Full Text of SB1166 95th General Assembly
SB1166sam001 95TH GENERAL ASSEMBLY
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Sen. Kwame Raoul
Filed: 3/12/2007
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| AMENDMENT TO SENATE BILL 1166
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| AMENDMENT NO. ______. Amend Senate Bill 1166 by replacing | 3 |
| everything after the enacting clause with the following:
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| "Section 1. Findings. In 1997, the General Assembly granted | 5 |
| pension funds created under Articles 3 (Downstate Police) and 4 | 6 |
| (Downstate Firefighter) of the Illinois Pension Code certain | 7 |
| limited authority to invest in publicly traded equities, | 8 |
| including mutual and similar funds that compile publicly
traded | 9 |
| equities. Investment in equities beyond the limits allowed by
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| law results in undue financial risk, diminishes the viability | 11 |
| and stability of these pension funds, and adversely affects the | 12 |
| interests and expectations of local police officers, | 13 |
| firefighters, and their families. According to reports | 14 |
| produced by the pension funds created under Articles 3 and 4 of | 15 |
| the Illinois Pension Code, a number of these pension funds are | 16 |
| invested in equities beyond the limits established by law. |
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| Section 5. The Illinois Pension Code is amended by changing | 2 |
| Sections 1-113.2, 1-113.3, 1-113.4, 3-132, 4-123, and 22A-113 | 3 |
| as follows:
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| (40 ILCS 5/1-113.2)
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| Sec. 1-113.2. List of permitted investments for all Article | 6 |
| 3 or 4 pension
funds. | 7 |
| (a) Any pension fund established under Article 3 or 4 may | 8 |
| invest in the
following items:
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| (1) Interest bearing direct obligations of the United | 10 |
| States of America.
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| (2) Interest bearing obligations to the extent that | 12 |
| they are fully
guaranteed or insured as to payment of | 13 |
| principal and interest by the United
States of America.
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| (3) Interest bearing bonds, notes, debentures, or | 15 |
| other similar obligations
of agencies of the United States | 16 |
| of America. For the purposes of this Section,
"agencies of | 17 |
| the United States of America" includes: (i) the Federal | 18 |
| National
Mortgage Association and the Student Loan | 19 |
| Marketing Association; (ii) federal
land banks, federal | 20 |
| intermediate credit banks,
federal farm credit banks, and | 21 |
| any other entity authorized to
issue direct debt | 22 |
| obligations of the United States of America under the Farm
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| Credit Act of 1971 or amendments to that Act; (iii) federal | 24 |
| home loan banks and
the Federal Home Loan Mortgage | 25 |
| Corporation; and (iv) any agency created
by Act of Congress |
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| that is authorized to issue direct debt obligations of the
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| United States of America.
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| (4) Interest bearing savings accounts or certificates | 4 |
| of deposit, issued by
federally chartered banks or savings | 5 |
| and loan associations, to the extent that
the deposits are | 6 |
| insured by agencies or instrumentalities of the federal
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| government.
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| (5) Interest bearing savings accounts or certificates | 9 |
| of deposit, issued by
State of Illinois chartered banks or | 10 |
| savings and loan associations, to the
extent that the | 11 |
| deposits are insured by agencies or instrumentalities of | 12 |
| the
federal government.
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| (6) Investments in credit unions, to the extent that | 14 |
| the investments are
insured by agencies or | 15 |
| instrumentalities of the federal government.
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| (7) Interest bearing bonds of the State of Illinois.
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| (8) Pooled interest bearing accounts managed by the | 18 |
| Illinois Public
Treasurer's Investment Pool in accordance | 19 |
| with the Deposit of State Moneys Act
and interest bearing | 20 |
| funds or pooled accounts managed, operated, and
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| administered by banks, subsidiaries of banks, or | 22 |
| subsidiaries of bank holding
companies in accordance with | 23 |
| the laws of the State of Illinois.
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| (9) Interest bearing bonds or tax anticipation | 25 |
| warrants of any county,
township, or municipal corporation | 26 |
| of the State of Illinois.
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| (10) Direct obligations of the State of Israel, subject | 2 |
| to the conditions
and limitations of item (5.1) of Section | 3 |
| 1-113.
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| (11) Money market mutual funds managed by investment | 5 |
| companies that are
registered under the federal Investment | 6 |
| Company Act of 1940 and the Illinois
Securities Law of 1953 | 7 |
| and are diversified, open-ended management investment
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| companies; provided that the portfolio of the money market | 9 |
| mutual fund is
limited to the following:
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| (i) bonds, notes, certificates of indebtedness, | 11 |
| treasury bills, or other
securities that are | 12 |
| guaranteed by the full faith and credit of the United
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| States of America as to principal and interest;
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| (ii) bonds, notes, debentures, or other similar | 15 |
| obligations of the United
States of America or its | 16 |
| agencies; and
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| (iii) short term obligations of corporations | 18 |
| organized in the United
States with assets exceeding | 19 |
| $400,000,000, provided that (A) the obligations
mature | 20 |
| no later than 180 days from the date of purchase, (B) | 21 |
| at the time of
purchase, the obligations are rated by | 22 |
| at least 2 standard national rating
services at one of | 23 |
| their 3 highest classifications, and (C) the | 24 |
| obligations
held by the mutual fund do not exceed 10% | 25 |
| of the corporation's outstanding
obligations.
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| (12) General accounts of life insurance companies |
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| authorized to transact
business in Illinois.
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| (13) Any combination of the following, not to exceed | 3 |
| 10% of the pension
fund's net assets:
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| (i) separate accounts that are managed by life | 5 |
| insurance companies
authorized to transact business in | 6 |
| Illinois and are comprised of diversified
portfolios | 7 |
| consisting of common or preferred stocks, bonds, or | 8 |
| money market
instruments;
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| (ii) separate accounts that are managed by | 10 |
| insurance companies authorized
to transact business in | 11 |
| Illinois, and are comprised of real estate
or loans | 12 |
| upon real estate secured by first or second mortgages; | 13 |
| and
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| (iii) mutual funds that meet the following | 15 |
| requirements:
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| (A) the mutual fund is managed by an investment | 17 |
| company as defined and
registered under the | 18 |
| federal Investment Company Act of 1940 and | 19 |
| registered
under the Illinois Securities Law of | 20 |
| 1953;
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| (B) the mutual fund has been in operation for | 22 |
| at least 5 years;
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| (C) the mutual fund has total net assets of | 24 |
| $250 million or more; and
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| (D) the mutual fund is comprised of | 26 |
| diversified portfolios of
common or preferred |
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| stocks, bonds, or money market instruments.
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| (b) If (i) a pension fund's investment in accounts or funds | 3 |
| described in item (13) of subsection (a) exceeds 15% of the | 4 |
| market value of the pension fund's assets according to the most | 5 |
| recent annual report filed with the Public Pension Division | 6 |
| within the Department of Financial and Professional Regulation | 7 |
| or (ii) a pension fund fails to file an annual report with the | 8 |
| Public Pension Division within 3 months after the due date of | 9 |
| the annual report, then the Public Pension Division shall | 10 |
| immediately notify the State Board of Investment established | 11 |
| under Article 22A of this Code, the Auditor General, and the | 12 |
| General Assembly, whereupon, by operation of law, all authority | 13 |
| and responsibility for managing the pension fund's assets shall | 14 |
| immediately lie with the State Board of Investment, who shall | 15 |
| have sole authority and responsibility for managing those | 16 |
| assets, as otherwise required by this Code, until 3 consecutive | 17 |
| annual reports filed with the Public Pension Division | 18 |
| demonstrate that all investments and practices comply with the | 19 |
| law. To effectuate the transfer of authority and responsibility | 20 |
| provided for in this subsection (b), the State Board of | 21 |
| Investment may, at the expense of the pension fund, take any | 22 |
| action that it deems necessary or appropriate and may further | 23 |
| obtain injunctive relief of a writ of mandamus.
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| (Source: P.A. 90-507, eff. 8-22-97; 91-887, eff. 7-6-00.)
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| (40 ILCS 5/1-113.3)
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| Sec. 1-113.3. List of additional permitted investments for | 2 |
| pension funds
with net assets of $2,500,000 or more.
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| (a) In addition to the items in Section
3-113.2, a pension | 4 |
| fund established under Article 3 or 4 that has net assets of
at | 5 |
| least $2,500,000 may invest a portion of its net assets in the | 6 |
| following
items:
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| (1) Separate accounts that are managed by life | 8 |
| insurance companies
authorized to transact business in | 9 |
| Illinois and are comprised of diversified
portfolios | 10 |
| consisting of common or preferred stocks, bonds, or money | 11 |
| market
instruments.
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| (2) Mutual funds that meet the following requirements:
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| (i) the mutual fund is managed by an investment | 14 |
| company as defined and
registered under the federal | 15 |
| Investment Company Act of 1940 and registered
under the | 16 |
| Illinois Securities Law of 1953;
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| (ii) the mutual fund has been in operation for at | 18 |
| least 5 years;
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| (iii) the mutual fund has total net assets of $250 | 20 |
| million or more; and
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| (iv) the mutual fund is comprised of diversified | 22 |
| portfolios of common or
preferred stocks, bonds, or | 23 |
| money market instruments.
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| (b) A pension fund's total investment in the items | 25 |
| authorized under this
Section shall not exceed 35% of the | 26 |
| market value of the pension fund's net
present assets stated in |
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| its most recent annual report on file with the
Public Pension | 2 |
| Division within the Department of Financial and Professional | 3 |
| Regulation
Illinois Department of Insurance .
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| (c) If (i) a pension fund's investment in accounts or funds | 5 |
| described in subsection (a) exceeds 40% of the market value of | 6 |
| the pension fund's assets according to the most recent annual | 7 |
| report filed with the Public Pension Division within the | 8 |
| Department of Financial and Professional Regulation or (ii) a | 9 |
| pension fund fails to file an annual report with the Public | 10 |
| Pension Division within 3 months after the due date of the | 11 |
| annual report, then the Public Pension Division shall | 12 |
| immediately notify the State Board of Investment established | 13 |
| under Article 22A of this Code, the Auditor General, and the | 14 |
| General Assembly, whereupon, by operation of law, all authority | 15 |
| and responsibility for managing the pension fund's assets shall | 16 |
| immediately lie with the State Board of Investment, who shall | 17 |
| have sole authority and responsibility for managing those | 18 |
| assets, as otherwise required by this Code, until 3 consecutive | 19 |
| annual reports filed with the Public Pension Division | 20 |
| demonstrate that all investments and practices comply with the | 21 |
| law. To effectuate the transfer of authority and responsibility | 22 |
| provided for in this subsection (c), the State Board of | 23 |
| Investment may, at the expense of the pension fund, take any | 24 |
| action that it deems necessary or appropriate and may further | 25 |
| obtain injunctive relief of a writ of mandamus.
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| (Source: P.A. 90-507, eff. 8-22-97.)
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| (40 ILCS 5/1-113.4)
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| Sec. 1-113.4. List of additional permitted investments for | 3 |
| pension funds
with net assets of $5,000,000 or more.
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| (a) In addition to the items in Sections 1-113.2 and | 5 |
| 1-113.3, a pension fund
established under Article 3 or 4 that | 6 |
| has net assets of at least $5,000,000 and
has appointed an | 7 |
| investment adviser under Section 1-113.5 may, through that
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| investment adviser, invest a portion of its assets in common | 9 |
| and preferred
stocks authorized for investments of trust funds | 10 |
| under the laws of the State
of Illinois. The stocks must meet | 11 |
| all of the following requirements:
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| (1) The common stocks are listed on a national | 13 |
| securities exchange or
board of trade (as defined in the | 14 |
| federal Securities Exchange Act of 1934 and
set forth in | 15 |
| Section 3.G of the Illinois Securities Law of 1953) or | 16 |
| quoted in
the National Association of Securities Dealers | 17 |
| Automated Quotation System
National Market System (NASDAQ | 18 |
| NMS).
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| (2) The securities are of a corporation created or | 20 |
| existing under the laws
of the United States or any state, | 21 |
| district, or territory thereof and the
corporation has been | 22 |
| in existence for at least 5 years.
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| (3) The corporation has not been in arrears on payment | 24 |
| of dividends on its
preferred stock during the preceding 5 | 25 |
| years.
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| (4) The market value of stock in any one corporation | 2 |
| does not exceed 5% of
the cash and invested assets of the | 3 |
| pension fund, and the investments in the
stock of any one | 4 |
| corporation do not exceed 5% of the total outstanding stock | 5 |
| of
that corporation.
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| (5) The straight preferred stocks or convertible | 7 |
| preferred stocks are
issued or guaranteed by a corporation | 8 |
| whose common stock qualifies for
investment by the board.
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| (6) The issuer of the stocks has been subject to the | 10 |
| requirements of
Section 12 of the federal Securities | 11 |
| Exchange Act of 1934 and has been current
with the filing | 12 |
| requirements of Sections 13 and 14 of that Act during the
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| preceding 3 years.
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| (b) A pension fund's total investment in the items | 15 |
| authorized under this
Section and Section 1-113.3 shall not | 16 |
| exceed 35% of the market value of the
pension fund's net | 17 |
| present assets stated in its most recent annual report on
file | 18 |
| with the Public Pension Division within the Department of | 19 |
| Financial and Professional Regulation
Illinois Department of | 20 |
| Insurance .
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| (c) A pension fund that invests funds under this Section | 22 |
| shall
electronically file with the Division any reports of its | 23 |
| investment activities
that the Division may require, at the | 24 |
| times and in the format required by the
Division.
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| (d) If (i) a pension fund's investment in accounts or funds | 26 |
| described in subsection (a) exceeds 40% of the market value of |
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| the pension fund's assets according to the most recent annual | 2 |
| report filed with the Public Pension Division within the | 3 |
| Department of Financial and Professional Regulation or (ii) a | 4 |
| pension fund fails to file an annual report with the Public | 5 |
| Pension Division within 3 months after the due date of the | 6 |
| annual report, then the Public Pension Division shall | 7 |
| immediately notify the State Board of Investment established | 8 |
| under Article 22A of this Code, the Auditor General, and the | 9 |
| General Assembly, whereupon, by operation of law, all authority | 10 |
| and responsibility for managing the pension fund's assets shall | 11 |
| immediately lie with the State Board of Investment, who shall | 12 |
| have sole authority and responsibility for managing those | 13 |
| assets, as otherwise required by this Code, until 3 consecutive | 14 |
| annual reports filed with the Public Pension Division | 15 |
| demonstrate that all investments and practices comply with the | 16 |
| law. To effectuate the transfer of authority and responsibility | 17 |
| provided for in this subsection (d), the State Board of | 18 |
| Investment may, at the expense of the pension fund, take any | 19 |
| action that it deems necessary or appropriate and may further | 20 |
| obtain injunctive relief of a writ of mandamus.
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| (Source: P.A. 90-507, eff. 8-22-97.)
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| (40 ILCS 5/3-132) (from Ch. 108 1/2, par. 3-132)
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| Sec. 3-132. To control and manage the Pension Fund. In | 24 |
| accordance with the
applicable provisions of Articles 1 and 1A | 25 |
| and this Article, to control and
manage , exclusively, the |
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| following:
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| (1) the pension fund,
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| (2) investment expenditures and income, including | 4 |
| interest dividends,
capital gains and other distributions | 5 |
| on the investments, and
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| (3) all money donated, paid, assessed, or provided by
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| law for the pensioning of disabled and retired police | 8 |
| officers, their
surviving spouses, minor children, and | 9 |
| dependent parents.
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| All money received or collected shall be credited by the | 11 |
| treasurer of the
municipality to the account of the pension | 12 |
| fund and
held by the treasurer of the municipality subject to | 13 |
| the order and
control of the board. The treasurer of the | 14 |
| municipality shall maintain a
record of all money received, | 15 |
| transferred, and held for the account of the
board.
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| (Source: P.A. 90-507, eff. 8-22-97.)
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| (40 ILCS 5/4-123) (from Ch. 108 1/2, par. 4-123)
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| Sec. 4-123. To control and manage the Pension Fund. In | 19 |
| accordance with the
applicable provisions of Articles 1 and 1A | 20 |
| and this Article, to control and
manage , exclusively, the | 21 |
| following:
| 22 |
| (1) the pension fund,
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| (2) investment expenditures and income, including | 24 |
| interest dividends,
capital gains, and other distributions | 25 |
| on the investments, and
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| (3) all money donated, paid, assessed, or provided by | 2 |
| law for the
pensioning of disabled and retired | 3 |
| firefighters, their surviving spouses,
minor children, and | 4 |
| dependent parents.
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| All money received or collected shall be credited by the | 6 |
| treasurer of the
municipality to the account of the pension | 7 |
| fund and held by the treasurer of
the municipality subject to | 8 |
| the order and control of the board. The treasurer
of the | 9 |
| municipality shall maintain a record of all money received, | 10 |
| transferred,
and held for the account of the board.
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| (Source: P.A. 90-507, eff. 8-22-97.)
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| (40 ILCS 5/22A-113) (from Ch. 108 1/2, par. 22A-113)
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| Sec. 22A-113. Transfer of securities and investment | 14 |
| functions. (a) As soon as possible or practicable following the | 15 |
| enactment of this
Article and prior to July 1, 1970, the | 16 |
| trustees of the State Employees'
Retirement System, the General | 17 |
| Assembly Retirement System and the Judges
Retirement System, | 18 |
| shall transfer to this board for management and
investment all | 19 |
| of their securities or for which commitments have been made,
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| and all funds, assets or moneys representing permanent or | 21 |
| temporary
investments, or cash reserves maintained for the | 22 |
| purpose of obtaining
income thereon.
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| (b) The board of trustees or retirement board of any | 24 |
| pension fund or
retirement system electing to come under the | 25 |
| authority of the Illinois
State Board of Investment for the |
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| management of its investments and the
performance of investment | 2 |
| functions previously performed by such board of
that pension | 3 |
| fund or retirement system shall effect a transfer of
securities | 4 |
| and other assets thereof not later than the first day of the | 5 |
| 4th
month next following the date of such election after | 6 |
| completion of an audit
by a certified public accountant of such | 7 |
| securities and other assets as
authorized by the Illinois State | 8 |
| Board of Investment and approved by the
Auditor General of the | 9 |
| State, the expense of which shall be assumed by the
pension | 10 |
| fund or retirement system. Upon such transfer, the authority of | 11 |
| The
Illinois State Board of Investment in the case of such | 12 |
| pension fund or
retirement system is effective. These transfers | 13 |
| shall be receipted for in
detail by the Chairman and director | 14 |
| of the board.
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| (c) The board of trustees or retirement board of any | 16 |
| pension fund or
retirement system authorized under the Illinois | 17 |
| Pension Code to participate
in any commingled investment fund | 18 |
| or funds established and managed by the
Illinois State Board of | 19 |
| Investment under this Article may invest in such
commingled | 20 |
| investment fund or funds upon written notice to the Illinois
| 21 |
| State Board of Investment. The board of trustees of the | 22 |
| Illinois Bank
Examiners' Education Foundation is authorized to | 23 |
| participate in any
commingled investment fund or funds | 24 |
| established and managed by the Illinois
State Board of | 25 |
| Investment upon providing written notice to the Illinois
State | 26 |
| Board of Investment. Any participation in a commingled fund and |
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| the
management thereof shall be in accordance with the | 2 |
| governing law and the
rules, policies and directives of the | 3 |
| Illinois State Board of Investment.
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| (d) When the State Board of Investment receives authority | 5 |
| and responsibility for managing the assets of a pension fund as | 6 |
| provided in Sections 1-113.2, 1-113.3, and 1-113.4 of this | 7 |
| Code, the State Board of Investment shall immediately, through | 8 |
| an audit conducted by a certified public accountant at the | 9 |
| expense of the pension fund, provide the Board of Trustees of | 10 |
| the pension fund and the Public Pension Division within the | 11 |
| Department of Financial and Professional Regulation with a | 12 |
| receipt that identifies and ascertains all assets over which | 13 |
| the State Board of Investment shall exercise authority and | 14 |
| responsibility. | 15 |
| (Source: P.A. 84-1127.)
| 16 |
| Section 99. Effective date. This Act takes effect upon | 17 |
| becoming law.".
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