99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB3278

 

Introduced 2/19/2016, by Sen. Jim Oberweis

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/2-105.1
40 ILCS 5/2-165.50 new

    Amends the General Assembly Article of the Illinois Pension Code. Defines "Tier 3 participant" as a participant who first becomes a participant on or after January 1, 2017. Requires the General Assembly Retirement System to establish, by July 1, 2016, a defined contribution plan for all Tier 3 participants. Provides that no Tier 3 participant shall be eligible to participate in the retirement plan available to Tier 1 and Tier 2 participants. Requires the System to report its progress in establishing the defined contribution plan to the Governor and the General Assembly on or before January 15, 2016. Provides that the Illinois State Board of Investment shall be the plan sponsor for the defined contribution plan. Provides that the System, its staff, its authorized representatives, and the Board of Trustees of the System shall not be liable for any information given to a Tier 3 participant concerning the defined contribution plan. Requires the defined contribution plan to provide a variety of options for payouts to retirees and their survivors. Requires the defined contribution plan to allow former participants in the plan to transfer or roll over Tier 3 participant contributions and vested State contributions into other qualified retirement plans. Contains provisions concerning maximum participant and State contributions, vesting, defined disability benefits, investment options, administrative fees, and qualified plan status. Effective immediately.


SRS099 00017 NIM 20018 b

 

 

A BILL FOR

 

SB3278SRS099 00017 NIM 20018 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Sections 2-105.1 and 2-165.50 as follows:
 
6    (40 ILCS 5/2-105.1)
7    Sec. 2-105.1. Tier 1 participant; Tier 2 participant.
8    "Tier 1 participant": A participant who first became a
9participant before January 1, 2011.
10    "Tier 2 participant": A participant who first became a
11participant on or after January 1, 2011 and before January 1,
122017.
13    "Tier 3 participant": A participant who first becomes a
14participant on or after January 1, 2017.
15(Source: P.A. 98-599, eff. 6-1-14.)
 
16    (40 ILCS 5/2-165.50 new)
17    Sec. 2-165.50. Defined contribution plan for Tier 3
18participants.
19    (a) No Tier 3 participant shall be eligible to participate
20in the retirement plan available under this Article to Tier 1
21and Tier 2 participants. All Tier 3 participants shall
22participate in the defined contribution plan established under

 

 

SB3278- 2 -SRS099 00017 NIM 20018 b

1this Section.
2    (b) By July 1, 2016, the System shall prepare and implement
3a defined contribution plan for all Tier 3 participants. The
4defined contribution plan developed under this Section shall be
5a plan that aggregates employer and employee contributions in
6individual participant accounts which, after meeting any other
7requirements, are used for payouts after retirement in
8accordance with this Section and any other applicable laws.
9        (1) Each Tier 3 participant shall determine the
10    percentage of salary that he or she will contribute to his
11    or her individual account in the defined contribution plan.
12        (2) State contributions shall be paid into the account
13    of each Tier 3 participant at the rate of 25% of the
14    employee's contribution, up to a maximum State
15    contribution of 2% of the participant's salary.
16        (3) The defined contribution plan shall require 3 years
17    of participation in the defined contribution plan before
18    vesting in State contributions. If the participant fails to
19    vest in them, then the State contributions, and the
20    earnings thereon, shall be forfeited.
21        (4) The defined contribution plan may provide for
22    participants in the plan to be eligible for defined
23    disability benefits at the participant's option. If it does
24    so and the Tier 3 participant so elects, the System shall
25    reduce the Tier 3 participant contributions credited to the
26    participant's defined contribution plan account by an

 

 

SB3278- 3 -SRS099 00017 NIM 20018 b

1    amount determined by the System to cover the cost of
2    offering such benefits.
3        (5) The defined contribution plan shall provide a
4    variety of options for investments. These options shall
5    include investments handled by the Illinois State Board of
6    Investment as well as private sector investment options.
7        (6) The defined contribution plan shall provide a
8    variety of options for payouts to retirees and their
9    survivors.
10        (7) To the extent authorized under federal law and as
11    authorized by the System, the plan shall allow former
12    participants in the plan to transfer or roll over Tier 3
13    participant and vested State contributions, and the
14    earnings thereon, into other qualified retirement plans.
15    (c) In no event shall the System, its staff, its authorized
16representatives, or the Board be liable for any information
17given to a Tier 3 participant under this Section. The System
18may coordinate with the Illinois Department of Central
19Management Services and other retirement systems administering
20a defined contribution plan to provide information concerning
21the impact of the defined contribution plan set forth in this
22Section.
23    (d) Notwithstanding any other provision of this Section, no
24person shall begin participating in the defined contribution
25plan until it has attained qualified plan status and received
26all necessary approvals from the United States Internal Revenue

 

 

SB3278- 4 -SRS099 00017 NIM 20018 b

1Service.
2    (e) The System shall report on its progress under this
3Section, including the available details of the defined
4contribution plan, to the Governor and the General Assembly on
5or before January 15, 2016.
6    (f) The Illinois State Board of Investment shall be the
7plan sponsor for the defined contribution plan established
8under this Section.
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.