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| | 99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016 HB6152 Introduced 2/11/2016, by Rep. Sheri L Jesiel SYNOPSIS AS INTRODUCED: |
| 40 ILCS 5/2-105.3 new | | 40 ILCS 5/2-124 | from Ch. 108 1/2, par. 2-124 | 40 ILCS 5/2-134 | from Ch. 108 1/2, par. 2-134 | 40 ILCS 5/2-167 new | | 40 ILCS 5/2-105.1 rep. | |
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Amends the General Assembly Article of the Illinois Pension Code. Requires the General Assembly Retirement System to establish a self-directed retirement plan. Provides that for persons who become a participant on or after the effective date of the amendatory Act, participation in the System shall be limited to participation in the self-directed retirement plan. Allows a Tier 1 or Tier 2 participant to make an irrevocable election to participate in the self-directed retirement plan instead of the defined benefit plan. Makes changes to the pensionable salary for active participants. Provides that upon a participant's first day of participation in the self-directed retirement plan, the participant becomes vested in his or her contributions to the self-directed retirement plan, the employer's contributions to the self-directed retirement plan, and the investment returns attributable to those contributions credited to his or her account. Provides a new funding formula for State contributions, with a 100% funding goal through 2046 (determined using the entry age normal actuarial cost method) and a 100% funding goal thereafter.
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| | FISCAL NOTE ACT MAY APPLY | | PENSION IMPACT NOTE ACT MAY APPLY |
| | A BILL FOR |
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| | HB6152 | | LRB099 15452 RPS 39737 b |
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1 | | AN ACT concerning public employee benefits.
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2 | | Be it enacted by the People of the State of Illinois,
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3 | | represented in the General Assembly:
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4 | | Section 5. The Illinois Pension Code is amended by changing |
5 | | Sections 2-124 and 2-134 and by adding Sections 2-167 and |
6 | | 2-105.3 as follows: |
7 | | (40 ILCS 5/2-105.3 new) |
8 | | Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier |
9 | | 3 participant. |
10 | | "Tier 1 participant": A participant who first became a |
11 | | participant before January 1, 2011. |
12 | | In the case of a Tier 1 participant who elects to |
13 | | participate in the self-directed retirement plan under Section |
14 | | 2-167, that participant shall be deemed a Tier 1 participant |
15 | | only with respect to service performed or established before |
16 | | the effective date of that election. |
17 | | "Tier 2 participant": A participant who first became a |
18 | | participant on or after January 1, 2011 and before the |
19 | | effective date of this amendatory Act of the 99th General |
20 | | Assembly. |
21 | | In the case of a Tier 2 participant who elects to |
22 | | participate in the self-directed retirement plan under Section |
23 | | 2-167, that participant shall be deemed a Tier 2 participant |
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1 | | only with respect to service performed or established before |
2 | | the effective date of that election. |
3 | | "Tier 3 participant": A participant who first becomes a |
4 | | participant on or after the effective date of this amendatory |
5 | | Act of the 99th General Assembly; or a Tier 1 or Tier 2 |
6 | | participant who elects to participate in the self-directed |
7 | | retirement under Section 2-167 of this Code, but only with |
8 | | respect to service performed or established on or after the |
9 | | effective date of that election.
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10 | | (40 ILCS 5/2-124) (from Ch. 108 1/2, par. 2-124)
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11 | | (Text of Section WITHOUT the changes made by P.A. 98-599, |
12 | | which has been
held unconstitutional)
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13 | | Sec. 2-124. Contributions by State.
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14 | | (a) The State shall make contributions to the System by
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15 | | appropriations of amounts which, together with the |
16 | | contributions of
participants, interest earned on investments, |
17 | | and other income
will meet the cost of maintaining and |
18 | | administering the System on a 100% 90%
funded basis in |
19 | | accordance with actuarial recommendations.
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20 | | (b) The Board shall determine the amount of State
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21 | | contributions required for each fiscal year on the basis of the
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22 | | actuarial tables and other assumptions adopted by the Board and |
23 | | the
prescribed rate of interest, using the formula in |
24 | | subsection (c).
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25 | | (c) For State fiscal years 2017 through 2046, the minimum |
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1 | | contribution
to the System to be made by the State for each |
2 | | fiscal year shall be an amount
determined by the System to be |
3 | | sufficient to bring the total assets of the
System up to 100% |
4 | | of the total actuarial liabilities of the System by the end of
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5 | | State fiscal year 2046. In making these determinations, the |
6 | | required State
contribution shall be calculated each year as a |
7 | | level dollar amount
over the years remaining to and including |
8 | | fiscal year 2046 and shall be
determined under the entry age |
9 | | normal actuarial cost method. For State fiscal years 2012 |
10 | | through 2016 2045 , the minimum contribution
to the System to be |
11 | | made by the State for each fiscal year shall be an amount
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12 | | determined by the System to be sufficient to bring the total |
13 | | assets of the
System up to 90% of the total actuarial |
14 | | liabilities of the System by the end of
State fiscal year 2045. |
15 | | In making these determinations, the required State
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16 | | contribution shall be calculated each year as a level |
17 | | percentage of payroll
over the years remaining to and including |
18 | | fiscal year 2045 and shall be
determined under the projected |
19 | | unit credit actuarial cost method.
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20 | | For State fiscal years 1996 through 2005, the State |
21 | | contribution to
the System, as a percentage of the applicable |
22 | | employee payroll, shall be
increased in equal annual increments |
23 | | so that by State fiscal year 2011, the
State is contributing at |
24 | | the rate required under this Section.
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25 | | Notwithstanding any other provision of this Article, the |
26 | | total required State
contribution for State fiscal year 2006 is |
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1 | | $4,157,000.
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2 | | Notwithstanding any other provision of this Article, the |
3 | | total required State
contribution for State fiscal year 2007 is |
4 | | $5,220,300.
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5 | | For each of State fiscal years 2008 through 2009, the State |
6 | | contribution to
the System, as a percentage of the applicable |
7 | | employee payroll, shall be
increased in equal annual increments |
8 | | from the required State contribution for State fiscal year |
9 | | 2007, so that by State fiscal year 2011, the
State is |
10 | | contributing at the rate otherwise required under this Section.
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11 | | Notwithstanding any other provision of this Article, the |
12 | | total required State contribution for State fiscal year 2010 is |
13 | | $10,454,000 and shall be made from the proceeds of bonds sold |
14 | | in fiscal year 2010 pursuant to Section 7.2 of the General |
15 | | Obligation Bond Act, less (i) the pro rata share of bond sale |
16 | | expenses determined by the System's share of total bond |
17 | | proceeds, (ii) any amounts received from the General Revenue |
18 | | Fund in fiscal year 2010, and (iii) any reduction in bond |
19 | | proceeds due to the issuance of discounted bonds, if |
20 | | applicable. |
21 | | Notwithstanding any other provision of this Article, the
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22 | | total required State contribution for State fiscal year 2011 is
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23 | | the amount recertified by the System on or before April 1, 2011 |
24 | | pursuant to Section 2-134 and shall be made from the proceeds |
25 | | of bonds sold
in fiscal year 2011 pursuant to Section 7.2 of |
26 | | the General
Obligation Bond Act, less (i) the pro rata share of |
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1 | | bond sale
expenses determined by the System's share of total |
2 | | bond
proceeds, (ii) any amounts received from the General |
3 | | Revenue
Fund in fiscal year 2011, and (iii) any reduction in |
4 | | bond
proceeds due to the issuance of discounted bonds, if
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5 | | applicable. |
6 | | Beginning in State fiscal year 2047, the minimum State
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7 | | contribution for each fiscal year shall be the amount needed to
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8 | | maintain the total assets of the System at 100% of the total
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9 | | actuarial liabilities of the System. |
10 | | Beginning in State fiscal year 2046, the minimum State |
11 | | contribution for
each fiscal year shall be the amount needed to |
12 | | maintain the total assets of
the System at 90% of the total |
13 | | actuarial liabilities of the System.
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14 | | Amounts received by the System pursuant to Section 25 of |
15 | | the Budget Stabilization Act or Section 8.12 of the State |
16 | | Finance Act in any fiscal year do not reduce and do not |
17 | | constitute payment of any portion of the minimum State |
18 | | contribution required under this Article in that fiscal year. |
19 | | Such amounts shall not reduce, and shall not be included in the |
20 | | calculation of, the required State contributions under this |
21 | | Article in any future year until the System has reached a |
22 | | funding ratio of at least 90%. A reference in this Article to |
23 | | the "required State contribution" or any substantially similar |
24 | | term does not include or apply to any amounts payable to the |
25 | | System under Section 25 of the Budget Stabilization Act.
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26 | | Notwithstanding any other provision of this Section, the |
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1 | | required State
contribution for State fiscal year 2005 and for |
2 | | fiscal year 2008 and each fiscal year thereafter, as
calculated |
3 | | under this Section and
certified under Section 2-134, shall not |
4 | | exceed an amount equal to (i) the
amount of the required State |
5 | | contribution that would have been calculated under
this Section |
6 | | for that fiscal year if the System had not received any |
7 | | payments
under subsection (d) of Section 7.2 of the General |
8 | | Obligation Bond Act, minus
(ii) the portion of the State's |
9 | | total debt service payments for that fiscal
year on the bonds |
10 | | issued in fiscal year 2003 for the purposes of that Section |
11 | | 7.2, as determined
and certified by the Comptroller, that is |
12 | | the same as the System's portion of
the total moneys |
13 | | distributed under subsection (d) of Section 7.2 of the General
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14 | | Obligation Bond Act. In determining this maximum for State |
15 | | fiscal years 2008 through 2010, however, the amount referred to |
16 | | in item (i) shall be increased, as a percentage of the |
17 | | applicable employee payroll, in equal increments calculated |
18 | | from the sum of the required State contribution for State |
19 | | fiscal year 2007 plus the applicable portion of the State's |
20 | | total debt service payments for fiscal year 2007 on the bonds |
21 | | issued in fiscal year 2003 for the purposes of Section 7.2 of |
22 | | the General
Obligation Bond Act, so that, by State fiscal year |
23 | | 2011, the
State is contributing at the rate otherwise required |
24 | | under this Section.
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25 | | (d) For purposes of determining the required State |
26 | | contribution to the System, the value of the System's assets |
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1 | | shall be equal to the actuarial value of the System's assets, |
2 | | which shall be calculated as follows: |
3 | | As of June 30, 2008, the actuarial value of the System's |
4 | | assets shall be equal to the market value of the assets as of |
5 | | that date. In determining the actuarial value of the System's |
6 | | assets for fiscal years after June 30, 2008, any actuarial |
7 | | gains or losses from investment return incurred in a fiscal |
8 | | year shall be recognized in equal annual amounts over the |
9 | | 5-year period following that fiscal year. |
10 | | (e) For purposes of determining the required State |
11 | | contribution to the system for a particular year, the actuarial |
12 | | value of assets shall be assumed to earn a rate of return equal |
13 | | to the system's actuarially assumed rate of return. |
14 | | (Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11; |
15 | | 96-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff. |
16 | | 7-13-12.)
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17 | | (40 ILCS 5/2-134)
(from Ch. 108 1/2, par. 2-134)
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18 | | (Text of Section WITHOUT the changes made by P.A. 98-599, |
19 | | which has been
held unconstitutional)
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20 | | Sec. 2-134. To certify required State contributions and |
21 | | submit vouchers.
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22 | | (a) The Board shall certify to the Governor on or before |
23 | | December 15 of each
year until December 15, 2011 the amount of |
24 | | the required State contribution to the System for the next
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25 | | fiscal year and shall specifically identify the System's |
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1 | | projected State normal cost for that fiscal year. The |
2 | | certification shall include a copy of the actuarial
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3 | | recommendations upon which it is based and shall specifically |
4 | | identify the System's projected State normal cost for that |
5 | | fiscal year.
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6 | | On or before November 1 of each year, beginning November 1, |
7 | | 2012, the Board shall submit to the State Actuary, the |
8 | | Governor, and the General Assembly a proposed certification of |
9 | | the amount of the required State contribution to the System for |
10 | | the next fiscal year, along with all of the actuarial |
11 | | assumptions, calculations, and data upon which that proposed |
12 | | certification is based. On or before January 1 of each year |
13 | | beginning January 1, 2013, the State Actuary shall issue a |
14 | | preliminary report concerning the proposed certification and |
15 | | identifying, if necessary, recommended changes in actuarial |
16 | | assumptions that the Board must consider before finalizing its |
17 | | certification of the required State contributions. On or before |
18 | | January 15, 2013 and every January 15 thereafter, the Board |
19 | | shall certify to the Governor and the General Assembly the |
20 | | amount of the required State contribution for the next fiscal |
21 | | year. The Board's certification must note any deviations from |
22 | | the State Actuary's recommended changes, the reason or reasons |
23 | | for not following the State Actuary's recommended changes, and |
24 | | the fiscal impact of not following the State Actuary's |
25 | | recommended changes on the required State contribution. |
26 | | On or before May 1, 2004, the Board shall recalculate and |
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1 | | recertify to
the Governor the amount of the required State |
2 | | contribution to the System for
State fiscal year 2005, taking |
3 | | into account the amounts appropriated to and
received by the |
4 | | System under subsection (d) of Section 7.2 of the General
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5 | | Obligation Bond Act.
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6 | | On or before July 1, 2005, the Board shall recalculate and |
7 | | recertify
to the Governor the amount of the required State
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8 | | contribution to the System for State fiscal year 2006, taking |
9 | | into account the changes in required State contributions made |
10 | | by this amendatory Act of the 94th General Assembly.
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11 | | On or before April 1, 2011, the Board shall recalculate and |
12 | | recertify to the Governor the amount of the required State |
13 | | contribution to the System for State fiscal year 2011, applying |
14 | | the changes made by Public Act 96-889 to the System's assets |
15 | | and liabilities as of June 30, 2009 as though Public Act 96-889 |
16 | | was approved on that date. |
17 | | (a-5) As soon as practical after the effective date of this |
18 | | amendatory Act of the 99th General Assembly, the State Actuary |
19 | | and the Board shall recalculate and recertify to the Governor |
20 | | and the General Assembly the amount of the State contribution |
21 | | to the System for State fiscal year 2017, taking into account |
22 | | the changes in required State contributions made by this |
23 | | amendatory Act of the 99th General Assembly. |
24 | | (b) Beginning in State fiscal year 1996, on or as soon as |
25 | | possible after the
15th day of each month the Board shall |
26 | | submit vouchers for payment of State
contributions to the |
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1 | | System, in a total monthly amount of one-twelfth of the
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2 | | required annual State contribution certified under subsection |
3 | | (a).
From the effective date of this amendatory Act
of the 93rd |
4 | | General Assembly through June 30, 2004, the Board shall not
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5 | | submit vouchers for the remainder of fiscal year 2004 in excess |
6 | | of the
fiscal year 2004 certified contribution amount |
7 | | determined
under this Section after taking into consideration |
8 | | the transfer to the
System under subsection (d) of Section |
9 | | 6z-61 of the State Finance Act.
These
vouchers shall be paid by |
10 | | the State Comptroller and Treasurer by warrants drawn
on the |
11 | | funds appropriated to the System for that fiscal year. If in |
12 | | any month
the amount remaining unexpended from all other |
13 | | appropriations to the System for
the applicable fiscal year |
14 | | (including the appropriations to the System under
Section 8.12 |
15 | | of the State Finance Act and Section 1 of the State Pension |
16 | | Funds
Continuing Appropriation Act) is less than the amount |
17 | | lawfully vouchered under
this Section, the difference shall be |
18 | | paid from the General Revenue Fund under
the continuing |
19 | | appropriation authority provided in Section 1.1 of the State
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20 | | Pension Funds Continuing Appropriation Act.
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21 | | (c) The full amount of any annual appropriation for the |
22 | | System for
State fiscal year 1995 shall be transferred and made |
23 | | available to the System
at the beginning of that fiscal year at |
24 | | the request of the Board.
Any excess funds remaining at the end |
25 | | of any fiscal year from appropriations
shall be retained by the |
26 | | System as a general reserve to meet the System's
accrued |
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1 | | liabilities.
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2 | | (Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11; |
3 | | 97-694, eff. 6-18-12.)
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4 | | (40 ILCS 5/2-167 new) |
5 | | Sec. 2-167. Self-directed retirement plan. |
6 | | (a) For the purposes of this Section: |
7 | | "Active participant" means a participant who is in |
8 | | active service in the System. |
9 | | "Consumer price index-u" means the index published by |
10 | | the Bureau of Labor Statistics of the United States |
11 | | Department of Labor that measures the average change in |
12 | | prices of goods and services purchased by all urban |
13 | | consumers, United States city average, all items, 1982-84 = |
14 | | 100. |
15 | | "Defined benefit plan" means the retirement plan |
16 | | available under this Article to Tier 1 or Tier 2 |
17 | | participants who have not made the election authorized |
18 | | under this Section. |
19 | | "Employer" means the State. |
20 | | "Pensionable salary" means the amount of salary used by |
21 | | the System to calculate the amount of an individual's |
22 | | retirement annuity. |
23 | | (b) On and after the effective date of this amendatory Act |
24 | | of the 99th General Assembly, a Tier 3 participant's |
25 | | participation in the System shall be limited to participation |
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1 | | in the self-directed retirement plan established under |
2 | | subsection (d) of this Section. |
3 | | An active Tier 1 or Tier 2 participant of this System may |
4 | | elect to cease accruing benefits in the defined benefit plan |
5 | | and begin accruing benefits for future service in the |
6 | | self-directed retirement plan established under subsection |
7 | | (d). The election to participate in the self-directed |
8 | | retirement plan is voluntary and irrevocable. |
9 | | For an active Tier 1 or Tier 2 participant who elects to |
10 | | participate in the self-directed retirement plan, all service |
11 | | credit under the System (including service under any |
12 | | participating system if the participant elects to use the |
13 | | reciprocal provisions of Article 20) shall be considered for |
14 | | purposes of vesting in the benefits provided prior to the |
15 | | effective date of this Section, but only service earned and |
16 | | contributions made before that effective date shall be |
17 | | considered in determining the amount of those benefits. In lieu |
18 | | of receiving any such benefits, an active Tier 1 or Tier 2 |
19 | | participant who elects to participate in the self-directed |
20 | | retirement plan may elect to have an account balance |
21 | | established in his or her self-directed retirement plan account |
22 | | in an amount equal to the amount of the contribution refund |
23 | | that the participant would be eligible to receive if he or she |
24 | | withdrew from service on the effective date of this Section and |
25 | | elected a refund of contributions, except that this |
26 | | hypothetical refund shall include interest at the effective |
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1 | | rate for the respective years. The System shall make these |
2 | | transfers of assets to the self-directed plan as tax-free |
3 | | transfers in accordance with Internal Revenue Service |
4 | | guidelines. |
5 | | (c) The pensionable salary of an active participant shall |
6 | | be equal to the average final monthly salary of the |
7 | | participant. For a participant who first becomes a participant |
8 | | of this System on or after the effective date of this |
9 | | amendatory Act of the 99th General Assembly, the average final |
10 | | monthly salary determined by dividing the total salary of the |
11 | | participant during the 96 consecutive months of service within |
12 | | the last 120 months of service in which the total compensation |
13 | | was the highest by the number of months of service in that |
14 | | period; however, the highest salary for annuity purposes may |
15 | | not exceed $106,800, except that that amount shall annually |
16 | | thereafter be increased by the lesser of (i) 3% of that amount, |
17 | | including all previous adjustments, or (ii) the annual |
18 | | unadjusted percentage increase (but not less than zero) in the |
19 | | consumer price index-u for the 12 months ending with the |
20 | | September preceding each November 1. The new amount resulting |
21 | | from each annual adjustment shall be determined by the Public |
22 | | Pension Division of the Department of Insurance and made |
23 | | available to the Board by November 1 of each year. |
24 | | (d) As soon as practicable after the effective date of this |
25 | | amendatory Act of the 99th General Assembly, the System shall |
26 | | establish a self-directed retirement plan that allows Tier 3 |
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1 | | participants the opportunity to accumulate assets for |
2 | | retirement through a combination of employee and employer |
3 | | contributions that may be invested in mutual funds, collective |
4 | | investment funds, or other investment products and used to |
5 | | purchase annuity contracts, either fixed or variable or a |
6 | | combination thereof. The plan must be qualified under the |
7 | | Internal Revenue Code of 1986. |
8 | | At any time after withdrawal from service, a participant in |
9 | | the self-directed plan shall be entitled to a benefit that is |
10 | | based on the account values attributable to his or her |
11 | | participant contributions and the employer contributions, as |
12 | | well as any investment returns attributable to those |
13 | | contributions. Upon a participant's first day of participation |
14 | | in the self-directed retirement plan, the participant becomes |
15 | | vested in his or her contributions to the self-directed |
16 | | retirement plan, the employer's contributions to the |
17 | | self-directed retirement plan, and the investment returns |
18 | | attributable to those contributions credited to his or her |
19 | | account. |
20 | | (e) All persons who begin to participate in this System on |
21 | | or after the effective date of this amendatory Act of the 99th |
22 | | General Assembly and any active Tier 1 or Tier 2 participant |
23 | | who makes the election provided in subsection (b) shall |
24 | | participate in the self-directed retirement plan established |
25 | | under subsection (d) and, in lieu of the contributions |
26 | | otherwise provided for in this Article, shall contribute 8% of |
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1 | | salary to the plan. The employer of each of those participants |
2 | | shall contribute 7% of salary to that plan on behalf of the |
3 | | participant. |
4 | | (f) The provisions of this amendatory Act of the 99th |
5 | | General Assembly apply notwithstanding any other law, |
6 | | including Section 1-160 of this Code. If there is a conflict |
7 | | between the provisions of this amendatory Act of the 99th |
8 | | General Assembly and any other law, the provisions of this |
9 | | Section shall control.
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10 | | (40 ILCS 5/2-105.1 rep.) |
11 | | Section 10. The Illinois Pension Code is amended by |
12 | | repealing Section 2-105.1.
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