Full Text of HB1959 97th General Assembly
HB1959 97TH GENERAL ASSEMBLY |
| | 97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012 HB1959 Introduced , by Rep. Mike Fortner SYNOPSIS AS INTRODUCED: |
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Amends the General Assembly and Judges Articles of the Illinois Pension Code. Allows persons who first became or become employees in the affected Systems on or after January 1, 2011 to elect to participate in a self-managed program of retirement benefits instead of the program of reformed retirement benefits currently offered. Provides that a self-managed plan shall authorize a participant to accumulate assets for retirement through a combination of employer and employee contributions that may be invested at the participant's direction in mutual funds, collective investment funds, or other investment products and used to purchase annuity contracts. Requires the affected Systems to make the self-managed plan available within 6 months after the effective date of the amendatory Act. Provides that, to the extent that the changes made by the amendatory Act are determined to be a new benefit increase under the new benefit increase provisions, the changes are exempt from the 5-year expiration provision. Effective immediately.
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| | FISCAL NOTE ACT MAY APPLY | | PENSION IMPACT NOTE ACT MAY APPLY |
| | A BILL FOR |
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| 1 | | AN ACT concerning public employee benefits.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Pension Code is amended by adding | 5 | | Sections 2-103.1, 2-103.2, 2-117.4, 2-126.2, 2-162.1, | 6 | | 18-118.1, 18-118.2, 18-120.2, 18-133.2, and 18-169.1 and | 7 | | changing Sections 2-126 and 18-133 as follows: | 8 | | (40 ILCS 5/2-103.1 new)
| 9 | | Sec. 2-103.1. Reformed benefit package. "Reformed benefit
| 10 | | package" means the benefit retirement program maintained by the | 11 | | System for persons who first became or become participants of | 12 | | the System on or after January 1, 2011. It
includes the | 13 | | following benefits for those persons: retirement annuities | 14 | | payable directly from the System, as provided in
Sections | 15 | | 2-119, 2-119.01, 2-119.1, and 2-120; survivor's annuities | 16 | | payable directly from the System, as provided in
Sections | 17 | | 2-121, 2-121.1, 2-121.2, and 2-121.3; and contribution | 18 | | refunds, as provided in Section
2-123. | 19 | | (40 ILCS 5/2-103.2 new)
| 20 | | Sec. 2-103.2. Self-managed plan. "Self-managed plan" means | 21 | | the defined
contribution retirement program maintained by the | 22 | | System, as described in
Section 2-126.2. The self-managed plan |
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| 1 | | does not
include retirement annuities or survivor's benefits
| 2 | | payable directly from the System, as provided in Sections | 3 | | 2-119, 2-119.01, 2-119.1, 2-120, 2-121, 2-121.1, 2-121.2, and | 4 | | 2-121.3 or refunds determined under Section 2-123. | 5 | | (40 ILCS 5/2-117.4 new)
| 6 | | Sec. 2-117.4. Retirement program elections. | 7 | | (a) For the purposes of this Section: | 8 | | "Currently eligible participant"
means a person who first | 9 | | became or becomes a participant under this Article on or after | 10 | | January 1, 2011 and is a participant under this Article before | 11 | | the day on which the System first offers the
self-managed plan | 12 | | as an alternative to the reformed benefit package. | 13 | | "Eligible participant" means either a currently eligible | 14 | | participant or a newly eligible
participant of the System. | 15 | | "Newly
eligible participant" means a person who first | 16 | | becomes a participant
under this Article on or after the date | 17 | | on which the System first offers the self-managed plan as an | 18 | | alternative to the reformed benefit package.
| 19 | | (b) When the System offers to participants under this | 20 | | Article a
self-managed plan as an alternative to the reformed | 21 | | benefit package, each eligible participant shall be
given the | 22 | | choice to elect which retirement program he or she wishes to
| 23 | | participate in with respect to all periods of covered | 24 | | employment occurring on,
before, and after the effective date | 25 | | of the participant's election. The retirement
program election |
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| 1 | | made by an eligible participant must be made in writing, in the
| 2 | | manner prescribed by the System, and within the time period | 3 | | described in
this Section. | 4 | | If an eligible participant elects the self-managed plan, | 5 | | then that election is irrevocable. If an eligible participant | 6 | | who elected to participate or participated by default in the | 7 | | reformed benefit plan terminates employment under this | 8 | | Article, then the participant, upon his or her subsequent
| 9 | | re-employment under this Article, may make an election under | 10 | | this Section. | 11 | | An eligible participant who fails to make an election under | 12 | | this Section shall, by default,
participate in the reformed | 13 | | benefit package.
| 14 | | (c) An eligible participant may elect to
participate in the | 15 | | reformed benefit package
or the self-managed plan. An eligible | 16 | | participant must make this election within one year
after the | 17 | | effective date of the adoption of the self-managed plan under | 18 | | Section 2-126.2 or 60 days after first becoming a participant | 19 | | under this Article, whichever is later, or, in the case of a | 20 | | currently eligible participant who terminates employment under | 21 | | this Article, within one year after his or her re-employment | 22 | | under this Article.
| 23 | | (d) If the eligible participant elects to participate in | 24 | | the self-managed plan, the system shall fund his or her account | 25 | | as stated in subsection (f) of Section 2-126.2.
| 26 | | (e) An eligible participant shall be provided with written |
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| 1 | | information prepared
or prescribed by the System that describes | 2 | | the participant's retirement program
choices. The eligible | 3 | | participant shall be offered an opportunity to
receive | 4 | | counseling from the System before making his or her election. | 5 | | This
counseling may consist of videotaped materials, group | 6 | | presentations, individual
consultation with an employee or | 7 | | authorized representative of the System in
person or by | 8 | | telephone or other electronic means, or any combination of | 9 | | these
methods.
| 10 | | (40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)
| 11 | | Sec. 2-126. Contributions by participants.
| 12 | | (a) Each participant shall contribute toward the cost of | 13 | | his or her
retirement annuity a percentage of each payment of | 14 | | salary received by him or
her for service as a member as | 15 | | follows: for service between October 31, 1947
and January 1, | 16 | | 1959, 5%; for service between January 1, 1959 and June 30, | 17 | | 1969,
6%; for service between July 1, 1969 and January 10, | 18 | | 1973, 6 1/2%; for service
after January 10, 1973, 7%; for | 19 | | service after December 31, 1981, 8 1/2%.
| 20 | | (b) Beginning August 2, 1949, each male participant, and | 21 | | from July 1,
1971, each female participant shall contribute | 22 | | towards the cost of the
survivor's annuity 2% of salary.
| 23 | | A participant who has no eligible survivor's annuity | 24 | | beneficiary may elect
to cease making contributions for | 25 | | survivor's annuity under this subsection.
A survivor's annuity |
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| 1 | | shall not be payable upon the death of a person who has
made | 2 | | this election, unless prior to that death the election has been | 3 | | revoked
and the amount of the contributions that would have | 4 | | been paid under this
subsection in the absence of the election | 5 | | is paid to the System, together
with interest at the rate of 4% | 6 | | per year from the date the contributions
would have been made | 7 | | to the date of payment.
| 8 | | Notwithstanding any provision in this subsection (b) to the | 9 | | contrary, in the case of an employee who participates in the | 10 | | self-managed plan under Section 2-126.2, contributions for a | 11 | | survivor's annuity shall instead be used to finance the | 12 | | benefits available under Section 2-126.2.
| 13 | | (c) Beginning July 1, 1967, each participant shall | 14 | | contribute 1% of
salary towards the cost of automatic increase | 15 | | in annuity provided in
Section 2-119.1. These contributions | 16 | | shall be made concurrently with
contributions for retirement | 17 | | annuity purposes.
| 18 | | (d) In addition, each participant serving as an officer of | 19 | | the General
Assembly shall contribute, for the same purposes | 20 | | and at the same rates
as are required of a regular participant, | 21 | | on each additional payment
received as an officer. If the | 22 | | participant serves as an
officer for at least 2 but less than 4 | 23 | | years, he or she shall
contribute an amount equal to the amount | 24 | | that would have been contributed
had the participant served as | 25 | | an officer for 4 years. Persons who serve
as officers in the | 26 | | 87th General Assembly but cannot receive the additional
payment |
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| 1 | | to officers because of the ban on increases in salary during | 2 | | their
terms may nonetheless make contributions based on those | 3 | | additional payments
for the purpose of having the additional | 4 | | payments included in their highest
salary for annuity purposes; | 5 | | however, persons electing to make these
additional | 6 | | contributions must also pay an amount representing the
| 7 | | corresponding employer contributions, as calculated by the | 8 | | System.
| 9 | | (e) Notwithstanding any other provision of this Article, | 10 | | the required contribution of a participant who first becomes a | 11 | | participant on or after January 1, 2011 shall not exceed the | 12 | | contribution that would be due under this Article if that | 13 | | participant's highest salary for annuity purposes were | 14 | | $106,800, plus any increases in that amount under Section | 15 | | 2-108.1. | 16 | | (Source: P.A. 96-1490, eff. 1-1-11.)
| 17 | | (40 ILCS 5/2-126.2 new)
| 18 | | Sec. 2-126.2. Self-managed plan. | 19 | | (a) The General Assembly finds that the State should have | 20 | | the flexibility to provide a defined contribution
| 21 | | (self-managed) plan for eligible participants.
Accordingly, | 22 | | the General Assembly Retirement System is hereby authorized to
| 23 | | establish and administer a self-managed plan, which shall offer | 24 | | participants the opportunity to accumulate assets for | 25 | | retirement through a
combination of participant and State |
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| 1 | | contributions that may be invested in
mutual funds, collective | 2 | | investment funds, or other investment products and
used to | 3 | | purchase annuity contracts that are fixed, variable, or a | 4 | | combination of fixed and variable. The plan must be qualified | 5 | | under the Internal Revenue Code of 1986. | 6 | | (b) The Board shall
adopt the self-managed plan established | 7 | | under this Section for participants under this Article. The | 8 | | adoption of the self-managed
plan makes available to the | 9 | | eligible participants under this Article the elections
| 10 | | described in Section 2-117.4.
| 11 | | The General Assembly Retirement System shall be the plan | 12 | | sponsor for the
self-managed plan and shall prepare a plan | 13 | | document and adopt any rules
and procedures as are considered | 14 | | necessary or desirable for the administration
of the | 15 | | self-managed plan. Consistent with its fiduciary duty to the
| 16 | | participants and beneficiaries of the self-managed plan, the | 17 | | Board of Trustees
of the System may delegate aspects of plan | 18 | | administration as it sees fit to
companies authorized to do | 19 | | business in this State.
| 20 | | (c) The System shall solicit proposals to provide
| 21 | | administrative services and funding vehicles for the | 22 | | self-managed plan from
insurance and annuity companies and | 23 | | mutual fund companies, banks, trust
companies, or other | 24 | | financial institutions authorized to do business in this
State. | 25 | | In reviewing the proposals received and approving and | 26 | | contracting with
no fewer than 2 and no more than 7 companies, |
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| 1 | | the Board of Trustees of the System shall
consider, among other | 2 | | things, the following criteria:
| 3 | | (1) the nature and extent of the benefits that would be | 4 | | provided
to the participants;
| 5 | | (2) the reasonableness of the benefits in relation to | 6 | | the premium
charged;
| 7 | | (3) the suitability of the benefits to the needs and
| 8 | | interests of the participants and the State; and | 9 | | (4) the ability of the company to provide benefits | 10 | | under the contract and
the financial stability of the | 11 | | company.
| 12 | | The System shall periodically review
each approved | 13 | | company. A company may continue to provide administrative
| 14 | | services and funding vehicles for the self-managed plan only so | 15 | | long as
it continues to be an approved company under contract | 16 | | with the Board.
| 17 | | In addition to the companies approved by the System under | 18 | | this subsection (c), the System may offer its participants an | 19 | | investment fund managed by the Illinois State Board of | 20 | | Investment.
| 21 | | (d) Participants in the program
must be allowed to direct | 22 | | the transfer of their account balances among the
various | 23 | | investment options offered, subject to applicable contractual
| 24 | | provisions.
The participant shall not be deemed a fiduciary by | 25 | | reason of providing such
investment direction. A person who is | 26 | | a fiduciary shall not be liable for any
loss resulting from |
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| 1 | | that investment direction and shall not be deemed to have
| 2 | | breached any fiduciary duty by acting in accordance with that | 3 | | direction.
Neither the System nor the State shall guarantee any | 4 | | of the investments in the
participant's account balances.
| 5 | | (e) Eligible participants, as defined in Section 2-117.4, | 6 | | must make a written election to participate in the
self-managed | 7 | | plan in accordance with the
provisions of Section 2-117.4 and | 8 | | the procedures established by the System.
Participation in the | 9 | | self-managed plan shall begin
on the first day of the month | 10 | | immediately following the month in which the
participant's | 11 | | election is filed with the System, but not sooner than the | 12 | | effective date of
the self-managed
plan. The System shall make | 13 | | the self-managed plan available under this Article within 6 | 14 | | months after the effective date of this amendatory Act of the | 15 | | 97th General Assembly. A member's participation in the reformed | 16 | | benefit package under this Article shall terminate on the date | 17 | | that
participation in the self-managed plan begins.
| 18 | | A member who has elected to participate in the self-managed | 19 | | plan under
this Section must continue participation while he or | 20 | | she remains a participant under this Article, and may not | 21 | | participate in the reformed benefit package.
| 22 | | Participation in the self-managed plan under this Section | 23 | | shall constitute
participation in the General Assembly | 24 | | Retirement System.
| 25 | | A participant under this Section shall be entitled to the | 26 | | benefits of
Article 20 of this Code.
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| 1 | | (f) If, at the time a participant
elects to participate in | 2 | | the self-managed plan, the participant has rights and credits
| 3 | | in the System due to previous participation in the reformed | 4 | | benefit package,
the System shall establish for the participant | 5 | | an opening account balance in the
self-managed plan, equal to | 6 | | (1) the amount of the contribution refund that the participant
| 7 | | would be eligible to receive under Section 2-123 if the | 8 | | participant terminated
employment on that date and elected a | 9 | | refund of contributions and (2) an amount equal to the amount | 10 | | of employee contributions, plus interest. The interest used in | 11 | | this subsection (f) shall be calculated using the actual annual | 12 | | rates of return that the System has earned during the time | 13 | | period corresponding to the actual investment of the | 14 | | contributions being transferred. The System shall transfer | 15 | | assets from the reformed benefit
package to the self-managed | 16 | | plan, as a tax-free transfer in
accordance with Internal | 17 | | Revenue Service guidelines, for purposes of funding
the | 18 | | participant's opening account balance.
| 19 | | (g) Notwithstanding any other provision
of this Article, a | 20 | | participant may not purchase or receive service or service
| 21 | | credit applicable to the reformed benefit package
under this | 22 | | Article for any period during which the employee was a | 23 | | participant
in the self-managed plan established under this | 24 | | Section.
| 25 | | (h) The self-managed plan shall be funded by contributions
| 26 | | from participants in the self-managed plan and State
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| 1 | | contributions as provided in this Section.
| 2 | | The contribution rate for participants in the self-managed | 3 | | plan
under this Section shall be equal to the member | 4 | | contribution rate for other
participants in the System, as | 5 | | provided in Section 2-126. This required
contribution shall be | 6 | | made as an employer pick-up under Section 414(h) of the
| 7 | | Internal Revenue Code of 1986 or any successor Section thereof. | 8 | | Any participant in the System's reformed benefit package before | 9 | | his or her
election to participate in the self-managed plan | 10 | | shall continue to have the
employer pick up the contributions | 11 | | required under Section 2-126. However, the
amounts picked up | 12 | | after the election of the self-managed plan shall be remitted
| 13 | | to and treated as assets of the self-managed plan. In no event | 14 | | shall a participant have the option of receiving these amounts | 15 | | in cash. Participants may make
additional contributions to the
| 16 | | self-managed plan in accordance with procedures prescribed by | 17 | | the System, to
the extent permitted under rules adopted by the | 18 | | System.
| 19 | | The program shall provide for State contributions to be | 20 | | credited to each self-managed plan participant
in an amount | 21 | | equal to the employee contributions required under this | 22 | | Section.
| 23 | | The State of Illinois shall make contributions by | 24 | | appropriations to the
System for participants in
the | 25 | | self-managed plan under this Section.
The amount required shall
| 26 | | be certified by the Board of Trustees of the System and paid by |
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| 1 | | the State in
accordance with Section 2-134. The System shall | 2 | | not be obligated to remit the
required State contributions to | 3 | | any of the insurance and annuity
companies, mutual fund
| 4 | | companies, banks, trust companies, financial institutions, or | 5 | | other sponsors
of any of the funding vehicles offered under the | 6 | | self-managed plan
until it has received the required State | 7 | | contributions from the State.
| 8 | | (i) A participant in the
self-managed plan becomes vested | 9 | | in the State contributions credited to his
or her accounts in | 10 | | the self-managed plan on the earliest to occur of the
| 11 | | following: (1) attainment of 5 years of service credit; (2) the | 12 | | death of the participating member while employed under this | 13 | | Article, if the member has completed at
least 1.5 years of | 14 | | service; or (3) the member's election to retire and
apply the | 15 | | reciprocal provisions of Article 20 of this Code.
| 16 | | A participant in the self-managed plan who receives a | 17 | | distribution of his or
her vested amounts from the self-managed | 18 | | plan
while not yet eligible for retirement under this Article
| 19 | | (and Article 20, if applicable) shall forfeit all service | 20 | | credit
and accrued rights in the System; if he or she | 21 | | subsequently becomes a participant under this Article again, he | 22 | | or she
shall be considered a new
participant. If a former | 23 | | participant again becomes a participating member (or
becomes | 24 | | employed by a participating system under Article 20 of this | 25 | | Code) and
continues as such for at least 2 years, all rights, | 26 | | service credits, and
previous status as a participant shall be |
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| 1 | | restored upon repayment of the amount
of the distribution, with | 2 | | interest at the actuarially assumed rate from the date of | 3 | | distribution until the date of payment.
| 4 | | (j) If a participant in the self-managed plan who is vested | 5 | | in State
contributions terminates employment, the participant | 6 | | shall be entitled to a
benefit that is based on the
account | 7 | | values attributable to both State and
member contributions and | 8 | | any
investment return thereon.
| 9 | | If a participant in the self-managed plan who is not vested | 10 | | in State contributions terminates
employment, the participant | 11 | | shall be entitled to a benefit based solely on the
account | 12 | | values attributable to the participant's contributions and any | 13 | | investment
return thereon, and the State contributions and any | 14 | | investment return
thereon shall be forfeited. Any State | 15 | | contributions that are forfeited
shall be held in escrow by the
| 16 | | company investing those contributions and shall be used, as | 17 | | directed by the
System, for future allocations of State | 18 | | contributions or for the restoration
of amounts previously | 19 | | forfeited by former participants who again become
| 20 | | participating members.
| 21 | | (40 ILCS 5/2-162.1 new)
| 22 | | Sec. 2-162.1. New benefit increases. To the extent that the | 23 | | changes made to this Article by this amendatory Act of the 97th | 24 | | General Assembly authorizing the System to offer a self-managed | 25 | | plan are determined to be a new benefit increase within the |
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| 1 | | meaning of Section 2-162, the changes made by this amendatory | 2 | | Act are exempt from the provisions of subsection (d) of Section | 3 | | 2-162.
| 4 | | (40 ILCS 5/18-118.1 new)
| 5 | | Sec. 18-118.1. Reformed benefit package. "Reformed benefit
| 6 | | package" means the defined benefit retirement program | 7 | | maintained by the System for persons who first became or become | 8 | | participants of the System on or after January 1, 2011. It
| 9 | | includes the following benefits for those persons: retirement | 10 | | annuities payable directly from the System, as provided in
| 11 | | Sections 18-124, 18-125, and 18-125.1; survivor's annuities | 12 | | payable directly from the System, as provided in
Sections | 13 | | 18-128, 18-128.01, 18-128.1, 18-128.1, and 18-128.3; and | 14 | | contribution refunds, as provided in Section
18-129. | 15 | | (40 ILCS 5/18-118.2 new)
| 16 | | Sec. 18-118.2. Self-managed plan. "Self-managed plan" | 17 | | means the defined
contribution retirement program maintained | 18 | | by the System, as described in
Section 18-133.2. The | 19 | | self-managed plan does not
include retirement annuities or | 20 | | survivor's benefits
payable directly from the System, as | 21 | | provided in Sections 18-124, 18-125, 18-125.1, 18-128, | 22 | | 18-128.01, 18-128.1, 18-128.1, and 18-128.3 or refunds | 23 | | determined under Section 18-129. |
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| 1 | | (40 ILCS 5/18-120.2 new)
| 2 | | Sec. 18-120.2. Retirement program elections. | 3 | | (a) For the purposes of this Section: | 4 | | "Currently eligible participant"
means a person who first | 5 | | became or becomes a participant under this Article on or after | 6 | | January 1, 2011 and is a participant under this Article before | 7 | | the day on which
the System first offers the
self-managed plan | 8 | | as an alternative to the reformed benefit package. | 9 | | "Eligible participant" means either a currently eligible | 10 | | participant or a newly eligible
participant of the System. | 11 | | "Newly
eligible participant" means a person who first | 12 | | becomes a participant
under this Article on or after the date | 13 | | on which the System first offers the self-managed plan as an | 14 | | alternative to the
reformed benefit package.
| 15 | | (b) When the System offers to members under this Article a
| 16 | | self-managed plan as an alternative to the reformed benefit | 17 | | package, each eligible participant shall be
given the choice to | 18 | | elect which retirement program he or she wishes to
participate | 19 | | in with respect to all periods of covered employment occurring | 20 | | on,
before, and after the effective date of the participant's | 21 | | election. The retirement
program election made by an eligible | 22 | | participant must be made in writing, in the
manner prescribed | 23 | | by the System, and within the time period described in
this | 24 | | Section. | 25 | | If an eligible participant elects the self-managed plan, | 26 | | then that election is irrevocable. If an eligible participant |
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| 1 | | who elected to participate or participated by default in the | 2 | | reformed benefit package terminates employment under this | 3 | | Article, then the participant, upon his or her subsequent
| 4 | | re-employment under this Article, may make an election under | 5 | | this Section. | 6 | | An eligible participant who fails to make an election under | 7 | | this Section shall, by default,
participate in the reformed | 8 | | benefit package.
| 9 | | (c) An eligible participant may elect to
participate in the | 10 | | reformed benefit package
or the self-managed plan.
| 11 | | An eligible participant must make this election within one | 12 | | year
after the effective date of the adoption of the | 13 | | self-managed plan under Section 18-133.2 or 60 days after first | 14 | | becoming a participant under this Article, whichever is later, | 15 | | or, in the case of a currently eligible participant who | 16 | | terminates employment under this Article, within one year after | 17 | | his or her re-employment under this Article.
| 18 | | (d) If the eligible participant elects to participate in | 19 | | the self-managed plan, the system shall fund his or her account | 20 | | as stated in subsection (f) of Section 18-133.2.
| 21 | | (e) An eligible participant shall be provided with written | 22 | | information prepared
or prescribed by the System that describes | 23 | | the participant's retirement program
choices. The eligible | 24 | | participant shall be offered an opportunity to
receive | 25 | | counseling from the System before making his or her election. | 26 | | This
counseling may consist of videotaped materials, group |
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| 1 | | presentations, individual
consultation with an employee or | 2 | | authorized representative of the System in
person or by | 3 | | telephone or other electronic means, or any combination of | 4 | | these
methods.
| 5 | | (40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)
| 6 | | Sec. 18-133. Financing; employee contributions.
| 7 | | (a) Effective July 1, 1967, each participant is required to | 8 | | contribute
7 1/2% of each payment of salary toward the | 9 | | retirement annuity. Such
contributions shall continue during | 10 | | the entire time the participant is in
service, with the | 11 | | following exceptions:
| 12 | | (1) Contributions for the retirement annuity are not | 13 | | required on salary
received after 18 years of service by | 14 | | persons who were participants before
January 2, 1954.
| 15 | | (2) A participant who continues to serve as a judge | 16 | | after becoming
eligible to receive the maximum rate of | 17 | | annuity may elect, through a written
direction filed with | 18 | | the Board, to discontinue contributing to the System.
Any | 19 | | such option elected by a judge shall be irrevocable unless | 20 | | prior to
January 1, 2000, and while continuing to
serve as | 21 | | judge, the judge (A) files with the Board a letter | 22 | | cancelling the
direction to discontinue contributing to | 23 | | the System and requesting that such
contributing resume, | 24 | | and (B) pays into the System an amount equal to the total
| 25 | | of the discontinued contributions plus interest thereon at |
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| 1 | | 5% per annum.
Service credits earned in any other | 2 | | "participating system" as defined in
Article 20 of this | 3 | | Code shall be considered for purposes of determining a
| 4 | | judge's eligibility to discontinue contributions under | 5 | | this subdivision
(a)(2).
| 6 | | (3) A participant who (i) has attained age 60, (ii) | 7 | | continues to serve
as a judge after becoming eligible to | 8 | | receive the maximum rate of annuity,
and (iii) has not | 9 | | elected to discontinue contributing to the System under
| 10 | | subdivision (a)(2) of this Section (or has revoked any such | 11 | | election) may
elect, through a written direction filed with | 12 | | the Board, to make contributions
to the System based only | 13 | | on the amount of the increases in salary received by
the | 14 | | judge on or after the date of the election, rather than the | 15 | | total salary
received. If a judge who is making | 16 | | contributions to the System on the
effective date of this | 17 | | amendatory Act of the 91st General Assembly makes an
| 18 | | election to limit contributions under this subdivision | 19 | | (a)(3) within 90 days
after that effective date, the | 20 | | election shall be deemed to become
effective on that | 21 | | effective date and the judge shall be entitled to receive a
| 22 | | refund of any excess contributions paid to the System | 23 | | during that 90-day
period; any other election under this | 24 | | subdivision (a)(3) becomes effective
on the first of the | 25 | | month following the date of the election. An election to
| 26 | | limit contributions under this subdivision (a)(3) is |
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| 1 | | irrevocable. Service
credits earned in any other | 2 | | participating system as defined in Article 20 of
this Code | 3 | | shall be considered for purposes of determining a judge's | 4 | | eligibility
to make an election under this subdivision | 5 | | (a)(3).
| 6 | | (b) Beginning July 1, 1969, each participant is required to | 7 | | contribute
1% of each payment of salary towards the automatic | 8 | | increase in annuity
provided in Section 18-125.1. However, such | 9 | | contributions need not be made
by any participant who has | 10 | | elected prior to September 15, 1969, not to be
subject to the | 11 | | automatic increase in annuity provisions.
| 12 | | (c) Effective July 13, 1953, each married participant | 13 | | subject to the
survivor's annuity provisions is required to | 14 | | contribute 2 1/2% of each
payment of salary, whether or not he | 15 | | or she is required to make any other
contributions under this | 16 | | Section. Such contributions shall be made
concurrently with the | 17 | | contributions made for annuity purposes.
| 18 | | Notwithstanding any provision in this subsection (c) to the | 19 | | contrary, in the case of an employee who participates in the | 20 | | self-managed plan under Section 14-133.2, contributions for a | 21 | | survivor's annuity shall instead be used to finance the | 22 | | benefits available under Section 18-133.2.
| 23 | | (d) Notwithstanding any other provision of this Article, | 24 | | the required contributions for a participant who first becomes | 25 | | a participant on or after January 1, 2011 shall not exceed the | 26 | | contributions that would be due under this Article if that |
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| 1 | | participant's highest salary for annuity purposes were | 2 | | $106,800, plus any increase in that amount under Section | 3 | | 18-125. | 4 | | (Source: P.A. 96-1490, eff. 1-1-11.)
| 5 | | (40 ILCS 5/18-133.2 new)
| 6 | | Sec. 18-133.2. Self-managed plan. | 7 | | (a) The General Assembly finds that the State should have | 8 | | the flexibility to provide a defined contribution
| 9 | | (self-managed) plan for eligible participants.
Accordingly, | 10 | | the Judges Retirement System of Illinois is hereby authorized | 11 | | to
establish and administer a self-managed plan, which shall | 12 | | offer participants the opportunity to accumulate assets for | 13 | | retirement through a
combination of participant and State | 14 | | contributions that may be invested in
mutual funds, collective | 15 | | investment funds, or other investment products and
used to | 16 | | purchase annuity contracts that are fixed, variable, or a | 17 | | combination of fixed and variable. The plan must be qualified | 18 | | under the Internal Revenue Code of 1986. | 19 | | (b) The Board shall
adopt the self-managed plan established | 20 | | under this Section for participants under this Article. The | 21 | | adoption of the self-managed
plan makes available to the | 22 | | eligible participants under this Article the elections
| 23 | | described in Section 18-120.2.
| 24 | | The Judges Retirement System of Illinois shall be the plan | 25 | | sponsor for the
self-managed plan and shall prepare a plan |
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| 1 | | document and adopt any rules
and procedures as are considered | 2 | | necessary or desirable for the administration
of the | 3 | | self-managed plan. Consistent with its fiduciary duty to the
| 4 | | participants and beneficiaries of the self-managed plan, the | 5 | | Board of Trustees
of the System may delegate aspects of plan | 6 | | administration as it sees fit to
companies authorized to do | 7 | | business in this State.
| 8 | | (c) The System shall solicit proposals to provide
| 9 | | administrative services and funding vehicles for the | 10 | | self-managed plan from
insurance and annuity companies and | 11 | | mutual fund companies, banks, trust
companies, or other | 12 | | financial institutions authorized to do business in this
State. | 13 | | In reviewing the proposals received and approving and | 14 | | contracting with
no fewer than 2 and no more than 7 companies, | 15 | | the Board of Trustees of the System shall
consider, among other | 16 | | things, the following criteria:
| 17 | | (1) the nature and extent of the benefits that would be | 18 | | provided
to the participants;
| 19 | | (2) the reasonableness of the benefits in relation to | 20 | | the premium
charged;
| 21 | | (3) the suitability of the benefits to the needs and
| 22 | | interests of the participants and the State; and | 23 | | (4) the ability of the company to provide benefits | 24 | | under the contract and
the financial stability of the | 25 | | company.
| 26 | | The System shall periodically review
each approved |
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| 1 | | company. A company may continue to provide administrative
| 2 | | services and funding vehicles for the self-managed plan only so | 3 | | long as
it continues to be an approved company under contract | 4 | | with the Board.
| 5 | | In addition to the companies approved by the System under | 6 | | this subsection (c), the System may offer its participants an | 7 | | investment fund managed by the Illinois State Board of | 8 | | Investment.
| 9 | | (d) Participants in the program
must be allowed to direct | 10 | | the transfer of their account balances among the
various | 11 | | investment options offered, subject to applicable contractual
| 12 | | provisions.
The participant shall not be deemed a fiduciary by | 13 | | reason of providing such
investment direction. A person who is | 14 | | a fiduciary shall not be liable for any
loss resulting from | 15 | | that investment direction and shall not be deemed to have
| 16 | | breached any fiduciary duty by acting in accordance with that | 17 | | direction.
Neither the System nor the State shall guarantee any | 18 | | of the investments in the
participant's account balances.
| 19 | | (e) Eligible participants, as defined in Section 18-120.2, | 20 | | must make a written election to participate in the
self-managed | 21 | | plan in accordance with the
provisions of Section 18-120.2 and | 22 | | the procedures established by the System.
Participation in the | 23 | | self-managed plan shall begin
on the first day of the month | 24 | | immediately following the month in which the
participant's | 25 | | election is filed with the System, but not sooner than the | 26 | | effective date of
the self-managed
plan. The System shall make |
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| 1 | | the self-managed plan available under this Article within 6 | 2 | | months after the effective date of this amendatory Act of the | 3 | | 97th General Assembly. A member's participation in the reformed | 4 | | benefit package under this Article shall terminate on the date | 5 | | that
participation in the self-managed plan begins.
| 6 | | A member who has elected to participate in the self-managed | 7 | | plan under
this Section must continue participation while he or | 8 | | she remains a participant under this Article, and may not | 9 | | participate in the reformed benefit package.
| 10 | | Participation in the self-managed plan under this Section | 11 | | shall constitute
participation in the Judges Retirement System | 12 | | of Illinois.
| 13 | | A participant under this Section shall be entitled to the | 14 | | benefits of
Article 20 of this Code.
| 15 | | (f) If, at the time a participant
elects to participate in | 16 | | the self-managed plan, the participant has rights and credits
| 17 | | in the System due to previous participation in the reformed | 18 | | benefit package,
the System shall establish for the participant | 19 | | an opening account balance in the
self-managed plan, equal to | 20 | | (1) the amount of the contribution refund that the participant
| 21 | | would be eligible to receive under Section 18-129 if the | 22 | | participant terminated
employment on that date and elected a | 23 | | refund of contributions and (2) an amount equal to the amount | 24 | | of employee contributions, plus interest. The interest used in | 25 | | this subsection (f) shall be calculated using the actual annual | 26 | | rates of return that the System has earned during the time |
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| 1 | | period corresponding to the actual investment of the | 2 | | contributions being transferred. The System shall transfer | 3 | | assets from the reformed benefit package to the self-managed | 4 | | plan, as a tax-free transfer in
accordance with Internal | 5 | | Revenue Service guidelines, for purposes of funding
the | 6 | | participant's opening account balance.
| 7 | | (g) Notwithstanding any other provision
of this Article, a | 8 | | participant may not purchase or receive service or service
| 9 | | credit applicable to the reformed benefit package
under this | 10 | | Article for any period during which the employee was a | 11 | | participant
in the self-managed plan established under this | 12 | | Section.
| 13 | | (h) The self-managed plan shall be funded by contributions
| 14 | | from participants in the self-managed plan and State
| 15 | | contributions as provided in this Section.
| 16 | | The contribution rate for participants in the self-managed | 17 | | plan
under this Section shall be equal to the member | 18 | | contribution rate for other
participants in the System, as | 19 | | provided in Section 18-133. This required
contribution shall be | 20 | | made as an employer pick-up under Section 414(h) of the
| 21 | | Internal Revenue Code of 1986 or any successor Section thereof. | 22 | | Any participant in the System's reformed benefit package before | 23 | | his or her
election to participate in the self-managed plan | 24 | | shall continue to have the
employer pick up the contributions | 25 | | required under Section 18-133. However, the
amounts picked up | 26 | | after the election of the self-managed plan shall be remitted
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| 1 | | to and treated as assets of the self-managed plan. In no event | 2 | | shall a participant have the option of receiving these amounts | 3 | | in cash. Participants may make
additional contributions to the
| 4 | | self-managed plan in accordance with procedures prescribed by | 5 | | the System, to
the extent permitted under rules adopted by the | 6 | | System.
| 7 | | The program shall provide for State contributions to be | 8 | | credited to each self-managed plan participant
in an amount | 9 | | equal to the employee contributions required under this | 10 | | Section.
| 11 | | The State of Illinois shall make contributions by | 12 | | appropriations to the
System for participants in
the | 13 | | self-managed plan under this Section.
The amount required shall
| 14 | | be certified by the Board of Trustees of the System and paid by | 15 | | the State in
accordance with Sections 18-132 and 18-140. The | 16 | | System shall not be obligated to remit the
required State | 17 | | contributions to any of the insurance and annuity
companies, | 18 | | mutual fund
companies, banks, trust companies, financial | 19 | | institutions, or other sponsors
of any of the funding vehicles | 20 | | offered under the self-managed plan
until it has received the | 21 | | required State contributions from the State.
| 22 | | (i) A participant in the
self-managed plan becomes vested | 23 | | in the State contributions credited to his
or her accounts in | 24 | | the self-managed plan on the earliest to occur of the
| 25 | | following: (1) attainment of 5 years of service credit; (2) the | 26 | | death of the participating member while employed under this |
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| 1 | | Article, if the member has completed at
least 1.5 years of | 2 | | service; or (3) the member's election to retire and
apply the | 3 | | reciprocal provisions of Article 20 of this Code.
| 4 | | A participant in the self-managed plan who receives a | 5 | | distribution of his or
her vested amounts from the self-managed | 6 | | plan
while not yet eligible for retirement under this Article
| 7 | | (and Article 20, if applicable) shall forfeit all service | 8 | | credit
and accrued rights in the System; if he or she | 9 | | subsequently becomes a participant under this Article again, he | 10 | | or she
shall be considered a new
participant. If a former | 11 | | participant again becomes a participating member (or
becomes | 12 | | employed by a participating system under Article 20 of this | 13 | | Code) and
continues as such for at least 2 years, all rights, | 14 | | service credits, and
previous status as a participant shall be | 15 | | restored upon repayment of the amount
of the distribution, with | 16 | | interest at the actuarially assumed rate from the date of | 17 | | distribution until the date of payment.
| 18 | | (j) If a participant in the self-managed plan who is vested | 19 | | in State
contributions terminates employment, the participant | 20 | | shall be entitled to a
benefit that is based on the
account | 21 | | values attributable to both State and
member contributions and | 22 | | any
investment return thereon.
| 23 | | If a participant in the self-managed plan who is not vested | 24 | | in State contributions terminates
employment, the participant | 25 | | shall be entitled to a benefit based solely on the
account | 26 | | values attributable to the participant's contributions and any |
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| 1 | | investment
return thereon, and the State contributions and any | 2 | | investment return
thereon shall be forfeited. Any State | 3 | | contributions that are forfeited
shall be held in escrow by the
| 4 | | company investing those contributions and shall be used, as | 5 | | directed by the
System, for future allocations of State | 6 | | contributions or for the restoration
of amounts previously | 7 | | forfeited by former participants who again become
| 8 | | participating members.
| 9 | | (40 ILCS 5/18-169.1 new)
| 10 | | Sec. 18-169.1. New benefit increases. To the extent that | 11 | | the changes made to this Article by this amendatory Act of the | 12 | | 97th General Assembly authorizing the System to offer a | 13 | | self-managed plan are determined to be a new benefit increase | 14 | | within the meaning of Section 18-169, the changes made by this | 15 | | amendatory Act are exempt from the provisions of subsection (d) | 16 | | of Section 18-169.
| 17 | | Section 99. Effective date. This Act takes effect upon | 18 | | becoming law.
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| 1 | |
INDEX
| 2 | |
Statutes amended in order of appearance
| | 3 | | 40 ILCS 5/2-103.1 new | | | 4 | | 40 ILCS 5/2-103.2 new | | | 5 | | 40 ILCS 5/2-117.4 new | | | 6 | | 40 ILCS 5/2-126 | from Ch. 108 1/2, par. 2-126 | | 7 | | 40 ILCS 5/2-126.2 new | | | 8 | | 40 ILCS 5/2-162.1 new | | | 9 | | 40 ILCS 5/18-118.1 new | | | 10 | | 40 ILCS 5/18-118.2 new | | | 11 | | 40 ILCS 5/18-120.2 new | | | 12 | | 40 ILCS 5/18-133 | from Ch. 108 1/2, par. 18-133 | | 13 | | 40 ILCS 5/18-133.2 new | | | 14 | | 40 ILCS 5/18-169.1 new | |
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