and
3    shall be determined under the projected unit credit
4    actuarial cost method.
5        For State fiscal years 1996 through 2005, the State
6    contribution to the System, as a percentage of the
7    applicable employee payroll, shall be increased in equal
8    annual increments so that by State fiscal year 2011, the
9    State is contributing at the rate required under this
10    Section.
11        Notwithstanding any other provision of this Article,
12    the total required State contribution for State fiscal year
13    2006 is $4,157,000.
14        Notwithstanding any other provision of this Article,
15    the total required State contribution for State fiscal year
16    2007 is $5,220,300.
17        For each of State fiscal years 2008 through 2009, the
18    State contribution to the System, as a percentage of the
19    applicable employee payroll, shall be increased in equal
20    annual increments from the required State contribution for
21    State fiscal year 2007, so that by State fiscal year 2011,
22    the State is contributing at the rate otherwise required
23    under this Section.
24        Notwithstanding any other provision of this Article,
25    the total required State contribution for State fiscal year
26    2010 is $10,454,000 and shall be made from the proceeds of

 

 

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1    bonds sold in fiscal year 2010 pursuant to Section 7.2 of
2    the General Obligation Bond Act, less (i) the pro rata
3    share of bond sale expenses determined by the System's
4    share of total bond proceeds, (ii) any amounts received
5    from the General Revenue Fund in fiscal year 2010, and
6    (iii) any reduction in bond proceeds due to the issuance of
7    discounted bonds, if applicable.
8        Beginning in State fiscal year 2046, the minimum State
9    contribution for each fiscal year shall be the amount
10    needed to maintain the total assets of the System at 90% of
11    the total actuarial liabilities of the System.
12        Amounts received by the System pursuant to Section 25
13    of the Budget Stabilization Act or Section 8.12 of the
14    State Finance Act in any fiscal year do not reduce and do
15    not constitute payment of any portion of the minimum State
16    contribution required under this Article in that fiscal
17    year. Such amounts shall not reduce, and shall not be
18    included in the calculation of, the required State
19    contributions under this Article in any future year until
20    the System has reached a funding ratio of at least 90%. A
21    reference in this Article to the "required State
22    contribution" or any substantially similar term does not
23    include or apply to any amounts payable to the System under
24    Section 25 of the Budget Stabilization Act.
25        Notwithstanding any other provision of this Section,
26    the required State contribution for State fiscal year 2005

 

 

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1    and for fiscal year 2008 and each fiscal year thereafter,
2    as calculated under this Section and certified under
3    Section 2-134, shall not exceed an amount equal to (i) the
4    amount of the required State contribution that would have
5    been calculated under this Section for that fiscal year if
6    the System had not received any payments under subsection
7    (d) of Section 7.2 of the General Obligation Bond Act,
8    minus (ii) the portion of the State's total debt service
9    payments for that fiscal year on the bonds issued for the
10    purposes of that Section 7.2, as determined and certified
11    by the Comptroller, that is the same as the System's
12    portion of the total moneys distributed under subsection
13    (d) of Section 7.2 of the General Obligation Bond Act. In
14    determining this maximum for State fiscal years 2008
15    through 2010, however, the amount referred to in item (i)
16    shall be increased, as a percentage of the applicable
17    employee payroll, in equal increments calculated from the
18    sum of the required State contribution for State fiscal
19    year 2007 plus the applicable portion of the State's total
20    debt service payments for fiscal year 2007 on the bonds
21    issued for the purposes of Section 7.2 of the General
22    Obligation Bond Act, so that, by State fiscal year 2011,
23    the State is contributing at the rate otherwise required
24    under this Section.
25    (d) For purposes of determining the required State
26contribution to the System, the value of the System's assets

 

 

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1shall be equal to the actuarial value of the System's assets,
2which shall be calculated as follows:
3    As of June 30, 2008, the actuarial value of the System's
4assets shall be equal to the market value of the assets as of
5that date. In determining the actuarial value of the System's
6assets for fiscal years after June 30, 2008, any actuarial
7gains or losses from investment return incurred in a fiscal
8year shall be recognized in equal annual amounts over the
95-year period following that fiscal year.
10    (e) For purposes of determining the required State
11contribution to the system for a particular year, the actuarial
12value of assets shall be assumed to earn a rate of return equal
13to the system's actuarially assumed rate of return.
14(Source: P.A. 95-950, eff. 8-29-08; 96-43, eff. 7-15-09.)
 
15    (40 ILCS 5/2-126)  (from Ch. 108 1/2, par. 2-126)
16    Sec. 2-126. Contributions by participants.
17    (a) Each participant shall contribute toward the cost of
18his or her retirement annuity a percentage of each payment of
19salary received by him or her for service as a member as
20follows: for service between October 31, 1947 and January 1,
211959, 5%; for service between January 1, 1959 and June 30,
221969, 6%; for service between July 1, 1969 and January 10,
231973, 6 1/2%; for service after January 10, 1973, 7%; for
24service after December 31, 1981, 8 1/2%.
25    (b) Beginning August 2, 1949, each male participant, and

 

 

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1from July 1, 1971, each female participant shall contribute
2towards the cost of the survivor's annuity 2% of salary.
3    A participant who has no eligible survivor's annuity
4beneficiary may elect to cease making contributions for
5survivor's annuity under this subsection. A survivor's annuity
6shall not be payable upon the death of a person who has made
7this election, unless prior to that death the election has been
8revoked and the amount of the contributions that would have
9been paid under this subsection in the absence of the election
10is paid to the System, together with interest at the rate of 4%
11per year from the date the contributions would have been made
12to the date of payment.
13    (c) Beginning July 1, 1967, each participant shall
14contribute 1% of salary towards the cost of automatic increase
15in annuity provided in Section 2-119.1. These contributions
16shall be made concurrently with contributions for retirement
17annuity purposes.
18    (d) In addition, each participant serving as an officer of
19the General Assembly shall contribute, for the same purposes
20and at the same rates as are required of a regular participant,
21on each additional payment received as an officer. If the
22participant serves as an officer for at least 2 but less than 4
23years, he or she shall contribute an amount equal to the amount
24that would have been contributed had the participant served as
25an officer for 4 years. Persons who serve as officers in the
2687th General Assembly but cannot receive the additional payment

 

 

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1to officers because of the ban on increases in salary during
2their terms may nonetheless make contributions based on those
3additional payments for the purpose of having the additional
4payments included in their highest salary for annuity purposes;
5however, persons electing to make these additional
6contributions must also pay an amount representing the
7corresponding employer contributions, as calculated by the
8System.
9    (e) Notwithstanding any other provision of this Article,
10the required contribution of a participant who first becomes a
11participant on or after January 1, 2011 shall not exceed the
12contribution that would be due under this Article if that
13participant's highest salary for annuity purposes were
14$106,800, plus any increases in that amount under Section
152-108.1.
16    (f) Notwithstanding anything in this Section to the
17contrary, effective July 1, 2012, all participants shall be
18required to make the following contributions:
19        (1) Participants who elect the traditional benefit
20    package provided under paragraph (1) of subsection (a) of
21    Section 2-163 of this Code shall contribute a percentage of
22    salary equal to the sum of the following:
23            (A) 6% of salary or one-half of the
24        actuarially-determined normal cost of the revised
25        defined benefit package provided under paragraph (2)
26        of subsection (a) of Section 2-163 of this Code,

 

 

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1        whichever is greater;
2            (B) an additional percentage of salary that is
3        actuarially determined to equal the difference between
4        the normal cost of the traditional plan and the normal
5        cost of the revised benefit package; and
6            (C) an additional percentage of salary that is
7        actuarially determined to be sufficient to amortize
8        the portion of the System's unfunded liability at the
9        end of fiscal year 2012 that is attributable to wage
10        increases occurring after the effective date of this
11        amendatory Act of the 97th General Assembly.
12        (2) Participants who elect the revised benefit package
13    provided under paragraph (2) of subsection (a) of Section
14    2-163 of this Code shall contribute 6% of salary or
15    one-half of the actuarially-determined normal cost of the
16    revised defined benefit package provided under paragraph
17    (2) of subsection (a) of Section 2-163 of this Code,
18    whichever is greater.
19        (3) Participants who elect the self-managed plan
20    provided under paragraph (3) of subsection (a) of Section
21    2-163 of this Code shall contribute 6% of salary or
22    one-half of the actuarially-determined normal cost of the
23    revised defined benefit package provided under paragraph
24    (2) of subsection (a) of Section 2-163 of this Code,
25    whichever is greater.
26    No prior contribution increases or other additional

 

 

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1contributions specified by this Section shall apply to any
2participant for service on or after July 1, 2012.
3(Source: P.A. 96-1490, eff. 1-1-11.)
 
4    (40 ILCS 5/2-163 new)
5    Sec. 2-163. Benefits accruals on and after July 1, 2012.
6    (a) Each participant under this Article, other than a
7person who first becomes a participant on or after January 1,
82011 shall be given the choice to elect which retirement
9program he or she wishes to participate in with respect to all
10periods of covered employment occurring on and after July 1,
112012. The retirement program election made by the participant
12must be made no later than January 1, 2012. The participant
13shall elect one of the following retirement programs:
14        (1) the traditional benefit package provided under
15    this Article prior to Public Act 96-889;
16        (2) the revised benefit package provided to persons who
17    first became (or become) participants on or after January
18    1, 2011 under Public Act 96-889; or
19        (3) the self-managed plan provided under Section
20    2-164.
21    (b) A person who first becomes a participant under this
22Article on or after January 1, 2011 shall be given the choice
23to elect which retirement program he or she wishes to
24participate in with respect to all periods of covered
25employment occurring on and after July 1, 2012. The participant

 

 

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1shall elect one of the retirement programs provided in
2paragraph (2) or (3) of subsection (a) of this Section. The
3retirement program election made by the participant must be
4made no later than January 1, 2012 or within 30 days after the
5participant's first day of service, whichever is later.
6    (c) The participant election authorized by this Section is
7a one-time, irrevocable election. The election shall be made in
8writing, in the manner prescribed by the System. Any
9participant who fails to make the election shall, by default,
10participate in the benefit program provided under paragraph (3)
11of subsection (a) of this Section.
12    (d) If a participant with an accrued benefit under the
13traditional benefit package provided under this Article prior
14to Public Act 96-889 elects the revised benefit package
15provided under paragraph (2) of subsection (a) of this Section,
16the participant's total accrued benefit for purposes of
17determining an annuity shall be the sum of (i) the
18participant's benefit accruals before July 1, 2012, based on
19the participant's pay and service through June 30, 2012 and
20frozen with respect to pay and service after that date and (ii)
21the participant's benefit accruals based on pay and service on
22and after July 1, 2012, as modified by the rules provided in
23Public Act 96-889.
24    (e) If a participant elects the self-managed plan provided
25under paragraph (3) of subsection (a) of this Section, the
26participant's total accrued benefit for purposes of

 

 

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1determining an annuity shall be the participant's benefit
2accruals before July 1, 2012, based on the participant's pay
3and service through June 30, 2012 and frozen with respect to
4pay and service after that date. However, the participant shall
5also have an accrued self-managed plan benefit as specified in
6subsection (g) of Section 2-164, for periods of covered
7employment on or after July 1, 2012.
 
8    (40 ILCS 5/2-164 new)
9    Sec. 2-164. Self-managed plan.
10    (a) The System shall establish and administer a
11self-managed plan, which shall offer participants the
12opportunity to accumulate assets for retirement through a
13combination of participant and State contributions that may be
14invested in mutual funds, collective investment funds, or other
15investment products and used to purchase annuity contracts that
16are fixed, variable, or a combination thereof. The plan must be
17qualified under the Internal Revenue Code of 1986.
18    (b) The System shall be the plan sponsor for the
19self-managed plan and shall prepare a plan document and
20prescribe the rules and procedures that are necessary or
21desirable for the administration of the self-managed plan.
22Consistent with its fiduciary duty to the participants and
23beneficiaries of the self-managed plan, the board of trustees
24of the System may delegate aspects of plan administration as it
25sees fit to companies authorized to do business in this State.

 

 

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1    (c) A participant eligible to participate in the
2self-managed plan must make a written election in accordance
3with the provisions of Section 2-163 and the procedures
4established by the System. Participation in the self-managed
5plan by a participant shall begin on the first day of the first
6pay period following the date the participant's election is
7filed with the System.
8    (d) Participants who are participating in the program must
9be allowed to direct the transfer of their account balances
10among the various investment options offered, subject to
11applicable contractual provisions. The participant shall not
12be deemed a fiduciary by reason of providing investment
13direction. A person who is a fiduciary shall not be liable for
14any loss resulting from the investment direction of the
15participant and shall not be deemed to have breached any
16fiduciary duty by acting in accordance with that direction. The
17System shall not guarantee any of the investments in the
18employee's account balances.
19    (e) The self-managed plan shall be funded by contributions
20from participants participating in the self-managed plan and
21State contributions as provided in this Article. Participants
22may make additional contributions to the self-managed plan in
23accordance with the procedures prescribed by the System, to the
24extent permitted under rules prescribed by the System.
25Participant and State contributions shall be paid into the
26participant's self-managed plan accounts in a manner to be

 

 

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1prescribed by the System.
2    (f) A participant in the self-managed plan becomes vested
3in the State contributions credited to his or her accounts in
4the self-managed plan on the earliest to occur of the
5following: (1) completion of 5 years of service under this
6Article or (2) if the participant has completed at least 1 1/2
7years of service, the death of the participant.
8    (g) If a participant who is vested in State contributions
9withdraws from service, the participant shall be entitled to a
10benefit that is based on the account values attributable to
11both participant and State contributions and any investment
12return on those contributions.
13    If a participant who is not vested in State contributions
14withdraws from service, the participant shall be entitled to a
15benefit based solely on the account values attributable to the
16participant's contributions and any investment return on those
17contributions, and the State contributions and any investment
18return on those contributions shall be forfeited. Any State
19contributions that are forfeited shall be held in escrow by the
20company investing those contributions and shall be used as
21directed by the System for future allocations of State
22contributions.
 
23    (40 ILCS 5/2-165 new)
24    Sec. 2-165. Minimum benefit provisions. Notwithstanding
25any other provision of this Article, each participant under

 

 

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1this Article shall receive a minimum benefit or allocation
2determined as follows:
3        (1) If the participant is participating in the
4    traditional benefit package provided under paragraph (1)
5    of subsection (a) of Section 2-163 of this Code or the
6    revised benefit package provided under paragraph (2) of
7    subsection (a) of Section 2-163 of this Code, the
8    participant shall receive a minimum benefit (commencing on
9    his or her Social Security retirement age) that is equal to
10    the annual primary insurance amount the employee would have
11    under Social Security. For the purposes of this item (1),
12    the primary insurance amount an individual would have under
13    Social Security shall be calculated so that the system
14    meets the requirements necessary to be considered a
15    "retirement system" under Section 3121(b)(7)(F) of the
16    Internal Revenue Code and the regulations in effect
17    thereunder.
18        (2) If the participant is participating in the
19    self-managed plan provided under paragraph (3) of
20    subsection (a) of Section 2-163 of this Code, the
21    participant shall receive a minimum allocation equal to
22    7.5% of the participant's compensation for service during
23    the period. State contributions shall be taken into account
24    for this purpose. For the purposes of this paragraph (2),
25    the minimum allocation shall be calculated so that the
26    System meets the requirements necessary to be considered a

 

 

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1    "retirement system" under Section 3121(b)(7)(F) of the
2    Internal Revenue Code and the regulations in effect
3    thereunder.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.