Illinois General Assembly - Full Text of HB2977
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Full Text of HB2977  102nd General Assembly

HB2977 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB2977

 

Introduced 2/19/2021, by Rep. Thomas Morrison

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the General Assembly, State Employee, State Universities, Downstate Teachers, and Judges Articles of the Illinois Pension Code. Requires the Board of each System to establish and maintain a voluntary defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. Provides that the contribution rate shall be established by the Board. Provides that the plan shall exist and serve in addition to other retirement, pension, and benefit plans established under the Code. Provides that any Tier 2 participant who first becomes a participant on or after establishment of the plan shall automatically be enrolled, unless he or she opts out within 60 days after first becoming a participant. Authorizes Tier 1 participants and Tier 2 participants who first became participants before the plan was established to enroll in the plan. Contains provisions concerning investment options, qualified plan status, and distribution requirements. Defines terms and repeals a definition added by Public Act 98-599, which has been held unconstitutional. Effective immediately.


LRB102 14892 RPS 20245 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2977LRB102 14892 RPS 20245 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 adding
5Sections 2-105.3, 2-165.5, 14-103.43, 14-155.5, 15-200.5,
616-106.42, 16-205.5, 18-110.1, 18-110.2, and 18-121.5 as
7follows:
 
8    (40 ILCS 5/2-105.3 new)
9    Sec. 2-105.3. Tier 1 participant; Tier 2 participant.
10"Tier 1 participant": A participant who first became a
11participant before January 1, 2011.
12    "Tier 2 participant": A participant who first became a
13participant on or after January 1, 2011.
 
14    (40 ILCS 5/2-165.5 new)
15    Sec. 2-165.5. Defined contribution plan.
16    (a) Authority. No later than one year after the effective
17date of this amendatory Act of the 102nd General Assembly, the
18Board shall establish and maintain a defined contribution plan
19to address the retirement preparedness gap for participants in
20a defined benefit plan who are not on track to maintain their
21standard of living in retirement. The plan shall be designed
22as a qualified tax-deferred savings plan under the Internal

 

 

HB2977- 2 -LRB102 14892 RPS 20245 b

1Revenue Code of 1986, as amended. The plan shall exist and
2serve in addition to other retirement, pension, and benefit
3plans established under this Code. All assets and income of
4the plan shall be held in trust for the exclusive benefit of
5participants and their beneficiaries.
6    (b) Enrollment. Tier 1 participants and Tier 2
7participants who first became participants before the defined
8contribution plan was established shall have the opportunity
9to voluntarily elect to enroll in the plan. Each Tier 2
10participant who becomes a participant on or after the
11establishment of the defined contribution plan shall be
12automatically enrolled in the plan at a contribution rate that
13is established by the Board, unless he or she opts out within
1460 days after the date that he or she becomes a participant.
15    (c) Investments. The plan shall be designed to enable
16participants to generate a stream of income to replace their
17pre-retirement income in retirement. The Board shall establish
18a default investment option in which employees are
19automatically invested upon initial enrollment in the plan or
20upon re-enrollment in the plan and absent direction by the
21participant to the contrary. Such investment in a default
22investment option shall be deemed to have been made by
23participant direction so long as the Board has provided
24reasonable notice and description of the default investment
25option and the participant's right to select other investment
26options.

 

 

HB2977- 3 -LRB102 14892 RPS 20245 b

1    (d) Distributions. The plan shall provide a variety of
2options for distributions to participants and their
3beneficiaries and shall meet the relevant requirements of the
4Internal Revenue Code of 1986, as amended. The manner and
5timing of benefit distributions shall meet the distribution
6requirements of Section 401(a)(9) of the Internal Revenue Code
7of 1986, as amended. Distributions upon the death of the
8participant shall meet the requirements of Section 401(a)(37)
9of the Internal Revenue Code of 1986, as amended.
 
10    (40 ILCS 5/14-103.43 new)
11    Sec. 14-103.43. Tier 2 member. "Tier 2 member": A member
12of this System who first becomes a member under this Article on
13or after January 1, 2011 and who is not a Tier 1 member.
 
14    (40 ILCS 5/14-155.5 new)
15    Sec. 14-155.5. Defined contribution plan.
16    (a) Authority. No later than one year after the effective
17date of this amendatory Act of the 102nd General Assembly, the
18Board shall establish and maintain a defined contribution plan
19to address the retirement preparedness gap for participants in
20a defined benefit plan who are not on track to maintain their
21standard of living in retirement. The plan shall be designed
22as a qualified tax-deferred savings plan under the Internal
23Revenue Code of 1986, as amended. The plan shall exist and
24serve in addition to other retirement, pension, and benefit

 

 

HB2977- 4 -LRB102 14892 RPS 20245 b

1plans established under this Code. All assets and income of
2the plan shall be held in trust for the exclusive benefit of
3participants and their beneficiaries.
4    (b) Enrollment. Tier 1 members and Tier 2 members who
5first became participants before the defined contribution plan
6was established shall have the opportunity to voluntarily
7elect to enroll in the plan. Each Tier 2 member who becomes a
8participant on or after the establishment of the defined
9contribution plan shall be automatically enrolled in the plan
10at a contribution rate that is established by the Board,
11unless he or she opts out within 60 days after the date that he
12or she becomes a participant.
13    (c) Investments. The plan shall be designed to enable
14participants to generate a stream of income to replace their
15pre-retirement income in retirement. The Board shall establish
16a default investment option in which employees are
17automatically invested upon initial enrollment in the plan or
18upon re-enrollment in the plan and absent direction by the
19participant to the contrary. Such investment in a default
20investment option shall be deemed to have been made by
21participant direction so long as the Board has provided
22reasonable notice and description of the default investment
23option and the participant's right to select other investment
24options.
25    (d) Distributions. The plan shall provide a variety of
26options for distributions to participants and their

 

 

HB2977- 5 -LRB102 14892 RPS 20245 b

1beneficiaries and shall meet the relevant requirements of the
2Internal Revenue Code of 1986, as amended. The manner and
3timing of benefit distributions shall meet the distribution
4requirements of Section 401(a)(9) of the Internal Revenue Code
5of 1986, as amended. Distributions upon the death of the
6participant shall meet the requirements of Section 401(a)(37)
7of the Internal Revenue Code of 1986, as amended.
 
8    (40 ILCS 5/15-200.5 new)
9    Sec. 15-200.5. Defined contribution plan.
10    (a) Authority. No later than one year after the effective
11date of this amendatory Act of the 102nd General Assembly, the
12Board shall establish and maintain a defined contribution plan
13to address the retirement preparedness gap for participants in
14a defined benefit plan who are not on track to maintain their
15standard of living in retirement. The plan shall be designed
16as a qualified tax-deferred savings plan under the Internal
17Revenue Code of 1986, as amended. The plan shall exist and
18serve in addition to other retirement, pension, and benefit
19plans established under this Code. All assets and income of
20the plan shall be held in trust for the exclusive benefit of
21participants and their beneficiaries.
22    (b) Enrollment. Tier 1 participants and Tier 2
23participants who first became participants before the defined
24contribution plan was established shall have the opportunity
25to voluntarily elect to enroll in the plan. Each Tier 2

 

 

HB2977- 6 -LRB102 14892 RPS 20245 b

1participant who becomes a participant on or after the
2establishment of the defined contribution plan shall be
3automatically enrolled in the plan at a contribution rate that
4is established by the Board, unless he or she opts out within
560 days after the date that he or she becomes a participant.
6    (c) Investments. The plan shall be designed to enable
7participants to generate a stream of income to replace their
8pre-retirement income in retirement. The Board shall establish
9a default investment option in which employees are
10automatically invested upon initial enrollment in the plan or
11upon re-enrollment in the plan and absent direction by the
12participant to the contrary. Such investment in a default
13investment option shall be deemed to have been made by
14participant direction so long as the Board has provided
15reasonable notice and description of the default investment
16option and the participant's right to select other investment
17options.
18    (d) Distributions. The plan shall provide a variety of
19options for distributions to participants and their
20beneficiaries and shall meet the relevant requirements of the
21Internal Revenue Code of 1986, as amended. The manner and
22timing of benefit distributions shall meet the distribution
23requirements of Section 401(a)(9) of the Internal Revenue Code
24of 1986, as amended. Distributions upon the death of the
25participant shall meet the requirements of Section 401(a)(37)
26of the Internal Revenue Code of 1986, as amended.
 

 

 

HB2977- 7 -LRB102 14892 RPS 20245 b

1    (40 ILCS 5/16-106.42 new)
2    Sec. 16-106.42. Tier 2 member. "Tier 2 member": A member
3of the System who first becomes a member under this Article on
4or after January 1, 2011 and who is not a Tier 1 member.
 
5    (40 ILCS 5/16-205.5 new)
6    Sec. 16-205.5. Defined contribution plan.
7    (a) Authority. No later than one year after the effective
8date of this amendatory Act of the 102nd General Assembly, the
9Board shall establish and maintain a defined contribution plan
10to address the retirement preparedness gap for participants in
11a defined benefit plan who are not on track to maintain their
12standard of living in retirement. The plan shall be designed
13as a qualified tax-deferred savings plan under the Internal
14Revenue Code of 1986, as amended. The plan shall exist and
15serve in addition to other retirement, pension, and benefit
16plans established under this Code. All assets and income of
17the plan shall be held in trust for the exclusive benefit of
18participants and their beneficiaries.
19    (b) Enrollment. Tier 1 members and Tier 2 members who
20first became participants before the defined contribution plan
21was established shall have the opportunity to voluntarily
22elect to enroll in the plan. Each Tier 2 member who becomes a
23participant on or after the establishment of the defined
24contribution plan shall be automatically enrolled in the plan

 

 

HB2977- 8 -LRB102 14892 RPS 20245 b

1at a contribution rate that is established by the Board,
2unless he or she opts out within 60 days after the date that he
3or she becomes a participant.
4    (c) Investments. The plan shall be designed to enable
5participants to generate a stream of income to replace their
6pre-retirement income in retirement. The Board shall establish
7a default investment option in which employees are
8automatically invested upon initial enrollment in the plan or
9upon subsequent re-enrollment and absent direction by the
10participant to the contrary. Such investment in a default
11investment option shall be deemed to have been made by
12participant direction so long as the Board has provided
13reasonable notice and description of the default investment
14option and the participant's right to select other investment
15options.
16    (d) Distributions. The plan shall provide a variety of
17options for distributions to participants and their
18beneficiaries and shall meet the relevant requirements of the
19Internal Revenue Code of 1986, as amended. The manner and
20timing of benefit distributions shall meet the distribution
21requirements of Section 401(a)(9) of the Internal Revenue Code
22of 1986, as amended. Distributions upon the death of the
23participant shall meet the requirements of Section 401(a)(37)
24of the Internal Revenue Code of 1986, as amended.
 
25    (40 ILCS 5/18-110.1 new)

 

 

HB2977- 9 -LRB102 14892 RPS 20245 b

1    Sec. 18-110.1. Tier 1 participant. "Tier 1 participant":
2A participant who first became a participant of this System
3before January 1, 2011.
 
4    (40 ILCS 5/18-110.2 new)
5    Sec. 18-110.2. Tier 2 participant. "Tier 2 participant":
6A participant who first becomes a participant of this System
7on or after January 1, 2011.
 
8    (40 ILCS 5/18-121.5 new)
9    Sec. 18-121.5. Defined contribution plan.
10    (a) Authority. No later than one year after the effective
11date of this amendatory Act of the 102nd General Assembly, the
12Board shall establish and maintain a defined contribution plan
13to address the retirement preparedness gap for participants in
14a defined benefit plan who are not on track to maintain their
15standard of living in retirement. The plan shall be designed
16as a qualified tax-deferred savings plan under the Internal
17Revenue Code of 1986, as amended. The plan shall exist and
18serve in addition to other retirement, pension, and benefit
19plans established under this Code. All assets and income of
20the plan shall be held in trust for the exclusive benefit of
21participants and their beneficiaries.
22    (b) Enrollment. Tier 1 participants and Tier 2
23participants who first became participants before the defined
24contribution plan was established shall have the opportunity

 

 

HB2977- 10 -LRB102 14892 RPS 20245 b

1to voluntarily elect to enroll in the plan. Each Tier 2
2participant who becomes a participant on or after the
3establishment of the defined contribution plan shall be
4automatically enrolled in the plan at a contribution rate that
5is established by the Board, unless he or she opts out within
660 days after the date that he or she becomes a participant.
7    (c) Investments. The plan shall be designed to enable
8participants to generate a stream of income to replace their
9pre-retirement income in retirement. The Board shall establish
10a default investment option in which employees are
11automatically invested upon initial enrollment in the plan or
12upon subsequent re-enrollment and absent direction by the
13participant to the contrary. Such investment in a default
14investment option shall be deemed to have been made by
15participant direction so long as the Board has provided
16reasonable notice and description of the default investment
17option and the participant's right to select other investment
18options.
19    (d) Distributions. The plan shall provide a variety of
20options for distributions to participants and their
21beneficiaries and shall meet the relevant requirements of the
22Internal Revenue Code of 1986, as amended. The manner and
23timing of benefit distributions shall meet the distribution
24requirements of Section 401(a)(9) of the Internal Revenue Code
25of 1986, as amended. Distributions upon the death of the
26participant shall meet the requirements of Section 401(a)(37)

 

 

HB2977- 11 -LRB102 14892 RPS 20245 b

1of the Internal Revenue Code of 1986, as amended.
 
2    (40 ILCS 5/2-105.1 rep.)
3    Section 10. The Illinois Pension Code is amended by
4repealing Section 2-105.1.
 
5    Section 99. Effective date. This Act takes effect upon
6becoming law.

 

 

HB2977- 12 -LRB102 14892 RPS 20245 b

1 INDEX
2 Statutes amended in order of appearance
3    40 ILCS 5/2-105.3 new
4    40 ILCS 5/2-165.5 new
5    40 ILCS 5/14-103.43 new
6    40 ILCS 5/14-155.5 new
7    40 ILCS 5/15-200.5 new
8    40 ILCS 5/16-106.42 new
9    40 ILCS 5/16-205.5 new
10    40 ILCS 5/18-110.1 new
11    40 ILCS 5/18-110.2 new
12    40 ILCS 5/18-121.5 new
13    40 ILCS 5/2-105.1 rep.