(40 ILCS 5/1-113.5)
    Sec. 1-113.5. Investment advisers and investment services for all Article 3 or 4 pension funds.
    (a) The board of trustees of a pension fund may appoint investment advisers as defined in Section 1-101.4. The board of any pension fund investing in common or preferred stock under Section 1-113.4 shall appoint an investment adviser before making such investments.
    The investment adviser shall be a fiduciary, as defined in Section 1-101.2, with respect to the pension fund and shall be one of the following:
        (1) an investment adviser registered under the
    
federal Investment Advisers Act of 1940 and the Illinois Securities Law of 1953;
        (2) a bank or trust company authorized to conduct a
    
trust business in Illinois;
        (3) a life insurance company authorized to transact
    
business in Illinois; or
        (4) an investment company as defined and registered
    
under the federal Investment Company Act of 1940 and registered under the Illinois Securities Law of 1953.
    (a-5) Notwithstanding any other provision of law, a person or entity that provides consulting services (referred to as a "consultant" in this Section) to a pension fund with respect to the selection of fiduciaries may not be awarded a contract to provide those consulting services that is more than 5 years in duration. No contract to provide such consulting services may be renewed or extended. At the end of the term of a contract, however, the contractor is eligible to compete for a new contract. No person shall attempt to avoid or contravene the restrictions of this subsection by any means. All offers from responsive offerors shall be accompanied by disclosure of the names and addresses of the following:
        (1) The offeror.
        (2) Any entity that is a parent of, or owns a
    
controlling interest in, the offeror.
        (3) Any entity that is a subsidiary of, or in which a
    
controlling interest is owned by, the offeror.
    Beginning on July 1, 2008, a person, other than a trustee or an employee of a pension fund or retirement system, may not act as a consultant under this Section unless that person is at least one of the following: (i) registered as an investment adviser under the federal Investment Advisers Act of 1940 (15 U.S.C. 80b-1, et seq.); (ii) registered as an investment adviser under the Illinois Securities Law of 1953; (iii) a bank, as defined in the Investment Advisers Act of 1940; or (iv) an insurance company authorized to transact business in this State.
    (b) All investment advice and services provided by an investment adviser or a consultant appointed under this Section shall be rendered pursuant to a written contract between the investment adviser and the board, and in accordance with the board's investment policy.
    The contract shall include all of the following:
        (1) acknowledgement in writing by the investment
    
adviser that he or she is a fiduciary with respect to the pension fund;
        (2) the board's investment policy;
        (3) full disclosure of direct and indirect fees,
    
commissions, penalties, and any other compensation that may be received by the investment adviser, including reimbursement for expenses; and
        (4) a requirement that the investment adviser submit
    
periodic written reports, on at least a quarterly basis, for the board's review at its regularly scheduled meetings. All returns on investment shall be reported as net returns after payment of all fees, commissions, and any other compensation.
    (b-5) Each contract described in subsection (b) shall also include (i) full disclosure of direct and indirect fees, commissions, penalties, and other compensation, including reimbursement for expenses, that may be paid by or on behalf of the investment adviser or consultant in connection with the provision of services to the pension fund and (ii) a requirement that the investment adviser or consultant update the disclosure promptly after a modification of those payments or an additional payment.
    Within 30 days after the effective date of this amendatory Act of the 95th General Assembly, each investment adviser and consultant providing services on the effective date or subject to an existing contract for the provision of services must disclose to the board of trustees all direct and indirect fees, commissions, penalties, and other compensation paid by or on behalf of the investment adviser or consultant in connection with the provision of those services and shall update that disclosure promptly after a modification of those payments or an additional payment.
    A person required to make a disclosure under subsection (d) is also required to disclose direct and indirect fees, commissions, penalties, or other compensation that shall or may be paid by or on behalf of the person in connection with the rendering of those services. The person shall update the disclosure promptly after a modification of those payments or an additional payment.
    The disclosures required by this subsection shall be in writing and shall include the date and amount of each payment and the name and address of each recipient of a payment.
    (c) Within 30 days after appointing an investment adviser or consultant, the board shall submit a copy of the contract to the Public Pension Division of the Department of Insurance.
    (d) Investment services provided by a person other than an investment adviser appointed under this Section, including but not limited to services provided by the kinds of persons listed in items (1) through (4) of subsection (a), shall be rendered only after full written disclosure of direct and indirect fees, commissions, penalties, and any other compensation that shall or may be received by the person rendering those services.
    (e) The board of trustees of each pension fund shall retain records of investment transactions in accordance with the rules of the Public Pension Division of the Department of Insurance.
(Source: P.A. 103-426, eff. 8-4-23.)