Illinois General Assembly - Full Text of HB2978
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Full Text of HB2978  102nd General Assembly

HB2978 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB2978

 

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

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/2-105.3 new
40 ILCS 5/2-167 new
40 ILCS 5/2-105.1 rep.

    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 participants 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. Makes other changes.


LRB102 14896 RPS 20249 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2978LRB102 14896 RPS 20249 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 and 2-167 as follows:
 
6    (40 ILCS 5/2-105.3 new)
7    Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier
83 participant. "Tier 1 participant": A participant who first
9became a participant before January 1, 2011.
10    In the case of a Tier 1 participant who elects to
11participate in the self-directed retirement plan under Section
122-167, that participant shall be deemed a Tier 1 participant
13only with respect to service performed or established before
14the effective date of that election.
15    "Tier 2 participant": A participant who first became a
16participant on or after January 1, 2011 and before the
17effective date of this amendatory Act of the 102nd General
18Assembly.
19    In the case of a Tier 2 participant who elects to
20participate in the self-directed retirement plan under Section
212-167, that participant shall be deemed a Tier 2 participant
22only with respect to service performed or established before
23the effective date of that election.

 

 

HB2978- 2 -LRB102 14896 RPS 20249 b

1    "Tier 3 participant": A participant who first becomes a
2participant on or after the effective date of this amendatory
3Act of the 102nd General Assembly; or a Tier 1 or Tier 2
4participant who elects to participate in the self-directed
5retirement under Section 2-167 of this Code, but only with
6respect to service performed or established on or after the
7effective date of that election.
 
8    (40 ILCS 5/2-167 new)
9    Sec. 2-167. Self-directed retirement plan.
10    (a) For the purposes of this Section:
11    "Active participant" means a participant who is in active
12service in the System.
13    "Consumer price index-u" means the index published by the
14Bureau of Labor Statistics of the United States Department of
15Labor that measures the average change in prices of goods and
16services purchased by all urban consumers, United States city
17average, all items, 1982-84 = 100.
18    "Defined benefit plan" means the retirement plan available
19under this Article to Tier 1 or Tier 2 participants who have
20not made the election authorized under this Section.
21    "Employer" means the State.
22    "Pensionable salary" means the amount of salary used by
23the System to calculate the amount of an individual's
24retirement annuity.
25    (b) On and after the effective date of this amendatory Act

 

 

HB2978- 3 -LRB102 14896 RPS 20249 b

1of the 102nd General Assembly, a Tier 3 participant's
2participation in the System shall be limited to participation
3in the self-directed retirement plan established under
4subsection (d) of this Section.
5    An active Tier 1 or Tier 2 participant of this System may
6elect to cease accruing benefits in the defined benefit plan
7and begin accruing benefits for future service in the
8self-directed retirement plan established under subsection
9(d). The election to participate in the self-directed
10retirement plan is voluntary and irrevocable.
11    For an active Tier 1 or Tier 2 participant who elects to
12participate in the self-directed retirement plan, all service
13credit under the System (including service under any
14participating system if the participant elects to use the
15reciprocal provisions of Article 20) shall be considered for
16purposes of vesting in the benefits provided prior to the
17effective date of this Section, but only service earned and
18contributions made before that effective date shall be
19considered in determining the amount of those benefits. In
20lieu of receiving any such benefits, an active Tier 1 or Tier 2
21participant who elects to participate in the self-directed
22retirement plan may elect to have an account balance
23established in his or her self-directed retirement plan
24account in an amount equal to the amount of the contribution
25refund that the participant would be eligible to receive if he
26or she withdrew from service on the effective date of this

 

 

HB2978- 4 -LRB102 14896 RPS 20249 b

1Section and elected a refund of contributions, except that
2this hypothetical refund shall include interest at the
3effective rate for the respective years. The System shall make
4these transfers of assets to the self-directed plan as
5tax-free transfers in accordance with Internal Revenue Service
6guidelines.
7    (c) The pensionable salary of an active participant shall
8be equal to the average final monthly salary of the
9participant. For a participant who first becomes a participant
10of this System on or after the effective date of this
11amendatory Act of the 102nd General Assembly, the average
12final monthly salary determined by dividing the total salary
13of the participant during the 96 consecutive months of service
14within the last 120 months of service in which the total
15compensation was the highest by the number of months of
16service in that period; however, the highest salary for
17annuity purposes may not exceed $106,800, except that that
18amount shall annually thereafter be increased by the lesser of
19(i) 3% of that amount, including all previous adjustments, or
20(ii) the annual unadjusted percentage increase (but not less
21than zero) in the consumer price index-u for the 12 months
22ending with the September preceding each November 1. The new
23amount resulting from each annual adjustment shall be
24determined by the Public Pension Division of the Department of
25Insurance and made available to the Board by November 1 of each
26year.

 

 

HB2978- 5 -LRB102 14896 RPS 20249 b

1    (d) As soon as practicable after the effective date of
2this amendatory Act of the 102nd General Assembly, the System
3shall establish a self-directed retirement plan that allows
4Tier 3 participants the opportunity to accumulate assets for
5retirement through a combination of employee and employer
6contributions that may be invested in mutual funds, collective
7investment funds, or other investment products and used to
8purchase annuity contracts, either fixed or variable or a
9combination thereof. The plan must be qualified under the
10Internal Revenue Code of 1986.
11    At any time after withdrawal from service, a participant
12in the self-directed plan shall be entitled to a benefit that
13is based on the account values attributable to his or her
14participant contributions and the employer contributions, as
15well as any investment returns attributable to those
16contributions. Upon a participant's first day of participation
17in the self-directed retirement plan, the participant becomes
18vested in his or her contributions to the self-directed
19retirement plan, the employer's contributions to the
20self-directed retirement plan, and the investment returns
21attributable to those contributions credited to his or her
22account.
23    (e) All persons who begin to participate in this System on
24or after the effective date of this amendatory Act of the 102nd
25General Assembly and any active Tier 1 or Tier 2 participant
26who makes the election provided in subsection (b) shall

 

 

HB2978- 6 -LRB102 14896 RPS 20249 b

1participate in the self-directed retirement plan established
2under subsection (d) and, in lieu of the contributions
3otherwise provided for in this Article, shall contribute 8% of
4salary to the plan. The employer of each of those participants
5shall contribute 7% of salary to that plan on behalf of the
6participant.
7    (f) The provisions of this amendatory Act of the 102nd
8General Assembly apply notwithstanding any other law. If there
9is a conflict between the provisions of this amendatory Act of
10the 102nd General Assembly and any other law, the provisions
11of this Section shall control.
 
12    (40 ILCS 5/2-105.1 rep.)
13    Section 10. The Illinois Pension Code is amended by
14repealing Section 2-105.1.