Full Text of HB2349 98th General Assembly
HB2349 98TH GENERAL ASSEMBLY |
| | 98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014 HB2349 Introduced , by Rep. John E. Bradley SYNOPSIS AS INTRODUCED: |
| 40 ILCS 5/24-101 | from Ch. 108 1/2, par. 24-101 | 40 ILCS 5/24-105.1 | | 40 ILCS 5/24-107 | from Ch. 108 1/2, par. 24-107 |
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Amends the Deferred Compensation Article of the Illinois Pension Code. Provides that a school district or community college district may administer a plan authorized in Section 403(b) of the Internal Revenue Code of 1986 and may authorize companies to provide annuities and other investments as part of the plan without a competitive selection process, subject to certain stated conditions. Among those conditions, provides that the company may not charge more than 10 times the fees and expenses of an investment in the deferred compensation plan for State employees. 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 changing | 5 | | Sections 24-101, 24-105.1, and 24-107 as follows:
| 6 | | (40 ILCS 5/24-101) (from Ch. 108 1/2, par. 24-101)
| 7 | | Sec. 24-101.
Notwithstanding any law to the contrary, the | 8 | | State of
Illinois or any unit of local government or school | 9 | | district may enter
into a written contract with any of its | 10 | | employees to defer a part of
their gross compensation and may | 11 | | invest such funds in any
such manner as prescribed by the | 12 | | deferred compensation program adopted
by it under this Article. | 13 | | Compensation deferred pursuant to a deferred
compensation | 14 | | program adopted under this Article shall not exceed the amount
| 15 | | of compensation allowed to be deferred without being subject to | 16 | | income tax
in the year in which it is earned, pursuant to | 17 | | Section 403(b) or 457 of the United
States Internal Revenue | 18 | | Code or laws supplementary or amendatory thereto.
| 19 | | It is hereby declared to be in the public interest to | 20 | | provide public employees
with a plan for the deferral of | 21 | | compensation and the accrual of income and
gain thereon if such | 22 | | deferred compensation be invested, and to encourage
the | 23 | | continued service of public employees by making available such |
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| 1 | | benefits to them.
| 2 | | (Source: P.A. 82-145.)
| 3 | | (40 ILCS 5/24-105.1)
| 4 | | Sec. 24-105.1. Changes in federal law. To the extent that | 5 | | federal law or
regulations which require a governmental | 6 | | employer to own the assets of its
deferred compensation plan | 7 | | are changed to allow plans established under Section 403(b) or
| 8 | | 457 of the Internal Revenue Code to hold their assets in trust, | 9 | | a custodial
account, an annuity contract, an insurance contract | 10 | | or some other contract, the
Department of Central Management | 11 | | Services and units of local government with
plans established | 12 | | under Section 24-107 shall within a reasonable time amend
their | 13 | | plans accordingly.
| 14 | | (Source: P.A. 89-478, eff. 6-18-96.)
| 15 | | (40 ILCS 5/24-107) (from Ch. 108 1/2, par. 24-107)
| 16 | | Sec. 24-107. Local government plans.
| 17 | | (a) Any unit of local government or school district may
| 18 | | establish for its employees a deferred compensation program.
| 19 | | Participation shall be by written agreement between each | 20 | | employee and
the legislative authority of the unit of local | 21 | | government or school
district providing for the deferral of | 22 | | such compensation and the
subsequent investment and | 23 | | administration of such funds.
| 24 | | (b) Any unit of local government may establish an |
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| 1 | | employer-funded
money purchase retirement plan for those of its | 2 | | full time employees who are
not eligible to participate in any | 3 | | pension fund or retirement system
established under Articles 2 | 4 | | through 18 of this Code. Contributions to the
plan shall be | 5 | | made by the unit of local government only from general
purpose | 6 | | funds not derived from real property taxes imposed by the unit, | 7 | | at
a rate to be determined from time to time by the unit of | 8 | | local government.
However, the rate of employer contribution | 9 | | shall be (i) the same for all
employees participating in the | 10 | | plan, and (ii) not more than 10% of the
employee's salary.
| 11 | | Any benefits accruing to the participants in a retirement | 12 | | plan
established under this subsection shall be protected from | 13 | | impairment in
accordance with Article XIII, Section 5 of the | 14 | | Illinois Constitution.
However, the unit of local government | 15 | | establishing such a plan may
terminate it at any time, unless | 16 | | it has otherwise contractually agreed
with its participating | 17 | | employees.
| 18 | | (c) The agency or department designated by the unit of | 19 | | local government
or school district to establish and administer | 20 | | a plan or program authorized
under subsection (a) or (b) of | 21 | | this Section may invest the assets of the
plan in investments | 22 | | deemed appropriate by the agency or
department, including but | 23 | | not limited to life insurance or annuity
contracts, and share | 24 | | or share certificate accounts of State or federal
credit | 25 | | unions, the accounts of which are insured as required by the
| 26 | | Illinois Credit Union Act or the Federal Credit Union Act, |
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| 1 | | whichever is
applicable. The payment of employer contributions | 2 | | to a retirement
plan established under subsection (b), and | 3 | | investment and
payment to a participant of deferred | 4 | | compensation and income or gain
thereon, if any, shall not be | 5 | | construed to be prohibited uses of the
general assets of the | 6 | | unit of local government or school district.
| 7 | | (d) A school district or community college district may | 8 | | administer a plan authorized in Section 403(b) of the Internal | 9 | | Revenue Code of 1986, and its subsequent amendments, and may | 10 | | authorize companies to provide annuities and other investments | 11 | | as part of the plan without a competitive selection process, if | 12 | | the school district or community college district includes the | 13 | | following provisions in its agreements with the authorized | 14 | | companies: | 15 | | (1) The company will fully disclose all fees and | 16 | | expenses to the school or community college district and to | 17 | | employees. | 18 | | (2) No annuity or other investment will have total fees | 19 | | and expenses that are more than (i) double the fees charged | 20 | | by the same company to a public employee for a similar | 21 | | product in a contiguous state or (ii) 10 times the fees and | 22 | | expenses of an investment in the deferred compensation plan | 23 | | for State employees. | 24 | | (3) No individual product fees will be charged to | 25 | | participants in the plan, including but not limited to | 26 | | surrender fees, back-end loads, and redemption fees. |
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| 1 | | (4) The company will not provide undisclosed | 2 | | commissions or incentives to agents, representatives, or | 3 | | brokers, including but not limited to free trips and cash | 4 | | bonuses. | 5 | | (5) Nothing of value, including but not limited to | 6 | | cash, food, and drink, will be provided by any employee or | 7 | | representative of the company, or any agent, | 8 | | representative, or broker, to an officer or employee of the | 9 | | school or community college to gain access to the officer | 10 | | or employee. | 11 | | This Section does not limit the power or authority of any | 12 | | unit of
local government, school district or any institution | 13 | | supported in whole
or in part by public funds to establish and | 14 | | administer any other
deferred compensation plans other than | 15 | | those described herein that may be authorized by law and deemed
| 16 | | appropriate by the officials of such subdivisions or | 17 | | institutions.
| 18 | | (Source: P.A. 87-794.)
| 19 | | Section 99. Effective date. This Act takes effect upon | 20 | | becoming law.
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