Full Text of SB0621 095th General Assembly
SB0621 95TH GENERAL ASSEMBLY
|
|
|
95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 SB0621
Introduced 2/8/2007, by Sen. Bill Brady - Dan Cronin SYNOPSIS AS INTRODUCED: |
|
|
Amends the Illinois Pension Code. Requires the General Assembly Retirement System, the State Employees' Retirement System of Illinois, the State Universities Retirement System, the Teachers' Retirement System of the State of Illinois, and the Judges Retirement System of Illinois to automatically enroll its newly eligible employees in a self-managed program of retirement benefits instead of the program of retirement benefits currently offered and allows currently eligible employees to elect to participate in the self-managed program. Provides that a self-managed plan shall authorize a participating employee to accumulate assets for retirement through a
combination of employer and employee contributions that may be invested at the employee's direction in
mutual funds, collective investment funds, or other investment products and
used to purchase annuity contracts. Provides that, to the extent that the changes made by the amendatory Act are determined to be a new benefit increase, the changes are exempt from the 5-year expiration provision. Effective immediately.
|
| |
|
|
FISCAL NOTE ACT MAY APPLY | |
PENSION IMPACT NOTE ACT MAY APPLY |
|
|
A BILL FOR
|
|
|
|
|
SB0621 |
|
LRB095 10003 AMC 30217 b |
|
| 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 |
| 14-103.40, 14-103.41, 14-105.8, 14-133.2, 14-152.2, 15-198.1, | 7 |
| 16-104.1, 16-104.2, 16-131.7, 16-158.2, 16-203.1, 18-105.1, | 8 |
| 18-105.2, 18-123.3, 18-133.2, and 18-169.1 and changing | 9 |
| Sections 2-126, 14-133, 15-103.3, 15-134.5, 15-158.2, 16-152, | 10 |
| and 18-133 as follows: | 11 |
| (40 ILCS 5/2-103.1 new)
| 12 |
| Sec. 2-103.1. Traditional benefit package. "Traditional | 13 |
| benefit
package" means the defined benefit retirement program | 14 |
| maintained by the System, which
includes retirement annuities | 15 |
| payable directly from the System, as provided in
Sections | 16 |
| 2-119, 2-119.01, 2-119.1, and 2-120; survivor's annuities | 17 |
| payable directly from the System, as provided in
Sections | 18 |
| 2-121, 2-121.1, 2-121.2, and 2-121.3; and contribution | 19 |
| refunds, as provided in Section
2-123. | 20 |
| (40 ILCS 5/2-103.2 new)
| 21 |
| Sec. 2-103.2. Self-managed plan. "Self-managed plan" means | 22 |
| the defined
contribution retirement program maintained by the |
|
|
|
SB0621 |
- 2 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| System, as described in
Section 2-126.2. The self-managed plan | 2 |
| does not
include retirement annuities or survivor's benefits
| 3 |
| payable directly from the System, as provided in Sections | 4 |
| 2-119, 2-119.01, 2-119.1, 2-120, 2-121, 2-121.1, 2-121.2, and | 5 |
| 2-121.3 or refunds determined under Section 2-123. | 6 |
| (40 ILCS 5/2-117.4 new)
| 7 |
| Sec. 2-117.4. Retirement program elections. | 8 |
| (a) For the purposes of this Section: | 9 |
| "Eligible participant" means either a currently eligible | 10 |
| participant or a newly eligible
participant of the System. | 11 |
| "Currently eligible participant"
means a person who is a | 12 |
| participant under this Article on the date on which
the System | 13 |
| first offers the
self-managed plan as an alternative to the | 14 |
| traditional benefit package. | 15 |
| "Newly
eligible participant" means a person who first | 16 |
| becomes a participant
after the date on which the System first | 17 |
| offers the self-managed plan as an alternative to the
| 18 |
| traditional benefit package.
| 19 |
| (b) When the System offers to participants under this | 20 |
| Article a
self-managed plan as an alternative to the | 21 |
| traditional benefit package, each currently eligible | 22 |
| participant shall be
given the choice to elect which retirement | 23 |
| program he or she wishes to
participate in with respect to all | 24 |
| periods of covered employment occurring on,
before, and after | 25 |
| the effective date of the participant's election. The |
|
|
|
SB0621 |
- 3 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| retirement
program election made by a currently eligible | 2 |
| participant must be made in writing, in the
manner prescribed | 3 |
| by the System, and within the time period described in
this | 4 |
| Section. | 5 |
| If a currently eligible participant elects the | 6 |
| self-managed plan, then that election is irrevocable. If a | 7 |
| currently eligible participant who elected to participate or | 8 |
| participated by default in the traditional benefit plan | 9 |
| terminates employment under this Article, then the | 10 |
| participant, upon his or her subsequent
re-employment under | 11 |
| this Article, may make an election under this Section. | 12 |
| A currently eligible participant who fails to make an | 13 |
| election under this Section shall, by default,
participate in | 14 |
| the traditional benefit package.
| 15 |
| (c) A currently eligible participant may elect to
| 16 |
| participate in the traditional benefit package
or the | 17 |
| self-managed plan.
| 18 |
| A currently eligible participant must make this election | 19 |
| within 5 years
after the effective date of the adoption of the | 20 |
| self-managed plan under Section 2-126.2 or, in the case of a | 21 |
| currently eligible participant who terminates employment under | 22 |
| this Article, within 6 months after his or her re-employment | 23 |
| under this Article.
| 24 |
| A newly eligible participant is automatically enrolled in | 25 |
| the self-managed plan under Section 2-162.2.
| 26 |
| (d) If the currently eligible participant elects to |
|
|
|
SB0621 |
- 4 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| participate in the self-managed plan, the system shall fund | 2 |
| their account as stated in subsection (f) of Section 2-126.2.
| 3 |
| (e) A currently eligible participant shall be provided with | 4 |
| written information prepared
or prescribed by the System that | 5 |
| describes the participant's retirement program
choices. The | 6 |
| eligible participant shall be offered an opportunity to
receive | 7 |
| counseling from the System prior to making his or her election. | 8 |
| This
counseling may consist of videotaped materials, group | 9 |
| presentations, individual
consultation with an employee or | 10 |
| authorized representative of the System in
person or by | 11 |
| telephone or other electronic means, or any combination of | 12 |
| these
methods.
| 13 |
| (40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)
| 14 |
| Sec. 2-126. Contributions by participants.
| 15 |
| (a) Each participant shall contribute toward the cost of | 16 |
| his or her
retirement annuity a percentage of each payment of | 17 |
| salary received by him or
her for service as a member as | 18 |
| follows: for service between October 31, 1947
and January 1, | 19 |
| 1959, 5%; for service between January 1, 1959 and June 30, | 20 |
| 1969,
6%; for service between July 1, 1969 and January 10, | 21 |
| 1973, 6 1/2%; for service
after January 10, 1973, 7%; for | 22 |
| service after December 31, 1981, 8 1/2%.
| 23 |
| (b) Beginning August 2, 1949, each male participant, and | 24 |
| from July 1,
1971, each female participant shall contribute | 25 |
| towards the cost of the
survivor's annuity 2% of salary.
|
|
|
|
SB0621 |
- 5 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| A participant who has no eligible survivor's annuity | 2 |
| beneficiary may elect
to cease making contributions for | 3 |
| survivor's annuity under this subsection.
A survivor's annuity | 4 |
| shall not be payable upon the death of a person who has
made | 5 |
| this election, unless prior to that death the election has been | 6 |
| revoked
and the amount of the contributions that would have | 7 |
| been paid under this
subsection in the absence of the election | 8 |
| is paid to the System, together
with interest at the rate of 4% | 9 |
| per year from the date the contributions
would have been made | 10 |
| to the date of payment.
| 11 |
| Notwithstanding any provision in this subsection (b) to the | 12 |
| contrary, in the case of an employee who participates in the | 13 |
| self-managed plan under Section 2-126.2, contributions for a | 14 |
| survivor's annuity shall instead be used to finance the | 15 |
| benefits available under Section 2-126.2.
| 16 |
| (c) Beginning July 1, 1967, each participant shall | 17 |
| contribute 1% of
salary towards the cost of automatic increase | 18 |
| in annuity provided in
Section 2-119.1. These contributions | 19 |
| shall be made concurrently with
contributions for retirement | 20 |
| annuity purposes.
| 21 |
| (d) In addition, each participant serving as an officer of | 22 |
| the General
Assembly shall contribute, for the same purposes | 23 |
| and at the same rates
as are required of a regular participant, | 24 |
| on each additional payment
received as an officer. If the | 25 |
| participant serves as an
officer for at least 2 but less than 4 | 26 |
| years, he or she shall
contribute an amount equal to the amount |
|
|
|
SB0621 |
- 6 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| that would have been contributed
had the participant served as | 2 |
| an officer for 4 years. Persons who serve
as officers in the | 3 |
| 87th General Assembly but cannot receive the additional
payment | 4 |
| to officers because of the ban on increases in salary during | 5 |
| their
terms may nonetheless make contributions based on those | 6 |
| additional payments
for the purpose of having the additional | 7 |
| payments included in their highest
salary for annuity purposes; | 8 |
| however, persons electing to make these
additional | 9 |
| contributions must also pay an amount representing the
| 10 |
| corresponding employer contributions, as calculated by the | 11 |
| System.
| 12 |
| (Source: P.A. 90-766, eff. 8-14-98.)
| 13 |
| (40 ILCS 5/2-126.2 new)
| 14 |
| Sec. 2-126.2. Self-managed plan. | 15 |
| (a) The General Assembly finds that the State should have | 16 |
| the flexibility to provide a defined contribution
| 17 |
| (self-managed) plan for eligible participants.
Accordingly, | 18 |
| the General Assembly Retirement System is hereby authorized to
| 19 |
| establish and administer a self-managed plan, which shall offer | 20 |
| participants the opportunity to accumulate assets for | 21 |
| retirement through a
combination of participant and State | 22 |
| contributions that may be invested in
mutual funds, collective | 23 |
| investment funds, or other investment products and
used to | 24 |
| purchase annuity contracts, either fixed or variable or a | 25 |
| combination of fixed and variable. The plan must be qualified |
|
|
|
SB0621 |
- 7 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| under the Internal Revenue Code of 1986. | 2 |
| (b) The Board shall
adopt the self-managed plan established | 3 |
| under this Section for participants under this Article. The | 4 |
| adoption of the self-managed
plan makes available to the | 5 |
| eligible participants under this Article the elections
| 6 |
| described in Section 2-117.4.
| 7 |
| The General Assembly Retirement System shall be the plan | 8 |
| sponsor for the
self-managed plan and shall prepare a plan | 9 |
| document and adopt any rules
and procedures as are considered | 10 |
| necessary or desirable for the administration
of the | 11 |
| self-managed plan. Consistent with its fiduciary duty to the
| 12 |
| participants and beneficiaries of the self-managed plan, the | 13 |
| Board of Trustees
of the System may delegate aspects of plan | 14 |
| administration as it sees fit to
companies authorized to do | 15 |
| business in this State.
| 16 |
| (c) The System shall solicit proposals to provide
| 17 |
| administrative services and funding vehicles for the | 18 |
| self-managed plan from
insurance and annuity companies and | 19 |
| mutual fund companies, banks, trust
companies, or other | 20 |
| financial institutions authorized to do business in this
State. | 21 |
| In reviewing the proposals received and approving and | 22 |
| contracting with
no fewer than 2 and no more than 7 companies, | 23 |
| the Board of Trustees of the System shall
consider, among other | 24 |
| things, the following criteria:
| 25 |
| (1) the nature and extent of the benefits that would be | 26 |
| provided
to the participants;
|
|
|
|
SB0621 |
- 8 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| (2) the reasonableness of the benefits in relation to | 2 |
| the premium
charged;
| 3 |
| (3) the suitability of the benefits to the needs and
| 4 |
| interests of the participants and the State; and | 5 |
| (4) the ability of the company to provide benefits | 6 |
| under the contract and
the financial stability of the | 7 |
| company.
| 8 |
| The System shall periodically review
each approved | 9 |
| company. A company may continue to provide administrative
| 10 |
| services and funding vehicles for the self-managed plan only so | 11 |
| long as
it continues to be an approved company under contract | 12 |
| with the Board.
| 13 |
| In addition to the companies approved by the System under | 14 |
| this subsection (c), the System may offer its participants an | 15 |
| investment fund managed by the System.
| 16 |
| (d) Participants in the program
must be allowed to direct | 17 |
| the transfer of their account balances among the
various | 18 |
| investment options offered, subject to applicable contractual
| 19 |
| provisions.
The participant shall not be deemed a fiduciary by | 20 |
| reason of providing such
investment direction. A person who is | 21 |
| a fiduciary shall not be liable for any
loss resulting from | 22 |
| that investment direction and shall not be deemed to have
| 23 |
| breached any fiduciary duty by acting in accordance with that | 24 |
| direction.
Neither the System nor the State shall guarantee any | 25 |
| of the investments in the
participant's account balances.
| 26 |
| (e) A currently eligible participant, as defined in Section |
|
|
|
SB0621 |
- 9 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| 2-117.4, must make a written election to participate in the
| 2 |
| self-managed plan in accordance with the
provisions of Section | 3 |
| 2-117.4 and the procedures established by the System.
| 4 |
| Participation in the self-managed plan shall begin
on the first | 5 |
| day of the month immediately following the month in which the
| 6 |
| currently eligible participant's election is filed with the | 7 |
| System or when a newly eligible participant, as defined in | 8 |
| Section 2-117.4, enters the System, but not sooner than the | 9 |
| effective date of
the self-managed
plan. The System shall make | 10 |
| the self-managed plan available under this Article by
January | 11 |
| 1, 2009. A member's participation in the traditional retirement | 12 |
| package under this Article shall terminate on the date that
| 13 |
| participation in the self-managed plan begins.
| 14 |
| A member who has elected to participate in the self-managed | 15 |
| plan under
this Section must continue participation while he or | 16 |
| she remains a participant under this Article, and may not | 17 |
| participate in the traditional benefit package.
| 18 |
| Participation in the self-managed plan under this Section | 19 |
| shall constitute
participation in the General Assembly | 20 |
| Retirement System.
| 21 |
| A participant under this Section shall be entitled to the | 22 |
| benefits of
Article 20 of this Code.
| 23 |
| (f) If, at the time a participant
elects to participate in | 24 |
| the self-managed plan, the participant has rights and credits
| 25 |
| in the System due to previous participation in the traditional | 26 |
| benefit package,
the System shall establish for the participant |
|
|
|
SB0621 |
- 10 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| an opening account balance in the
self-managed plan, equal to | 2 |
| (1) the amount of the contribution refund that the participant
| 3 |
| would be eligible to receive under Section 2-123 if the | 4 |
| participant terminated
employment on that date and elected a | 5 |
| refund of contributions and (2) an amount equal to the regular | 6 |
| employer contribution that would be required to fund the actual | 7 |
| regular cost incurred for each year of service credit earned, | 8 |
| provided that the total opening account balance does not exceed | 9 |
| 7.6% of the participant's salary for that year, plus interest. | 10 |
| The interest used in this subsection (f) is calculated as the | 11 |
| average annual rate of return that the System has earned over | 12 |
| the past 20 fiscal years and is compounded. The System shall | 13 |
| transfer assets from the defined benefit
retirement program to | 14 |
| the self-managed plan, as a tax-free transfer in
accordance | 15 |
| with Internal Revenue Service guidelines, for purposes of | 16 |
| funding
the participant's opening account balance.
| 17 |
| (g) Notwithstanding any other provision
of this Article, a | 18 |
| participant may not purchase or receive service or service
| 19 |
| credit applicable to the traditional benefit package
under this | 20 |
| Article for any period during which the employee was a | 21 |
| participant
in the self-managed plan established under this | 22 |
| Section.
| 23 |
| (h) The self-managed plan shall be funded by contributions
| 24 |
| from participants in the self-managed plan and State
| 25 |
| contributions as provided in this Section.
| 26 |
| The contribution rate for participants in the self-managed |
|
|
|
SB0621 |
- 11 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| plan
under this Section shall be equal to the member | 2 |
| contribution rate for other
participants in the System, as | 3 |
| provided in Section 2-126. This required
contribution shall be | 4 |
| made as an employer pick-up under Section 414(h) of the
| 5 |
| Internal Revenue Code of 1986 or any successor Section thereof. | 6 |
| Any participant in the System's traditional benefit package | 7 |
| prior to his or her
election to participate in the self-managed | 8 |
| plan shall continue to have the
employer pick up the | 9 |
| contributions required under Section 2-126. However, the
| 10 |
| amounts picked up after the election of the self-managed plan | 11 |
| shall be remitted
to and treated as assets of the self-managed | 12 |
| plan. In no event shall a participant have the option of | 13 |
| receiving these amounts in cash. Participants may make
| 14 |
| additional contributions to the
self-managed plan in | 15 |
| accordance with procedures prescribed by the System, to
the | 16 |
| extent permitted under rules adopted by the System.
| 17 |
| The program shall provide for State contributions to be | 18 |
| credited to each self-managed plan participant
in an amount | 19 |
| equal to the regular employer contribution that would be | 20 |
| required to fund the actual regular cost incurred for each year | 21 |
| of service credit earned had the participant chosen to enroll | 22 |
| in the traditional benefit plan. The amounts so credited
shall | 23 |
| be paid into the participant's self-managed plan accounts in a | 24 |
| manner
to be prescribed by the System.
| 25 |
| The State of Illinois shall make contributions by | 26 |
| appropriations to the
System for participants in
the |
|
|
|
SB0621 |
- 12 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| self-managed plan under this Section.
The amount required shall
| 2 |
| be certified by the Board of Trustees of the System and paid by | 3 |
| the State in
accordance with Section 2-134. The System shall | 4 |
| not be obligated to remit the
required State contributions to | 5 |
| any of the insurance and annuity
companies, mutual fund
| 6 |
| companies, banks, trust companies, financial institutions, or | 7 |
| other sponsors
of any of the funding vehicles offered under the | 8 |
| self-managed plan
until it has received the required State | 9 |
| contributions from the State.
| 10 |
| (i) A participant in the
self-managed plan becomes vested | 11 |
| in the State contributions credited to his
or her accounts in | 12 |
| the self-managed plan on the earliest to occur of the
| 13 |
| following: (1) attainment of 5 years of service credit; (2) the | 14 |
| death of the participating member while employed under this | 15 |
| Article, if the member has completed at
least 1.5 years of | 16 |
| service; or (3) the member's election to retire and
apply the | 17 |
| reciprocal provisions of Article 20 of this Code.
| 18 |
| A participant in the self-managed plan who receives a | 19 |
| distribution of his or
her vested amounts from the self-managed | 20 |
| plan
while not yet eligible for retirement under this Article
| 21 |
| (and Article 20, if applicable) shall forfeit all service | 22 |
| credit
and accrued rights in the System; if he or she | 23 |
| subsequently becomes a participant under this Article again, he | 24 |
| or she
shall be considered a new
participant. If a former | 25 |
| participant again becomes a participating member (or
becomes | 26 |
| employed by a participating system under Article 20 of this |
|
|
|
SB0621 |
- 13 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| Code) and
continues as such for at least 2 years, all rights, | 2 |
| service credits, and
previous status as a participant shall be | 3 |
| restored upon repayment of the amount
of the distribution, | 4 |
| without interest.
| 5 |
| (j) If a participant in the self-managed plan who is vested | 6 |
| in State
contributions terminates employment, the participant | 7 |
| shall be entitled to a
benefit that is based on the
account | 8 |
| values attributable to both State and
member contributions and | 9 |
| any
investment return thereon.
| 10 |
| If a participant in the self-managed plan who is not vested | 11 |
| in State contributions terminates
employment, the participant | 12 |
| shall be entitled to a benefit based solely on the
account | 13 |
| values attributable to the participant's contributions and any | 14 |
| investment
return thereon, and the State contributions and any | 15 |
| investment return
thereon shall be forfeited. Any State | 16 |
| contributions that are forfeited
shall be held in escrow by the
| 17 |
| company investing those contributions and shall be used, as | 18 |
| directed by the
System, for future allocations of State | 19 |
| contributions or for the restoration
of amounts previously | 20 |
| forfeited by former participants who again become
| 21 |
| participating members.
| 22 |
| (40 ILCS 5/2-162.1 new)
| 23 |
| Sec. 2-162.1. New benefit increases. To the extent that the | 24 |
| changes made to this Article by this amendatory Act of the 95th | 25 |
| General Assembly authorizing the System to offer a self-managed |
|
|
|
SB0621 |
- 14 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| plan are determined to be a new benefit increase within the | 2 |
| meaning of Section 2-162, the changes made by this amendatory | 3 |
| Act are exempt from the provisions of subsection (d) of Section | 4 |
| 2-162. | 5 |
| (40 ILCS 5/14-103.40 new)
| 6 |
| Sec. 14-103.40. Traditional benefit package. "Traditional | 7 |
| benefit
package" means the defined benefit retirement program | 8 |
| maintained by the System, which
includes retirement annuities | 9 |
| payable directly from the System, as provided in
Sections | 10 |
| 14-107, 14-108, 14-108.3, 14-108.4, 14-109, 14-110, 14-112, | 11 |
| 14-113, 14-114, and 14-115; disability
benefits payable under | 12 |
| Sections 14-123, 14-123.1, 14-124, 14-125, 14-125.1, and | 13 |
| 14-126; death benefits payable
directly from the System, as | 14 |
| provided in Sections 14-116, 14-117, and 14-128; widow or | 15 |
| survivors annuities payable directly from the System, as | 16 |
| provided in
Sections 14-118, 14-119, 14-120, 14-121, 14-121.1, | 17 |
| and 14-122; and contribution refunds, as provided in Section
| 18 |
| 14-130. | 19 |
| (40 ILCS 5/14-103.41 new)
| 20 |
| Sec. 14-103.41. Self-managed plan. "Self-managed plan" | 21 |
| means the defined
contribution retirement program maintained | 22 |
| under the System, as described in
Section 14-133.2. The | 23 |
| self-managed plan also includes disability benefits, as
| 24 |
| provided in Sections 14-123, 14-123.1, 14-124, 14-125, |
|
|
|
SB0621 |
- 15 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| 14-125.1, and 14-126. The self-managed plan does not
include | 2 |
| retirement annuities, death benefits, widow or survivors | 3 |
| annuities
payable directly from the System, as provided in | 4 |
| Sections 14-107, 14-108, 14-108.3, 14-108.4, 14-109, 14-110, | 5 |
| 14-112, 14-113, 14-114, 14-115, 14-116, 14-117, 14-118, | 6 |
| 14-119, 14-120, 14-121, 14-121.1, 14-122, and 14-128 or refunds | 7 |
| determined under Section 14-130.
| 8 |
| (40 ILCS 5/14-105.8 new)
| 9 |
| Sec. 14-105.8. Retirement program elections. | 10 |
| (a) For the purposes of this Section: | 11 |
| "Eligible employee" means either a currently eligible | 12 |
| employee or a newly eligible
employee. | 13 |
| "Currently eligible employee"
means an employee who is | 14 |
| employed by the State on the date on which
the System first | 15 |
| offers the self-managed plan as an alternative to the | 16 |
| traditional benefit package. | 17 |
| "Newly
eligible employee" means an employee who first | 18 |
| becomes employed under this Article
after the date on which the | 19 |
| System first offers the
self-managed plan as an alternative to | 20 |
| the
traditional benefit package. | 21 |
| (b) When the System offers to employees under this Article | 22 |
| the
self-managed plan as an alternative to the traditional | 23 |
| benefit package, each currently eligible employee shall be
| 24 |
| given the choice to elect which retirement program he or she | 25 |
| wishes to
participate in with respect to all periods of covered |
|
|
|
SB0621 |
- 16 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| employment occurring on, before,
and after the effective date | 2 |
| of the employee's election. The retirement
program election | 3 |
| made by a currently eligible employee must be made in writing, | 4 |
| in the
manner prescribed by the System, and within the time | 5 |
| period described in this Section. | 6 |
| If a currently eligible employee elects the self-managed | 7 |
| plan, then that election is irrevocable. If a currently | 8 |
| eligible employee who elected to participate or participated by | 9 |
| default in the traditional benefit plan terminates employment | 10 |
| under this Article, then the employee, upon his or her | 11 |
| subsequent
re-employment under this Article, may make an | 12 |
| election under this Section. | 13 |
| A currently eligible employee who fails to make an election | 14 |
| under this Section shall, by default,
participate in the | 15 |
| traditional benefit package.
| 16 |
| (c) A currently eligible employee may elect to
participate | 17 |
| in the traditional benefit package
or the self-managed plan. | 18 |
| A currently eligible employee must make this election | 19 |
| within 5 years
after the effective date of the adoption of the | 20 |
| self-managed plan under Section 14-133.2 or, in the case of a | 21 |
| currently eligible employee who terminates employment under | 22 |
| this Article, within 6 months after his or her re-employment | 23 |
| under this Article. | 24 |
| A newly eligible employee is automatically enrolled in the | 25 |
| self-managed plan under Section 14-133.2. | 26 |
| (d) If a currently eligible participant elects to |
|
|
|
SB0621 |
- 17 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| participate in the self-managed plan, the System shall fund | 2 |
| their account as stated in subsection (f) of Section 14-133.2.
| 3 |
| (e) A currently eligible employee shall be provided with | 4 |
| written information prepared
or prescribed by the System that | 5 |
| describes the employee's retirement program
choices. Each | 6 |
| eligible employee shall be offered an opportunity to
receive | 7 |
| counseling from the System prior to making his or her election. | 8 |
| This
counseling may consist of videotaped materials, group | 9 |
| presentations, individual
consultation with an employee or | 10 |
| authorized representative of the System in
person or by | 11 |
| telephone or other electronic means, or any combination of | 12 |
| these
methods.
| 13 |
| (40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)
| 14 |
| Sec. 14-133. Contributions on behalf of members.
| 15 |
| (a) Each participating employee shall make contributions | 16 |
| to the System,
based on the employee's compensation, as | 17 |
| follows:
| 18 |
| (1) Covered employees, except as indicated below, 3.5% | 19 |
| for
retirement annuity, and 0.5% for a widow or survivors
| 20 |
| annuity;
| 21 |
| (2) Noncovered employees, except as indicated below, | 22 |
| 7% for retirement
annuity and 1% for a widow or survivors | 23 |
| annuity;
| 24 |
| (3) Noncovered employees serving in a position in which | 25 |
| "eligible
creditable service" as defined in Section 14-110 |
|
|
|
SB0621 |
- 18 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| may be earned, 1% for a widow
or survivors annuity
plus the | 2 |
| following amount for retirement annuity: 8.5% through | 3 |
| December 31,
2001; 9.5% in 2002; 10.5% in 2003; and 11.5% | 4 |
| in 2004 and thereafter;
| 5 |
| (4) Covered employees serving in a position in which | 6 |
| "eligible creditable
service" as defined in Section 14-110 | 7 |
| may be earned, 0.5% for a widow or survivors annuity
plus | 8 |
| the following amount for retirement annuity: 5% through | 9 |
| December 31,
2001; 6% in 2002; 7% in 2003; and 8% in 2004 | 10 |
| and thereafter;
| 11 |
| (5) Each security employee of the Department of | 12 |
| Corrections
or of the Department of Human Services who is a | 13 |
| covered employee, 0.5% for a widow or survivors annuity
| 14 |
| plus the following amount for retirement annuity: 5% | 15 |
| through December 31,
2001; 6% in 2002; 7% in 2003; and 8% | 16 |
| in 2004 and thereafter;
| 17 |
| (6) Each security employee of the Department of | 18 |
| Corrections
or of the Department of Human Services who is | 19 |
| not a covered employee, 1% for a widow or survivors annuity
| 20 |
| plus the following amount for retirement annuity: 8.5% | 21 |
| through December 31,
2001; 9.5% in 2002; 10.5% in 2003; and | 22 |
| 11.5% in 2004 and thereafter.
| 23 |
| Notwithstanding any provision in this subsection (a) to the | 24 |
| contrary, in the case of an employee who participates in the | 25 |
| self-managed plan under Section 14-133.2, contributions for | 26 |
| widow or survivors annuities shall instead be used by the |
|
|
|
SB0621 |
- 19 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| System to fund the benefits in Sections 14-123, 14-123.1, | 2 |
| 14-124, 14-125, 14-125.1, and 14-126.
| 3 |
| (b) Contributions shall be in the form of a deduction from
| 4 |
| compensation and shall be made notwithstanding that the | 5 |
| compensation
paid in cash to the employee shall be reduced | 6 |
| thereby below the minimum
prescribed by law or regulation. Each | 7 |
| member is deemed to consent and
agree to the deductions from | 8 |
| compensation provided for in this Article,
and shall receipt in | 9 |
| full for salary or compensation.
| 10 |
| (Source: P.A. 92-14, eff. 6-28-01.)
| 11 |
| (40 ILCS 5/14-133.2 new) | 12 |
| Sec. 14-133.2. Self-managed plan. | 13 |
| (a) The General Assembly finds that it is important for | 14 |
| Illinois to be able to attract and retain the most qualified | 15 |
| employees
and that in order to attract and retain these | 16 |
| employees, the State of Illinois should have the flexibility to | 17 |
| provide the defined contribution
(self-managed) plan for | 18 |
| eligible employees.
Accordingly, the State Employees | 19 |
| Retirement System of Illinois is hereby authorized to
establish | 20 |
| and administer a self-managed plan, which shall offer | 21 |
| participating
employees the opportunity to accumulate assets | 22 |
| for retirement through a
combination of employee and employer | 23 |
| contributions that may be invested in
mutual funds, collective | 24 |
| investment funds, or other investment products and
used to | 25 |
| purchase annuity contracts, either fixed or variable or a |
|
|
|
SB0621 |
- 20 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| combination
of fixed and variable. The plan must be qualified | 2 |
| under the Internal Revenue Code of 1986. | 3 |
| (b) The Board shall
adopt the self-managed plan established | 4 |
| under this Section for members under this Article. The State's | 5 |
| election to adopt the self-managed
plan makes available to the | 6 |
| eligible employees of the State of Illinois the elections
| 7 |
| described in Section 14-105.8.
| 8 |
| The State Employees Retirement System of Illinois shall be | 9 |
| the plan sponsor for the
self-managed plan and shall prepare a | 10 |
| plan document and adopt such rules
and procedures as are | 11 |
| considered necessary or desirable for the administration
of the | 12 |
| self-managed plan. Consistent with its fiduciary duty to the
| 13 |
| participants and beneficiaries of the self-managed plan, the | 14 |
| Board of Trustees
of the System may delegate aspects of plan | 15 |
| administration as it sees fit to
companies authorized to do | 16 |
| business in this State.
| 17 |
| (c) The System shall solicit proposals to provide
| 18 |
| administrative services and funding vehicles for the | 19 |
| self-managed plan from
insurance and annuity companies and | 20 |
| mutual fund companies, banks, trust
companies, or other | 21 |
| financial institutions authorized to do business in this
State. | 22 |
| In reviewing the proposals received and approving and | 23 |
| contracting with
no fewer than 2 and no more than 7 companies, | 24 |
| the Board of Trustees of the System shall
consider, among other | 25 |
| things, the following criteria:
| 26 |
| (1) the nature and extent of the benefits that would be |
|
|
|
SB0621 |
- 21 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| provided
to the participants;
| 2 |
| (2) the reasonableness of the benefits in relation to | 3 |
| the premium
charged;
| 4 |
| (3) the suitability of the benefits to the needs and
| 5 |
| interests of the participating employees and the State;
| 6 |
| (4) the ability of the company to provide benefits | 7 |
| under the contract and
the financial stability of the | 8 |
| company; and
| 9 |
| (5) the efficacy of the contract in the recruitment and | 10 |
| retention of
employees.
| 11 |
| The System shall periodically review
each approved | 12 |
| company. A company may continue to provide administrative
| 13 |
| services and funding vehicles for the self-managed plan only so | 14 |
| long as
it continues to be an approved company under contract | 15 |
| with the Board.
| 16 |
| In addition to the companies approved by the System under | 17 |
| this subsection (c), the System may offer its participants an | 18 |
| investment fund managed by the System.
| 19 |
| (d) Employees who are participating in the program
must be | 20 |
| allowed to direct the transfer of their account balances among | 21 |
| the
various investment options offered, subject to applicable | 22 |
| contractual
provisions.
The participant shall not be deemed a | 23 |
| fiduciary by reason of providing such
investment direction. A | 24 |
| person who is a fiduciary shall not be liable for any
loss | 25 |
| resulting from such investment direction and shall not be | 26 |
| deemed to have
breached any fiduciary duty by acting in |
|
|
|
SB0621 |
- 22 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| accordance with that direction.
Neither the System nor the | 2 |
| employer shall guarantee any of the investments in the
| 3 |
| employee's account balances.
| 4 |
| (e) A currently eligible employee, as defined in Section | 5 |
| 14-105.8, must make a written election to participate in the
| 6 |
| self-managed plan in accordance with the
provisions of Section | 7 |
| 14-105.8 and the procedures established by the System.
| 8 |
| Participation in the self-managed plan shall begin
on the first | 9 |
| day of the month immediately following the month in which the
| 10 |
| currently eligible employee's election is filed with the System | 11 |
| or when a newly eligible employee, as defined in Section | 12 |
| 14-105.8, enters the System, but not sooner than the effective | 13 |
| date of
the self-managed
plan. The System shall make the | 14 |
| self-managed plan available under this Article by
January 1, | 15 |
| 2009. An employee's participation in the traditional | 16 |
| retirement package under this Article shall terminate on the | 17 |
| date that
participation in the self-managed plan begins.
| 18 |
| An employee who has elected to participate in the | 19 |
| self-managed plan under
this Section must continue | 20 |
| participation while employed in an eligible
position, and may | 21 |
| not participate in the traditional benefit package | 22 |
| administered
by the System under this Article while employed by | 23 |
| the State under this Article.
| 24 |
| Participation in the self-managed plan under this Section | 25 |
| shall constitute
membership in the State Employees' Retirement | 26 |
| System of Illinois.
|
|
|
|
SB0621 |
- 23 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| A participant under this Section shall be entitled to the | 2 |
| benefits of
Article 20 of this Code.
| 3 |
| (f) If, at the time an employee
elects to participate in | 4 |
| the self-managed plan, the employee has rights and credits
in | 5 |
| the System due to previous participation in the traditional | 6 |
| benefit package,
the System shall establish for the employee an | 7 |
| opening account balance in the
self-managed plan, equal to (i) | 8 |
| the amount of the contribution refund that the employee
would | 9 |
| be eligible to receive under Section 14-130 if the employee | 10 |
| terminated
employment on that date and elected a refund of | 11 |
| contributions, plus (ii) an amount equal to the regular | 12 |
| employer contribution that would be required to fund the actual | 13 |
| regular cost incurred for each year of service credit earned, | 14 |
| provided that the total opening account balance does not exceed | 15 |
| 7.6% of that participant's salary for that year, plus interest. | 16 |
| The interest used in this subsection (f) is calculated as the | 17 |
| average annual rate of return that the System has earned over | 18 |
| the past 20 fiscal years and is compounded. The System shall | 19 |
| transfer assets from the defined benefit
retirement program to | 20 |
| the self-managed plan, as a tax-free transfer in
accordance | 21 |
| with Internal Revenue Service guidelines, for purposes of | 22 |
| funding
the employee's opening account balance.
| 23 |
| (g) Notwithstanding any other provision
of this Article, an | 24 |
| employee may not purchase or receive service or service
credit | 25 |
| applicable to the traditional benefit package
under this | 26 |
| Article for any period during which the employee was a |
|
|
|
SB0621 |
- 24 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| participant
in the self-managed plan established under this | 2 |
| Section.
| 3 |
| (h) The self-managed plan shall be funded by contributions
| 4 |
| from employees participating in the self-managed plan and State
| 5 |
| contributions as provided in this Section.
| 6 |
| The contribution rate for employees participating in the | 7 |
| self-managed plan
under this Section shall be equal to the | 8 |
| employee contribution rate applicable to participants of the | 9 |
| same class under Section 14-133. This required
contribution | 10 |
| shall be made as an employer pick-up under Section 414(h) of | 11 |
| the
Internal Revenue Code of 1986 or any successor Section | 12 |
| thereof. Any employee
participating in the System's | 13 |
| traditional benefit package prior to his or her
election to | 14 |
| participate in the self-managed plan shall continue to have the
| 15 |
| employer pick up the contributions required under Section | 16 |
| 14-133. However, the
amounts picked up after the election of | 17 |
| the self-managed plan shall be remitted
to and treated as | 18 |
| assets of the self-managed plan. In no event shall the
employee | 19 |
| have an option of receiving these amounts in cash. Employees | 20 |
| may make
additional contributions to the
self-managed plan in | 21 |
| accordance with procedures prescribed by the System, to
the | 22 |
| extent permitted under rules adopted by the System.
| 23 |
| The program shall provide for State contributions to be | 24 |
| credited to each self-managed plan participant in an amount | 25 |
| equal to the regular employer contribution that would be | 26 |
| required to fund the actual regular cost incurred for each year |
|
|
|
SB0621 |
- 25 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| of service credit earned had the participant chosen to enroll | 2 |
| in the traditional benefit plan.
| 3 |
| The System shall not be obligated to remit the
required | 4 |
| employer contributions to any of the insurance and annuity
| 5 |
| companies, mutual fund
companies, banks, trust companies, | 6 |
| financial institutions, or other sponsors
of any of the funding | 7 |
| vehicles offered under the self-managed plan
until it has | 8 |
| received the required employer contributions from the State. In
| 9 |
| the event of a deficiency in the amount of State contributions, | 10 |
| the System
shall implement any procedures
to obtain the | 11 |
| required funding from the General Revenue
Fund.
| 12 |
| An amount of employer contribution, not exceeding 1% of the | 13 |
| participating
employee's salary, shall be used for the purpose | 14 |
| of providing the disability
benefits of the System to the | 15 |
| employee. Prior to the beginning of each plan
year under the | 16 |
| self-managed plan, the Board of Trustees shall determine, as a
| 17 |
| percentage of salary, the amount of employer contributions to | 18 |
| be allocated
during that plan year for providing disability | 19 |
| benefits for employees in the
self-managed plan. The provisions | 20 |
| of this paragraph shall work in conjunction with the provisions | 21 |
| of subsection (a-1) of Section 14-133.
| 22 |
| (i) A participant in the
self-managed plan becomes vested | 23 |
| in the employer contributions credited to his
or her accounts | 24 |
| in the self-managed plan on the earliest to occur of the
| 25 |
| following: (1) completion of 5 years of service credit under | 26 |
| this Article; (2) the death of the participating employee while |
|
|
|
SB0621 |
- 26 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| employed by
an employer under this Article, if the participant | 2 |
| has completed at
least 1.5 years of service; or (3) the | 3 |
| participant's election to retire and
apply the reciprocal | 4 |
| provisions of Article 20 of this Code.
| 5 |
| A participant in the self-managed plan who receives a | 6 |
| distribution of his or
her vested amounts from the self-managed | 7 |
| plan
while not yet eligible for retirement under this Article
| 8 |
| (and Article 20, if applicable) shall forfeit all service | 9 |
| credit
and accrued rights in the System; if subsequently | 10 |
| re-employed, the participant
shall be considered a new
| 11 |
| employee. If a former participant again becomes a participating | 12 |
| employee (or
becomes employed by a participating system under | 13 |
| Article 20 of this Code) and
continues as such for at least 2 | 14 |
| years, all rights, service credits, and
previous status as a | 15 |
| participant shall be restored upon repayment of the amount
of | 16 |
| the distribution, without interest.
| 17 |
| (j) If an employee participating in the self-managed plan | 18 |
| who is vested in employer
contributions terminates employment, | 19 |
| the employee shall be entitled to a
benefit which is based on | 20 |
| the
account values attributable to both employer and
employee | 21 |
| contributions and any
investment return thereon.
| 22 |
| If an employee participating in the self-managed plan who | 23 |
| is not vested in employer contributions terminates
employment, | 24 |
| the employee shall be entitled to a benefit based solely on the
| 25 |
| account values attributable to the employee's contributions | 26 |
| and any investment
return thereon, and the employer |
|
|
|
SB0621 |
- 27 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| contributions and any investment return
thereon shall be | 2 |
| forfeited. Any employer contributions which are forfeited
| 3 |
| shall be held in escrow by the
company investing those | 4 |
| contributions and shall be used, as directed by the
System, for | 5 |
| future allocations of employer contributions or for the | 6 |
| restoration
of amounts previously forfeited by former | 7 |
| participants who again become
participating employees.
| 8 |
| (40 ILCS 5/14-152.2 new)
| 9 |
| Sec. 14-152.2. New benefit increases. To the extent that | 10 |
| the changes made to this Article by this amendatory Act of the | 11 |
| 95th General Assembly authorizing the System to offer a | 12 |
| self-managed plan are determined to be a new benefit increase | 13 |
| within the meaning of Section 14-152.1, the changes made by | 14 |
| this amendatory Act are exempt from the provisions of | 15 |
| subsection (d) of Section 14-152.1.
| 16 |
| (40 ILCS 5/15-103.3)
| 17 |
| Sec. 15-103.3. Self-Managed Plan. "Self-managed plan": The | 18 |
| defined
contribution retirement program maintained under the | 19 |
| System as described in
Section 15-158.2. The self-managed plan | 20 |
| also includes disability benefits as
provided in Sections | 21 |
| 15-150 through 15-153.3 (but disregarding disability
| 22 |
| retirement annuities under Section 15-153.2). The self-managed | 23 |
| plan does not
include retirement annuities, death benefits, or | 24 |
| survivors insurance benefits
payable directly from the System |
|
|
|
SB0621 |
- 28 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| as provided in Sections 15-135 through 15-149
and Section | 2 |
| 15-153.2, or refunds determined under Section 15-154.
| 3 |
| (Source: P.A. 90-766, eff. 8-14-98.)
| 4 |
| (40 ILCS 5/15-134.5)
| 5 |
| Sec. 15-134.5. Retirement program elections.
| 6 |
| (a) All participating employees are participants under the | 7 |
| traditional
benefit package prior to January 1, 1998.
| 8 |
| Effective as of the date that the System offers
an employer | 9 |
| elects, as described in Section
15-158.2, to offer to its | 10 |
| employees the portable benefit package and the
self-managed | 11 |
| plan as alternatives to the traditional benefit package, each | 12 |
| of
that employer's eligible employee
employees (as defined in | 13 |
| subsection (b)) shall be
given the choice to elect which | 14 |
| retirement program he or she wishes to
participate in with | 15 |
| respect to all periods of covered employment occurring on
and | 16 |
| after the effective date of the employee's election. The | 17 |
| retirement
program election made by an eligible employee must | 18 |
| be made in writing, in the
manner prescribed by the System, and | 19 |
| within the time period described in
subsection (d) or (d-1).
| 20 |
| If a currently eligible employee elects the self-managed | 21 |
| plan, then that election is irrevocable.
The employee election | 22 |
| authorized by this Section is a one-time, irrevocable
election.
| 23 |
| If an employee who elected to participate or participated by | 24 |
| default in the traditional benefit plan terminates employment | 25 |
| after making the election
provided under this subsection (a) , |
|
|
|
SB0621 |
- 29 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| then upon his or her subsequent
re-employment under this | 2 |
| Article the employee may make an election under this Section
| 3 |
| with an employer the original election shall automatically | 4 |
| apply
to him or her, provided that the employer is then a | 5 |
| participating employer as
described in Section 15-158.2 .
| 6 |
| An eligible employee who fails to make this election shall, | 7 |
| by default,
participate in the traditional benefit package.
| 8 |
| (b) "Eligible employee" means an employee (as defined in | 9 |
| Section
15-107) who is either a currently eligible employee or | 10 |
| a newly eligible
employee. For purposes of this Section, a | 11 |
| "currently eligible employee"
is an employee who is employed | 12 |
| under this Article on the date on which
the System first offers | 13 |
| the self-managed plan as an alternative to the traditional | 14 |
| benefit package
an employee who is employed by an employer on | 15 |
| the effective date on which
the employer offers to its | 16 |
| employees the portable benefit package and the
self-managed | 17 |
| plan as alternatives to the traditional benefit package . A | 18 |
| "newly
eligible employee" is an employee who first becomes an | 19 |
| employee after the date on which
the System first offers the | 20 |
| self-managed plan as an alternative to the traditional benefit | 21 |
| package.
an employee who first becomes employed by an employer
| 22 |
| after the effective date on which the employer offers its | 23 |
| employees the
portable benefit package and the self-managed | 24 |
| plan as alternatives to the
traditional benefit package.
A | 25 |
| newly eligible employee participates in the traditional | 26 |
| benefit package
until he or she makes an election to |
|
|
|
SB0621 |
- 30 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| participate in the portable benefit
package or the self-managed | 2 |
| plan. If an employee does not elect to participate
in the | 3 |
| portable benefit package or the self-managed plan, he or she | 4 |
| shall
continue to participate in the
traditional benefit | 5 |
| package by default.
| 6 |
| (c) A currently
An eligible employee who at the time he or | 7 |
| she is first eligible to
make the election described in | 8 |
| subsection (a) does not have sufficient age and
service to | 9 |
| qualify for a retirement annuity under Section 15-135 may elect | 10 |
| to
participate in the traditional benefit package, the portable | 11 |
| benefit package,
or the self-managed plan. An eligible employee | 12 |
| who has sufficient age and
service to qualify for a retirement | 13 |
| annuity under Section 15-135 at the time he
or she is first | 14 |
| eligible to make the election described in subsection (a) may
| 15 |
| elect to participate in the traditional benefit package or the | 16 |
| portable benefit
package, but may not elect to participate in | 17 |
| the self-managed plan.
| 18 |
| (d) A currently eligible employee must make this election | 19 |
| within 5 years
one year
after the effective date of the | 20 |
| employer's adoption of the self-managed plan.
| 21 |
| A currently
newly eligible employee who terminates | 22 |
| employment under this Article must make this election within
6 | 23 |
| months after his or her re-employment under this Article.
the | 24 |
| date on which the System receives the report of status
| 25 |
| certification from the employer.
If an employee elects to | 26 |
| participate in the self-managed plan, no employer
|
|
|
|
SB0621 |
- 31 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| contributions shall be remitted to the self-managed plan when | 2 |
| the employee's
account balance transfer is made. Employer | 3 |
| contributions to the self-managed
plan shall commence as of the | 4 |
| first pay period that begins after the System
receives the | 5 |
| employee's election.
| 6 |
| (d-1) A newly eligible employee is automatically enrolled | 7 |
| in the self-managed plan under Section 15-158.2.
who, prior to | 8 |
| the effective date of this
amendatory Act of the 91st General | 9 |
| Assembly, fails to make the election within
the period provided | 10 |
| under subsection (d) and participates by default in the
| 11 |
| traditional benefit package may make a late election to | 12 |
| participate in the
portable benefit package or the self-managed | 13 |
| plan instead of the traditional
benefit package at any time | 14 |
| within 6 months after the effective date of this
amendatory Act | 15 |
| of the 91st General Assembly.
| 16 |
| (e) (Blank)
If a currently eligible employee elects the | 17 |
| portable benefit
package, that
election shall not become | 18 |
| effective until the one-year anniversary of the date
on which | 19 |
| the election is filed with the System, provided the employee | 20 |
| remains
continuously employed by the employer throughout the | 21 |
| one-year waiting period,
and any benefits payable to or on | 22 |
| account of the employee before such one-year
waiting period has | 23 |
| ended shall not be determined under the provisions
applicable | 24 |
| to the portable benefit package but shall instead be determined | 25 |
| in
accordance with the traditional benefit package. If a | 26 |
| currently
eligible employee who
has elected the portable |
|
|
|
SB0621 |
- 32 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| benefit package terminates employment covered by the
System | 2 |
| before the one-year waiting period has ended, then no
benefits | 3 |
| shall be determined under the portable benefit package | 4 |
| provisions
while he or she is inactive in the System and upon | 5 |
| re-employment with an
employer covered by the System he or she | 6 |
| shall begin a new one-year waiting
period before the provisions | 7 |
| of the portable benefit
package become effective .
| 8 |
| (f) An eligible employee shall be provided with written | 9 |
| information prepared
or prescribed by the System which | 10 |
| describes the employee's retirement program
choices. The | 11 |
| eligible employee shall be offered an opportunity to
receive | 12 |
| counseling from the System prior to making his or her election. | 13 |
| This
counseling may consist of videotaped materials, group | 14 |
| presentations, individual
consultation with an employee or | 15 |
| authorized representative of the System in
person or by | 16 |
| telephone or other electronic means, or any combination of | 17 |
| these
methods.
| 18 |
| (Source: P.A. 90-766, eff. 8-14-98; 91-887, eff. 7-6-00.)
| 19 |
| (40 ILCS 5/15-158.2)
| 20 |
| Sec. 15-158.2. Self-managed plan.
| 21 |
| (a) Purpose. The General Assembly finds that it is | 22 |
| important for colleges
and universities to be able to attract | 23 |
| and retain the most qualified employees
and that in order to | 24 |
| attract and retain these employees, colleges and
universities | 25 |
| should have the flexibility to provide a defined contribution
|
|
|
|
SB0621 |
- 33 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| (self-managed) plan as an alternative for eligible employees | 2 |
| who elect not to participate
in a defined benefit retirement | 3 |
| program provided under this Article.
Accordingly, the State | 4 |
| Universities Retirement System is hereby authorized to
| 5 |
| establish and administer a self-managed plan, which shall offer | 6 |
| participating
employees the opportunity to accumulate assets | 7 |
| for retirement through a
combination of employee and employer | 8 |
| contributions that may be invested in
mutual funds, collective | 9 |
| investment funds, or other investment products and
used to | 10 |
| purchase annuity contracts, either fixed or variable or a | 11 |
| combination
thereof. The plan must be qualified under the | 12 |
| Internal Revenue Code of 1986.
| 13 |
| (b) The Board shall adopt the self-managed plan established | 14 |
| under this Section for participants under this Article. The | 15 |
| adoption of
Adoption by employers. Each employer subject to | 16 |
| this Article may
elect to adopt the self-managed plan | 17 |
| established under this Section; this
election is irrevocable. | 18 |
| An employer's election to adopt the self-managed
plan makes | 19 |
| available to the eligible employees of that employer the | 20 |
| elections
described in Section 15-134.5.
| 21 |
| The State Universities Retirement System shall be the plan | 22 |
| sponsor for the
self-managed plan and shall prepare a plan | 23 |
| document and prescribe such rules
and procedures as are | 24 |
| considered necessary or desirable for the administration
of the | 25 |
| self-managed plan. Consistent with its fiduciary duty to the
| 26 |
| participants and beneficiaries of the self-managed plan, the |
|
|
|
SB0621 |
- 34 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| Board of Trustees
of the System may delegate aspects of plan | 2 |
| administration as it sees fit to
companies authorized to do | 3 |
| business in this State, to the employers, or to a
combination | 4 |
| of both.
| 5 |
| (c) Selection of service providers and funding vehicles. | 6 |
| The System, in
consultation with the employers, shall solicit | 7 |
| proposals to provide
administrative services and funding | 8 |
| vehicles for the self-managed plan from
insurance and annuity | 9 |
| companies and mutual fund companies, banks, trust
companies, or | 10 |
| other financial institutions authorized to do business in this
| 11 |
| State. In reviewing the proposals received and approving and | 12 |
| contracting with
no fewer than 2 and no more than 7 companies, | 13 |
| the Board of Trustees of the System shall
consider, among other | 14 |
| things, the following criteria:
| 15 |
| (1) the nature and extent of the benefits that would be | 16 |
| provided
to the participants;
| 17 |
| (2) the reasonableness of the benefits in relation to | 18 |
| the premium
charged;
| 19 |
| (3) the suitability of the benefits to the needs and
| 20 |
| interests of the participating employees and the employer;
| 21 |
| (4) the ability of the company to provide benefits | 22 |
| under the contract and
the financial stability of the | 23 |
| company; and
| 24 |
| (5) the efficacy of the contract in the recruitment and | 25 |
| retention of
employees.
| 26 |
| The System, in consultation with the employers, shall |
|
|
|
SB0621 |
- 35 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| periodically review
each approved company. A company may | 2 |
| continue to provide administrative
services and funding | 3 |
| vehicles for the self-managed plan only so long as
it continues | 4 |
| to be an approved company under contract 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 System.
| 8 |
| (d) Employee Direction. Employees who are participating in | 9 |
| the program
must be allowed to direct the transfer of their | 10 |
| account balances among the
various investment options offered, | 11 |
| subject to applicable contractual
provisions.
The participant | 12 |
| shall not be deemed a fiduciary by reason of providing such
| 13 |
| investment direction. A person who is a fiduciary shall not be | 14 |
| liable for any
loss resulting from such investment direction | 15 |
| and shall not be deemed to have
breached any fiduciary duty by | 16 |
| acting in accordance with that direction.
Neither the System | 17 |
| nor the employer guarantees any of the investments in the
| 18 |
| employee's account balances.
| 19 |
| (e) Participation. A currently eligible
An employee | 20 |
| eligible to participate in the
self-managed plan must make a | 21 |
| written election in accordance with the
provisions of Section | 22 |
| 15-134.5 and the procedures established by the System.
| 23 |
| Participation in the self-managed plan by an electing employee | 24 |
| shall begin
on the first day of the first pay period following | 25 |
| the later of the date the
employee's election is filed with the | 26 |
| System or the effective date as of
which the employee's |
|
|
|
SB0621 |
- 36 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| employer begins to offer participation in the self-managed
| 2 |
| plan. Employers may not make the self-managed plan available | 3 |
| earlier than
January 1, 1998. An employee's participation in | 4 |
| any other retirement program
administered by the System under | 5 |
| this Article shall terminate on the date that
participation in | 6 |
| the self-managed plan begins.
| 7 |
| An employee who has elected to participate in the | 8 |
| self-managed plan under
this Section must continue | 9 |
| participation while employed in an eligible
position, and may | 10 |
| not participate in any other retirement program administered
by | 11 |
| the System under this Article while employed by that employer | 12 |
| or any other
employer that has adopted the self-managed plan, | 13 |
| unless the self-managed plan
is terminated in accordance with | 14 |
| subsection (i).
| 15 |
| Participation in the self-managed plan under this Section | 16 |
| shall constitute
membership in the State Universities | 17 |
| Retirement System.
| 18 |
| A participant under this Section shall be entitled to the | 19 |
| benefits of
Article 20 of this Code.
| 20 |
| (f) Establishment of Initial Account Balance. If at the | 21 |
| time an employee
elects to participate in the self-managed plan | 22 |
| he or she has rights and credits
in the System due to previous | 23 |
| participation in the traditional benefit package,
the System | 24 |
| shall establish for the employee an opening account balance in | 25 |
| the
self-managed plan, equal to the amount of contribution | 26 |
| refund that the employee
would be eligible to receive under |
|
|
|
SB0621 |
- 37 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| Section 15-154 if the employee terminated
employment on that | 2 |
| date and elected a refund of contributions, except that this
| 3 |
| hypothetical refund shall include interest at the effective | 4 |
| rate for the
respective years. The System shall transfer assets | 5 |
| from the defined benefit
retirement program to the self-managed | 6 |
| plan, as a tax free transfer in
accordance with Internal | 7 |
| Revenue Service guidelines, for purposes of funding
the | 8 |
| employee's opening account balance.
| 9 |
| (g) No Duplication of Service Credit. Notwithstanding any | 10 |
| other provision
of this Article, an employee may not purchase | 11 |
| or receive service or service
credit applicable to any other | 12 |
| retirement program administered by the System
under this | 13 |
| Article for any period during which the employee was a | 14 |
| participant
in the self-managed plan established under this | 15 |
| Section.
| 16 |
| (h) Contributions. The self-managed plan shall be funded by | 17 |
| contributions
from employees participating in the self-managed | 18 |
| plan and employer
contributions as provided in this Section.
| 19 |
| The contribution rate for employees participating in the | 20 |
| self-managed plan
under this Section shall be equal to the | 21 |
| employee contribution rate for other
participants in the | 22 |
| System, as provided in Section 15-157. This required
| 23 |
| contribution shall be made as an "employer pick-up" under | 24 |
| Section 414(h) of the
Internal Revenue Code of 1986 or any | 25 |
| successor Section thereof. Any employee
participating in the | 26 |
| System's traditional benefit package prior to his or her
|
|
|
|
SB0621 |
- 38 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| election to participate in the self-managed plan shall continue | 2 |
| to have the
employer pick up the contributions required under | 3 |
| Section 15-157. However, the
amounts picked up after the | 4 |
| election of the self-managed plan shall be remitted
to and | 5 |
| treated as assets of the self-managed plan. In no event shall | 6 |
| an
employee have an option of receiving these amounts in cash. | 7 |
| Employees may make
additional contributions to the
| 8 |
| self-managed plan in accordance with procedures prescribed by | 9 |
| the System, to
the extent permitted under rules prescribed by | 10 |
| the System.
| 11 |
| The program shall provide for employer contributions to be | 12 |
| credited to each
self-managed plan participant in an amount | 13 |
| equal to the regular employer contribution that would be | 14 |
| required to fund the actual regular cost incurred for each year | 15 |
| of service credit earned had the participant chosen to enroll | 16 |
| in the traditional benefit plan.
at a rate of 7.6%
of the | 17 |
| participating employee's salary, less the amount used by
the | 18 |
| System to provide disability benefits for the employee.
The | 19 |
| amounts so credited
shall be paid into the participant's | 20 |
| self-managed plan accounts in a manner
to be prescribed by the | 21 |
| System.
| 22 |
| An amount of employer contribution, not exceeding 1% of the | 23 |
| participating
employee's salary, shall be used for the purpose | 24 |
| of providing the disability
benefits of the System to the | 25 |
| employee. Prior to the beginning of each plan
year under the | 26 |
| self-managed plan, the Board of Trustees shall determine, as a
|
|
|
|
SB0621 |
- 39 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| percentage of salary, the amount of employer contributions to | 2 |
| be allocated
during that plan year for providing disability | 3 |
| benefits for employees in the
self-managed plan.
| 4 |
| The State of Illinois shall make contributions by | 5 |
| appropriations to the
System of the employer contributions | 6 |
| required for employees who participate in
the self-managed plan | 7 |
| under this Section.
The amount required shall
be certified by | 8 |
| the Board of Trustees of the System and paid by the State in
| 9 |
| accordance with Section 15-165. The System shall not be | 10 |
| obligated to remit the
required employer contributions to any | 11 |
| of the insurance and annuity
companies, mutual fund
companies, | 12 |
| banks, trust companies, financial institutions, or other | 13 |
| sponsors
of any of the funding vehicles offered under the | 14 |
| self-managed plan
until it has received the required employer | 15 |
| contributions from the State. In
the event of a deficiency in | 16 |
| the amount of State contributions, the System
shall implement | 17 |
| those procedures described in subsection (c) of Section 15-165
| 18 |
| to obtain the required funding from the General Revenue
Fund.
| 19 |
| (i) (Blank)
Termination. The self-managed plan authorized | 20 |
| under this
Section may be terminated by the System, subject to | 21 |
| the terms
of any relevant
contracts, and the System shall have | 22 |
| no obligation to
reestablish the self-managed plan under this | 23 |
| Section. This Section does not
create a right
to continued | 24 |
| participation in any self-managed plan set up by the System | 25 |
| under
this Section. If the self-managed plan is terminated,
the | 26 |
| participants shall have the right to participate in one of the |
|
|
|
SB0621 |
- 40 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| other
retirement programs offered by the System and receive | 2 |
| service credit in such
other retirement program for any years | 3 |
| of employment following the termination .
| 4 |
| (j) Vesting; Withdrawal; Return to Service. A participant | 5 |
| in the
self-managed plan becomes vested in the employer | 6 |
| contributions credited to his
or her accounts in the | 7 |
| self-managed plan on the earliest to occur of the
following: | 8 |
| (1) completion of 5 years of service with an employer described | 9 |
| in
Section 15-106; (2) the death of the participating employee | 10 |
| while employed by
an employer described in Section 15-106, if | 11 |
| the participant has completed at
least 1 1/2 years of service; | 12 |
| or (3) the participant's election to retire and
apply the | 13 |
| reciprocal provisions of Article 20 of this Code.
| 14 |
| A participant in the self-managed plan who receives a | 15 |
| distribution of his or
her vested amounts from the self-managed | 16 |
| plan
while not yet eligible for retirement under this Article
| 17 |
| (and Article 20, if applicable) shall forfeit all service | 18 |
| credit
and accrued rights in the System; if subsequently | 19 |
| re-employed, the participant
shall be considered a new
| 20 |
| employee. If a former participant again becomes a participating | 21 |
| employee (or
becomes employed by a participating system under | 22 |
| Article 20 of this Code) and
continues as such for at least 2 | 23 |
| years, all such rights, service credits, and
previous status as | 24 |
| a participant shall be restored upon repayment of the amount
of | 25 |
| the distribution, without interest.
| 26 |
| (k) Benefit amounts. If an employee who is vested in |
|
|
|
SB0621 |
- 41 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| employer
contributions terminates employment, the employee | 2 |
| shall be entitled to a
benefit which is based on the
account | 3 |
| values attributable to both employer and
employee | 4 |
| contributions and any
investment return thereon.
| 5 |
| If an employee who is not vested in employer contributions | 6 |
| terminates
employment, the employee shall be entitled to a | 7 |
| benefit based solely on the
account values attributable to the | 8 |
| employee's contributions and any investment
return thereon, | 9 |
| and the employer contributions and any investment return
| 10 |
| thereon shall be forfeited. Any employer contributions which | 11 |
| are forfeited
shall be held in escrow by the
company investing | 12 |
| those contributions and shall be used as directed by the
System | 13 |
| for future allocations of employer contributions or for the | 14 |
| restoration
of amounts previously forfeited by former | 15 |
| participants who again become
participating employees.
| 16 |
| (Source: P.A. 93-347, eff. 7-24-03.)
| 17 |
| (40 ILCS 5/15-198.1 new)
| 18 |
| Sec. 15-198.1. New benefit increases. To the extent that | 19 |
| the changes made to this Article by this amendatory Act of the | 20 |
| 95th General Assembly authorizing the System to offer a | 21 |
| self-managed plan are determined to be a new benefit increase | 22 |
| within the meaning of Section 15-198, the changes made by this | 23 |
| amendatory Act are exempt from the provisions of subsection (d) | 24 |
| of Section 15-198.
|
|
|
|
SB0621 |
- 42 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| (40 ILCS 5/16-104.1 new)
| 2 |
| Sec. 16-104.1. Traditional benefit package. "Traditional | 3 |
| benefit
package" means the defined benefit retirement program | 4 |
| maintained by the System, which
includes retirement annuities | 5 |
| payable directly from the System, as provided in
Sections | 6 |
| 16-132 through 16-136.4; disability
benefits payable under | 7 |
| Sections 16-149 through 16-149.5; survivor's benefits payable | 8 |
| directly from the System, as provided in
Sections 16-140 | 9 |
| through 16-143.1; and contribution refunds, as provided in | 10 |
| Sections 16-138, 16-143.2, and 16-151.
| 11 |
| (40 ILCS 5/16-104.2 new)
| 12 |
| Sec. 16-104.2. Self-managed plan. "Self-managed plan" | 13 |
| means the defined
contribution retirement program maintained | 14 |
| by the System, as described in
Section 16-158.2. The | 15 |
| self-managed plan also includes disability benefits, as
| 16 |
| provided in Sections 16-149 through 16-149.5 (but disregarding | 17 |
| disability
retirement annuities under Section 16-149.2). The | 18 |
| self-managed plan does not
include retirement annuities or | 19 |
| survivor's benefits
payable directly from the System as | 20 |
| provided in Sections 16-132 through 16-136.4, Sections 16-140 | 21 |
| through 16-143.1, and Section 16-149.2, or refunds determined | 22 |
| under Sections 16-138, 16-143.2, and 16-151.
| 23 |
| (40 ILCS 5/16-131.7 new)
| 24 |
| Sec. 16-131.7. Retirement program elections.
|
|
|
|
SB0621 |
- 43 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| (a) For the purposes of this Act: | 2 |
| "Eligible member" means a either a currently eligible | 3 |
| member or a newly eligible
member. | 4 |
| "Currently eligible member"
means a member who is employed | 5 |
| by an employer on the date on which
the employer first offers | 6 |
| to its employees the
self-managed plan as an alternative to the | 7 |
| traditional benefit package. | 8 |
| "Newly
eligible member" is a member who first becomes | 9 |
| employed by an employer
after the date on which the employer | 10 |
| first offers its members the
self-managed plan as an | 11 |
| alternative to the
traditional benefit package.
| 12 |
| (b) Effective as of the date that an employer adopts the | 13 |
| self-managed plan as described in Section 16-158.2 as an | 14 |
| alternative to the traditional benefit package, each of
that | 15 |
| employer's currently eligible members shall be
given the choice | 16 |
| to elect which retirement program he or she wishes to
| 17 |
| participate in with respect to all periods of covered | 18 |
| employment occurring on
and after the effective date of the | 19 |
| employee's election. The retirement
program election made by a | 20 |
| currently eligible member must be made in writing, in the
| 21 |
| manner prescribed by the System, and within the time period | 22 |
| described in
this Section.
| 23 |
| If a currently eligible member elects the self-managed | 24 |
| plan, then that election is irrevocable. If a currently | 25 |
| eligible member who elected to participate or participated by | 26 |
| default in the traditional benefit plan terminates employment |
|
|
|
SB0621 |
- 44 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| under this Article, then the member, upon his or her subsequent
| 2 |
| re-employment under this Article, may make an election under | 3 |
| this Section. | 4 |
| A currently eligible member who fails to make an election | 5 |
| under this Section shall, by default,
participate in the | 6 |
| traditional benefit package.
| 7 |
| (c) A currently eligible member may elect to
participate in | 8 |
| the traditional benefit package
or the self-managed plan.
| 9 |
| A currently eligible member must make this election within | 10 |
| 5 years
after the effective date of the employer's adoption of | 11 |
| the self-managed plan or, in the case of a currently eligible | 12 |
| member who terminates employment under this Article, within 6 | 13 |
| months after his or her re-employment under this Article.
| 14 |
| A newly eligible member is automatically enrolled in the | 15 |
| self-managed plan under Section 16-158.2.
| 16 |
| (d) If a currently eligible member elects to participate in | 17 |
| the self-managed plan, the System shall fund their account as | 18 |
| stated in subsection (f) of Section 16-158.2. Employer | 19 |
| contributions to the self-managed
plan shall commence as of the | 20 |
| first pay period that begins after the System
receives the | 21 |
| member's election.
| 22 |
| (e) A currently eligible member shall be provided with | 23 |
| written information prepared
or prescribed by the System that | 24 |
| describes the member's retirement program
choices. The | 25 |
| eligible member shall be offered an opportunity to
receive | 26 |
| counseling from the System prior to making his or her election. |
|
|
|
SB0621 |
- 45 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| This
counseling may consist of videotaped materials, group | 2 |
| presentations, individual
consultation with an employee or | 3 |
| authorized representative of the System in
person or by | 4 |
| telephone or other electronic means, or any combination of | 5 |
| these
methods.
| 6 |
| (40 ILCS 5/16-152) (from Ch. 108 1/2, par. 16-152)
| 7 |
| Sec. 16-152. Contributions by members.
| 8 |
| (a) Each member shall make contributions for membership | 9 |
| service to this
System as follows:
| 10 |
| (1) Effective July 1, 1998, contributions of 7.50% of | 11 |
| salary towards the
cost of the retirement annuity. Such | 12 |
| contributions shall be deemed "normal
contributions".
| 13 |
| (2) Effective July 1, 1969, contributions of 1/2 of 1% | 14 |
| of salary toward
the cost of the automatic annual increase | 15 |
| in retirement annuity provided
under Section 16-133.1.
| 16 |
| (3) Effective July 24, 1959, contributions of 1% of | 17 |
| salary towards the
cost of survivor benefits. Such | 18 |
| contributions shall not be credited to
the individual | 19 |
| account of the member and shall not be subject to refund
| 20 |
| except as provided under Section 16-143.2.
| 21 |
| (4) Effective July 1, 2005, contributions of 0.40% of | 22 |
| salary toward the cost of the early retirement without | 23 |
| discount option provided under Section 16-133.2. This | 24 |
| contribution shall cease upon termination of the early | 25 |
| retirement without discount option as provided in Section |
|
|
|
SB0621 |
- 46 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| 16-176.
The contributions made under this paragraph (4) | 2 |
| shall be used by the System to fund benefits under Sections | 3 |
| 16-149 through 16-149.5 for those that participate in the | 4 |
| self-managed plan. | 5 |
| (b) The minimum required contribution for any year of | 6 |
| full-time
teaching service shall be $192.
| 7 |
| (c) Contributions shall not be required of any annuitant | 8 |
| receiving
a retirement annuity who is given employment as | 9 |
| permitted under Section 16-118 or 16-150.1.
| 10 |
| (d) A person who (i) was a member before July 1, 1998, (ii) | 11 |
| retires with
more than 34 years of creditable service, and | 12 |
| (iii) does not elect to qualify
for the augmented rate under | 13 |
| Section 16-129.1 shall be entitled, at the time
of retirement, | 14 |
| to receive a partial refund of contributions made under this
| 15 |
| Section for service occurring after the later of June 30, 1998 | 16 |
| or attainment
of 34 years of creditable service, in an amount | 17 |
| equal to 1.00% of the salary
upon which those contributions | 18 |
| were based.
| 19 |
| (e) A member's contributions toward the cost of early | 20 |
| retirement without discount made under item (a)(4) of this | 21 |
| Section shall not be refunded if the member has elected early | 22 |
| retirement without discount under Section 16-133.2 and has | 23 |
| begun to receive a retirement annuity under this Article | 24 |
| calculated in accordance with that election. Otherwise, a | 25 |
| member's contributions toward the cost of early retirement | 26 |
| without discount made under item (a)(4) of this Section shall |
|
|
|
SB0621 |
- 47 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| be refunded according to whichever one of the following | 2 |
| circumstances occurs first: | 3 |
| (1) The contributions shall be refunded to the member, | 4 |
| without interest, within 120 days after the member's | 5 |
| retirement annuity commences, if the member does not elect | 6 |
| early retirement without discount under Section 16-133.2. | 7 |
| (2) The contributions shall be included, without | 8 |
| interest, in any refund claimed by the member under Section | 9 |
| 16-151. | 10 |
| (3) The contributions shall be refunded to the member's | 11 |
| designated beneficiary (or if there is no beneficiary, to | 12 |
| the member's estate), without interest, if the member dies | 13 |
| without having begun to receive a retirement annuity under | 14 |
| this Article. | 15 |
| (4) The contributions shall be refunded to the member, | 16 |
| without interest, within 120 days after the early | 17 |
| retirement without discount option provided under Section | 18 |
| 16-133.2 is terminated under Section 16-176.
| 19 |
| (Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)
| 20 |
| (40 ILCS 5/16-158.2 new)
| 21 |
| Sec. 16-158.2. Self-managed plan.
| 22 |
| (a) The General Assembly finds that it is important for | 23 |
| schools to be able to attract and retain the most qualified | 24 |
| employees
and that in order to attract and retain these | 25 |
| employees, schools should have the flexibility to provide a |
|
|
|
SB0621 |
- 48 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| defined contribution
(self-managed) plan for eligible members.
| 2 |
| Accordingly, the Teachers' Retirement System of the State of | 3 |
| Illinois is hereby authorized to
establish and administer a | 4 |
| self-managed plan, which shall offer participating
members the | 5 |
| opportunity to accumulate assets for retirement through a
| 6 |
| combination of member and employer contributions that may be | 7 |
| invested in
mutual funds, collective investment funds, or other | 8 |
| investment products and
used to purchase annuity contracts, | 9 |
| either fixed or variable or a combination
of fixed and | 10 |
| variable. The plan must be qualified under the Internal Revenue | 11 |
| Code of 1986.
| 12 |
| (b) Each employer subject to this Article shall adopt the | 13 |
| self-managed plan established under this Section. This
| 14 |
| election is irrevocable. An employer's election to adopt the | 15 |
| self-managed
plan makes available to the eligible members of | 16 |
| that employer the elections
described in Section 16-131.7.
| 17 |
| The Teachers' Retirement System of the State of Illinois | 18 |
| shall be the plan sponsor for the
self-managed plan and shall | 19 |
| prepare a plan document and adopt any rules
and procedures as | 20 |
| are considered necessary or desirable for the administration
of | 21 |
| the self-managed plan. Consistent with its fiduciary duty to | 22 |
| the
participants and beneficiaries of the self-managed plan, | 23 |
| the Board of Trustees
of the System may delegate aspects of | 24 |
| plan administration as it sees fit to
companies authorized to | 25 |
| do business in this State, to the employers, or to a
| 26 |
| combination of both.
|
|
|
|
SB0621 |
- 49 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| (c) Selection of service providers and funding vehicles. | 2 |
| The System shall solicit proposals to provide
administrative | 3 |
| services and funding vehicles for the self-managed plan from
| 4 |
| insurance and annuity companies and mutual fund companies, | 5 |
| banks, trust
companies, or other financial institutions | 6 |
| authorized to do business in this
State. In reviewing the | 7 |
| proposals received and approving and contracting with
no fewer | 8 |
| than 2 and no more than 7 companies, the Board of Trustees of | 9 |
| the System shall
consider, among other things, the following | 10 |
| criteria:
| 11 |
| (1) the nature and extent of the benefits that would be | 12 |
| provided
to the participants;
| 13 |
| (2) the reasonableness of the benefits in relation to | 14 |
| the premium
charged;
| 15 |
| (3) the suitability of the benefits to the needs and
| 16 |
| interests of the participating members and employers;
| 17 |
| (4) the ability of the company to provide benefits | 18 |
| under the contract and
the financial stability of the | 19 |
| company; and
| 20 |
| (5) the efficacy of the contract in the recruitment and | 21 |
| retention of
employees.
| 22 |
| The System shall periodically review
each approved | 23 |
| company. A company may continue to provide administrative
| 24 |
| services and funding vehicles for the self-managed plan only so | 25 |
| long as
it continues to be an approved company under contract | 26 |
| with the Board.
|
|
|
|
SB0621 |
- 50 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| In addition to the companies approved by the System under | 2 |
| this subsection (c), the System may offer its participants an | 3 |
| investment fund managed by the System.
| 4 |
| (d) Participants in the program
must be allowed to direct | 5 |
| the transfer of their account balances among the
various | 6 |
| investment options offered, subject to applicable contractual
| 7 |
| provisions.
The participant shall not be deemed a fiduciary by | 8 |
| reason of providing such
investment direction. A person who is | 9 |
| a fiduciary shall not be liable for any
loss resulting from | 10 |
| such investment direction and shall not be deemed to have
| 11 |
| breached any fiduciary duty by acting in accordance with that | 12 |
| direction.
Neither the System nor the employer guarantees any | 13 |
| of the investments in the
participant's account balances.
| 14 |
| (e) A currently eligible member, as defined in Section | 15 |
| 16-131.7, must make a written election to participate in the
| 16 |
| self-managed plan in accordance with the
provisions of Section | 17 |
| 16-131.7 and the procedures established by the System.
| 18 |
| Participation in the self-managed plan shall begin
on the first | 19 |
| day of the month immediately following the month in which the
| 20 |
| currently eligible member's election is filed with the System | 21 |
| or when a newly eligible member, as defined in Section | 22 |
| 16-131.7, enters the System, but not sooner than the effective | 23 |
| date of
the self-managed
plan. The System shall make the | 24 |
| self-managed plan available under this Article by
January 1, | 25 |
| 2009. A member's participation in the traditional retirement | 26 |
| package under this Article shall terminate on the date that
|
|
|
|
SB0621 |
- 51 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| participation in the self-managed plan begins.
| 2 |
| A member who has elected to participate in the self-managed | 3 |
| plan under
this Section must continue participation while he or | 4 |
| she remains a member, and may not participate in the | 5 |
| traditional benefit package while employed by that employer or | 6 |
| any other
employer under this Article.
| 7 |
| Participation in the self-managed plan under this Section | 8 |
| shall constitute
membership in the Teachers' Retirement System | 9 |
| of the State of Illinois.
| 10 |
| A participant under this Section shall be entitled to the | 11 |
| benefits of
Article 20 of this Code.
| 12 |
| (f) If, at the time an employee
elects to participate in | 13 |
| the self-managed plan, the employee has rights and credits
in | 14 |
| the System due to previous participation in the traditional | 15 |
| benefit package,
the System shall establish for the employee an | 16 |
| opening account balance in the
self-managed plan, equal to (i) | 17 |
| the amount of the contribution refund that the employee
would | 18 |
| be eligible to receive under Section 16-143.2 and 16-151 if the | 19 |
| employee terminated
employment on that date and elected a | 20 |
| refund of contributions, plus (ii) an amount equal to the | 21 |
| regular employer contribution that would be required to fund | 22 |
| the actual regular cost incurred for each year of service | 23 |
| credit earned, provided that the total opening account balance | 24 |
| does not exceed 7.6% of that participant's salary for that | 25 |
| year, plus interest. The interest used in this subsection (f) | 26 |
| is calculated as the average annual rate of return that the |
|
|
|
SB0621 |
- 52 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| System has earned over the past 20 fiscal years and is | 2 |
| compounded. The System shall transfer assets from the defined | 3 |
| benefit
retirement program to the self-managed plan, as a | 4 |
| tax-free transfer in
accordance with Internal Revenue Service | 5 |
| guidelines, for purposes of funding
the employee's opening | 6 |
| account balance.
| 7 |
| (g) Notwithstanding any other provision
of this Article, a | 8 |
| member may not purchase or receive service or service
credit | 9 |
| applicable to the traditional benefit package
under this | 10 |
| Article for any period during which the member 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 employer
| 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 all
participants in the System, as | 19 |
| provided in Section 16-152. 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 |
| A participant in the System's traditional benefit package prior | 23 |
| to 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 16-152. However, the
amounts picked up | 26 |
| after the election of the self-managed plan shall be remitted
|
|
|
|
SB0621 |
- 53 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| to and treated as assets of the self-managed plan. In no event | 2 |
| shall a member have the option of receiving these amounts in | 3 |
| cash. Members 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 prescribed by | 6 |
| the 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 regular employer contribution that would be | 10 |
| required to fund the actual regular cost incurred for each year | 11 |
| of service credit earned had the participant chosen to enroll | 12 |
| in the traditional benefit plan.
| 13 |
| An amount of employer contribution, not exceeding 1% of the | 14 |
| participating
member's salary, shall be used for the purpose of | 15 |
| providing the disability
benefits of the System to the member. | 16 |
| Prior to the beginning of each plan
year under the self-managed | 17 |
| plan, the Board of Trustees shall determine, as a
percentage of | 18 |
| salary, the amount of member contributions to be allocated
| 19 |
| during that plan year for providing disability benefits for | 20 |
| members in the
self-managed plan. The provisions of this | 21 |
| paragraph shall be administered in conjunction with the | 22 |
| provisions of Section 16-132.
| 23 |
| The State of Illinois shall make contributions by | 24 |
| appropriations to the
System of the employer contributions | 25 |
| required for participants in
the self-managed plan under this | 26 |
| Section.
The amount required shall
be certified by the Board of |
|
|
|
SB0621 |
- 54 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| Trustees of the System and paid by the State in
accordance with | 2 |
| Section 16-158. The System shall not be obligated to remit the
| 3 |
| required employer contributions to any of the insurance and | 4 |
| annuity
companies, mutual fund
companies, banks, trust | 5 |
| companies, financial institutions, or other sponsors
of any of | 6 |
| the funding vehicles offered under the self-managed plan
until | 7 |
| it has received the required employer contributions from the | 8 |
| State. In
the event of a deficiency in the amount of State | 9 |
| contributions, the System
shall implement those procedures | 10 |
| described in subsection (b-1) of Section 16-158
to obtain the | 11 |
| required funding from the Common School
Fund.
| 12 |
| (i) A participant in the
self-managed plan becomes vested | 13 |
| in the employer contributions credited to his
or her accounts | 14 |
| in the self-managed plan on the earliest to occur of the
| 15 |
| following: (1) attainment of at least 5 years of creditable | 16 |
| service under this Article; (2) the death of the participating | 17 |
| member while employed under this Article, if the participant | 18 |
| has completed at
least 1.5 years of service; or (3) the | 19 |
| participant's election to retire and
apply the reciprocal | 20 |
| provisions of Article 20 of this Code.
| 21 |
| A participant in the self-managed plan who receives a | 22 |
| distribution of his or
her vested amounts from the self-managed | 23 |
| plan
while not yet eligible for retirement under this Article
| 24 |
| (and Article 20, if applicable) shall forfeit all service | 25 |
| credit
and accrued rights in the System; if subsequently | 26 |
| re-employed under this Article, the participant
shall be |
|
|
|
SB0621 |
- 55 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| considered a new
member. If a former participant in the | 2 |
| self-managed plan again becomes a member (or
becomes employed | 3 |
| by a participating system under Article 20 of this Code) and
| 4 |
| continues as such for at least 2 years, all such rights, | 5 |
| service credits, and
previous status as a participant shall be | 6 |
| restored upon repayment of the amount
of the distribution, | 7 |
| without interest.
| 8 |
| (j) If a member participating in the self-managed plan who | 9 |
| is vested in employer
contributions terminates employment, the | 10 |
| member shall be entitled to a
benefit that is based on the
| 11 |
| account values attributable to both employer and
member | 12 |
| contributions and any
investment return thereon.
| 13 |
| If a member participating in the self-managed plan who is | 14 |
| not vested in employer contributions terminates
employment, | 15 |
| the member shall be entitled to a benefit based solely on the
| 16 |
| account values attributable to the member's contributions and | 17 |
| any investment
return thereon, and the employer contributions | 18 |
| and any investment return
thereon shall be forfeited. Any | 19 |
| employer contributions that are forfeited
shall be held in | 20 |
| escrow by the
company investing those contributions and shall | 21 |
| be used, as directed by the
System, for future allocations of | 22 |
| employer contributions or for the restoration
of amounts | 23 |
| previously forfeited by former participants who again become
| 24 |
| participants in the self-managed plan.
| 25 |
| (40 ILCS 5/16-203.1 new)
|
|
|
|
SB0621 |
- 56 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| Sec. 16-203.1. New benefit increases. To the extent that | 2 |
| the changes made to this Article by this amendatory Act of the | 3 |
| 95th General Assembly authorizing the System to offer a | 4 |
| self-managed plan are determined to be a new benefit increase | 5 |
| within the meaning of Section 16-203, the changes made by this | 6 |
| amendatory Act are exempt from the provisions of subsection (d) | 7 |
| of Section 16-203.
| 8 |
| (40 ILCS 5/18-105.1 new)
| 9 |
| Sec. 18-105.1. Traditional benefit package. "Traditional | 10 |
| benefit
package" means the defined benefit retirement program | 11 |
| maintained by the System, which
includes retirement annuities | 12 |
| payable directly from the System, as provided in
Sections | 13 |
| 18-124 through 18-125.1; disability
retirement annuities | 14 |
| payable under Sections 18-126 and 18-126.1; survivor's | 15 |
| annuities payable directly from the System, as provided in
| 16 |
| Section 18-123 and Sections 18-128 through 18-128.1 and Section | 17 |
| 18-128.3; and contribution refunds as provided in Section
| 18 |
| 18-129.
| 19 |
| (40 ILCS 5/18-105.2 new)
| 20 |
| Sec. 18-105.2. Self-managed plan. "Self-managed plan" | 21 |
| means the defined
contribution retirement program maintained | 22 |
| by the System, as described in
Section 18-133.2. The | 23 |
| self-managed plan also includes disability benefits, as
| 24 |
| provided in Section 18-126.1. The self-managed plan does not
|
|
|
|
SB0621 |
- 57 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| include retirement annuities or survivor's annuities
payable | 2 |
| directly from the System, as provided in Section 18-123, | 3 |
| Sections 18-124 through 18-126, Sections 18-128 through | 4 |
| 18-128.1, and Section 18-128.3 or refunds determined under | 5 |
| Section 18-129.
| 6 |
| (40 ILCS 5/18-123.3 new)
| 7 |
| Sec. 18-123.3. Retirement program elections.
| 8 |
| (a) For the purposes of this Section: | 9 |
| "Eligible participant" means either a currently eligible | 10 |
| participant or a newly eligible
participant. | 11 |
| "Currently eligible participant"
means a participant who | 12 |
| is employed as a judge on the date on which
the System first | 13 |
| offers the
self-managed plan as an alternative to the | 14 |
| traditional benefit package. | 15 |
| "Newly
eligible participant" means a participant who first | 16 |
| becomes employed as a judge
after the date on which the System | 17 |
| first offers the self-managed plan as an alternative to the
| 18 |
| traditional benefit package.
| 19 |
| (b) When the System offers to participants the
self-managed | 20 |
| plan as an alternative to the traditional benefit package, each | 21 |
| currently eligible participant shall be
given the choice to | 22 |
| elect which retirement program he or she wishes to
participate | 23 |
| in with respect to all periods of covered employment occurring | 24 |
| on
or after the effective date of the participant's election. | 25 |
| The retirement
program election made by a currently eligible |
|
|
|
SB0621 |
- 58 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| participant must be made in writing, in the
manner prescribed | 2 |
| by the System, and within the time period described in
this | 3 |
| Section.
| 4 |
| If a currently eligible participant elects the | 5 |
| self-managed plan, then that election is irrevocable. If a | 6 |
| currently eligible participant who elected to participate or | 7 |
| participated by default in the traditional benefit plan | 8 |
| terminates employment under this Article, then the | 9 |
| participant, upon his or her subsequent
re-employment under | 10 |
| this Article, may make an election under this Section. | 11 |
| A currently eligible participant who fails to make an | 12 |
| election under this Section shall, by default,
participate in | 13 |
| the traditional benefit package.
| 14 |
| (c) A currently eligible participant may elect to
| 15 |
| participate in the traditional benefit package
or the | 16 |
| self-managed plan.
| 17 |
| A currently eligible participant must make this election | 18 |
| within 5 years
after the effective date of the employer's | 19 |
| adoption of the self-managed plan or, in the case of a | 20 |
| currently eligible participant who terminates employment under | 21 |
| this Article, within 6 months after his or her re-employment | 22 |
| under this Article.
| 23 |
| A newly eligible participant is automatically enrolled in | 24 |
| the self-managed plan under Section 18-133.2.
| 25 |
| (d) If a currently eligible participant elects to | 26 |
| participate in the self-managed plan, the System shall fund |
|
|
|
SB0621 |
- 59 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| their account as stated in subsection (f) of Section 18-133.2. | 2 |
| Employer contributions to the self-managed
plan shall commence | 3 |
| as of the first pay period that begins after the System
| 4 |
| receives the member's election.
| 5 |
| (e) A currently eligible participant shall be provided with | 6 |
| written information prepared
or prescribed by the System that | 7 |
| describes the participant's retirement program
choices. The | 8 |
| eligible participant shall be offered an opportunity to
receive | 9 |
| counseling from the System prior to making his or her election. | 10 |
| This
counseling may consist of videotaped materials, group | 11 |
| presentations, individual
consultation with an employee or | 12 |
| authorized representative of the System in
person or by | 13 |
| telephone or other electronic means, or any combination of | 14 |
| these
methods.
| 15 |
| (40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)
| 16 |
| Sec. 18-133. Financing; employee contributions.
| 17 |
| (a) Effective July 1, 1967, each participant is required to | 18 |
| contribute
7 1/2% of each payment of salary toward the | 19 |
| retirement annuity. Such
contributions shall continue during | 20 |
| the entire time the participant is in
service, with the | 21 |
| following exceptions:
| 22 |
| (1) Contributions for the retirement annuity are not | 23 |
| required on salary
received after 18 years of service by | 24 |
| persons who were participants before
January 2, 1954.
| 25 |
| (2) A participant who continues to serve as a judge |
|
|
|
SB0621 |
- 60 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| after becoming
eligible to receive the maximum rate of | 2 |
| annuity may elect, through a written
direction filed with | 3 |
| the Board, to discontinue contributing to the System.
Any | 4 |
| such option elected by a judge shall be irrevocable unless | 5 |
| prior to
January 1, 2000, and while continuing to
serve as | 6 |
| judge, the judge (A) files with the Board a letter | 7 |
| cancelling the
direction to discontinue contributing to | 8 |
| the System and requesting that such
contributing resume, | 9 |
| and (B) pays into the System an amount equal to the total
| 10 |
| of the discontinued contributions plus interest thereon at | 11 |
| 5% per annum.
Service credits earned in any other | 12 |
| "participating system" as defined in
Article 20 of this | 13 |
| Code shall be considered for purposes of determining a
| 14 |
| judge's eligibility to discontinue contributions under | 15 |
| this subdivision
(a)(2).
| 16 |
| (3) A participant who (i) has attained age 60, (ii) | 17 |
| continues to serve
as a judge after becoming eligible to | 18 |
| receive the maximum rate of annuity,
and (iii) has not | 19 |
| elected to discontinue contributing to the System under
| 20 |
| subdivision (a)(2) of this Section (or has revoked any such | 21 |
| election) may
elect, through a written direction filed with | 22 |
| the Board, to make contributions
to the System based only | 23 |
| on the amount of the increases in salary received by
the | 24 |
| judge on or after the date of the election, rather than the | 25 |
| total salary
received. If a judge who is making | 26 |
| contributions to the System on the
effective date of this |
|
|
|
SB0621 |
- 61 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| amendatory Act of the 91st General Assembly makes an
| 2 |
| election to limit contributions under this subdivision | 3 |
| (a)(3) within 90 days
after that effective date, the | 4 |
| election shall be deemed to become
effective on that | 5 |
| effective date and the judge shall be entitled to receive a
| 6 |
| refund of any excess contributions paid to the System | 7 |
| during that 90-day
period; any other election under this | 8 |
| subdivision (a)(3) becomes effective
on the first of the | 9 |
| month following the date of the election. An election to
| 10 |
| limit contributions under this subdivision (a)(3) is | 11 |
| irrevocable. Service
credits earned in any other | 12 |
| participating system as defined in Article 20 of
this Code | 13 |
| shall be considered for purposes of determining a judge's | 14 |
| eligibility
to make an election under this subdivision | 15 |
| (a)(3).
| 16 |
| (b) Beginning July 1, 1969, each participant is required to | 17 |
| contribute
1% of each payment of salary towards the automatic | 18 |
| increase in annuity
provided in Section 18-125.1. However, such | 19 |
| contributions need not be made
by any participant who has | 20 |
| elected prior to September 15, 1969, not to be
subject to the | 21 |
| automatic increase in annuity provisions.
| 22 |
| (c) Effective July 13, 1953, each married participant | 23 |
| subject to the
survivor's annuity provisions is required to | 24 |
| contribute 2 1/2% of each
payment of salary, whether or not he | 25 |
| or she is required to make any other
contributions under this | 26 |
| Section. Such contributions shall be made
concurrently with the |
|
|
|
SB0621 |
- 62 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| contributions made for annuity purposes.
| 2 |
| Notwithstanding any provision in this subsection (c) to the | 3 |
| contrary, in the case of an employee who participates in the | 4 |
| self-managed plan under Section 18-133.2, contributions for | 5 |
| survivor's annuity shall be used to fund benefits under Section | 6 |
| 18-133.2.
| 7 |
| (Source: P.A. 91-653, eff. 12-10-99.)
| 8 |
| (40 ILCS 5/18-133.2 new)
| 9 |
| Sec. 18-133.2. Self-managed plan.
| 10 |
| (a) The General Assembly finds that it is important to be | 11 |
| able to attract and retain the most qualified judges
and that | 12 |
| in order to attract and retain these judges, the System should | 13 |
| have the flexibility to provide a defined contribution
| 14 |
| (self-managed) plan for eligible participants.
Accordingly, | 15 |
| the Judges Retirement System of Illinois is hereby authorized | 16 |
| to
establish and administer a self-managed plan, which shall | 17 |
| offer participants the opportunity to accumulate assets for | 18 |
| retirement through a
combination of participant and employer | 19 |
| contributions that may be invested in
mutual funds, collective | 20 |
| investment funds, or other investment products and
used to | 21 |
| purchase annuity contracts, either fixed or variable or a | 22 |
| combination
thereof. The plan must be qualified under the | 23 |
| Internal Revenue Code of 1986.
| 24 |
| (b) The Board shall adopt the self-managed plan established | 25 |
| under this Section. An employer's election to adopt the |
|
|
|
SB0621 |
- 63 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| self-managed
plan makes available to the eligible participants | 2 |
| of that employer the elections
described in Section 18-133.2.
| 3 |
| The Judges Retirement System of Illinois shall be the plan | 4 |
| sponsor for the
self-managed plan and shall prepare a plan | 5 |
| document and prescribe such rules
and procedures as are | 6 |
| considered necessary or desirable for the administration
of the | 7 |
| self-managed plan. Consistent with its fiduciary duty to the
| 8 |
| participants and beneficiaries of the self-managed plan, the | 9 |
| Board of Trustees
of the System may delegate aspects of plan | 10 |
| administration as it sees fit to
companies authorized to do | 11 |
| business in this State.
| 12 |
| (c) The System shall solicit proposals to provide
| 13 |
| administrative services and funding vehicles for the | 14 |
| self-managed plan from
insurance and annuity companies and | 15 |
| mutual fund companies, banks, trust
companies, or other | 16 |
| financial institutions authorized to do business in this
State. | 17 |
| In reviewing the proposals received and approving and | 18 |
| contracting with
no fewer than 2 and no more than 7 companies, | 19 |
| the Board of Trustees of the System shall
consider, among other | 20 |
| things, the following criteria:
| 21 |
| (1) the nature and extent of the benefits that would be | 22 |
| provided
to the participants;
| 23 |
| (2) the reasonableness of the benefits in relation to | 24 |
| the premium
charged;
| 25 |
| (3) the suitability of the benefits to the needs and
| 26 |
| interests of the participants and the employer;
|
|
|
|
SB0621 |
- 64 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| (4) the ability of the company to provide benefits | 2 |
| under the contract and
the financial stability of the | 3 |
| company; and
| 4 |
| (5) the efficacy of the contract in the recruitment and | 5 |
| retention of
judges.
| 6 |
| The System shall periodically review
each approved | 7 |
| company. A company may continue to provide administrative
| 8 |
| services and funding vehicles for the self-managed plan only so | 9 |
| long as
it continues to be an approved company under contract | 10 |
| with the Board.
| 11 |
| In addition to the companies approved by the System under | 12 |
| this subsection (c), the System may offer its participants an | 13 |
| investment fund managed by the System.
| 14 |
| (d) Participants who are under the self-managed plan
must | 15 |
| be allowed to direct the transfer of their account balances | 16 |
| among the
various investment options offered, subject to | 17 |
| applicable contractual
provisions.
The participant shall not | 18 |
| be deemed a fiduciary by reason of providing such
investment | 19 |
| direction. A person who is a fiduciary shall not be liable for | 20 |
| any
loss resulting from such investment direction and shall not | 21 |
| be deemed to have
breached any fiduciary duty by acting in | 22 |
| accordance with that direction.
Neither the System nor the | 23 |
| State guarantees any of the investments in the
participant's | 24 |
| account balances.
| 25 |
| (e) A currently eligible participant, as defined in Section | 26 |
| 18-123.3, must make a written election to participate in the
|
|
|
|
SB0621 |
- 65 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| self-managed plan in accordance with the
provisions of Section | 2 |
| 18-133.2 and the procedures established by the System.
| 3 |
| Participation in the self-managed plan shall begin
on the first | 4 |
| day of the month immediately following the month in which the
| 5 |
| currently eligible participant's election is filed with the | 6 |
| System or when a newly eligible participant, as defined in | 7 |
| Section 18-123.3, enters the System, but not sooner than the | 8 |
| effective date of
the self-managed
plan. The System shall make | 9 |
| the self-managed plan available under this Article by January | 10 |
| 1, 2009. A participant's participation in the traditional | 11 |
| retirement package under this Article shall terminate on the | 12 |
| date that
participation in the self-managed plan begins.
| 13 |
| A participant who has elected to participate in the | 14 |
| self-managed plan under
this Section must continue | 15 |
| participation while employed as a judge, and may not | 16 |
| participate in the traditional benefit package administered
by | 17 |
| the System under this Article while employed as a judge.
| 18 |
| Participation in the self-managed plan under this Section | 19 |
| shall constitute
membership in the Judges Retirement System of | 20 |
| Illinois.
| 21 |
| A participant under this Section shall be entitled to the | 22 |
| benefits of
Article 20 of this Code.
| 23 |
| (f) If, at the time a participant
elects to participate in | 24 |
| the self-managed plan, the participant rights and credits
in | 25 |
| the System due to previous participation in the traditional | 26 |
| benefit package,
the System shall establish for the participant |
|
|
|
SB0621 |
- 66 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| an opening account balance in the
self-managed plan, equal to | 2 |
| (i) the amount of the contribution refund that the participant
| 3 |
| would be eligible to receive under Section 18-129 if the | 4 |
| participant terminated
employment on that date and elected a | 5 |
| refund of contributions, plus (ii) an amount equal to the | 6 |
| regular employer contribution that would be required to fund | 7 |
| the actual regular cost incurred for each year of service | 8 |
| credit earned, provided that the total opening account balance | 9 |
| does not exceed 7.6% of that participant's salary for that | 10 |
| year, plus interest. The interest used in this subsection (f) | 11 |
| is calculated as the average annual rate of return that the | 12 |
| System has earned over the past 20 fiscal years and is | 13 |
| compounded. The System shall transfer assets from the defined | 14 |
| benefit
retirement program to the self-managed plan, as a | 15 |
| tax-free transfer in
accordance with Internal Revenue Service | 16 |
| guidelines, for purposes of funding
the participant's opening | 17 |
| account balance.
| 18 |
| (g) Notwithstanding any other provision
of this Article, a | 19 |
| participant may not purchase or receive service or service
| 20 |
| credit applicable to the traditional benefit package
under this | 21 |
| Article for any period during which the participant was covered | 22 |
| under the self-managed plan established under this Section.
| 23 |
| (h) The self-managed plan shall be funded by contributions
| 24 |
| from participants participating in the self-managed plan and | 25 |
| State
contributions as provided in this Section.
| 26 |
| The contribution rate for persons participating in the |
|
|
|
SB0621 |
- 67 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| self-managed plan
under this Section shall be equal to the | 2 |
| participant contribution rate for other
participants in the | 3 |
| System, as provided in Section 18-133. This required | 4 |
| contribution shall be made as an employer pick-up under Section | 5 |
| 414(h) of the
Internal Revenue Code of 1986 or any successor | 6 |
| Section thereof. Any employee
participating in the System's | 7 |
| traditional benefit package prior to his or her
election to | 8 |
| participate in the self-managed plan shall continue to have the
| 9 |
| employer pick up that contribution. However, the
amounts picked | 10 |
| up after the election of the self-managed plan shall be | 11 |
| remitted
to and treated as assets of the self-managed plan. In | 12 |
| no event shall a participant have the option of receiving these | 13 |
| amounts in cash. Participants may make
additional | 14 |
| contributions to the
self-managed plan in accordance with | 15 |
| procedures prescribed by the System, to
the extent permitted | 16 |
| under rules prescribed by the System.
| 17 |
| The program shall provide for State contributions to be | 18 |
| credited to each self-managed plan participant in an amount | 19 |
| equal to the regular employer contribution that would be | 20 |
| required to fund the actual regular cost incurred for each year | 21 |
| of service credit earned had the participant chosen to enroll | 22 |
| in the traditional benefit plan.
| 23 |
| An amount of participant contribution, not exceeding 1% of | 24 |
| the participant's salary, shall be used for the purpose of | 25 |
| providing the disability
benefits of the System to the | 26 |
| employee. Prior to the beginning of each plan
year under the |
|
|
|
SB0621 |
- 68 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| self-managed plan, the Board of Trustees shall determine, as a
| 2 |
| percentage of salary, the amount of participant contributions | 3 |
| to be allocated
during that plan year for providing disability | 4 |
| benefits for participants in the
self-managed plan. The | 5 |
| provisions of this paragraph shall be administered in | 6 |
| conjunction with the provisions of Section 18-124.
| 7 |
| The State of Illinois shall make contributions by | 8 |
| appropriations to the
System of the employer contributions | 9 |
| required for participants who are covered under the | 10 |
| self-managed plan under this Section.
The amount required shall
| 11 |
| be certified by the Board of Trustees of the System and paid by | 12 |
| the State in
accordance with Section 18-140. The System shall | 13 |
| not be obligated to remit the
required employer contributions | 14 |
| to any of the insurance and annuity
companies, mutual fund
| 15 |
| companies, banks, trust companies, financial institutions, or | 16 |
| other sponsors
of any of the funding vehicles offered under the | 17 |
| self-managed plan
until it has received the required employer | 18 |
| contributions from the State. In
the event of a deficiency in | 19 |
| the amount of State contributions, the System
shall implement | 20 |
| those procedures described in subsection (b) of Section 18-140
| 21 |
| to obtain the required funding from the General Revenue
Fund.
| 22 |
| (i) A participant in the
self-managed plan becomes vested | 23 |
| in the employer contributions credited to his
or her accounts | 24 |
| in 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 participant while employed as a judge, if the |
|
|
|
SB0621 |
- 69 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| participant has completed at
least 1.5 years of service; or (3) | 2 |
| the participant's election to retire and
apply the reciprocal | 3 |
| 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 subsequently | 9 |
| re-employed as a judge, the participant
shall be considered a | 10 |
| new
employee. If a former participant again becomes a | 11 |
| participating employee (or
becomes employed by a participating | 12 |
| system under Article 20 of this Code) and
continues as such for | 13 |
| at least 2 years, all such rights, service credits, and
| 14 |
| previous status as a participant shall be restored upon | 15 |
| repayment of the amount
of the distribution, without interest.
| 16 |
| (j) If a participant who is vested in employer
| 17 |
| contributions terminates employment, the participant shall be | 18 |
| entitled to a
benefit which is based on the
account values | 19 |
| attributable to both employer and
participant contributions | 20 |
| and any
investment return thereon.
| 21 |
| If a participant who is not vested in employer | 22 |
| contributions terminates
employment, the participant shall be | 23 |
| entitled to a benefit based solely on the
account values | 24 |
| attributable to the participant's contributions and any | 25 |
| investment
return thereon, and the employer contributions and | 26 |
| any investment return
thereon shall be forfeited. Any employer |
|
|
|
SB0621 |
- 70 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| contributions which are forfeited
shall be held in escrow by | 2 |
| the
company investing those contributions and shall be used, as | 3 |
| directed by the
System, for future allocations of employer | 4 |
| contributions or for the restoration
of amounts previously | 5 |
| forfeited by former participants who again become
| 6 |
| participating employees.
| 7 |
| (40 ILCS 5/18-169.1 new)
| 8 |
| Sec. 18-169.1. To the extent that the changes made to this | 9 |
| Article by this amendatory Act of the 95th General Assembly | 10 |
| authorizing the System to offer a self-managed plan are | 11 |
| determined to be a new benefit increase within the meaning of | 12 |
| Section 18-169, the changes made by this amendatory Act are | 13 |
| exempt from the provisions of subsection (d) of Section 18-169.
| 14 |
| Section 99. Effective date. This Act takes effect upon | 15 |
| becoming law.
|
|
|
|
SB0621 |
- 71 - |
LRB095 10003 AMC 30217 b |
|
| 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 5/14-103.40 new |
|
| 10 |
| 40 ILCS 5/14-103.41 new |
|
| 11 |
| 40 ILCS 5/14-105.8 new |
|
| 12 |
| 40 ILCS 5/14-133 |
from Ch. 108 1/2, par. 14-133 |
| 13 |
| 40 ILCS 5/14-133.2 new |
|
| 14 |
| 40 ILCS 5/14-152.2 new |
|
| 15 |
| 40 ILCS 5/15-103.3 |
|
| 16 |
| 40 ILCS 5/15-134.5 |
|
| 17 |
| 40 ILCS 5/15-158.2 |
|
| 18 |
| 40 ILCS 5/15-198.1 new |
|
| 19 |
| 40 ILCS 5/16-104.1 new |
|
| 20 |
| 40 ILCS 5/16-104.2 new |
|
| 21 |
| 40 ILCS 5/16-131.7 new |
|
| 22 |
| 40 ILCS 5/16-152 |
from Ch. 108 1/2, par. 16-152 |
| 23 |
| 40 ILCS 5/16-158.2 new |
|
| 24 |
| 40 ILCS 5/16-203.1 new |
|
| 25 |
| 40 ILCS 5/18-105.1 new |
|
|
|
|
|
SB0621 |
- 72 - |
LRB095 10003 AMC 30217 b |
|
| 1 |
| 40 ILCS 5/18-105.2 new |
|
| 2 |
| 40 ILCS 5/18-123.3 new |
|
| 3 |
| 40 ILCS 5/18-133 |
from Ch. 108 1/2, par. 18-133 |
| 4 |
| 40 ILCS 5/18-133.2 new |
|
| 5 |
| 40 ILCS 5/18-169.1 new |
|
| |
|