Full Text of HB6152 99th General Assembly
HB6152 99TH GENERAL ASSEMBLY |
| | 99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016 HB6152 Introduced 2/11/2016, by Rep. Sheri L Jesiel SYNOPSIS AS INTRODUCED: |
| 40 ILCS 5/2-105.3 new | | 40 ILCS 5/2-124 | from Ch. 108 1/2, par. 2-124 | 40 ILCS 5/2-134 | from Ch. 108 1/2, par. 2-134 | 40 ILCS 5/2-167 new | | 40 ILCS 5/2-105.1 rep. | |
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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 a participant 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. Provides a new funding formula for State contributions, with a 100% funding goal through 2046 (determined using the entry age normal actuarial cost method) and a 100% funding goal thereafter.
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| | FISCAL NOTE ACT MAY APPLY | | PENSION IMPACT NOTE ACT MAY APPLY |
| | A BILL FOR |
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| | | HB6152 | | LRB099 15452 RPS 39737 b |
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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 changing | 5 | | Sections 2-124 and 2-134 and by adding Sections 2-167 and | 6 | | 2-105.3 as follows: | 7 | | (40 ILCS 5/2-105.3 new) | 8 | | Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier | 9 | | 3 participant. | 10 | | "Tier 1 participant": A participant who first became a | 11 | | participant before January 1, 2011. | 12 | | In the case of a Tier 1 participant who elects to | 13 | | participate in the self-directed retirement plan under Section | 14 | | 2-167, that participant shall be deemed a Tier 1 participant | 15 | | only with respect to service performed or established before | 16 | | the effective date of that election. | 17 | | "Tier 2 participant": A participant who first became a | 18 | | participant on or after January 1, 2011 and before the | 19 | | effective date of this amendatory Act of the 99th General | 20 | | Assembly. | 21 | | In the case of a Tier 2 participant who elects to | 22 | | participate in the self-directed retirement plan under Section | 23 | | 2-167, that participant shall be deemed a Tier 2 participant |
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| 1 | | only with respect to service performed or established before | 2 | | the effective date of that election. | 3 | | "Tier 3 participant": A participant who first becomes a | 4 | | participant on or after the effective date of this amendatory | 5 | | Act of the 99th General Assembly; or a Tier 1 or Tier 2 | 6 | | participant who elects to participate in the self-directed | 7 | | retirement under Section 2-167 of this Code, but only with | 8 | | respect to service performed or established on or after the | 9 | | effective date of that election.
| 10 | | (40 ILCS 5/2-124) (from Ch. 108 1/2, par. 2-124)
| 11 | | (Text of Section WITHOUT the changes made by P.A. 98-599, | 12 | | which has been
held unconstitutional)
| 13 | | Sec. 2-124. Contributions by State.
| 14 | | (a) The State shall make contributions to the System by
| 15 | | appropriations of amounts which, together with the | 16 | | contributions of
participants, interest earned on investments, | 17 | | and other income
will meet the cost of maintaining and | 18 | | administering the System on a 100% 90%
funded basis in | 19 | | accordance with actuarial recommendations.
| 20 | | (b) The Board shall determine the amount of State
| 21 | | contributions required for each fiscal year on the basis of the
| 22 | | actuarial tables and other assumptions adopted by the Board and | 23 | | the
prescribed rate of interest, using the formula in | 24 | | subsection (c).
| 25 | | (c) For State fiscal years 2017 through 2046, the minimum |
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| 1 | | contribution
to the System to be made by the State for each | 2 | | fiscal year shall be an amount
determined by the System to be | 3 | | sufficient to bring the total assets of the
System up to 100% | 4 | | of the total actuarial liabilities of the System by the end of
| 5 | | State fiscal year 2046. In making these determinations, the | 6 | | required State
contribution shall be calculated each year as a | 7 | | level dollar amount
over the years remaining to and including | 8 | | fiscal year 2046 and shall be
determined under the entry age | 9 | | normal actuarial cost method. For State fiscal years 2012 | 10 | | through 2016 2045 , the minimum contribution
to the System to be | 11 | | made by the State for each fiscal year shall be an amount
| 12 | | determined by the System to be sufficient to bring the total | 13 | | assets of the
System up to 90% of the total actuarial | 14 | | liabilities of the System by the end of
State fiscal year 2045. | 15 | | In making these determinations, the required State
| 16 | | contribution shall be calculated each year as a level | 17 | | percentage of payroll
over the years remaining to and including | 18 | | fiscal year 2045 and shall be
determined under the projected | 19 | | unit credit actuarial cost method.
| 20 | | For State fiscal years 1996 through 2005, the State | 21 | | contribution to
the System, as a percentage of the applicable | 22 | | employee payroll, shall be
increased in equal annual increments | 23 | | so that by State fiscal year 2011, the
State is contributing at | 24 | | the rate required under this Section.
| 25 | | Notwithstanding any other provision of this Article, the | 26 | | total required State
contribution for State fiscal year 2006 is |
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| 1 | | $4,157,000.
| 2 | | Notwithstanding any other provision of this Article, the | 3 | | total required State
contribution for State fiscal year 2007 is | 4 | | $5,220,300.
| 5 | | For each of State fiscal years 2008 through 2009, the State | 6 | | contribution to
the System, as a percentage of the applicable | 7 | | employee payroll, shall be
increased in equal annual increments | 8 | | from the required State contribution for State fiscal year | 9 | | 2007, so that by State fiscal year 2011, the
State is | 10 | | contributing at the rate otherwise required under this Section.
| 11 | | Notwithstanding any other provision of this Article, the | 12 | | total required State contribution for State fiscal year 2010 is | 13 | | $10,454,000 and shall be made from the proceeds of bonds sold | 14 | | in fiscal year 2010 pursuant to Section 7.2 of the General | 15 | | Obligation Bond Act, less (i) the pro rata share of bond sale | 16 | | expenses determined by the System's share of total bond | 17 | | proceeds, (ii) any amounts received from the General Revenue | 18 | | Fund in fiscal year 2010, and (iii) any reduction in bond | 19 | | proceeds due to the issuance of discounted bonds, if | 20 | | applicable. | 21 | | Notwithstanding any other provision of this Article, the
| 22 | | total required State contribution for State fiscal year 2011 is
| 23 | | the amount recertified by the System on or before April 1, 2011 | 24 | | pursuant to Section 2-134 and shall be made from the proceeds | 25 | | of bonds sold
in fiscal year 2011 pursuant to Section 7.2 of | 26 | | the General
Obligation Bond Act, less (i) the pro rata share of |
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| 1 | | bond sale
expenses determined by the System's share of total | 2 | | bond
proceeds, (ii) any amounts received from the General | 3 | | Revenue
Fund in fiscal year 2011, and (iii) any reduction in | 4 | | bond
proceeds due to the issuance of discounted bonds, if
| 5 | | applicable. | 6 | | Beginning in State fiscal year 2047, the minimum State
| 7 | | contribution for each fiscal year shall be the amount needed to
| 8 | | maintain the total assets of the System at 100% of the total
| 9 | | actuarial liabilities of the System. | 10 | | Beginning in State fiscal year 2046, the minimum State | 11 | | contribution for
each fiscal year shall be the amount needed to | 12 | | maintain the total assets of
the System at 90% of the total | 13 | | actuarial liabilities of the System.
| 14 | | Amounts received by the System pursuant to Section 25 of | 15 | | the Budget Stabilization Act or Section 8.12 of the State | 16 | | Finance Act in any fiscal year do not reduce and do not | 17 | | constitute payment of any portion of the minimum State | 18 | | contribution required under this Article in that fiscal year. | 19 | | Such amounts shall not reduce, and shall not be included in the | 20 | | calculation of, the required State contributions under this | 21 | | Article in any future year until the System has reached a | 22 | | funding ratio of at least 90%. A reference in this Article to | 23 | | the "required State contribution" or any substantially similar | 24 | | term does not include or apply to any amounts payable to the | 25 | | System under Section 25 of the Budget Stabilization Act.
| 26 | | Notwithstanding any other provision of this Section, the |
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| 1 | | required State
contribution for State fiscal year 2005 and for | 2 | | fiscal year 2008 and each fiscal year thereafter, as
calculated | 3 | | under this Section and
certified under Section 2-134, shall not | 4 | | exceed an amount equal to (i) the
amount of the required State | 5 | | contribution that would have been calculated under
this Section | 6 | | for that fiscal year if the System had not received any | 7 | | payments
under subsection (d) of Section 7.2 of the General | 8 | | Obligation Bond Act, minus
(ii) the portion of the State's | 9 | | total debt service payments for that fiscal
year on the bonds | 10 | | issued in fiscal year 2003 for the purposes of that Section | 11 | | 7.2, as determined
and certified by the Comptroller, that is | 12 | | the same as the System's portion of
the total moneys | 13 | | distributed under subsection (d) of Section 7.2 of the General
| 14 | | Obligation Bond Act. In determining this maximum for State | 15 | | fiscal years 2008 through 2010, however, the amount referred to | 16 | | in item (i) shall be increased, as a percentage of the | 17 | | applicable employee payroll, in equal increments calculated | 18 | | from the sum of the required State contribution for State | 19 | | fiscal year 2007 plus the applicable portion of the State's | 20 | | total debt service payments for fiscal year 2007 on the bonds | 21 | | issued in fiscal year 2003 for the purposes of Section 7.2 of | 22 | | the General
Obligation Bond Act, so that, by State fiscal year | 23 | | 2011, the
State is contributing at the rate otherwise required | 24 | | under this Section.
| 25 | | (d) For purposes of determining the required State | 26 | | contribution to the System, the value of the System's assets |
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| 1 | | shall be equal to the actuarial value of the System's assets, | 2 | | which shall be calculated as follows: | 3 | | As of June 30, 2008, the actuarial value of the System's | 4 | | assets shall be equal to the market value of the assets as of | 5 | | that date. In determining the actuarial value of the System's | 6 | | assets for fiscal years after June 30, 2008, any actuarial | 7 | | gains or losses from investment return incurred in a fiscal | 8 | | year shall be recognized in equal annual amounts over the | 9 | | 5-year period following that fiscal year. | 10 | | (e) For purposes of determining the required State | 11 | | contribution to the system for a particular year, the actuarial | 12 | | value of assets shall be assumed to earn a rate of return equal | 13 | | to the system's actuarially assumed rate of return. | 14 | | (Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11; | 15 | | 96-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff. | 16 | | 7-13-12.)
| 17 | | (40 ILCS 5/2-134)
(from Ch. 108 1/2, par. 2-134)
| 18 | | (Text of Section WITHOUT the changes made by P.A. 98-599, | 19 | | which has been
held unconstitutional)
| 20 | | Sec. 2-134. To certify required State contributions and | 21 | | submit vouchers.
| 22 | | (a) The Board shall certify to the Governor on or before | 23 | | December 15 of each
year until December 15, 2011 the amount of | 24 | | the required State contribution to the System for the next
| 25 | | fiscal year and shall specifically identify the System's |
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| 1 | | projected State normal cost for that fiscal year. The | 2 | | certification shall include a copy of the actuarial
| 3 | | recommendations upon which it is based and shall specifically | 4 | | identify the System's projected State normal cost for that | 5 | | fiscal year.
| 6 | | On or before November 1 of each year, beginning November 1, | 7 | | 2012, the Board shall submit to the State Actuary, the | 8 | | Governor, and the General Assembly a proposed certification of | 9 | | the amount of the required State contribution to the System for | 10 | | the next fiscal year, along with all of the actuarial | 11 | | assumptions, calculations, and data upon which that proposed | 12 | | certification is based. On or before January 1 of each year | 13 | | beginning January 1, 2013, the State Actuary shall issue a | 14 | | preliminary report concerning the proposed certification and | 15 | | identifying, if necessary, recommended changes in actuarial | 16 | | assumptions that the Board must consider before finalizing its | 17 | | certification of the required State contributions. On or before | 18 | | January 15, 2013 and every January 15 thereafter, the Board | 19 | | shall certify to the Governor and the General Assembly the | 20 | | amount of the required State contribution for the next fiscal | 21 | | year. The Board's certification must note any deviations from | 22 | | the State Actuary's recommended changes, the reason or reasons | 23 | | for not following the State Actuary's recommended changes, and | 24 | | the fiscal impact of not following the State Actuary's | 25 | | recommended changes on the required State contribution. | 26 | | On or before May 1, 2004, the Board shall recalculate and |
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| 1 | | recertify to
the Governor the amount of the required State | 2 | | contribution to the System for
State fiscal year 2005, taking | 3 | | into account the amounts appropriated to and
received by the | 4 | | System under subsection (d) of Section 7.2 of the General
| 5 | | Obligation Bond Act.
| 6 | | On or before July 1, 2005, the Board shall recalculate and | 7 | | recertify
to the Governor the amount of the required State
| 8 | | contribution to the System for State fiscal year 2006, taking | 9 | | into account the changes in required State contributions made | 10 | | by this amendatory Act of the 94th General Assembly.
| 11 | | On or before April 1, 2011, the Board shall recalculate and | 12 | | recertify to the Governor the amount of the required State | 13 | | contribution to the System for State fiscal year 2011, applying | 14 | | the changes made by Public Act 96-889 to the System's assets | 15 | | and liabilities as of June 30, 2009 as though Public Act 96-889 | 16 | | was approved on that date. | 17 | | (a-5) As soon as practical after the effective date of this | 18 | | amendatory Act of the 99th General Assembly, the State Actuary | 19 | | and the Board shall recalculate and recertify to the Governor | 20 | | and the General Assembly the amount of the State contribution | 21 | | to the System for State fiscal year 2017, taking into account | 22 | | the changes in required State contributions made by this | 23 | | amendatory Act of the 99th General Assembly. | 24 | | (b) Beginning in State fiscal year 1996, on or as soon as | 25 | | possible after the
15th day of each month the Board shall | 26 | | submit vouchers for payment of State
contributions to the |
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| 1 | | System, in a total monthly amount of one-twelfth of the
| 2 | | required annual State contribution certified under subsection | 3 | | (a).
From the effective date of this amendatory Act
of the 93rd | 4 | | General Assembly through June 30, 2004, the Board shall not
| 5 | | submit vouchers for the remainder of fiscal year 2004 in excess | 6 | | of the
fiscal year 2004 certified contribution amount | 7 | | determined
under this Section after taking into consideration | 8 | | the transfer to the
System under subsection (d) of Section | 9 | | 6z-61 of the State Finance Act.
These
vouchers shall be paid by | 10 | | the State Comptroller and Treasurer by warrants drawn
on the | 11 | | funds appropriated to the System for that fiscal year. If in | 12 | | any month
the amount remaining unexpended from all other | 13 | | appropriations to the System for
the applicable fiscal year | 14 | | (including the appropriations to the System under
Section 8.12 | 15 | | of the State Finance Act and Section 1 of the State Pension | 16 | | Funds
Continuing Appropriation Act) is less than the amount | 17 | | lawfully vouchered under
this Section, the difference shall be | 18 | | paid from the General Revenue Fund under
the continuing | 19 | | appropriation authority provided in Section 1.1 of the State
| 20 | | Pension Funds Continuing Appropriation Act.
| 21 | | (c) The full amount of any annual appropriation for the | 22 | | System for
State fiscal year 1995 shall be transferred and made | 23 | | available to the System
at the beginning of that fiscal year at | 24 | | the request of the Board.
Any excess funds remaining at the end | 25 | | of any fiscal year from appropriations
shall be retained by the | 26 | | System as a general reserve to meet the System's
accrued |
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| 1 | | liabilities.
| 2 | | (Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11; | 3 | | 97-694, eff. 6-18-12.)
| 4 | | (40 ILCS 5/2-167 new) | 5 | | Sec. 2-167. Self-directed retirement plan. | 6 | | (a) For the purposes of this Section: | 7 | | "Active participant" means a participant who is in | 8 | | active service in the System. | 9 | | "Consumer price index-u" means the index published by | 10 | | the Bureau of Labor Statistics of the United States | 11 | | Department of Labor that measures the average change in | 12 | | prices of goods and services purchased by all urban | 13 | | consumers, United States city average, all items, 1982-84 = | 14 | | 100. | 15 | | "Defined benefit plan" means the retirement plan | 16 | | available under this Article to Tier 1 or Tier 2 | 17 | | participants who have not made the election authorized | 18 | | under this Section. | 19 | | "Employer" means the State. | 20 | | "Pensionable salary" means the amount of salary used by | 21 | | the System to calculate the amount of an individual's | 22 | | retirement annuity. | 23 | | (b) On and after the effective date of this amendatory Act | 24 | | of the 99th General Assembly, a Tier 3 participant's | 25 | | participation in the System shall be limited to participation |
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| 1 | | in the self-directed retirement plan established under | 2 | | subsection (d) of this Section. | 3 | | An active Tier 1 or Tier 2 participant of this System may | 4 | | elect to cease accruing benefits in the defined benefit plan | 5 | | and begin accruing benefits for future service in the | 6 | | self-directed retirement plan established under subsection | 7 | | (d). The election to participate in the self-directed | 8 | | retirement plan is voluntary and irrevocable. | 9 | | For an active Tier 1 or Tier 2 participant who elects to | 10 | | participate in the self-directed retirement plan, all service | 11 | | credit under the System (including service under any | 12 | | participating system if the participant elects to use the | 13 | | reciprocal provisions of Article 20) shall be considered for | 14 | | purposes of vesting in the benefits provided prior to the | 15 | | effective date of this Section, but only service earned and | 16 | | contributions made before that effective date shall be | 17 | | considered in determining the amount of those benefits. In lieu | 18 | | of receiving any such benefits, an active Tier 1 or Tier 2 | 19 | | participant who elects to participate in the self-directed | 20 | | retirement plan may elect to have an account balance | 21 | | established in his or her self-directed retirement plan account | 22 | | in an amount equal to the amount of the contribution refund | 23 | | that the participant would be eligible to receive if he or she | 24 | | withdrew from service on the effective date of this Section and | 25 | | elected a refund of contributions, except that this | 26 | | hypothetical refund shall include interest at the effective |
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| 1 | | rate for the respective years. The System shall make these | 2 | | transfers of assets to the self-directed plan as tax-free | 3 | | transfers in accordance with Internal Revenue Service | 4 | | guidelines. | 5 | | (c) The pensionable salary of an active participant shall | 6 | | be equal to the average final monthly salary of the | 7 | | participant. For a participant who first becomes a participant | 8 | | of this System on or after the effective date of this | 9 | | amendatory Act of the 99th General Assembly, the average final | 10 | | monthly salary determined by dividing the total salary of the | 11 | | participant during the 96 consecutive months of service within | 12 | | the last 120 months of service in which the total compensation | 13 | | was the highest by the number of months of service in that | 14 | | period; however, the highest salary for annuity purposes may | 15 | | not exceed $106,800, except that that amount shall annually | 16 | | thereafter be increased by the lesser of (i) 3% of that amount, | 17 | | including all previous adjustments, or (ii) the annual | 18 | | unadjusted percentage increase (but not less than zero) in the | 19 | | consumer price index-u for the 12 months ending with the | 20 | | September preceding each November 1. The new amount resulting | 21 | | from each annual adjustment shall be determined by the Public | 22 | | Pension Division of the Department of Insurance and made | 23 | | available to the Board by November 1 of each year. | 24 | | (d) As soon as practicable after the effective date of this | 25 | | amendatory Act of the 99th General Assembly, the System shall | 26 | | establish a self-directed retirement plan that allows Tier 3 |
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| 1 | | participants the opportunity to accumulate assets for | 2 | | retirement through a combination of employee and employer | 3 | | contributions that may be invested in mutual funds, collective | 4 | | investment funds, or other investment products and used to | 5 | | purchase annuity contracts, either fixed or variable or a | 6 | | combination thereof. The plan must be qualified under the | 7 | | Internal Revenue Code of 1986. | 8 | | At any time after withdrawal from service, a participant in | 9 | | the self-directed plan shall be entitled to a benefit that is | 10 | | based on the account values attributable to his or her | 11 | | participant contributions and the employer contributions, as | 12 | | well as any investment returns attributable to those | 13 | | contributions. Upon a participant's first day of participation | 14 | | in the self-directed retirement plan, the participant becomes | 15 | | vested in his or her contributions to the self-directed | 16 | | retirement plan, the employer's contributions to the | 17 | | self-directed retirement plan, and the investment returns | 18 | | attributable to those contributions credited to his or her | 19 | | account. | 20 | | (e) All persons who begin to participate in this System on | 21 | | or after the effective date of this amendatory Act of the 99th | 22 | | General Assembly and any active Tier 1 or Tier 2 participant | 23 | | who makes the election provided in subsection (b) shall | 24 | | participate in the self-directed retirement plan established | 25 | | under subsection (d) and, in lieu of the contributions | 26 | | otherwise provided for in this Article, shall contribute 8% of |
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| 1 | | salary to the plan. The employer of each of those participants | 2 | | shall contribute 7% of salary to that plan on behalf of the | 3 | | participant. | 4 | | (f) The provisions of this amendatory Act of the 99th | 5 | | General Assembly apply notwithstanding any other law, | 6 | | including Section 1-160 of this Code. If there is a conflict | 7 | | between the provisions of this amendatory Act of the 99th | 8 | | General Assembly and any other law, the provisions of this | 9 | | Section shall control.
| 10 | | (40 ILCS 5/2-105.1 rep.) | 11 | | Section 10. The Illinois Pension Code is amended by | 12 | | repealing Section 2-105.1.
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