HB1678ham001 98TH GENERAL ASSEMBLY

Rep. Joe Sosnowski

Filed: 3/22/2013

09800HB1678ham001 LRB098 09623 EFG 41996 a

AMENDMENT TO HOUSE BILL 1678

AMENDMENT NO. ______. Amend House Bill 1678 by replacing everything after the enacting clause with the following:

"Section 3. The State Employees Group Insurance Act of 1971 is amended by changing Section 3 as follows:

(5 ILCS 375/3) (from Ch. 127, par. 523)

Sec. 3. Definitions. Unless the context otherwise requires, the following words and phrases as used in this Act shall have the following meanings. The Department may define these and other words and phrases separately for the purpose of implementing specific programs providing benefits under this Act.

(a) "Administrative service organization" means any person, firm or corporation experienced in the handling of claims which is fully qualified, financially sound and capable of meeting the service requirements of a contract of administration executed with the Department.

(b) "Annuitant" means (1) an employee who retires, or has retired, on or after January 1, 1966 on an immediate annuity under the provisions of Article Articles 2 (including an employee who has retired under the self-managed plan), 14 (including an employee who has retired under the self-managed plan and including an employee who has elected to receive an alternative retirement cancellation payment under Section 14-108.5 of the Illinois Pension Code in lieu of an annuity), or 15 (including an employee who has retired under the optional retirement program established under Section 15-158.2), or under paragraphs (2), (3), or (5) of Section 16-106 of Article 16 (including an employee who has retired under the self-managed plan), or under Article 18 (including an employee who has retired under the self-managed plan) of the Illinois Pension Code; (2) any person who was receiving group insurance coverage under this Act as of March 31, 1978 by reason of his status as an annuitant, even though the annuity in relation to which such coverage was provided is a proportional annuity based on less than the minimum period of service required for a retirement annuity in the system involved; (3) any person not otherwise covered by this Act who has retired as a participating member under Article 2 of the Illinois Pension Code but is ineligible for the retirement annuity under Section 2-119 of the Illinois Pension Code; (4) the spouse of any person who is receiving a retirement annuity under Article 18 of the Illinois Pension Code and who is covered under a group health insurance program sponsored by a governmental employer other than the State of Illinois and who has irrevocably elected to waive his or her coverage under this Act and to have his or her spouse considered as the "annuitant" under this Act and not as a "dependent"; or (5) an employee who retires, or has retired, from a qualified position, as determined according to rules promulgated by the Director, under a qualified local government, a qualified rehabilitation facility, a qualified domestic violence shelter or service, or a qualified child advocacy center. (For definition of "retired employee", see (p) post).

(b-5) (Blank).

(b-6) (Blank).

(b-7) (Blank).

(c) "Carrier" means (1) an insurance company, a corporation organized under the Limited Health Service Organization Act or the Voluntary Health Services Plan Act, a partnership, or other nongovernmental organization, which is authorized to do group life or group health insurance business in Illinois, or (2) the State of Illinois as a self-insurer.

(d) "Compensation" means salary or wages payable on a regular payroll by the State Treasurer on a warrant of the State Comptroller out of any State, trust or federal fund, or by the Governor of the State through a disbursing officer of the State out of a trust or out of federal funds, or by any Department out of State, trust, federal or other funds held by the State Treasurer or the Department, to any person for personal services currently performed, and ordinary or accidental disability benefits under Articles 2, 14, 15 (including ordinary or accidental disability benefits under the optional retirement program established under Section 15-158.2), paragraphs (2), (3), or (5) of Section 16-106 of Article 16, or Article 18 of the Illinois Pension Code, for disability incurred after January 1, 1966, or benefits payable under the Workers' Compensation or Occupational Diseases Act or benefits payable under a sick pay plan established in accordance with Section 36 of the State Finance Act. "Compensation" also means salary or wages paid to an employee of any qualified local government, qualified rehabilitation facility, qualified domestic violence shelter or service, or qualified child advocacy center.

(e) "Commission" means the State Employees Group Insurance Advisory Commission authorized by this Act. Commencing July 1, 1984, "Commission" as used in this Act means the Commission on Government Forecasting and Accountability as established by the Legislative Commission Reorganization Act of 1984.

(f) "Contributory", when referred to as contributory coverage, shall mean optional coverages or benefits elected by the member toward the cost of which such member makes contribution, or which are funded in whole or in part through the acceptance of a reduction in earnings or the foregoing of an increase in earnings by an employee, as distinguished from noncontributory coverage or benefits which are paid entirely by the State of Illinois without reduction of the member's salary.

(g) "Department" means any department, institution, board, commission, officer, court or any agency of the State government receiving appropriations and having power to certify payrolls to the Comptroller authorizing payments of salary and wages against such appropriations as are made by the General Assembly from any State fund, or against trust funds held by the State Treasurer and includes boards of trustees of the retirement systems created by Articles 2, 14, 15, 16 and 18 of the Illinois Pension Code. "Department" also includes the Illinois Comprehensive Health Insurance Board, the Board of Examiners established under the Illinois Public Accounting Act, and the Illinois Finance Authority.

(h) "Dependent", when the term is used in the context of the health and life plan, means a member's spouse and any child (1) from birth to age 26 including an adopted child, a child who lives with the member from the time of the filing of a petition for adoption until entry of an order of adoption, a stepchild or adjudicated child, or a child who lives with the member if such member is a court appointed guardian of the child or (2) age 19 or over who is mentally or physically disabled from a cause originating prior to the age of 19 (age 26 if enrolled as an adult child dependent). For the health plan only, the term "dependent" also includes (1) any person enrolled prior to the effective date of this Section who is dependent upon the member to the extent that the member may claim such person as a dependent for income tax deduction purposes and (2) any person who has received after June 30, 2000 an organ transplant and who is financially dependent upon the member and eligible to be claimed as a dependent for income tax purposes. A member requesting to cover any dependent must provide documentation as requested by the Department of Central Management Services and file with the Department any and all forms required by the Department.

(i) "Director" means the Director of the Illinois Department of Central Management Services or of any successor agency designated to administer this Act.

(j) "Eligibility period" means the period of time a member has to elect enrollment in programs or to select benefits without regard to age, sex or health.

(k) "Employee" means and includes each officer or employee in the service of a department who (1) receives his compensation for service rendered to the department on a warrant issued pursuant to a payroll certified by a department or on a warrant or check issued and drawn by a department upon a trust, federal or other fund or on a warrant issued pursuant to a payroll certified by an elected or duly appointed officer of the State or who receives payment of the performance of personal services on a warrant issued pursuant to a payroll certified by a Department and drawn by the Comptroller upon the State Treasurer against appropriations made by the General Assembly from any fund or against trust funds held by the State Treasurer, and (2) is employed full-time or part-time in a position normally requiring actual performance of duty during not less than 1/2 of a normal work period, as established by the Director in cooperation with each department, except that persons elected by popular vote will be considered employees during the entire term for which they are elected regardless of hours devoted to the service of the State, and (3) except that "employee" does not include any person who is not eligible by reason of such person's employment to participate in one of the State retirement systems under Articles 2, 14, 15 (either the regular Article 15 system or the optional retirement program established under Section 15-158.2) or 18, or under paragraph (2), (3), or (5) of Section 16-106, of the Illinois Pension Code, but such term does include persons who are employed during the 6 month qualifying period under Article 14 of the Illinois Pension Code. Such term also includes any person who (1) after January 1, 1966, is receiving ordinary or accidental disability benefits under Articles 2, 14, 15 (including ordinary or accidental disability benefits under the optional retirement program established under Section 15-158.2), paragraphs (2), (3), or (5) of Section 16-106, or Article 18 of the Illinois Pension Code, for disability incurred after January 1, 1966, (2) receives total permanent or total temporary disability under the Workers' Compensation Act or Occupational Disease Act as a result of injuries sustained or illness contracted in the course of employment with the State of Illinois, or (3) is not otherwise covered under this Act and has retired as a participating member under Article 2 of the Illinois Pension Code but is ineligible for the retirement annuity under Section 2-119 of the Illinois Pension Code. However, a person who satisfies the criteria of the foregoing definition of "employee" except that such person is made ineligible to participate in the State Universities Retirement System by clause (4) of subsection (a) of Section 15-107 of the Illinois Pension Code is also an "employee" for the purposes of this Act. "Employee" also includes any person receiving or eligible for benefits under a sick pay plan established in accordance with Section 36 of the State Finance Act. "Employee" also includes (i) each officer or employee in the service of a qualified local government, including persons appointed as trustees of sanitary districts regardless of hours devoted to the service of the sanitary district, (ii) each employee in the service of a qualified rehabilitation facility, (iii) each full-time employee in the service of a qualified domestic violence shelter or service, and (iv) each full-time employee in the service of a qualified child advocacy center, as determined according to rules promulgated by the Director.

(l) "Member" means an employee, annuitant, retired employee or survivor. In the case of an annuitant or retired employee who first becomes an annuitant or retired employee on or after the effective date of this amendatory Act of the 97th General Assembly, the individual must meet the minimum vesting requirements of the applicable retirement system in order to be eligible for group insurance benefits under that system. In the case of a survivor who first becomes a survivor on or after the effective date of this amendatory Act of the 97th General Assembly, the deceased employee, annuitant, or retired employee upon whom the annuity is based must have been eligible to participate in the group insurance system under the applicable retirement system in order for the survivor to be eligible for group insurance benefits under that system.

(m) "Optional coverages or benefits" means those coverages or benefits available to the member on his or her voluntary election, and at his or her own expense.

(n) "Program" means the group life insurance, health benefits and other employee benefits designed and contracted for by the Director under this Act.

(o) "Health plan" means a health benefits program offered by the State of Illinois for persons eligible for the plan.

(p) "Retired employee" means any person who would be an annuitant as that term is defined herein but for the fact that such person retired prior to January 1, 1966. Such term also includes any person formerly employed by the University of Illinois in the Cooperative Extension Service who would be an annuitant but for the fact that such person was made ineligible to participate in the State Universities Retirement System by clause (4) of subsection (a) of Section 15-107 of the Illinois Pension Code.

(q) "Survivor" means a person receiving an annuity as a survivor of an employee or of an annuitant. "Survivor" also includes: (1) the surviving dependent of a person who satisfies the definition of "employee" except that such person is made ineligible to participate in the State Universities Retirement System by clause (4) of subsection (a) of Section 15-107 of the Illinois Pension Code; (2) the surviving dependent of any person formerly employed by the University of Illinois in the Cooperative Extension Service who would be an annuitant except for the fact that such person was made ineligible to participate in the State Universities Retirement System by clause (4) of subsection (a) of Section 15-107 of the Illinois Pension Code; and (3) the surviving dependent of a person who was an annuitant under this Act by virtue of receiving an alternative retirement cancellation payment under Section 14-108.5 of the Illinois Pension Code.

(q-2) "SERS" means the State Employees' Retirement System of Illinois, created under Article 14 of the Illinois Pension Code.

(q-3) "SURS" means the State Universities Retirement System, created under Article 15 of the Illinois Pension Code.

(q-4) "TRS" means the Teachers' Retirement System of the State of Illinois, created under Article 16 of the Illinois Pension Code.

(q-5) (Blank).

(q-6) (Blank).

(q-7) (Blank).

(r) "Medical services" means the services provided within the scope of their licenses by practitioners in all categories licensed under the Medical Practice Act of 1987.

(s) "Unit of local government" means any county, municipality, township, school district (including a combination of school districts under the Intergovernmental Cooperation Act), special district or other unit, designated as a unit of local government by law, which exercises limited governmental powers or powers in respect to limited governmental subjects, any not-for-profit association with a membership that primarily includes townships and township officials, that has duties that include provision of research service, dissemination of information, and other acts for the purpose of improving township government, and that is funded wholly or partly in accordance with Section 85-15 of the Township Code; any not-for-profit corporation or association, with a membership consisting primarily of municipalities, that operates its own utility system, and provides research, training, dissemination of information, or other acts to promote cooperation between and among municipalities that provide utility services and for the advancement of the goals and purposes of its membership; the Southern Illinois Collegiate Common Market, which is a consortium of higher education institutions in Southern Illinois; the Illinois Association of Park Districts; and any hospital provider that is owned by a county that has 100 or fewer hospital beds and has not already joined the program. "Qualified local government" means a unit of local government approved by the Director and participating in a program created under subsection (i) of Section 10 of this Act.

(t) "Qualified rehabilitation facility" means any not-for-profit organization that is accredited by the Commission on Accreditation of Rehabilitation Facilities or certified by the Department of Human Services (as successor to the Department of Mental Health and Developmental Disabilities) to provide services to persons with disabilities and which receives funds from the State of Illinois for providing those services, approved by the Director and participating in a program created under subsection (j) of Section 10 of this Act.

(u) "Qualified domestic violence shelter or service" means any Illinois domestic violence shelter or service and its administrative offices funded by the Department of Human Services (as successor to the Illinois Department of Public Aid), approved by the Director and participating in a program created under subsection (k) of Section 10.

(v) "TRS benefit recipient" means a person who:

(1) is not a "member" as defined in this Section; and

(2) is receiving a monthly benefit or retirement annuity (which may include an annuity or other benefit under the self-managed plan) under Article 16 of the Illinois Pension Code; and

(3) either (i) has at least 8 years of creditable service under Article 16 of the Illinois Pension Code, or (ii) was enrolled in the health insurance program offered under that Article on January 1, 1996, or (iii) is the survivor of a benefit recipient who had at least 8 years of creditable service under Article 16 of the Illinois Pension Code or was enrolled in the health insurance program offered under that Article on the effective date of this amendatory Act of 1995, or (iv) is a recipient or survivor of a recipient of a disability benefit under Article 16 of the Illinois Pension Code.

(w) "TRS dependent beneficiary" means a person who:

(1) is not a "member" or "dependent" as defined in this Section; and

(2) is a TRS benefit recipient's: (A) spouse, (B) dependent parent who is receiving at least half of his or her support from the TRS benefit recipient, or (C) natural, step, adjudicated, or adopted child who is (i) under age 26, (ii) was, on January 1, 1996, participating as a dependent beneficiary in the health insurance program offered under Article 16 of the Illinois Pension Code, or (iii) age 19 or over who is mentally or physically disabled from a cause originating prior to the age of 19 (age 26 if enrolled as an adult child).

"TRS dependent beneficiary" does not include, as indicated under paragraph (2) of this subsection (w), a dependent of the survivor of a TRS benefit recipient who first becomes a dependent of a survivor of a TRS benefit recipient on or after the effective date of this amendatory Act of the 97th General Assembly unless that dependent would have been eligible for coverage as a dependent of the deceased TRS benefit recipient upon whom the survivor benefit is based.

(x) "Military leave" refers to individuals in basic training for reserves, special/advanced training, annual training, emergency call up, activation by the President of the United States, or any other training or duty in service to the United States Armed Forces.

(y) (Blank).

(z) "Community college benefit recipient" means a person who:

(1) is not a "member" as defined in this Section; and

(2) is receiving a monthly survivor's annuity or retirement annuity (which may include an annuity or other benefit under the self-managed plan) under Article 15 of the Illinois Pension Code; and

(3) either (i) was a full-time employee of a community college district or an association of community college boards created under the Public Community College Act (other than an employee whose last employer under Article 15 of the Illinois Pension Code was a community college district subject to Article VII of the Public Community College Act) and was eligible to participate in a group health benefit plan as an employee during the time of employment with a community college district (other than a community college district subject to Article VII of the Public Community College Act) or an association of community college boards, or (ii) is the survivor of a person described in item (i).

(aa) "Community college dependent beneficiary" means a person who:

(1) is not a "member" or "dependent" as defined in this Section; and

(2) is a community college benefit recipient's: (A) spouse, (B) dependent parent who is receiving at least half of his or her support from the community college benefit recipient, or (C) natural, step, adjudicated, or adopted child who is (i) under age 26, or (ii) age 19 or over and mentally or physically disabled from a cause originating prior to the age of 19 (age 26 if enrolled as an adult child).

"Community college dependent beneficiary" does not include, as indicated under paragraph (2) of this subsection (aa), a dependent of the survivor of a community college benefit recipient who first becomes a dependent of a survivor of a community college benefit recipient on or after the effective date of this amendatory Act of the 97th General Assembly unless that dependent would have been eligible for coverage as a dependent of the deceased community college benefit recipient upon whom the survivor annuity is based.

(bb) "Qualified child advocacy center" means any Illinois child advocacy center and its administrative offices funded by the Department of Children and Family Services, as defined by the Children's Advocacy Center Act (55 ILCS 80/), approved by the Director and participating in a program created under subsection (n) of Section 10.

(Source: P.A. 96-756, eff. 1-1-10; 96-1519, eff. 2-4-11; 97-668, eff. 1-13-12; 97-695, eff. 7-1-12.)

Section 5. The Illinois Pension Code is amended by changing Sections 1-160, 2-126, 2-162, 14-133, 14-152.1, 16-152, 16-203, 18-133, 18-169, 20-121, 20-123, and 20-124 and adding Sections 2-107.5, 2-107.6, 2-123.5, 2-123.6, 14-103.40, 14-103.41, 14-130.5, 14-130.6, 16-115.1 16-115.2, 16-151.5, 16-151.6, 18-110.1, 18-110.2, 18-130.1, and 18-130.2 as follows:

(40 ILCS 5/1-160)

Sec. 1-160. Provisions applicable to new hires.

(a) The provisions of this Section apply to a person who, on or after January 1, 2011, first becomes a member or a participant under any reciprocal retirement system or pension fund established under this Code, other than a retirement system or pension fund established under Article 2, 3, 4, 5, 6, or 18 of this Code, notwithstanding any other provision of this Code to the contrary, but do not apply to any self-managed plan established under this Code, to any person with respect to service as a sheriff's law enforcement employee under Article 7, or to any participant of the retirement plan established under Section 22-101.

(b) "Final average salary" means the average monthly (or annual) salary obtained by dividing the total salary or earnings calculated under the Article applicable to the member or participant during the 96 consecutive months (or 8 consecutive years) of service within the last 120 months (or 10 years) of service in which the total salary or earnings calculated under the applicable Article was the highest by the number of months (or years) of service in that period. For the purposes of a person who first becomes a member or participant of any retirement system or pension fund to which this Section applies on or after January 1, 2011, in this Code, "final average salary" shall be substituted for the following:

(1) In Articles 7 (except for service as sheriff's law enforcement employees) and 15, "final rate of earnings".

(2) In Articles 8, 9, 10, 11, and 12, "highest average annual salary for any 4 consecutive years within the last 10 years of service immediately preceding the date of withdrawal".

(3) In Article 13, "average final salary".

(4) In Article 14, "final average compensation".

(5) In Article 17, "average salary".

(6) In Section 22-207, "wages or salary received by him at the date of retirement or discharge".

(b-5) Beginning on January 1, 2011, for all purposes under this Code (including without limitation the calculation of benefits and employee contributions), the annual earnings, salary, or wages (based on the plan year) of a member or participant to whom this Section applies shall not exceed $106,800; however, that amount shall annually thereafter be increased by the lesser of (i) 3% of that amount, including all previous adjustments, or (ii) one-half the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12 months ending with the September preceding each November 1, including all previous adjustments.

For the purposes of this Section, "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds by November 1 of each year.

(c) A member or participant is entitled to a retirement annuity upon written application if he or she has attained age 67 and has at least 10 years of service credit and is otherwise eligible under the requirements of the applicable Article.

A member or participant who has attained age 62 and has at least 10 years of service credit and is otherwise eligible under the requirements of the applicable Article may elect to receive the lower retirement annuity provided in subsection (d) of this Section.

(d) The retirement annuity of a member or participant who is retiring after attaining age 62 with at least 10 years of service credit shall be reduced by one-half of 1% for each full month that the member's age is under age 67.

(e) Any retirement annuity or supplemental annuity shall be subject to annual increases on the January 1 occurring either on or after the attainment of age 67 or the first anniversary of the annuity start date, whichever is later. Each annual increase shall be calculated at 3% or one-half the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12 months ending with the September preceding each November 1, whichever is less, of the originally granted retirement annuity. If the annual unadjusted percentage change in the consumer price index-u for the 12 months ending with the September preceding each November 1 is zero or there is a decrease, then the annuity shall not be increased.

(f) The initial survivor's or widow's annuity of an otherwise eligible survivor or widow of a retired member or participant who first became a member or participant on or after January 1, 2011 shall be in the amount of 66 2/3% of the retired member's or participant's retirement annuity at the date of death. In the case of the death of a member or participant who has not retired and who first became a member or participant on or after January 1, 2011, eligibility for a survivor's or widow's annuity shall be determined by the applicable Article of this Code. The initial benefit shall be 66 2/3% of the earned annuity without a reduction due to age. A child's annuity of an otherwise eligible child shall be in the amount prescribed under each Article if applicable. Any survivor's or widow's annuity shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at 3% or one-half the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12 months ending with the September preceding each November 1, whichever is less, of the originally granted survivor's annuity. If the annual unadjusted percentage change in the consumer price index-u for the 12 months ending with the September preceding each November 1 is zero or there is a decrease, then the annuity shall not be increased.

(g) The benefits in Section 14-110 apply only if the person is a State policeman, a fire fighter in the fire protection service of a department, or a security employee of the Department of Corrections or the Department of Juvenile Justice, as those terms are defined in subsection (b) of Section 14-110. A person who meets the requirements of this Section is entitled to an annuity calculated under the provisions of Section 14-110, in lieu of the regular or minimum retirement annuity, only if the person has withdrawn from service with not less than 20 years of eligible creditable service and has attained age 60, regardless of whether the attainment of age 60 occurs while the person is still in service.

(h) If a person who first becomes a member or a participant of a retirement system or pension fund subject to this Section on or after January 1, 2011 is receiving a retirement annuity or retirement pension under that system or fund and becomes a member or participant under any other system or fund created by this Code and is employed on a full-time basis, except for those members or participants exempted from the provisions of this Section under subsection (a) of this Section, then the person's retirement annuity or retirement pension under that system or fund shall be suspended during that employment. Upon termination of that employment, the person's retirement annuity or retirement pension payments shall resume and be recalculated if recalculation is provided for under the applicable Article of this Code.

If a person who first becomes a member of a retirement system or pension fund subject to this Section on or after January 1, 2012 and is receiving a retirement annuity or retirement pension under that system or fund and accepts on a contractual basis a position to provide services to a governmental entity from which he or she has retired, then that person's annuity or retirement pension earned as an active employee of the employer shall be suspended during that contractual service. A person receiving an annuity or retirement pension under this Code shall notify the pension fund or retirement system from which he or she is receiving an annuity or retirement pension, as well as his or her contractual employer, of his or her retirement status before accepting contractual employment. A person who fails to submit such notification shall be guilty of a Class A misdemeanor and required to pay a fine of $1,000. Upon termination of that contractual employment, the person's retirement annuity or retirement pension payments shall resume and, if appropriate, be recalculated under the applicable provisions of this Code.

(i) Notwithstanding any other provision of this Section, a person who first becomes a participant of the retirement system established under Article 15 on or after January 1, 2011 shall have the option to enroll in the self-managed plan created under Section 15-158.2 of this Code.

Notwithstanding any other provision of this Section, a person who first becomes a participant of a retirement system established under Article 14 or 16 on or after January 1, 2011 shall have the option to enroll in the self-managed plan created under the applicable Article.

(j) In the case of a conflict between the provisions of this Section and any other provision of this Code, the provisions of this Section shall control.

(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11; 97-609, eff. 1-1-12.)

(40 ILCS 5/2-107.5 new)

Sec. 2-107.5. Defined benefit package.

"Defined benefit package" means either the traditional benefit package or the reformed benefit package, whichever would apply to a participant if he or she does not participate in the self-managed plan.

"Traditional benefit package" means the benefits provided under this Article, other than the self-managed plan, for persons who first became participants of the System before January 1, 2011.

"Reformed benefit package" means the traditional benefit package as modified for persons who first become participants of the System on or after January 1, 2011.

(40 ILCS 5/2-107.6 new)

Sec. 2-107.6. Self-managed plan. "Self-managed plan" means the defined contribution retirement program maintained by the System and established under Section 2-123.5. The self-managed plan does not include any annuity or refund payable directly by the System under the defined benefit package.

(40 ILCS 5/2-123.5 new)

Sec. 2-123.5. Self-managed plan.

(a) The General Assembly finds that the System should provide a defined contribution (self-managed) plan for eligible participants. Accordingly, the System is hereby directed 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 employer 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 make the self-managed plan established under this Section available to eligible participants under this Article within 6 months after the effective date of this amendatory Act of the 98th General Assembly. The adoption of the self-managed plan makes available to the eligible participants under this Article the election described in Section 2-123.6.

The System shall be the plan sponsor for the self-managed plan and shall prepare a plan document and adopt any rules and procedures that 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, 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 employers; 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) In order to participate in the self-managed plan, an eligible participant, as defined in Section 2-123.6, must make a written election in accordance with the provisions of that Section 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. A person's participation in the defined benefit package under this Article shall terminate on the date that participation in the self-managed plan begins.

A person 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 defined benefit package.

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

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

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

(f) If, at the time a participant begins to participate in the self-managed plan, the participant has rights and credits in the System due to previous participation in the defined 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 refund that the participant would be eligible to receive if the participant terminated employment on that date and elected a refund and (2) an amount, representing employer contributions, equal to the amount of participant 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 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) In lieu of a disability benefit, in the event that a participant in the self-managed plan has completed 8 years of service and has become permanently disabled and, as a consequence, is unable to perform the duties of his or her office, the participant may elect to receive benefits from the self-managed plan at any age.

(h) The self-managed plan shall be funded by contributions from participants in the self-managed plan and employer 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 defined 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 beginning participation in 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 plan shall provide for employer contributions to be credited to each self-managed plan participant in an amount equal to the participant contributions. The amounts so credited shall be paid into the participant's self-managed plan accounts in a manner to be prescribed by the System.

Employer contributions for participants in the self-managed plan shall be paid to the System by the State and shall be included in the calculation of required State contributions under Section 2-124. The System shall not be obligated to remit the required employer 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 employer contributions from the State.

(i) A participant in the self-managed plan becomes vested in the employer contributions credited to his or her accounts in the self-managed plan on the earliest to occur of the following: (1) attainment of 4 years of service credit; (2) the death of the participant while employed under this Article, if the participant has completed at least 1.5 years of service; or (3) the participant'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 (including subsection (g) of this Section 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 participant (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 to the date of payment.

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

If a participant in the self-managed plan who is not vested in employer 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 employer contributions and any investment return thereon shall be forfeited. Any employer 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 employer contributions or for the restoration of amounts previously forfeited.

(40 ILCS 5/2-123.6 new)

Sec. 2-123.6. Election to participate in the self-managed plan.

(a) For the purposes of this Section and Section 2-123.5:

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

"Currently eligible participant" means a person who is a participant under this Article before the day on which the System first offers the self-managed plan as an alternative to the defined benefit package.

"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 defined benefit package.

(b) Each eligible participant shall be given an opportunity to elect to participate in the self-managed plan rather than the defined benefit package. An election to participate in the self-managed plan applies to all periods of employment under this System, including employment occurring on, before, and after the effective date of the participant's election. An eligible participant who does not make an election under this Section shall, by default, participate in the defined benefit package.

An election to participate in the self-managed plan is irrevocable. If an eligible participant who participates in the defined 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.

(c) The election must be made in writing, in the manner prescribed by the System, and within the required time period. A currently eligible participant may make the election within one year after the day on which the System first offers the self-managed plan. A newly eligible participant may make the election within 60 days after first becoming a participant under this Article. An eligible participant who terminates employment under this Article without having made an election to participate in the self-managed plan and later returns to employment under this Article may make the election within 60 days after returning to employment under this Article.

(d) If an 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 2-123.5.

(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 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%.

(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.

(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. These contributions shall be made concurrently with contributions for retirement annuity purposes.

(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. This subsection (e) does not apply to participants in the self-managed plan.

(f) In the case of a participant who participates in the self-managed plan under Section 2-123.5, the contributions required under this Section shall instead be used to finance the benefits available under the self-managed plan.

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

(40 ILCS 5/2-162)

Sec. 2-162. Application and expiration of new benefit increases.

(a) As used in this Section, "new benefit increase" means an increase in the amount of any benefit provided under this Article, or an expansion of the conditions of eligibility for any benefit under this Article, that results from an amendment to this Code that takes effect after the effective date of this amendatory Act of the 94th General Assembly. "New benefit increase", however, does not include any benefit increase resulting from the changes made to this Article by this amendatory Act of the 98th General Assembly.

(b) Notwithstanding any other provision of this Code or any subsequent amendment to this Code, every new benefit increase is subject to this Section and shall be deemed to be granted only in conformance with and contingent upon compliance with the provisions of this Section.

(c) The Public Act enacting a new benefit increase must identify and provide for payment to the System of additional funding at least sufficient to fund the resulting annual increase in cost to the System as it accrues.

Every new benefit increase is contingent upon the General Assembly providing the additional funding required under this subsection. The Commission on Government Forecasting and Accountability shall analyze whether adequate additional funding has been provided for the new benefit increase and shall report its analysis to the Public Pension Division of the Department of Financial and Professional Regulation. A new benefit increase created by a Public Act that does not include the additional funding required under this subsection is null and void. If the Public Pension Division determines that the additional funding provided for a new benefit increase under this subsection is or has become inadequate, it may so certify to the Governor and the State Comptroller and, in the absence of corrective action by the General Assembly, the new benefit increase shall expire at the end of the fiscal year in which the certification is made.

(d) Every new benefit increase shall expire 5 years after its effective date or on such earlier date as may be specified in the language enacting the new benefit increase or provided under subsection (c). This does not prevent the General Assembly from extending or re-creating a new benefit increase by law.

(e) Except as otherwise provided in the language creating the new benefit increase, a new benefit increase that expires under this Section continues to apply to persons who applied and qualified for the affected benefit while the new benefit increase was in effect and to the affected beneficiaries and alternate payees of such persons, but does not apply to any other person, including without limitation a person who continues in service after the expiration date and did not apply and qualify for the affected benefit while the new benefit increase was in effect.

(Source: P.A. 94-4, eff. 6-1-05.)

(40 ILCS 5/14-103.40 new)

Sec. 14-103.40. Defined benefit package.

"Defined benefit package" means either the traditional benefit package or the reformed benefit package, whichever would apply to an employee if he or she does not participate in the self-managed plan.

"Traditional benefit package" means the benefits provided under this Article, other than the self-managed plan, without modification by Section 1-160 of this Code.

"Reformed benefit package" means the traditional benefit package as modified by Section 1-160 of this Code for certain persons who first become participants of the System on or after January 1, 2011.

(40 ILCS 5/14-103.41 new)

Sec. 14-103.41. Self-managed plan. "Self-managed plan" means the defined contribution retirement program maintained by the System and established under Section 14-130.5. The self-managed plan includes disability benefits, but does not include any other annuity or refund payable directly by the System under the defined benefit package.

(40 ILCS 5/14-130.5 new)

Sec. 14-130.5. Self-managed plan.

(a) The General Assembly finds that the System should provide a defined contribution (self-managed) plan for eligible participants. Accordingly, the System is hereby directed 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 employer 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 make the self-managed plan established under this Section available to eligible participants under this Article within 6 months after the effective date of this amendatory Act of the 98th General Assembly. The adoption of the self-managed plan makes available to eligible participants under this Article the election described in Section 14-130.6.

The System shall be the plan sponsor for the self-managed plan and shall prepare a plan document and adopt any rules and procedures that 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, 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 employers; 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) In order to participate in the self-managed plan, an eligible participant, as defined in Section 7-140.5, must make a written election in accordance with the provisions of that Section 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. A person's participation in the defined benefit package under this Article shall terminate on the date that participation in the self-managed plan begins.

A person 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 defined benefit package.

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

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

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

(f) If, at the time a participant begins to participate in the self-managed plan, the participant has rights and credits in the System due to previous participation in the defined 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 refund that the participant would be eligible to receive if the participant terminated employment on that date and elected a refund and (2) an amount, representing employer contributions, 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 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) A participant in the self-managed plan is covered by the disability benefits of the System. An amount of employer contribution, not exceeding 1% of the participating employee's salary, shall be used for the purpose of providing the disability benefits of the System to the participant. Prior to the beginning of each plan year under the self-managed plan, the Board of Trustees shall determine, as a percentage of salary, the amount of employer contributions to be allocated during that plan year for providing disability benefits for employees in the self-managed plan.

(h) The self-managed plan shall be funded by contributions from participants in the self-managed plan and employer 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 14-133. 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 defined 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 14-133. However, the amounts picked up after beginning participation in 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 plan shall provide for employer contributions to be credited to each self-managed plan participant in an amount equal to the employee contributions, less the amount used by the System to provide disability benefits for the employee. The amounts so credited shall be paid into the participant's self-managed plan accounts in a manner to be prescribed by the System.

Employer contributions for participants in the self-managed plan shall be paid to the System by the State and shall be included in the calculation of required State contributions under Section 14-131. The System shall not be obligated to remit the required employer 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 employer contributions from the State.

(i) A participant in the self-managed plan becomes vested in the employer 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 participant (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 to the date of payment.

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

If a participant in the self-managed plan who is not vested in employer 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 employer contributions and any investment return thereon shall be forfeited. Any employer 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 employer contributions or for the restoration of amounts previously forfeited.

(40 ILCS 5/14-130.6 new)

Sec. 14-130.6. Election to participate in the self-managed plan.

(a) For the purposes of this Section and Section 14-130.5:

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

"Currently eligible participant" means a person who is a participant under this Article before the day on which the System first offers the self-managed plan as an alternative to the defined benefit package.

"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 defined benefit package.

(b) Each eligible participant shall be given an opportunity to elect to participate in the self-managed plan rather than the defined benefit package. An election to participate in the self-managed plan applies to all periods of employment under this System, including employment occurring on, before, and after the effective date of the participant's election. An eligible participant who does not make an election under this Section shall, by default, participate in the defined benefit package.

An election to participate in the self-managed plan is irrevocable. If an eligible participant who participates in the defined 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.

(c) The election must be made in writing, in the manner prescribed by the System, and within the required time period. A currently eligible participant may make the election within one year after the day on which the System first offers the self-managed plan. A newly eligible participant may make the election within 60 days after first becoming a participant under this Article. An eligible participant who terminates employment under this Article without having made an election to participate in the self-managed plan and later returns to employment under this Article may make the election within 60 days after returning to employment under this Article.

(d) If an 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 14-130.5.

(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 5/14-133) (from Ch. 108 1/2, par. 14-133)

Sec. 14-133. Contributions on behalf of members.

(a) Each participating employee shall make contributions to the System, based on the employee's compensation, as follows:

(1) Covered employees, except as indicated below, 3.5% for retirement annuity, and 0.5% for a widow or survivors annuity;

(2) Noncovered employees, except as indicated below, 7% for retirement annuity and 1% for a widow or survivors annuity;

(3) Noncovered employees serving in a position in which "eligible creditable service" as defined in Section 14-110 may be earned, 1% for a widow or survivors annuity plus the following amount for retirement annuity: 8.5% through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5% in 2004 and thereafter;

(4) Covered employees serving in a position in which "eligible creditable service" as defined in Section 14-110 may be earned, 0.5% for a widow or survivors annuity plus the following amount for retirement annuity: 5% through December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004 and thereafter;

(5) Each security employee of the Department of Corrections or of the Department of Human Services who is a covered employee, 0.5% for a widow or survivors annuity plus the following amount for retirement annuity: 5% through December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004 and thereafter;

(6) Each security employee of the Department of Corrections or of the Department of Human Services who is not a covered employee, 1% for a widow or survivors annuity plus the following amount for retirement annuity: 8.5% through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5% in 2004 and thereafter.

(a-5) In the case of an employee who participates in the self-managed plan under Section 14-130.5, the contributions required under this Section shall instead be used to finance the benefits available under the self-managed plan.

(b) Contributions shall be in the form of a deduction from compensation and shall be made notwithstanding that the compensation paid in cash to the employee shall be reduced thereby below the minimum prescribed by law or regulation. Each member is deemed to consent and agree to the deductions from compensation provided for in this Article, and shall receipt in full for salary or compensation.

(Source: P.A. 92-14, eff. 6-28-01.)

(40 ILCS 5/14-152.1)

Sec. 14-152.1. Application and expiration of new benefit increases.

(a) As used in this Section, "new benefit increase" means an increase in the amount of any benefit provided under this Article, or an expansion of the conditions of eligibility for any benefit under this Article, that results from an amendment to this Code that takes effect after June 1, 2005 (the effective date of Public Act 94-4). "New benefit increase", however, does not include any benefit increase resulting from the changes made to this Article by Public Act 96-37 or by this amendatory Act of the 98th 96th General Assembly.

(b) Notwithstanding any other provision of this Code or any subsequent amendment to this Code, every new benefit increase is subject to this Section and shall be deemed to be granted only in conformance with and contingent upon compliance with the provisions of this Section.

(c) The Public Act enacting a new benefit increase must identify and provide for payment to the System of additional funding at least sufficient to fund the resulting annual increase in cost to the System as it accrues.

Every new benefit increase is contingent upon the General Assembly providing the additional funding required under this subsection. The Commission on Government Forecasting and Accountability shall analyze whether adequate additional funding has been provided for the new benefit increase and shall report its analysis to the Public Pension Division of the Department of Financial and Professional Regulation. A new benefit increase created by a Public Act that does not include the additional funding required under this subsection is null and void. If the Public Pension Division determines that the additional funding provided for a new benefit increase under this subsection is or has become inadequate, it may so certify to the Governor and the State Comptroller and, in the absence of corrective action by the General Assembly, the new benefit increase shall expire at the end of the fiscal year in which the certification is made.

(d) Every new benefit increase shall expire 5 years after its effective date or on such earlier date as may be specified in the language enacting the new benefit increase or provided under subsection (c). This does not prevent the General Assembly from extending or re-creating a new benefit increase by law.

(e) Except as otherwise provided in the language creating the new benefit increase, a new benefit increase that expires under this Section continues to apply to persons who applied and qualified for the affected benefit while the new benefit increase was in effect and to the affected beneficiaries and alternate payees of such persons, but does not apply to any other person, including without limitation a person who continues in service after the expiration date and did not apply and qualify for the affected benefit while the new benefit increase was in effect.

(Source: P.A. 96-37, eff. 7-13-09.)

(40 ILCS 5/16-115.1 new)

Sec. 16-115.1. Defined benefit package.

"Defined benefit package" means either the traditional benefit package or the reformed benefit package, whichever would apply to an employee if he or she does not participate in the self-managed plan.

"Traditional benefit package" means the benefits provided under this Article, other than the self-managed plan, without modification by Section 1-160 of this Code.

"Reformed benefit package" means the traditional benefit package as modified by Section 1-160 of this Code for certain persons who first become participants of the System on or after January 1, 2011.

(40 ILCS 5/16-115.2 new)

Sec. 16-115.2. Self-managed plan. "Self-managed plan" means the defined contribution retirement program maintained by the System and established under Section 16-151.5. The self-managed plan includes disability benefits, but does not include any other annuity or refund payable directly by the System under the defined benefit package.

(40 ILCS 5/16-151.5 new)

Sec. 16-151.5. Self-managed plan.

(a) The General Assembly finds that the System should provide a defined contribution (self-managed) plan for eligible participants. Accordingly, the System is hereby directed 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 employer 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 make the self-managed plan established under this Section available to eligible participants under this Article within 6 months after the effective date of this amendatory Act of the 98th General Assembly. The adoption of the self-managed plan makes available to eligible participants under this Article the election described in Section 16-151.6.

The System shall be the plan sponsor for the self-managed plan and shall prepare a plan document and adopt any rules and procedures that 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, 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 employers; 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) In order to participate in the self-managed plan, an eligible participant, as defined in Section 7-140.5, must make a written election in accordance with the provisions of that Section 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. A person's participation in the defined benefit package under this Article shall terminate on the date that participation in the self-managed plan begins.

A person 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 defined benefit package.

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

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

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

(f) If, at the time a participant begins to participate in the self-managed plan, the participant has rights and credits in the System due to previous participation in the defined 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 refund that the participant would be eligible to receive if the participant terminated employment on that date and elected a refund and (2) an amount, representing employer contributions, 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 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) A participant in the self-managed plan is covered by the disability benefits of the System. An amount of employer contribution, not exceeding 1% of the participating employee's salary, shall be used for the purpose of providing the disability benefits of the System to the participant. Prior to the beginning of each plan year under the self-managed plan, the Board of Trustees shall determine, as a percentage of salary, the amount of employer contributions to be allocated during that plan year for providing disability benefits for employees in the self-managed plan.

(h) The self-managed plan shall be funded by contributions from participants in the self-managed plan and employer 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 16-152. 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 defined 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 16-158. However, the amounts picked up after beginning participation in 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 plan shall provide for employer contributions to be credited to each self-managed plan participant in an amount equal to the employee contributions, less the amount used by the System to provide disability benefits for the employee. The amounts so credited shall be paid into the participant's self-managed plan accounts in a manner to be prescribed by the System.

Employer contributions for participants in the self-managed plan shall be paid to the System by the State and shall be included in the calculation of required State contributions under Section 16-158. The System shall not be obligated to remit the required employer 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 employer contributions from the State.

(i) A participant in the self-managed plan becomes vested in the employer 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 participant (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 to the date of payment.

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

If a participant in the self-managed plan who is not vested in employer 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 employer contributions and any investment return thereon shall be forfeited. Any employer 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 employer contributions or for the restoration of amounts previously forfeited.

(40 ILCS 5/16-151.6 new)

Sec. 16-151.6. Election to participate in the self-managed plan.

(a) For the purposes of this Section and Section 16-151.5:

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

"Currently eligible participant" means a person who is a participant under this Article before the day on which the System first offers the self-managed plan as an alternative to the defined benefit package.

"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 defined benefit package.

(b) Each eligible participant shall be given an opportunity to elect to participate in the self-managed plan rather than the defined benefit package. An election to participate in the self-managed plan applies to all periods of employment under this System, including employment occurring on, before, and after the effective date of the participant's election. An eligible participant who does not make an election under this Section shall, by default, participate in the defined benefit package.

An election to participate in the self-managed plan is irrevocable. If an eligible participant who participates in the defined 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.

(c) The election must be made in writing, in the manner prescribed by the System, and within the required time period. A currently eligible participant may make the election within one year after the day on which the System first offers the self-managed plan. A newly eligible participant may make the election within 60 days after first becoming a participant under this Article. An eligible participant who terminates employment under this Article without having made an election to participate in the self-managed plan and later returns to employment under this Article may make the election within 60 days after returning to employment under this Article.

(d) If an 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 16-151.5.

(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 5/16-152) (from Ch. 108 1/2, par. 16-152)

Sec. 16-152. Contributions by members.

(a) Each member shall make contributions for membership service to this System as follows:

(1) Effective July 1, 1998, contributions of 7.50% of salary towards the cost of the retirement annuity. Such contributions shall be deemed "normal contributions".

(2) Effective July 1, 1969, contributions of 1/2 of 1% of salary toward the cost of the automatic annual increase in retirement annuity provided under Section 16-133.1.

(3) Effective July 24, 1959, contributions of 1% of salary towards the cost of survivor benefits. Such contributions shall not be credited to the individual account of the member and shall not be subject to refund except as provided under Section 16-143.2.

(4) Effective July 1, 2005, contributions of 0.40% of salary toward the cost of the early retirement without discount option provided under Section 16-133.2. This contribution shall cease upon termination of the early retirement without discount option as provided in Section 16-176.

(b) The minimum required contribution for any year of full-time teaching service shall be $192.

(c) Contributions shall not be required of any annuitant receiving a retirement annuity who is given employment as permitted under Section 16-118 or 16-150.1.

(d) A person who (i) was a member before July 1, 1998, (ii) retires with more than 34 years of creditable service, and (iii) does not elect to qualify for the augmented rate under Section 16-129.1 shall be entitled, at the time of retirement, to receive a partial refund of contributions made under this Section for service occurring after the later of June 30, 1998 or attainment of 34 years of creditable service, in an amount equal to 1.00% of the salary upon which those contributions were based.

(e) A member's contributions toward the cost of early retirement without discount made under item (a)(4) of this Section shall not be refunded if the member has elected early retirement without discount under Section 16-133.2 and has begun to receive a retirement annuity under this Article calculated in accordance with that election. Otherwise, a member's contributions toward the cost of early retirement without discount made under item (a)(4) of this Section shall be refunded according to whichever one of the following circumstances occurs first:

(1) The contributions shall be refunded to the member, without interest, within 120 days after the member's retirement annuity commences, if the member does not elect early retirement without discount under Section 16-133.2.

(2) The contributions shall be included, without interest, in any refund claimed by the member under Section 16-151.

(3) The contributions shall be refunded to the member's designated beneficiary (or if there is no beneficiary, to the member's estate), without interest, if the member dies without having begun to receive a retirement annuity under this Article.

(4) The contributions shall be refunded to the member, without interest, within 120 days after the early retirement without discount option provided under Section 16-133.2 is terminated under Section 16-176.

(f) In the case of a member who participates in the self-managed plan under Section 16-151.5, the contributions required under this Section shall instead be used to finance the benefits available under the self-managed plan.

(Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)

(40 ILCS 5/16-203)

Sec. 16-203. Application and expiration of new benefit increases.

(a) As used in this Section, "new benefit increase" means an increase in the amount of any benefit provided under this Article, or an expansion of the conditions of eligibility for any benefit under this Article, that results from an amendment to this Code that takes effect after June 1, 2005 (the effective date of Public Act 94-4). "New benefit increase", however, does not include any benefit increase resulting from the changes made to this Article by public Act 95-910 or by this amendatory Act of the 98th 95th General Assembly.

(b) Notwithstanding any other provision of this Code or any subsequent amendment to this Code, every new benefit increase is subject to this Section and shall be deemed to be granted only in conformance with and contingent upon compliance with the provisions of this Section.

(c) The Public Act enacting a new benefit increase must identify and provide for payment to the System of additional funding at least sufficient to fund the resulting annual increase in cost to the System as it accrues.

Every new benefit increase is contingent upon the General Assembly providing the additional funding required under this subsection. The Commission on Government Forecasting and Accountability shall analyze whether adequate additional funding has been provided for the new benefit increase and shall report its analysis to the Public Pension Division of the Department of Financial and Professional Regulation. A new benefit increase created by a Public Act that does not include the additional funding required under this subsection is null and void. If the Public Pension Division determines that the additional funding provided for a new benefit increase under this subsection is or has become inadequate, it may so certify to the Governor and the State Comptroller and, in the absence of corrective action by the General Assembly, the new benefit increase shall expire at the end of the fiscal year in which the certification is made.

(d) Every new benefit increase shall expire 5 years after its effective date or on such earlier date as may be specified in the language enacting the new benefit increase or provided under subsection (c). This does not prevent the General Assembly from extending or re-creating a new benefit increase by law.

(e) Except as otherwise provided in the language creating the new benefit increase, a new benefit increase that expires under this Section continues to apply to persons who applied and qualified for the affected benefit while the new benefit increase was in effect and to the affected beneficiaries and alternate payees of such persons, but does not apply to any other person, including without limitation a person who continues in service after the expiration date and did not apply and qualify for the affected benefit while the new benefit increase was in effect.

(Source: P.A. 94-4, eff. 6-1-05; 95-910, eff. 8-26-08.)

(40 ILCS 5/18-110.1 new)

Sec. 18-110.1. Defined benefit package.

"Defined benefit package" means either the traditional benefit package or the reformed benefit package, whichever would apply to a participant if he or she does not participate in the self-managed plan.

"Traditional benefit package" means the benefits provided under this Article, other than the self-managed plan, for persons who first became participants of the System before January 1, 2011.

"Reformed benefit package" means the traditional benefit package as modified for persons who first become participants of the System on or after January 1, 2011.

(40 ILCS 5/18-110.2 new)

Sec. 18-110.2. Self-managed plan. "Self-managed plan" means the defined contribution retirement program maintained by the System and established under Section 18-130.1. The self-managed plan includes disability benefits, but does not include any other annuity or refund payable directly by the System under the defined benefit package.

(40 ILCS 5/18-130.1 new)

Sec. 18-130.1. Self-managed plan.

(a) The General Assembly finds that the System should provide a defined contribution (self-managed) plan for eligible participants. Accordingly, the System is hereby directed 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 employer 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 make the self-managed plan established under this Section available to eligible participants under this Article within 6 months after the effective date of this amendatory Act of the 98th General Assembly. The adoption of the self-managed plan makes available to eligible participants under this Article the election described in Section 18-130.2.

The System shall be the plan sponsor for the self-managed plan and shall prepare a plan document and adopt any rules and procedures that 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, 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 employers; 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) In order to participate in the self-managed plan, an eligible participant, as defined in Section 7-140.5, must make a written election in accordance with the provisions of that Section 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. A person's participation in the defined benefit package under this Article shall terminate on the date that participation in the self-managed plan begins.

A person 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 defined benefit package.

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

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

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

(f) If, at the time a participant begins to participate in the self-managed plan, the participant has rights and credits in the System due to previous participation in the defined 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 refund that the participant would be eligible to receive if the participant terminated employment on that date and elected a refund and (2) an amount, representing employer contributions, 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 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) A participant in the self-managed plan is covered by the disability benefits of the System. An amount of employer contribution, not exceeding 1% of the participating employee's salary, shall be used for the purpose of providing the disability benefits of the System to the participant. Prior to the beginning of each plan year under the self-managed plan, the Board of Trustees shall determine, as a percentage of salary, the amount of employer contributions to be allocated during that plan year for providing disability benefits for employees in the self-managed plan.

(h) The self-managed plan shall be funded by contributions from participants in the self-managed plan and employer 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 defined 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 beginning participation in 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 plan shall provide for employer contributions to be credited to each self-managed plan participant in an amount equal to the employee contributions, less the amount used by the System to provide disability benefits for the employee. The amounts so credited shall be paid into the participant's self-managed plan accounts in a manner to be prescribed by the System.

Employer contributions for participants in the self-managed plan shall be paid to the System by the State and shall be included in the calculation of required State contributions under Section 18-131. The System shall not be obligated to remit the required employer 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 employer contributions from the State.

(i) A participant in the self-managed plan becomes vested in the employer 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 participant (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 to the date of payment.

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

If a participant in the self-managed plan who is not vested in employer 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 employer contributions and any investment return thereon shall be forfeited. Any employer 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 employer contributions or for the restoration of amounts previously forfeited.

(40 ILCS 5/18-130.2 new)

Sec. 18-130.2. Election to participate in the self-managed plan.

(a) For the purposes of this Section and Section 18-130.1:

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

"Currently eligible participant" means a person who is a participant under this Article before the day on which the System first offers the self-managed plan as an alternative to the defined benefit package.

"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 defined benefit package.

(b) Each eligible participant shall be given an opportunity to elect to participate in the self-managed plan rather than the defined benefit package. An election to participate in the self-managed plan applies to all periods of employment under this System, including employment occurring on, before, and after the effective date of the participant's election. An eligible participant who does not make an election under this Section shall, by default, participate in the defined benefit package.

An election to participate in the self-managed plan is irrevocable. If an eligible participant who participates in the defined 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.

(c) The election must be made in writing, in the manner prescribed by the System, and within the required time period. A currently eligible participant may make the election within one year after the day on which the System first offers the self-managed plan. A newly eligible participant may make the election within 60 days after first becoming a participant under this Article. An eligible participant who terminates employment under this Article without having made an election to participate in the self-managed plan and later returns to employment under this Article may make the election within 60 days after returning to employment under this Article.

(d) If an 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 18-130.1.

(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. 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, 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.

(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. This subsection (d) does not apply to participants in the self-managed plan.

(e) In the case of a participant who participates in the self-managed plan under Section 18-130.1, the contributions required under this Section shall instead be used to finance the benefits available under the self-managed plan.

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

(40 ILCS 5/18-169)

Sec. 18-169. Application and expiration of new benefit increases.

(a) As used in this Section, "new benefit increase" means an increase in the amount of any benefit provided under this Article, or an expansion of the conditions of eligibility for any benefit under this Article, that results from an amendment to this Code that takes effect after the effective date of this amendatory Act of the 94th General Assembly. "New benefit increase", however, does not include any benefit increase resulting from the changes made to this Article by this amendatory Act of the 98th General Assembly.

(b) Notwithstanding any other provision of this Code or any subsequent amendment to this Code, every new benefit increase is subject to this Section and shall be deemed to be granted only in conformance with and contingent upon compliance with the provisions of this Section.

(c) The Public Act enacting a new benefit increase must identify and provide for payment to the System of additional funding at least sufficient to fund the resulting annual increase in cost to the System as it accrues.

Every new benefit increase is contingent upon the General Assembly providing the additional funding required under this subsection. The Commission on Government Forecasting and Accountability shall analyze whether adequate additional funding has been provided for the new benefit increase and shall report its analysis to the Public Pension Division of the Department of Financial and Professional Regulation. A new benefit increase created by a Public Act that does not include the additional funding required under this subsection is null and void. If the Public Pension Division determines that the additional funding provided for a new benefit increase under this subsection is or has become inadequate, it may so certify to the Governor and the State Comptroller and, in the absence of corrective action by the General Assembly, the new benefit increase shall expire at the end of the fiscal year in which the certification is made.

(d) Every new benefit increase shall expire 5 years after its effective date or on such earlier date as may be specified in the language enacting the new benefit increase or provided under subsection (c). This does not prevent the General Assembly from extending or re-creating a new benefit increase by law.

(e) Except as otherwise provided in the language creating the new benefit increase, a new benefit increase that expires under this Section continues to apply to persons who applied and qualified for the affected benefit while the new benefit increase was in effect and to the affected beneficiaries and alternate payees of such persons, but does not apply to any other person, including without limitation a person who continues in service after the expiration date and did not apply and qualify for the affected benefit while the new benefit increase was in effect.

(Source: P.A. 94-4, eff. 6-1-05.)

(40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)

Sec. 20-121. Calculation of proportional retirement annuities. Upon retirement of the employee, a proportional retirement annuity shall be computed by each participating system in which pension credit has been established on the basis of pension credits under each system. The computation shall be in accordance with the formula or method prescribed by each participating system which is in effect at the date of the employee's latest withdrawal from service covered by any of the systems in which he has pension credits which he elects to have considered under this Article. However, the amount of any retirement annuity payable under the self-managed plan established under Section 2-135.5, 14-130.5, 15-158.2, 16-151.5, or 18-130.1 of this Code depends solely on the value of the participant's vested account balances and is not subject to any proportional adjustment under this Section.

Combined pension credit under all retirement systems subject to this Article shall be considered in determining whether the minimum qualification has been met and the formula or method of computation which shall be applied. If a system has a step-rate formula for calculation of the retirement annuity, pension credits covering previous service which have been established under another system shall be considered in determining which range or ranges of the step-rate formula are to be applicable to the employee.

Interest on pension credit shall continue to accumulate in accordance with the provisions of the law governing the retirement system in which the same has been established during the time an employee is in the service of another employer, on the assumption such employee, for interest purposes for pension credit, is continuing in the service covered by such retirement system.

(Source: P.A. 91-887, eff. 7-6-00.)

(40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)

Sec. 20-123. Survivor's annuity. The provisions governing a retirement annuity shall be applicable to a survivor's annuity. Appropriate credits shall be established for survivor's annuity purposes in those participating systems which provide survivor's annuities, according to the same conditions and subject to the same limitations and restrictions herein prescribed for a retirement annuity. If a participating system has no survivor's annuity benefit, or if the survivor's annuity benefit under that system is waived, pension credit established in that system shall not be considered in determining eligibility for or the amount of the survivor's annuity which may be payable by any other participating system.

For persons who participate in a self-managed plan established under Section 2-135.5, 14-130.5, 16-151.5, or 18-130.1, pension credit established under the Article governing that self-managed plan may be considered in determining eligibility for or the amount of the survivor's annuity that is payable by any other participating system, but pension credit established in any other system shall not result in any right to a survivor's annuity under the Article governing that self-managed.

For persons who participate in the self-managed plan established under Section 15-158.2 or the portable benefit package established under Section 15-136.4, pension credit established under Article 15 may be considered in determining eligibility for or the amount of the survivor's annuity that is payable by any other participating system, but pension credit established in any other system shall not result in any right to a survivor's annuity under the Article 15 system.

(Source: P.A. 91-887, eff. 7-6-00.)

(40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)

Sec. 20-124. Maximum benefits.

(a) In no event shall the combined retirement or survivors annuities exceed the highest annuity which would have been payable by any participating system in which the employee has pension credits, if all of his pension credits had been validated in that system.

If the combined annuities should exceed the highest maximum as determined in accordance with this Section, the respective annuities shall be reduced proportionately according to the ratio which the amount of each proportional annuity bears to the aggregate of all such annuities.

(b) In the case of a participant in the self-managed plan established under Section 2-135.5, 14-130.5, 16-151.5, or 18-130.1 of this Code to whom the provisions of this Article apply:

(i) For purposes of calculating the combined retirement annuity and the proportionate reduction, if any, in a retirement annuity other than one payable under a self-managed plan, the amount of the retirement annuity under the Article governing the self-managed plan shall be deemed to be the highest annuity to which the annuitant would have been entitled if he or she had participated in the defined benefit package instead of in the self-managed plan.

(ii) For purposes of calculating the combined survivor's annuity and the proportionate reduction, if any, in a survivor's annuity other than one payable under a self-managed plan, the amount of the survivor's annuity under the Article governing the self-managed plan shall be deemed to be the highest survivor's annuity to which the survivor would have been entitled if the deceased person had participated in the defined benefit package instead of in the self-managed plan.

(iii) Benefits payable under the self-managed plan are not subject to proportionate reduction under this Section.

(c) In the case of a participant in the self-managed plan established under Section 15-158.2 of this Code to whom the provisions of this Article apply:

(i) For purposes of calculating the combined retirement annuity and the proportionate reduction, if any, in a retirement annuity other than one payable under the self-managed plan, the amount of the Article 15 retirement annuity shall be deemed to be the highest annuity to which the annuitant would have been entitled if he or she had participated in the traditional benefit package as defined in Section 15-103.1 rather than the self-managed plan.

(ii) For purposes of calculating the combined survivor's annuity and the proportionate reduction, if any, in a survivor's annuity other than one payable under the self-managed plan, the amount of the Article 15 survivor's annuity shall be deemed to be the highest survivor's annuity to which the survivor would have been entitled if the deceased employee had participated in the traditional benefit package as defined in Section 15-103.1 rather than the self-managed plan.

(iii) Benefits payable under the self-managed plan are not subject to proportionate reduction under this Section.

(Source: P.A. 91-887, eff. 7-6-00.)

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