State of Illinois
90th General Assembly
Legislation

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90_SB1423

      40 ILCS 5/15-103.1 new
      40 ILCS 5/15-103.2 new
      40 ILCS 5/15-103.3 new
      40 ILCS 5/15-134.5 new
      40 ILCS 5/15-135          from Ch. 108 1/2, par. 15-135
      40 ILCS 5/15-136          from Ch. 108 1/2, par. 15-136
      40 ILCS 5/15-136.4
      40 ILCS 5/15-141          from Ch. 108 1/2, par. 15-141
      40 ILCS 5/15-142          from Ch. 108 1/2, par. 15-142
      40 ILCS 5/15-145          from Ch. 108 1/2, par. 15-145
      40 ILCS 5/15-146          from Ch. 108 1/2, par. 15-146
      40 ILCS 5/15-154          from Ch. 108 1/2, par. 15-154
      40 ILCS 5/15-157          from Ch. 108 1/2, par. 15-157
      40 ILCS 5/15-158.2
      40 ILCS 5/15-158.3
      40 ILCS 5/15-165          from Ch. 108 1/2, par. 15-165
      40 ILCS 5/15-167          from Ch. 108 1/2, par. 15-167
      30 ILCS 805/8.22 new
          Amends the State  Universities  Article  of  the  Pension
      Code.      Makes   numerous   changes   in  relation  to  the
      implementation and administration of the optional  retirement
      program  (renamed  the  self-managed  plan)  and the portable
      benefit package.  Makes participants in the self-managed plan
      eligible for certain benefits under  the  Retirement  Systems
      Reciprocal  Act.    Also  specifies  that required age 70 1/2
      distributions  are   payable   regardless   of   whether   an
      application   has  been  filed,  and  delays  those  required
      distributions for one year in the case of persons turning age
      70 1/2 before April 1 of a calendar year.  Provides that  the
      System  need  not make an involuntary age 70 1/2 distribution
      to a person who is employed under any retirement system  that
      participates   in  the  Retirement  Systems  Reciprocal  Act.
      Amends the  State  Mandates  Act  to  require  implementation
      without reimbursement.  Effective immediately.
                                                     LRB9011087EGfg
                                               LRB9011087EGfg
 1        AN ACT to amend the Illinois Pension Code.
 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
 5    changing  Sections  15-135, 15-136, 15-136.4, 15-141, 15-142,
 6    15-145, 15-146, 15-154, 15-157,  15-158.2,  15-158.3,  15-165
 7    and  15-167  and adding Sections 15-103.1, 15-103.2, 15-103.3
 8    and 15-134.5 as follows:
 9        (40 ILCS 5/15-103.1 new)
10        Sec.15-103.1.  Traditional Benefit Package.  "Traditional
11    benefit package":  The  defined  benefit  retirement  program
12    maintained   under   the  System  which  includes  retirement
13    annuities payable directly from the  System  as  provided  in
14    Sections  15-135  through  15-140  (but  disregarding Section
15    15-136.4),  disability  retirement  annuities  payable  under
16    Section 15-153.2, death benefits payable  directly  from  the
17    System   as  provided  in  Sections  15-141  through  15-144,
18    survivors insurance benefits payable directly from the System
19    as  provided  in  Sections   15-145   through   15-149,   and
20    contribution  refunds  as  provided  in  Section 15-154.  The
21    traditional benefit package also includes disability benefits
22    as provided in Sections 15-150 through 15-153.3.
23        (40 ILCS 5/15-103.2 new)
24        Sec.15-103.2.   Portable  Benefit   Package.    "Portable
25    benefit  package":  The  defined  benefit  retirement program
26    maintained  under  the  System  which   includes   retirement
27    annuities  payable  directly  from  the System as provided in
28    Sections  15-135  through  15-139   (specifically   including
29    Section  15-136.4),  disability  retirement annuities payable
30    under Section 15-153.2, death benefits payable directly  from
                            -2-                LRB9011087EGfg
 1    the System as provided in Sections 15-141 through 15-144, and
 2    contribution  refunds  as  provided  in  Section 15-154.  The
 3    portable benefit package also includes disability benefits as
 4    provided in Sections 15-150 through 15-153.3.   The  portable
 5    benefit  package  does  not  include  the survivors insurance
 6    benefits payable directly from  the  System  as  provided  in
 7    Sections 15-145 through 15-149.
 8        (40 ILCS 5/15-103.3 new)
 9        Sec.15-103.3.   Self-Managed  Plan.  "Self-managed plan":
10    The defined contribution retirement program maintained  under
11    the   System   as   described   in   Section  15-158.2.   The
12    self-managed  plan  also  includes  disability  benefits   as
13    provided   in   Sections   15-150   through   15-153.3   (but
14    disregarding  disability  retirement  annuities under Section
15    15-153.2).  The self-managed plan does not include retirement
16    annuities, death benefits, or  survivors  insurance  benefits
17    payable  directly  from  the  System  as provided in Sections
18    15-135  through  15-149  and  Section  15-153.2,  or  refunds
19    determined under Section 15-154.
20        (40 ILCS 5/15-134.5 new)
21        Sec.15-134.5.  Retirement Program Elections.
22        (a)  All participating employees are  participants  under
23    the  traditional  benefit  package  prior to January 1, 1998.
24    Effective  as  of  the  date  that  an  employer  elects,  as
25    described in Section 15-158.2, to offer to its employees  the
26    portable   benefit  package  and  the  self-managed  plan  as
27    alternatives to the traditional benefit package, each of that
28    employer's eligible employees (as defined in subsection  (b))
29    shall  be  given the choice to elect which retirement program
30    he or she wishes  to  participate  in  with  respect  to  all
31    periods  of  covered  employment  occurring  on and after the
32    effective date of the employee's  election.   The  retirement
                            -3-                LRB9011087EGfg
 1    program election made by an eligible employee must be made in
 2    writing,  in  the manner prescribed by the System, and within
 3    the time period described in subsection  (d).   The  employee
 4    election   authorized   by   this   Section  is  a  one-time,
 5    irrevocable election.  If an employee  terminates  employment
 6    after making the election provided under this subsection (a),
 7    then  upon  his  or  her  subsequent  re-employment  with  an
 8    employer  the  original election shall automatically apply to
 9    him  or  her,  provided  that  the   employer   is   then   a
10    participating employer as described in Section 15-158.2.
11        (b)  "Eligible employee" means an employee (as defined in
12    Section  15-107)  who is either a currently eligible employee
13    or a newly eligible employee.  For purposes of this  Section,
14    a  "currently  eligible  employee"  is  an  employee  who  is
15    employed  by  an  employer on the effective date on which the
16    employer offers to its employees the portable benefit package
17    and the self-managed plan as alternatives to the  traditional
18    benefit  package.  A "newly eligible employee" is an employee
19    who first becomes employed by an employer after the effective
20    date on which the employer offers its employees the  portable
21    benefit  package and the self-managed plan as alternatives to
22    the traditional benefit package.
23        (c)  An eligible employee who at the time he  or  she  is
24    first  eligible  to make the election described in subsection
25    (a) does not have sufficient age and service to qualify for a
26    retirement  annuity  under  Section  15-135  may   elect   to
27    participate  in the traditional benefit package, the portable
28    benefit package,  or  the  self-managed  plan.   An  eligible
29    employee  who has sufficient age and service to qualify for a
30    retirement annuity under Section 15-135 at the time he or she
31    is  first  eligible  to  make  the  election   described   in
32    subsection  (a)  may  elect to participate in the traditional
33    benefit package or the portable benefit package, but may  not
34    elect to participate in the self-managed plan.
                            -4-                LRB9011087EGfg
 1        (d)  A   currently   eligible  employee  must  make  this
 2    election within one year after  the  effective  date  of  the
 3    employer's  adoption  of  the  self-managed  plan.    A newly
 4    eligible employee must make  this  election  within  60  days
 5    after  becoming an eligible employee.  The employer shall not
 6    remit contributions to  the  system  on  behalf  of  a  newly
 7    eligible  employee until the earlier of the expiration of the
 8    employee's 60-day election period or the date  on  which  the
 9    employee   submits  a  properly  completed  election  to  the
10    employer or to the system.
11        (e)  If an eligible employee elects the portable  benefit
12    package,  that  election shall not become effective until the
13    one-year anniversary of the date on  which  the  election  is
14    filed   with   the  system,  provided  the  employee  remains
15    continuously employed by the employer throughout the one-year
16    waiting period, and any benefits payable to or on account  of
17    the  employee  before  such one-year waiting period has ended
18    shall not be determined under the  provisions  applicable  to
19    the  portable benefit package but shall instead be determined
20    in accordance with the traditional benefit  package.   If  an
21    eligible  employee  who  has  elected  the  portable  benefit
22    package  terminates  employment  covered by the system before
23    the one-year waiting period has ended, then no benefits shall
24    be determined under the portable benefit  package  provisions
25    while   he  or  she  is  inactive  in  the  system  and  upon
26    re-employment with an employer covered by the  system  he  or
27    she  shall  begin  a  new  one-year waiting period before the
28    provisions of the portable benefit package become effective.
29        (f)  An eligible employee shall be provided with  written
30    information  prepared  or  prescribed  by  the  system  which
31    describes  the  employee's  retirement  program choices.  The
32    eligible employee shall be offered an opportunity to  receive
33    counseling  from  the  system  prior  to  making  his  or her
34    election.   This  counseling  may   consist   of   videotaped
                            -5-                LRB9011087EGfg
 1    materials,  group presentations, individual consultation with
 2    an employee or authorized representative  of  the  system  in
 3    person  or  by  telephone  or  other electronic means, or any
 4    combination of these methods.
 5        (40 ILCS 5/15-135) (from Ch. 108 1/2, par. 15-135)
 6        Sec. 15-135.  Retirement annuities - Conditions.
 7        (a)  A participant who retires in one  of  the  following
 8    specified  years  with  the  specified  amount  of service is
 9    entitled to  a  retirement  annuity  at  any  age  under  the
10    retirement program applicable to the participant:
11             35 years if retirement is in 1997 or before;
12             34 years if retirement is in 1998;
13             33 years if retirement is in 1999;
14             32 years if retirement is in 2000;
15             31 years if retirement is in 2001;
16             30 years if retirement is in 2002;
17             35 years if retirement is in 2003 or later.
18        A  participant  with  8  or  more  years of service after
19    September 1, 1941, is entitled to a retirement annuity on  or
20    after attainment of age 55.
21        A  participant  with  at least 5 but less than 8 years of
22    service after September 1, 1941, is entitled to a  retirement
23    annuity on or after attainment of age 62.
24        A  participant  who  has  at least 25 years of service in
25    this system as a police officer or firefighter is entitled to
26    a retirement annuity on or after the attainment of age 50, if
27    Rule 4 of Section 15-136 is applicable to the participant.
28        (b)  The annuity payment period shall begin on  the  date
29    specified   by   the   participant   submitting   a   written
30    application,  which date shall not be prior to termination of
31    employment or more than one year before  the  application  is
32    received  by the board; however, if the participant is not an
33    employee of an employer participating in this System or in  a
                            -6-                LRB9011087EGfg
 1    participating system as defined in Article 20 of this Code on
 2    April 1 of the calendar year next following the calendar year
 3    in  which the participant attains following the attainment of
 4    age 70 1/2, the annuity payment period shall  begin  on  that
 5    date regardless of whether an application has been filed.
 6        (c)  An  annuity  is  not  payable if the amount provided
 7    under Section 15-136 is less than $10 per month.
 8    (Source: P.A. 90-65, eff. 7-7-97.)
 9        (40 ILCS 5/15-136) (from Ch. 108 1/2, par. 15-136)
10        Sec.  15-136.  Retirement  annuities   -   Amount.    The
11    provisions  of  this  Section  15-136  apply  only  to  those
12    participants who are participating in the traditional benefit
13    package  or  the portable benefit package and do not apply to
14    participants who are participating in the self-managed plan.
15        (a)  The  amount  of  a  participant's   the   retirement
16    annuity,  expressed  in  the  form  of a single-life annuity,
17    shall be determined by whichever of the  following  rules  is
18    applicable and provides the largest annuity:
19        Rule  1:  The  retirement annuity shall be 1.67% of final
20    rate of earnings for each of the first 10 years  of  service,
21    1.90%  for  each  of  the next 10 years of service, 2.10% for
22    each year of service in excess of 20 but  not  exceeding  30,
23    and  2.30%  for each year in excess of 30; or for persons who
24    retire on or after January 1, 1998, 2.2% of the final rate of
25    earnings for each year of service, except  that  the  annuity
26    for  those  persons  having  made  an  election under Section
27    15-154(a-1)  shall  be  calculated  and  payable  under   the
28    portable   retirement   benefit   program   pursuant  to  the
29    provisions of Section 15-136.4.
30        Rule 2:  The retirement annuity shall be the sum  of  the
31    following,   determined   from   amounts   credited   to  the
32    participant in accordance with the actuarial tables  and  the
33    prescribed  rate  of  interest  in  effect  at  the  time the
                            -7-                LRB9011087EGfg
 1    retirement annuity begins:
 2             (i)  The normal annuity which can be provided on  an
 3        actuarially  equivalent  basis, by the accumulated normal
 4        contributions as of the date the annuity begins; and
 5             (ii)  an annuity from employer contributions  of  an
 6        amount which can be provided on an actuarially equivalent
 7        basis  from  the accumulated normal contributions made by
 8        the  participant  under  Section  15-113.6  and   Section
 9        15-113.7  plus  1.4  times  all  other accumulated normal
10        contributions made by the participant,  except  that  the
11        annuity  for  those persons having made an election under
12        Section 15-154(a-1) shall be calculated and payable under
13        the portable retirement benefit program pursuant  to  the
14        provisions of Section 15-136.4.
15        Rule  3:  The  retirement annuity of a participant who is
16    employed at least one-half time during the  period  on  which
17    his or her final rate of earnings is based, shall be equal to
18    the   participant's  years  of  service  not  to  exceed  30,
19    multiplied by (1) $96 if  the  participant's  final  rate  of
20    earnings  is  less than $3,500, (2) $108 if the final rate of
21    earnings is at least $3,500 but less than $4,500, (3) $120 if
22    the final rate of earnings is at least $4,500 but  less  than
23    $5,500,  (4)  $132  if the final rate of earnings is at least
24    $5,500 but less than $6,500, (5) $144 if the  final  rate  of
25    earnings is at least $6,500 but less than $7,500, (6) $156 if
26    the  final  rate of earnings is at least $7,500 but less than
27    $8,500, (7) $168 if the final rate of earnings  is  at  least
28    $8,500  but  less than $9,500, and (8) $180 if the final rate
29    of earnings is $9,500 or more, except that  the  annuity  for
30    those   persons   having   made  an  election  under  Section
31    15-154(a-1)  shall  be  calculated  and  payable  under   the
32    portable   retirement   benefit   program   pursuant  to  the
33    provisions of Section 15-136.4.
34        Rule 4:  A participant who is at least age 50 and has  25
                            -8-                LRB9011087EGfg
 1    or  more years of service as a police officer or firefighter,
 2    and a participant who is age 55 or over and has at  least  20
 3    but  less  than  25  years  of service as a police officer or
 4    firefighter, shall be entitled to a retirement annuity  of  2
 5    1/4%  of  the final rate of earnings for each of the first 10
 6    years of service as a police officer or firefighter,  2  1/2%
 7    for  each of the next 10 years of service as a police officer
 8    or firefighter, and 2 3/4% for each  year  of  service  as  a
 9    police  officer  or  firefighter in excess of 20, except that
10    the annuity for those persons having made an  election  under
11    Section 15-154(a-1) shall be calculated and payable under the
12    portable   retirement   benefit   program   pursuant  to  the
13    provisions of Section 15-136.4.  The retirement  annuity  for
14    all  other  service  shall  be computed under Rule 1, payable
15    under the portable retirement benefit program pursuant to the
16    provisions of Section 15-136.4, if applicable.
17        (b)  The retirement annuity provided under Rules 1 and  3
18    above  shall  be  reduced  by  1/2  of  1% for each month the
19    participant is under  age  60  at  the  time  of  retirement.
20    However,  this  reduction  shall  not  apply in the following
21    cases:
22             (1)  For a  disabled  participant  whose  disability
23        benefits  have  been  discontinued  because he or she has
24        exhausted  eligibility  for  disability  benefits   under
25        clause (6) of Section 15-152;
26             (2)  For  a  participant who has at least the number
27        of years of service required to retire at any  age  under
28        subsection (a) of Section 15-135; or
29             (3)  For  that portion of a retirement annuity which
30        has  been  provided  on  account  of   service   of   the
31        participant  during  periods when he or she performed the
32        duties of a  police  officer  or  firefighter,  if  these
33        duties  were  performed  for at least 5 years immediately
34        preceding the date the retirement annuity is to begin.
                            -9-                LRB9011087EGfg
 1        (c)  The maximum retirement annuity provided under  Rules
 2    1,  2,  and  4 shall be the lesser of (1) the annual limit of
 3    benefits as specified in Section 415 of the Internal  Revenue
 4    Code  of  1986,  as  such Section may be amended from time to
 5    time and as such benefit limits  shall  be  adjusted  by  the
 6    Commissioner  of  Internal Revenue, and (2) 80% of final rate
 7    of earnings.
 8        (d)  An annuitant whose status as an employee  terminates
 9    after  August  14,  1969 shall receive automatic increases in
10    his or her retirement annuity as follows:
11        Effective January 1 immediately following  the  date  the
12    retirement  annuity  begins,  the  annuitant shall receive an
13    increase in his or her monthly retirement annuity  of  0.125%
14    of the monthly retirement annuity provided under Rule 1, Rule
15    2,  Rule  3, or Rule 4, contained in this Section, multiplied
16    by the number of full months which elapsed from the date  the
17    retirement  annuity  payments  began to January 1, 1972, plus
18    0.1667% of such annuity, multiplied by  the  number  of  full
19    months  which  elapsed  from January 1, 1972, or the date the
20    retirement annuity payments began,  whichever  is  later,  to
21    January 1, 1978, plus 0.25% of such annuity multiplied by the
22    number  of full months which elapsed from January 1, 1978, or
23    the date the retirement annuity payments began, whichever  is
24    later, to the effective date of the increase.
25        The  annuitant  shall  receive  an increase in his or her
26    monthly retirement  annuity  on  each  January  1  thereafter
27    during  the  annuitant's  life  of  3% of the monthly annuity
28    provided under Rule 1, Rule 2, Rule 3, or Rule 4 contained in
29    this Section.  The change made under this subsection by  P.A.
30    81-970  is  effective  January  1,  1980  and applies to each
31    annuitant whose status as an employee  terminates  before  or
32    after that date.
33        Beginning January 1, 1990, all automatic annual increases
34    payable   under   this  Section  shall  be  calculated  as  a
                            -10-               LRB9011087EGfg
 1    percentage of the total annuity payable at the  time  of  the
 2    increase,  including  all  increases previously granted under
 3    this Article.
 4        The change made in this subsection  by  P.A.  85-1008  is
 5    effective  January 26, 1988, and is applicable without regard
 6    to whether status as an employee terminated before that date.
 7        (e)  If, on January 1, 1987, or the date  the  retirement
 8    annuity payment period begins, whichever is later, the sum of
 9    the  retirement  annuity  provided  under Rule 1 or Rule 2 of
10    this Section and  the  automatic  annual  increases  provided
11    under  the  preceding subsection or Section 15-136.1, amounts
12    to less than the retirement annuity which would  be  provided
13    by  Rule  3,  the retirement annuity shall be increased as of
14    January 1, 1987, or the date the retirement  annuity  payment
15    period  begins, whichever is later, to the amount which would
16    be provided by Rule 3 of this Section. Such increased  amount
17    shall  be considered as the retirement annuity in determining
18    benefits provided under other Sections of this Article.  This
19    paragraph  applies  without  regard  to  whether status as an
20    employee  terminated  before  the  effective  date  of   this
21    amendatory  Act  of  1987,  provided  that  the annuitant was
22    employed at least one-half time during the  period  on  which
23    the final rate of earnings was based.
24        (f)  A participant is entitled to such additional annuity
25    as may be provided on an actuarially equivalent basis, by any
26    accumulated  additional  contributions  to his or her credit.
27    However, the additional contributions made by the participant
28    toward the automatic increases in annuity provided under this
29    Section shall not be taken into account  in  determining  the
30    amount of such additional annuity.
31        (g)  If,  (1)  by law, a function of a governmental unit,
32    as defined by Section 20-107 of this Code, is transferred  in
33    whole  or  in  part  to  an  employer,  and (2) a participant
34    transfers employment from  such  governmental  unit  to  such
                            -11-               LRB9011087EGfg
 1    employer  within 6 months after the transfer of the function,
 2    and (3) the sum of (A) the annuity payable to the participant
 3    under Rule 1, 2, or 3 of this Section  (B)  all  proportional
 4    annuities  payable to the participant by all other retirement
 5    systems covered by Article 20, and (C)  the  initial  primary
 6    insurance  amount  to which the participant is entitled under
 7    the Social Security Act, is less than the retirement  annuity
 8    which  would  have  been  payable if all of the participant's
 9    pension credits  validated  under  Section  20-109  had  been
10    validated  under this system, a supplemental annuity equal to
11    the difference in  such  amounts  shall  be  payable  to  the
12    participant.
13        (h)  On January 1, 1981, an annuitant who was receiving a
14    retirement  annuity  on  or before January 1, 1971 shall have
15    his or her retirement annuity then being  paid  increased  $1
16    per  month for each year of creditable service. On January 1,
17    1982, an annuitant  whose  retirement  annuity  began  on  or
18    before  January  1,  1977,  shall  have his or her retirement
19    annuity then being paid increased $1 per month for each  year
20    of creditable service.
21        (i)  On  January  1, 1987, any annuitant whose retirement
22    annuity began on or before January 1, 1977,  shall  have  the
23    monthly retirement annuity increased by an amount equal to 8¢
24    per year of creditable service times the number of years that
25    have elapsed since the annuity began.
26    (Source: P.A. 90-14, eff. 7-1-97; 90-65, eff. 7-7-97; 90-448,
27    eff. 8-16-97; revised 8-21-97.)
28        (40 ILCS 5/15-136.4)
29        Sec.  15-136.4.  Retirement  and  Survivor Benefits Under
30    Portable Retirement Benefit Package Program.
31        (a)  This Section 15-136.4 describes the form of  annuity
32    and  survivor  benefits  available  to  a participant who has
33    elected the portable benefit package and  has  completed  the
                            -12-               LRB9011087EGfg
 1    one-year  waiting  period  required  under  subsection (e) of
 2    Section 15-134.5.  For purposes of  this  Section,  the  term
 3    "eligible  spouse" means the husband or wife of a participant
 4    to  whom  the  participant  is  married  on  the   date   the
 5    participant's  retirement  annuity begins, provided. however,
 6    that if the participant should die prior to the  commencement
 7    of  retirement  date  the  annuity benefits would have begun,
 8    then "eligible spouse" means the husband or wife, if any,  to
 9    whom  the  participant  was  married  throughout the one-year
10    period preceding the date of his or her death.
11        (b)  This subsection (b) describes  the  normal  form  of
12    annuity  payable  to  a  participant  subject to this Section
13    15-136.4.  If the participant is unmarried on the date his or
14    her annuity payments  commence,  then  the  annuity  payments
15    shall  be  made  in  the  form  of  a  single-life annuity as
16    described in Section 15-118.  If the participant  is  married
17    on  the  date  his or her annuity payments commence, then the
18    annuity payments shall be paid in the  form  of  a  qualified
19    joint  and  survivor annuity that is the actuarial equivalent
20    of the single-life annuity.  Under the "qualified  joint  and
21    survivor  annuity",  a  reduced  amount  shall be paid to the
22    participant for his or her lifetime and his or  her  eligible
23    spouse,  if  surviving  at  the participant's death, shall be
24    entitled  to  receive  thereafter  a  lifetime   survivorship
25    annuity  in  a  monthly  amount  equal  to 50% of the reduced
26    monthly amount that was payable to the participant.  The last
27    payment of a qualified joint and survivor  annuity  shall  be
28    made  as  of the first day of the month in which the death of
29    the survivor occurs. If a participant has an eligible  spouse
30    on the date his or her annuity payments commence, the annuity
31    shall be paid in the form of a 50% joint and survivor annuity
32    unless the participant elects otherwise in writing and his or
33    her  eligible  spouse consents to that election.  Under a 50%
34    joint and survivor annuity, a reduced amount shall be paid to
                            -13-               LRB9011087EGfg
 1    the participant for his  or  her  lifetime  and  his  or  her
 2    eligible  spouse,  if  surviving  at the participant's death,
 3    shall  be  entitled  to   receive   thereafter   a   lifetime
 4    survivorship  annuity in a monthly amount equal to 50% of the
 5    reduced monthly amount that was payable to  the  participant.
 6    The  reduced  amount payable to the participant under the 50%
 7    joint and survivor annuity shall be determined  so  that  the
 8    aggregate  of the annuity payments expected to be made to the
 9    participant and his or her eligible spouse is  the  actuarial
10    equivalent  of  a single-life annuity.  The last payment of a
11    50% joint and survivor annuity shall be made as of the  first
12    day of the month in which the death of the survivor occurs.
13        (c)  Instead  of the normal form of annuity that would be
14    paid under subsection (b), a participant may elect in writing
15    within the 90-day period prior to the date his or her annuity
16    payments commence to waive the normal form of annuity payment
17    and receive an optional  form  of  annuity  as  described  in
18    subsection  (h).  If the participant is married and elects an
19    optional form of annuity under subsection (h)  other  than  a
20    joint   and   survivor   annuity  with  the  eligible  spouse
21    designated as the contingent annuitant,  then  such  election
22    shall  require  the  consent of his or her eligible spouse in
23    the manner described in subsection (d).  At any  time  during
24    the  90-day  period  preceding  the  date  the  participant's
25    annuity  commences,  the  participant may revoke the optional
26    form elected under this subsection (c) and reinstate coverage
27    under the qualified joint and survivor  annuity  without  the
28    spouse's consent, but an election to revoke the optional form
29    elected  and  elect  a  new  optional  form  or  designate  a
30    different contingent annuitant shall not be effective without
31    the  eligible spouse's consent.  Instead of the 50% joint and
32    survivor annuity, a participant may elect in writing,  within
33    the  90-day  period  prior  to  the  date  his or her annuity
34    payments commence, and only with the consent of  his  or  her
                            -14-               LRB9011087EGfg
 1    eligible spouse, to receive a monthly amount in the form of a
 2    single-life annuity.  A participant may also elect instead an
 3    optional  form  of benefit under subsection (k).  However, if
 4    the participant does elect an optional form of benefit  under
 5    subsection  (k)  and  if  the  contingent annuitant under the
 6    option is not the participant's  eligible  spouse,  then  the
 7    optional  election shall be canceled and the annuity shall be
 8    paid in the form of a 50% joint and survivor annuity  unless,
 9    within  the  90-day period preceding the annuity commencement
10    date, the eligible spouse consents to the optional election.
11        (d)  A participant may  also  revoke  any  election  made
12    under  this  Section  at  any  time  during the 90-day period
13    preceding the date the participant's annuity commences if the
14    purpose of such revocation is to reinstate coverage under the
15    50% joint and survivor annuity.
16        (d) (e)  The eligible spouse's consent  to  any  election
17    made  pursuant  to  this  Section  that requires the eligible
18    spouse's consent shall be in writing  and  shall  acknowledge
19    the  effect  of  the  consent.   In  addition,  the  eligible
20    spouse's  signature  on the written consent must be witnessed
21    by a notary public.  The eligible spouse's consent  need  not
22    be  obtained  if  the  system  is  satisfied that there is no
23    eligible spouse, that the eligible spouse cannot be  located,
24    or  because of any other relevant circumstances.  An eligible
25    spouse's consent  under  this  Section  is  valid  only  with
26    respect  to  the  specified  optional form of payment and, if
27    applicable, alternate contingent annuitant designated by  the
28    participant.    If  the  optional  form  of  payment  or  the
29    alternate contingent annuitant is subsequently changed (other
30    than by a revocation of the optional form  and  reinstatement
31    of  the  qualified joint and survivor annuity), a new consent
32    by the eligible spouse is required.   The  eligible  spouse's
33    consent to an election made by a participant pursuant to this
34    Section,  once  made,  may  not  be  revoked  by the eligible
                            -15-               LRB9011087EGfg
 1    spouse.
 2        (e) (f)  Within a reasonable period of time preceding the
 3    date a participant's annuity commences, a  participant  shall
 4    be  supplied  with a written explanation of (1) the terms and
 5    conditions  of  the  normal  form  single-life  annuity   and
 6    qualified   50%   joint   and   survivor   annuity,  (2)  the
 7    participant's right, if any, to elect a  single-life  annuity
 8    or  an  optional  form of payment under subsection (h) (k) in
 9    lieu of the 50% joint and survivor annuity  and  subject,  in
10    certain  cases,  to  his or her eligible spouse's consent, if
11    applicable, and (3)  the  participant's  right  to  reinstate
12    coverage  under  the qualified 50% joint and survivor annuity
13    prior to his or her annuity commencement date by revoking  an
14    election  of  a  single-life  annuity  or an optional form of
15    benefit under subsection (h) (k).
16        (g)  If a participant does not have  an  eligible  spouse
17    on  the  date  his  or  her  annuity  payments  commence, the
18    participant shall receive a single-life annuity,  subject  to
19    his  or  her  right,  if  any,  to  elect an optional form of
20    benefit. The last payment of the single-life annuity shall be
21    made as of the first day of the month in which the  death  of
22    the participant occurs.
23    (h)  A  participant  with  a  least  5 years of service whose
24    employment has not terminated shall be  covered  by  the  50%
25    joint  and  survivor  annuity provisions so that if he or she
26    dies prior to termination of employment, his or her  eligible
27    spouse  will  be entitled to receive an annuity.  The annuity
28    payable under this subsection  (h)  to  the  eligible  spouse
29    shall be actuarially equivalent to the
30        (f)  If  a  married  participant with at least 5 years of
31    service dies prior to commencing retirement annuity  payments
32    and prior to taking a refund under Section 15-154, his or her
33    eligible  spouse  is  entitled  to  receive  a pre-retirement
34    survivor annuity, if there is not then in effect a waiver  of
                            -16-               LRB9011087EGfg
 1    the  pre-retirement  survivor  annuity.   The  pre-retirement
 2    survivor  annuity  payable  under  this subsection shall be a
 3    monthly annuity  payable  for  the  eligible  spouse's  life,
 4    commencing  as  of  the beginning of the month next following
 5    the later of the date of the participant's death or the  date
 6    the   participant   would  have  first  met  the  eligibility
 7    requirements  for  retirement,  and  continuing  through  the
 8    beginning of the month in which the  death  of  the  eligible
 9    spouse  occurs.   The  monthly  amount  payable to the spouse
10    under the pre-retirement survivor annuity shall be  equal  to
11    the  monthly  amount  that  would  be  payable  as a survivor
12    annuity  under  the  qualified  joint  and  survivor  annuity
13    described in  subsection  (b)  if:  (1)  in  the  case  of  a
14    participant  who  dies  on  or  after  the  date on which the
15    participant has met the eligibility requirements for attained
16    the earliest retirement age, the participant had retired with
17    an immediate qualified joint and survivor annuity on the  day
18    before  the  participant's date  of death; or (2) in the case
19    of a participant who dies on or before the earliest  date  on
20    which   the   participant  would  have  met  the  eligibility
21    requirements for attained the earliest  retirement  age,  the
22    participant  had separated from service on the date of death,
23    survived to the earliest  retirement  age  based  on  service
24    prior  to  his  or  her  death,  retired  with  an  immediate
25    qualified   joint   and  survivor  annuity  at  the  earliest
26    retirement age, and died on the day after the  day  on  which
27    the  participant  would have attained the earliest retirement
28    age.
29        (g)  A married participant who has not retired may  elect
30    at  any  time  to  waive  the pre-retirement survivor annuity
31    described in subsection (f).  Any such election shall require
32    the consent of  the  participant's  eligible  spouse  in  the
33    manner   described  in  subsection  (e).   A  waiver  of  the
34    pre-retirement survivor annuity shall increase the  lump  sum
                            -17-               LRB9011087EGfg
 1    death benefit payable under subsection (b) of Section 15-141.
 2    Prior  to  electing any waiver of the pre-retirement survivor
 3    annuity, the participant shall be  provided  with  a  written
 4    explanation   of   (1)   the  terms  and  conditions  of  the
 5    pre-retirement  survivor  annuity  and  the  death   benefits
 6    payable   from   the   system   both  with  and  without  the
 7    pre-retirement survivor annuity, (2) the participant's  right
 8    to  elect  a  waiver  of  the pre-retirement survivor annuity
 9    coverage subject to his or her spouse's consent, and (3)  the
10    participant's  right  to  reinstate  pre-retirement  survivor
11    annuity  coverage  at  any time by revoking a prior waiver of
12    such coverage.
13        (h)  By filing a  timely  election  with  the  system,  a
14    participant  who  will  be  eligible  to receive a retirement
15    annuity under this Section  may  waive  the  normal  form  of
16    annuity  payment  described  in  subsection  (b),  subject to
17    obtaining the consent of  his  or  her  eligible  spouse,  if
18    applicable,  and  elect  to  receive any one of the following
19    optional annuity forms:
20             (1)  Joint  and  Survivor  Annuity   Options:    The
21        participant  may  elect  to  receive  a  reduced  annuity
22        payable  for  his  or  her  life  and  to have a lifetime
23        survivorship annuity in a monthly amount  equal  to  50%,
24        75%,  or  100%  (as  elected  by the participant) of that
25        reduced  monthly   amount,   to   be   paid   after   the
26        participant's  death  to his or her contingent annuitant,
27        if the contingent annuitant is alive at the time  of  the
28        participant's death.
29             (2)  Single-Life   Annuity   Option   (optional  for
30        married participants).   The  participant  may  elect  to
31        receive a single-life annuity payable for his or her life
32        only.
33    All  optional  forms  shall  be  in  an  amount  that  is the
34    actuarial equivalent of the single-life annuity.
                            -18-               LRB9011087EGfg
 1        For the purposes of this Section,  the  term  "contingent
 2    annuitant"  means  the  beneficiary  who  is  designated by a
 3    participant at the time the participant elects  a  joint  and
 4    survivor annuity to receive the lifetime survivorship annuity
 5    in  the event the beneficiary survives the participant at the
 6    participant's death.
 7        The  annuity  payable  to  an  eligible   spouse   of   a
 8    participant  shall  commence as of the beginning of the month
 9    next following the later of the date of death or the date the
10    participant would have met the eligibility  requirements  for
11    an  annuity  and  shall continue through the beginning of the
12    month in which the death of the eligible spouse occurs.
13        No benefit shall be payable under this subsection (h) for
14    death during employment after the participant  has  satisfied
15    the  requirements  for  retirement  if an option is effective
16    under subsection (k).
17        (i)  A participant who (1) has terminated employment with
18    at least 5 years of service,  (2)  has  not  begun  receiving
19    annuity  payments,  (3)  has not taken a refund under Section
20    15-154(a-2), and (4) has  not  elected  an  effective  option
21    under  subsection  (k), shall be covered by the 50% joint and
22    survivor annuity provisions of subsection (b) until the  date
23    his  or  her  annuity  payments commence.  If the participant
24    dies before the date his or her  annuity  payments  commence,
25    the  participant's surviving eligible spouse shall receive an
26    annuity computed in accordance with the applicable provisions
27    of this Section as if the participant's annuity payments  had
28    commenced  on  the  first day of the month coincident with or
29    next following the later of his or her date of death  or  the
30    date   the   participant  would  have  been  eligible  for  a
31    retirement annuity based on  service  prior  to  his  or  her
32    death.   The annuity payable to such an eligible spouse shall
33    commence on the first day of the  month  coincident  with  or
34    next  following  the later of the participant's date of death
                            -19-               LRB9011087EGfg
 1    or the date the participant would have been  eligible  for  a
 2    retirement  annuity  based  on service prior to his death and
 3    shall continue through the beginning of the  month  in  which
 4    the death of the eligible spouse occurs.
 5        (j)  The  provisions  of  subsection (i) shall not affect
 6    the right of a participant to elect  a  single-life  annuity,
 7    pursuant to the provisions of subsection (b).
 8        (k)  By  filing  a  timely  election  with  the system, a
 9    participant who will be  eligible  to  receive  a  retirement
10    annuity under this Section may designate his or her spouse or
11    any  person  approved  by the system as his or her contingent
12    annuitant  and  elect  to  receive  an  annuity  payable   in
13    accordance  with one of the following options, instead of the
14    annuity to which he or she may otherwise become entitled:
15             Option 1:  The participant shall receive  a  reduced
16        annuity  payable  for life, and payments in the amount of
17        100%  of   such   reduced   amount   shall,   after   the
18        participant's  death,  be  continued  to  the  contingent
19        annuitant during the latter's lifetime.
20             Option  2:  The  participant shall receive a reduced
21        annuity payable for life, and payments in the  amount  of
22        75%   of   such   reduced   annuity   shall,   after  the
23        participant's  death,  be  continued  to  the  contingent
24        annuitant during the latter's lifetime.
25             Option 3:  The participant shall receive  a  reduced
26        annuity  payable  for life, and payments in the amount of
27        50%  of   such   reduced   annuity   shall,   after   the
28        participant's  death,  be  continued  to  the  contingent
29        annuitant during the latter's lifetime.
30        The aggregate of the annuity payments expected to be paid
31    to  a  participant  and his contingent annuitant under any of
32    the above options shall be the actuarial  equivalent  of  the
33    annuity that the participant is otherwise entitled to receive
34    upon retirement.
                            -20-               LRB9011087EGfg
 1        (i)  Under  no  circumstances  may  an option be elected,
 2    changed,  or  revoked  after  the  date   the   participant's
 3    retirement  annuity  commences.   An  option  in  favor  of a
 4    contingent annuitant who is not  the  participant's  eligible
 5    spouse  may  be  revoked  at  any  time prior to the date the
 6    participant's annuity payments commence.  If  the  contingent
 7    annuitant  under  the elected option is not the participant's
 8    eligible spouse, then the  election  is  valid  only  if  the
 9    eligible   spouse  consents  to  the  participant's  optional
10    election and to the specific contingent annuitant within  the
11    90-day  period  preceding  the date the participant's annuity
12    commences.
13        (j)  An election made pursuant to this subsection (h) (k)
14    shall become  inoperative  if  the  participant's  employment
15    terminates  before  he  or  she  is eligible for a retirement
16    annuity, or if the participant or  the  contingent  annuitant
17    dies  before  the  date  the  participant's  annuity payments
18    commence, or if the eligible spouse's consent is required and
19    not given.
20        (k)  For purposes of applying the provisions  of  Section
21    20-123  of  this  Code, the portable benefit package shall be
22    treated as if it were provided by a participating system that
23    has no survivor's annuity benefit. An effective option  under
24    this  subsection (k) takes the place of any benefit otherwise
25    payable under this Section, and the form  made  available  by
26    the system for election of the option shall so specify.
27        (1)  Within   the  appropriate  applicable  period  under
28    Section 417 of the Internal Revenue Code of 1986, as  amended
29    from  time  to  time,  a participant shall be supplied with a
30    written explanation of (1) the terms and  conditions  of  the
31    preretirement survivor annuity under subsections (h) and (i),
32    (2)  the  participant's right, if any, to elect a single-life
33    annuity or an optional form of payment under  subsection  (k)
34    in lieu of the preretirement survivor annuity and subject, in
                            -21-               LRB9011087EGfg
 1    certain  cases,  to his or her eligible spouse's consent, and
 2    (3) the participant's right to reinstate coverage  under  the
 3    preretirement  survivor  annuity by revoking an election of a
 4    single-life annuity or an  optional  form  of  benefit  under
 5    subsection (k).
 6    (Source: P.A. 90-448, eff. 8-16-97.)
 7        (40 ILCS 5/15-141) (from Ch. 108 1/2, par. 15-141)
 8        Sec. 15-141. Death benefits - Death of participant.
 9        (a)  The   beneficiary   of   a   participant  under  the
10    traditional benefit package is entitled to  a  death  benefit
11    equal to the sum of (1) the employee's accumulated normal and
12    additional  contributions  on  the  date  of  death,  (2) the
13    employee's accumulated survivors insurance  contributions  on
14    the  date  of  death, if a survivors insurance benefit is not
15    payable, (3) an amount equal to the employee's final rate  of
16    earnings,  but  not  more than $5,000 if (i) the beneficiary,
17    under rules of the board, was dependent upon the participant,
18    (ii) the participant was a participating employee immediately
19    prior to his or her death, and (iii)  a  survivors  insurance
20    benefit is not payable, and (4) $2,500 if (i) the beneficiary
21    was  not dependent upon the participant, (ii) the participant
22    was a participating employee immediately prior to his or  her
23    death,  and  (iii)  a  survivors  insurance  benefit  is  not
24    payable.
25        (b)  However,   If   the   participant   has  elected  to
26    participate in the portable benefit package and has completed
27    the one-year waiting period required under subsection (e)  of
28    retirement  benefit  program by making the election specified
29    in Section 15-134.5 15-154(a-1), the death benefit  shall  be
30    calculated  as  follows.  The death benefit shall be equal to
31    the   employee's   accumulated    normal    and    additional
32    contributions  on  the date of death plus, or if the employee
33    died with 5 or  more  years  of  service  for  employment  as
                            -22-               LRB9011087EGfg
 1    defined  in  Section  15-113.1,  his or her beneficiary shall
 2    also be entitled to employer contributions in an amount equal
 3    to  the  sum  of  the  accumulated  normal   and   additional
 4    contributions;   except  that  if  a  pre-retirement survivor
 5    annuity benefit  to  a  surviving  spouse  is  payable  under
 6    Section  15-136.4,  the  death  benefit  payable  under  this
 7    paragraph shall be reduced, but to not less than zero, by the
 8    actuarial  value  of  the  benefit  payable  to the surviving
 9    spouse.  The beneficiary of the participant must  be  his  or
10    her spouse unless the spouse has consented to the designation
11    of  another beneficiary in the manner described in subsection
12    (d) of Section 15-136.4.
13        (c)  If payments are made  under  any  State  or  Federal
14    Workers' Compensation or Occupational Diseases Law because of
15    the  death  of  an employee, the portion of the death benefit
16    payable from employer contributions shall be reduced  by  the
17    total amount of the payments.
18    (Source: P.A. 90-448, eff. 8-16-97.)
19        (40 ILCS 5/15-142) (from Ch. 108 1/2, par. 15-142)
20        Sec.  15-142.  Death benefits - Death of annuitant.  Upon
21    the death of an annuitant receiving a retirement  annuity  or
22    disability  retirement  annuity,  the annuitant's beneficiary
23    shall, if a survivor's insurance benefit is not payable under
24    Section 15-145 and a pre-retirement survivor or an annuity is
25    not payable under Section 15-136.4, be entitled  to  a  death
26    benefit  equal  to  the  greater  of  the  following: (1) the
27    excess, if  any,  of  the  sum  of  the  accumulated  normal,
28    survivors  insurance,  and additional contributions as of the
29    date of retirement, or the  date  the  disability  retirement
30    annuity  began,  whichever  is  earlier,  over the sum of all
31    annuity payments made prior to the  date  of  death,  or  (2)
32    $1,000.
33    (Source: P.A. 90-448, eff. 8-16-97.)
                            -23-               LRB9011087EGfg
 1        (40 ILCS 5/15-145) (from Ch. 108 1/2, par. 15-145)
 2        Sec.  15-145.   Survivors  insurance benefits; Conditions
 3    and amounts.
 4        (a)  The survivors insurance benefits provided under this
 5    Section shall be payable  to  the  eligible  survivors  of  a
 6    participant  covered  under  the  traditional benefit package
 7    upon the death of (1) a participating employee with at  least
 8    1 1/2  years  of  service,  (2)  a participant who terminated
 9    employment with at least 10 years  of  service,  and  (3)  an
10    annuitant  in  receipt  of a retirement annuity or disability
11    retirement annuity under this Article.
12        Service under the State Employees' Retirement  System  of
13    Illinois,  the  Teachers'  Retirement  System of the State of
14    Illinois,  and  the  Public  School  Teacher's  Pension   and
15    Retirement Fund of Chicago shall be considered in determining
16    eligibility for survivors benefits under this Section.
17        If  by law, a function of a governmental unit, as defined
18    by Section 20-107, is transferred in whole or in part  to  an
19    employer,  and  an  employee  transfers  employment from this
20    governmental unit to such employer within 6 months after  the
21    transfer  of  this  function,  the  service  credits  in  the
22    governmental   unit's   retirement  system  which  have  been
23    validated  under  Section  20-109  shall  be  considered   in
24    determining  eligibility  for  survivors  benefits under this
25    Section.
26        (b)  A surviving spouse of a deceased participant, or  of
27    a   deceased   annuitant   who   had  a  survivors  insurance
28    beneficiary at  the  time  of  retirement,  shall  receive  a
29    survivors  annuity  of  30%  of  the  final rate of earnings.
30    Payments shall begin on the day following  the  participant's
31    or annuitant's death or the date the surviving spouse attains
32    age  50,  whichever is later, and continue until the death of
33    the surviving spouse.  The annuity shall be  payable  to  the
34    surviving  spouse  prior  to  attainment  of  age  50  if the
                            -24-               LRB9011087EGfg
 1    surviving  spouse  has  in  his  or  her  care   a   deceased
 2    participant's  or annuitant's dependent unmarried child under
 3    age 18 (under age 22 if a full-time student) who is  eligible
 4    for  a  survivors  annuity.  Remarriage of a surviving spouse
 5    prior to attainment of age 55 shall disqualify him or her for
 6    the receipt of a survivors annuity.
 7        (c)  Each dependent unmarried child under age  18  (under
 8    age  22 if a full-time student) of a deceased participant, or
 9    of  a  deceased  annuitant  who  had  a  survivors  insurance
10    beneficiary at the time  of  his  or  her  retirement,  shall
11    receive  a  survivors  annuity equal to the sum of (1) 20% of
12    the final rate of earnings, and (2) 10% of the final rate  of
13    earnings  divided  by the number of children entitled to this
14    benefit.  Payments shall  begin  on  the  day  following  the
15    participant's  or  annuitant's  death  and continue until the
16    child marries, dies, or attains age 18 (age 22 if a full-time
17    student).  If the child is in the care of a surviving  spouse
18    who is eligible for survivors insurance benefits, the child's
19    benefit shall be paid to the surviving spouse.
20        Each   unmarried   child   over  age  18  of  a  deceased
21    participant or of a deceased annuitant who had  a  survivor's
22    insurance  beneficiary  at the time of his or her retirement,
23    and who was dependent upon the participant  or  annuitant  by
24    reason  of  a physical or mental disability which began prior
25    to the date the child attained age 18 (age 22 if a  full-time
26    student), shall receive a survivor's annuity equal to the sum
27    of  (1) 20% of the final rate of earnings, and (2) 10% of the
28    final rate of earnings divided  by  the  number  of  children
29    entitled  to survivors benefits.  Payments shall begin on the
30    day following the  participant's  or  annuitant's  death  and
31    continue  until  the  child  marries,  dies,  or is no longer
32    disabled.  If the child is in the care of a surviving  spouse
33    who is eligible for survivors insurance benefits, the child's
34    benefit  may  be  paid  to  the  surviving  spouse.   For the
                            -25-               LRB9011087EGfg
 1    purposes of  this  Section,  disability  means  inability  to
 2    engage  in  any substantial gainful activity by reason of any
 3    medically determinable physical or mental impairment that can
 4    be expected to result in death or that has lasted or  can  be
 5    expected  to  last  for  a  continuous period of at least one
 6    year.
 7        (d)  Each dependent parent of a deceased participant,  or
 8    of  a  deceased  annuitant  who  had  a  survivors  insurance
 9    beneficiary  at  the  time  of  his  or her retirement, shall
10    receive a survivors annuity equal to the sum of  (1)  20%  of
11    final rate of earnings, and (2) 10% of final rate of earnings
12    divided by the number of parents who qualify for the benefit.
13    Payments  shall  begin  when the parent reaches age 55 or the
14    day  following  the  participant's  or   annuitant's   death,
15    whichever  is  later,  and  continue  until  the parent dies.
16    Remarriage of a parent prior to attainment of  age  55  shall
17    disqualify the parent for the receipt of a survivors annuity.
18        (e)  In addition to the survivors annuity provided above,
19    each survivors insurance beneficiary shall, upon death of the
20    participant  or  annuitant,  receive  a  lump  sum payment of
21    $1,000 divided by the number of such beneficiaries.
22        (f)  The changes made  in  this  Section  by  Public  Act
23    81-712   pertaining   to  survivors  annuities  in  cases  of
24    remarriage prior to age 55  shall  apply  to  each  survivors
25    insurance  beneficiary  who  remarries  after  June 30, 1979,
26    regardless of the date  that  the  participant  or  annuitant
27    terminated his employment or died.
28        (g)  On  January  1, 1981, any person who was receiving a
29    survivors annuity on or before January 1, 1971 shall have the
30    survivors annuity then being paid increased by  1%  for  each
31    full  year which has elapsed from the date the annuity began.
32    On January 1, 1982, any survivor whose  annuity  began  after
33    January  1,  1971, but before January 1, 1981, shall have the
34    survivor's annuity then being paid increased by 1%  for  each
                            -26-               LRB9011087EGfg
 1    year  which  has elapsed from the date the survivor's annuity
 2    began. On January 1, 1987, any survivor who began receiving a
 3    survivor's annuity on or before January 1, 1977,  shall  have
 4    the  monthly survivor's annuity increased by $1 for each full
 5    year which has elapsed since the date the survivor's  annuity
 6    began.
 7        (h)  If  the  sum  of  the  lump  sum  and  total monthly
 8    survivor benefits payable under this Section upon  the  death
 9    of  a  participant  amounts to less than the sum of the death
10    benefits payable under items (2) and (3) of  Section  15-141,
11    the difference shall be paid in a lump sum to the beneficiary
12    of  the  participant  who  is  living  on  the date that this
13    additional amount becomes payable.
14        (i)  If the  sum  of  the  lump  sum  and  total  monthly
15    survivor  benefits  payable under this Section upon the death
16    of an annuitant receiving a retirement annuity or  disability
17    retirement  annuity  amounts  to  less than the death benefit
18    payable under Section 15-142, the difference shall be paid to
19    the beneficiary of the annuitant who is living  on  the  date
20    that this additional amount becomes payable.
21        (j)  Effective  on  the  later of (1) January 1, 1990, or
22    (2) the January 1 on or next after  the  date  on  which  the
23    survivor  annuity  begins,  if the deceased member died while
24    receiving a retirement annuity, or in  all  other  cases  the
25    January  1  nearest  the  first  anniversary  of the date the
26    survivor annuity payments begin,  every  survivors  insurance
27    beneficiary  shall  receive an increase in his or her monthly
28    survivors annuity of 3%.  On each January 1 after the initial
29    increase, the monthly survivors annuity shall be increased by
30    3%  of  the  total  survivors  annuity  provided  under  this
31    Article,  including  previous  increases  provided  by   this
32    subsection.   Such  increases  shall  apply  to the survivors
33    insurance beneficiaries of each  participant  and  annuitant,
34    whether  or  not  the employment status of the participant or
                            -27-               LRB9011087EGfg
 1    annuitant  terminates  before  the  effective  date  of  this
 2    amendatory Act of 1990.
 3        (k)  If the Internal Revenue Code of  1986,  as  amended,
 4    requires  that  the  survivors  benefits be payable at an age
 5    earlier than that specified  in  this  Section  the  benefits
 6    shall   begin  at  the  earlier  age,  in  which  event,  the
 7    survivor's beneficiary shall be entitled only to that  amount
 8    which  is  equal  to the actuarial equivalent of the benefits
 9    provided by this Section.
10        (l)  The changes made to this Section and Section  15-131
11    by  this  amendatory  Act  of  1997, relating to benefits for
12    certain unmarried children who are full-time  students  under
13    age  22,  apply without regard to whether the deceased member
14    was in service  on  or  after  the  effective  date  of  this
15    amendatory  Act  of 1997.  These changes do not authorize the
16    repayment of a refund or a re-election of benefits,  and  any
17    benefit  or increase in benefits resulting from these changes
18    is not  payable  retroactively  for  any  period  before  the
19    effective date of this amendatory Act of 1997.
20    (Source: P.A. 90-448, eff. 8-16-97.)
21        (40 ILCS 5/15-146) (from Ch. 108 1/2, par. 15-146)
22        Sec.  15-146.   Survivors  insurance  benefits  - Minimum
23    amounts.
24        (a)  The  minimum  total  survivors  annuity  payable  on
25    account of the death of a participant shall  be  50%  of  the
26    retirement  annuity which would have been provided under Rule
27    1, Rule 2, or Rule 3 of Section 15-136 upon the participant's
28    attainment of the minimum age at which the penalty for  early
29    retirement  would  not  be  applicable  or  the  date  of the
30    participant's death, whichever is  later,  on  the  basis  of
31    credits earned prior to the time of death.
32        (b)  The  minimum  total  survivors  annuity  payable  on
33    account  of  the  death  of  an annuitant shall be 50% of the
                            -28-               LRB9011087EGfg
 1    retirement annuity which is payable under Section  15-136  at
 2    the time of death or 50% of the disability retirement annuity
 3    payable   under  Section  15-153.2.  This  minimum  survivors
 4    annuity shall apply to each  participant  and  annuitant  who
 5    dies  after  September  16,  1979,  whether or not his or her
 6    employee status terminates before or after that date.
 7        (c)  If an annuitant has elected a reversionary  annuity,
 8    the  retirement  annuity  referred to in this Section is that
 9    which would have been payable  had  such  election  not  been
10    filed.
11        (d)  If  a participant has made the election provided for
12    under Section 15-154(a-1), the minimum survivor benefit shall
13    be determined under Section 15-136.4.
14    (Source: P.A. 90-448, eff. 8-16-97.)
15        (40 ILCS 5/15-154) (from Ch. 108 1/2, par. 15-154)
16        Sec. 15-154.  Refunds.
17        (a)  A  participant  whose  status  as  an  employee   is
18    terminated,  regardless  of cause, or who has been on lay off
19    status for more than 120 days, and who is  not  on  leave  of
20    absence,  is  entitled  to  a  refund  of  contributions upon
21    application; except  that  not  more  than  one  such  refund
22    application may be made during any academic year.
23        Except  as  set forth in subsections (a-1) and (a-2), the
24    refund shall be the sum of the accumulated normal, additional
25    and survivors insurance contributions,  less  the  amount  of
26    interest  credited on these contributions each year in excess
27    of 4 1/2% of the amount on which interest was calculated.
28        (a-1)  A  person  who  elects,  in  accordance  with  the
29    requirements of  Section  15-134.5,  to  participate  in  the
30    portable  benefit  package  and  who  becomes a participating
31    employee under that retirement program upon the conclusion of
32    the  one-year  waiting  period  applicable  to  the  portable
33    benefit  package  election  shall  have  his  or  her  refund
                            -29-               LRB9011087EGfg
 1    calculated in accordance with the  provisions  of  subsection
 2    (a-2).
 3        (a-1)  Every  person who becomes a participating employee
 4    after the date on which his or her employer first  offers  an
 5    optional  retirement program under Section 15-158.2 may elect
 6    within 60 days of becoming a participant to have  any  refund
 7    calculated  pursuant  to  subsection  (a-2)  by  forgoing all
 8    survivors insurance benefits to which the person's  survivors
 9    would   otherwise  be  entitled  under  this  Article.   This
10    election is irrevocable and may be made by filing an election
11    with the system on such form as the Executive Director  shall
12    prescribe.
13        Each  person  who is a participating employee on the date
14    on which  his  or  her  employer  first  offers  an  optional
15    retirement  program  under  Section  15-158.2  shall  have  a
16    one-time option to elect to have his or her refund calculated
17    pursuant  to  subsection  (a-2),  by  forgoing  all survivors
18    insurance benefits to  which  the  person's  survivors  would
19    otherwise  be entitled under this Article.  The election will
20    not be effective until one year after the election  is  filed
21    with  the  system.   This  election is irrevocable and may be
22    made by filing an election with the system, on such  form  as
23    the Executive Director shall prescribe, within one year after
24    the  date  on  which  his  or  her  employer  first offers an
25    optional retirement program under Section 15-158.2.
26        A person  may  make  the  one-time  irrevocable  election
27    authorized  under  this  Section  or  the election authorized
28    under Section 15-158.2(g), but may not make  both  elections.
29    Any  person  interested  in  electing the portable retirement
30    benefit program  provided  under  this  Section  and  Section
31    15-136.4   must  be  given  a  consultation  with  the  State
32    Universities Retirement System before making that election.
33        (a-2)  The refund payable to a participant  described  in
34    elected  under  subsection  (a-1)  shall  be  the  sum of the
                            -30-               LRB9011087EGfg
 1    participant's    accumulated    normal     and     additional
 2    contributions,  as defined in Sections 15-116 and 15-117.  If
 3    the participant terminates with 5 or more  years  of  service
 4    for  employment  as  defined  in  Section 15-113.1, he or she
 5    shall also be entitled to a distribution refund  of  employer
 6    contributions   in   an  amount  equal  to  the  sum  of  the
 7    accumulated normal and additional contributions,  as  defined
 8    in Sections 15-116 and 15-117.
 9        (b)  Upon   acceptance   of  a  refund,  the  participant
10    forfeits all accrued rights and credits in the System, and if
11    subsequently reemployed, the participant shall be  considered
12    a  new  employee subject to all the qualifying conditions for
13    participation and eligibility for benefits applicable to  new
14    employees.  If  such  person  again  becomes  a participating
15    employee and continues as such for 2 years, or is employed by
16    an employer and participates for at  least  2  years  in  the
17    Federal  Civil  Service  Retirement  System, all such rights,
18    credits, and  previous  status  as  a  participant  shall  be
19    restored upon repayment of the amount of the refund, together
20    with  compound  interest thereon from the date the refund was
21    received to the date of repayment at the rate of 6% per annum
22    through August 31, 1982, and at  the  effective  rates  after
23    that date.
24        (c)  If  a  participant  covered  under  the  traditional
25    benefit  package  has made survivors insurance contributions,
26    but has no survivors insurance beneficiary  upon  retirement,
27    he  or  she  shall be entitled to a refund of the accumulated
28    survivors  insurance  contributions,  or  to  an   additional
29    annuity  the  value  of  which  is  equal  to the accumulated
30    survivors insurance contributions.
31        (d)  A participant, upon application, is  entitled  to  a
32    refund  of  his  or  her accumulated additional contributions
33    attributable to the additional contributions described in the
34    last sentence of subsection  (c)  of  Section  15-157  except
                            -31-               LRB9011087EGfg
 1    those  covering  the  cost  of  the  annual  increase  in the
 2    retirement annuity provided under Section  15-136.  Upon  the
 3    acceptance   of  such  a  refund  of  accumulated  additional
 4    contributions,  the  participant  forfeits  all  rights   and
 5    credits which may have accrued because of such contributions.
 6        (e)  A  participant  who  terminates  his or her employee
 7    status and elects  to  waive  service  credit  under  Section
 8    15-154.2,  is entitled to a refund of the accumulated normal,
 9    additional and survivors  insurance  contributions,  if  any,
10    which  were  credited the participant for this service, or to
11    an additional annuity the value of  which  is  equal  to  the
12    accumulated   normal,   additional  and  survivors  insurance
13    contributions, if any; except that not  more  than  one  such
14    refund application may be made during any academic year. Upon
15    acceptance  of  this  refund,  the  participant  forfeits all
16    rights and credits accrued because of this service.
17        (f)  If  a  police  officer  or  firefighter  receives  a
18    retirement annuity under Rule 1, 2, or 3 of  Section  15-136,
19    he  or she shall be entitled at retirement to a refund of the
20    difference   between   his   or   her   accumulated    normal
21    contributions  and  the normal contributions which would have
22    accumulated had such person filed a waiver of the  retirement
23    formula provided by Rule 4 of Section 15-136.
24        (g)  If,  at  the time of retirement, a participant would
25    be entitled to a retirement annuity under Rule 1, 2, 3  or  4
26    of  Section  15-136  that  exceeds  the  maximum specified in
27    clause (1) of subsection (c) of Section  15-136,  he  or  she
28    shall  be entitled to a refund of the employee contributions,
29    if any, paid under Section 15-157 after the date  upon  which
30    continuance of such contributions would have otherwise caused
31    the  retirement annuity to exceed this maximum, plus compound
32    interest at the effective rates.
33    (Source: P.A. 90-448, eff. 8-16-97.)
                            -32-               LRB9011087EGfg
 1        (40 ILCS 5/15-157) (from Ch. 108 1/2, par. 15-157)
 2        Sec. 15-157.  Employee Contributions.
 3        (a)  Each participating employee shall make contributions
 4    towards the retirement benefits payable under the  retirement
 5    program  applicable  to  the  employee  from  annuity of each
 6    payment of  earnings  applicable  to  employment  under  this
 7    system  on  and  after the date of becoming a participant, as
 8    follows:  Prior to September 1,  1949,  3 1/2%  of  earnings;
 9    from September 1, 1949 to August 31, 1955, 5%; from September
10    1,  1955  to  August  31,  1969,  6%; from September 1, 1969,
11    6 1/2%.  These contributions are to be considered  as  normal
12    contributions for purposes of this Article.
13        Each  participant  who is a police officer or firefighter
14    shall make normal contributions of  8%  of  each  payment  of
15    earnings  applicable  to  employment  as  a police officer or
16    firefighter under this system on or after September 1,  1981,
17    unless  he  or  she files with the board within 60 days after
18    the effective date of this amendatory Act of 1991 or 60  days
19    after the board receives notice that he or she is employed as
20    a  police  officer  or  firefighter,  whichever  is  later, a
21    written notice waiving the  retirement  formula  provided  by
22    Rule  4 of Section 15-136.  This waiver shall be irrevocable.
23    If a participant had met the conditions set forth in  Section
24    15-132.1  prior  to the effective date of this amendatory Act
25    of  1991  but  failed   to   make   the   additional   normal
26    contributions required by this paragraph, he or she may elect
27    to pay the additional contributions plus compound interest at
28    the  effective  rate.   If  such  payment  is received by the
29    board, the service shall  be  considered  as  police  officer
30    service in calculating the retirement annuity under Rule 4 of
31    Section 15-136.
32        (b)  Starting   September  1,  1969,  each  participating
33    employee shall make additional contributions of 1/2 of 1%  of
34    earnings  to  finance  a  portion  of  the cost of the annual
                            -33-               LRB9011087EGfg
 1    increases  in  retirement  annuity  provided  under   Section
 2    15-136,  except  that  with  respect  to  participants in the
 3    self-managed plan this additional contribution shall be  used
 4    to  finance  the  benefits  obtained  under  that  retirement
 5    program.
 6        (c)  In  addition to the amounts described in subsections
 7    (a) and (b) of  this  Section,  each  participating  employee
 8    shall   make  additional  contributions  of  1%  of  earnings
 9    applicable under this system on and  after  August  1,  1959.
10    The contributions contribution made under this subsection (c)
11    shall be considered as survivor's insurance contributions for
12    purposes of this Article if the employee is covered under the
13    traditional  benefit package, and such contributions shall be
14    considered as additional contributions for purposes  of  this
15    Article  if the employee is participating in the self-managed
16    plan or has elected to participate in  the  portable  benefit
17    package  and  has  completed  the applicable one-year waiting
18    period shall be used to finance survivors insurance benefits,
19    unless the participant has made  an  election  under  Section
20    15-154(a-1),  in  which case the contribution made under this
21    subsection shall be used to  finance  the  benefits  obtained
22    under  that  election.  Contributions in excess of $80 during
23    any fiscal year beginning  before  August  31,  1969  and  in
24    excess  of  $120  during  any  fiscal  year  thereafter until
25    September  1,  1971  shall  be   considered   as   additional
26    contributions for purposes of this Article.
27        (d)  If the board by board rule so permits and subject to
28    such  conditions  and  limitations as may be specified in its
29    rules, a participant may make other additional  contributions
30    of  such percentage of earnings or amounts as the participant
31    shall elect in a  written  notice  thereof  received  by  the
32    board.
33        (e)  That  fraction  of a participant's total accumulated
34    normal contributions, the numerator of which is equal to  the
                            -34-               LRB9011087EGfg
 1    number  of  years  of  service  in  excess  of  that which is
 2    required to qualify for the maximum retirement  annuity,  and
 3    the denominator of which is equal to the total service of the
 4    participant,  shall  be  considered as accumulated additional
 5    contributions.  The determination of the  applicable  maximum
 6    annuity  and the adjustment in contributions required by this
 7    provision shall be made as of the date of  the  participant's
 8    retirement.
 9        (f)  Notwithstanding   the   foregoing,  a  participating
10    employee shall not be required to  make  contributions  under
11    this  Section  after  the date upon which continuance of such
12    contributions would otherwise cause  his  or  her  retirement
13    annuity to exceed the maximum retirement annuity as specified
14    in clause (1) of subsection (c) of Section 15-136.
15        (g)  A  participating employee may make contributions for
16    the purchase of service credit under this Article.
17    (Source:  P.A.  90-32,  eff.  6-27-97;  90-65,  eff.  7-7-97;
18    90-448,  eff.  8-16-97;   90-511,   eff.   8-22-97;   revised
19    11-14-97.)
20        (40 ILCS 5/15-158.2)
21        Sec.  15-158.2.  Self-managed  plan  Optional  retirement
22    program for educational employees.
23        (a)  Purpose.   The  General  Assembly  finds  that it is
24    important for colleges and universities to be able to attract
25    and retain the most qualified employees and that in order  to
26    attract and retain these employees, colleges and universities
27    should have the flexibility to provide a defined contribution
28    plan  as  an  alternative  retirement  program  for  eligible
29    employees  who  elect not to participate in a defined benefit
30    the other retirement program  programs  provided  under  this
31    Article.    Accordingly,  the  State  Universities Retirement
32    System is hereby authorized to  establish  and  administer  a
33    self-managed  plan, which shall offer participating employees
                            -35-               LRB9011087EGfg
 1    the opportunity to accumulate assets for retirement through a
 2    combination of employee and employer contributions  that  may
 3    be  invested in mutual funds, collective investment funds, or
 4    other  investment  products  and  used  to  purchase  annuity
 5    contracts, either fixed or variable or a combination thereof.
 6    The plan must be qualified under the Internal Revenue Code of
 7    1986.
 8        (b)  Definitions.  For  the  purposes  of  this  Section,
 9    "eligible employee" means an  employee  who  is  eligible  to
10    participate  in  the State Universities Retirement System and
11    who does not have sufficient age and service to qualify for a
12    retirement  annuity  under  Section  15-135.   A   "currently
13    eligible  employee"  is  an  employee who becomes an eligible
14    employee on the effective date  of  the  optional  retirement
15    program  established  by  the  employee's employer.  A "newly
16    eligible employee" is an employee  who  becomes  an  eligible
17    employee  after the effective date of the optional retirement
18    program established by the employee's employer.
19        (b)  Adoption by employers. (c)  Program.  Each  employer
20    subject  to  this Article may elect to adopt the self-managed
21    plan established establish  an  optional  retirement  program
22    under   this  Section;  this  election  is  irrevocable.   An
23    employer's election to  adopt  the  self-managed  plan  makes
24    available  to  the  eligible  employees  of that employer the
25    elections described in Section  15-134.5.  for  the  eligible
26    employees  whom  it employs.  The optional retirement program
27    shall provide retirement benefits for participating employees
28    through the purchase of annuity contracts,  either  fixed  or
29    variable  or  a  combination thereof, through the purchase of
30    mutual funds, or through both  and  shall  also  provide  for
31    disability benefits.
32        The  State  Universities  Retirement  System shall be the
33    plan sponsor for the self-managed plan and  shall  prepare  a
34    plan  document and prescribe such rules and procedures as are
                            -36-               LRB9011087EGfg
 1    considered necessary or desirable for the  administration  of
 2    the self-managed plan program.  Consistent with its fiduciary
 3    duty   to   the   participants   and   beneficiaries  of  the
 4    self-managed plan program,  the  Board  of  Trustees  of  the
 5    System may delegate aspects of plan program administration as
 6    it  sees  fit  to companies authorized to do business in this
 7    State, to the employers, or to a combination of both.
 8        The plan must be qualified  under  the  Internal  Revenue
 9    Code of 1986.
10        (c)  Selection of service providers and funding vehicles.
11    (d)   Proposals.    The  System,  in  consultation  with  the
12    employers, shall solicit proposals to provide  administrative
13    services  and  funding  vehicles  for  the  self-managed plan
14    participate  in  the  program  from  insurance  and   annuity
15    companies  and mutual fund companies, banks, trust companies,
16    or other financial institutions authorized to do business  in
17    this   State.    In  reviewing  the  proposals  received  and
18    approving and contracting with no fewer than 2  and  no  more
19    than  7  companies, at least 2 of which must be insurance and
20    annuity companies, the Board of Trustees of the System  shall
21    consider, among other things, the following criteria:
22             (1)  the  nature  and  extent  of  the benefits that
23        would be provided to the participants;
24             (2)  the reasonableness of the benefits in  relation
25        to the premium charged;
26             (3)  the  suitability  of  the benefits to the needs
27        and interests of  the  participating  employees  and  the
28        employer;
29             (4)  the  ability of the company to provide benefits
30        under the contract and the  financial  stability  of  the
31        company; and
32             (5)  the efficacy of the contract in the recruitment
33        and retention of employees.
34        An  employer  that elects to offer an optional retirement
                            -37-               LRB9011087EGfg
 1    program  under   subsection   (c)   may   only   select   for
 2    participation  in  the  program  2  or  more of the companies
 3    approved by the Board of Trustees of the System.  The System,
 4    in consultation with the employers, shall periodically review
 5    each approved company.;  A company may  continue  to  provide
 6    administrative   services   and   funding  vehicles  for  the
 7    self-managed plan participate in the program only so long  as
 8    it  continues  to  be an approved company under contract with
 9    the Board.
10        (d)  Employee Direction.  Employees who are participating
11    in the program must be allowed  to  direct  the  transfer  of
12    their  account  balances among the various investment options
13    offered, subject to applicable contractual provisions.    The
14    participant  shall  not  be  deemed  a fiduciary by reason of
15    providing such investment  direction.   A  person  who  is  a
16    fiduciary  shall  not  be  liable for any loss resulting from
17    such investment direction and shall not  be  deemed  to  have
18    breached any fiduciary duty by acting in accordance with that
19    direction.    Neither  the System nor the employer guarantees
20    any of the investments in the employee's account balances.
21        (e)  Participation.  An employee eligible to  participate
22    in  the  self-managed  plan  must  make a written election in
23    accordance with the provisions of Section  15-134.5  and  the
24    procedures  established  by the System.  Participation in the
25    self-managed plan by an electing employee shall begin on  the
26    first  day of the first pay period following the later of the
27    date the employee's election is filed with the System or  the
28    effective  date as of which the employee's employer begins to
29    offer participation in the self-managed plan.  Employers  may
30    not make the self-managed plan available earlier than January
31    1, 1998.  An employee's participation in any other retirement
32    program  administered  by the System under this Article shall
33    terminate on the date that participation in the  self-managed
34    plan begins.
                            -38-               LRB9011087EGfg
 1        An  employee  who  has  elected  to  participate  in  the
 2    self-managed   plan   under   this   Section   must  continue
 3    participation while employed in an eligible position, and may
 4    not participate in any other retirement program  administered
 5    by  the  System  under  this  Article  while employed by that
 6    employer  or  any  other  employer  that  has   adopted   the
 7    self-managed plan, unless the self-managed plan is terminated
 8    in accordance with subsection (i).
 9        Participation in the self-managed plan under this Section
10    shall   constitute   membership  in  the  State  Universities
11    Retirement System.
12        A participant under this Section shall be entitled to the
13    benefits of Article 20 of this Code modified to  reflect  the
14    following principles:
15             (1)  The  amount of any retirement annuities payable
16        under this Section depend solely  on  the  value  of  the
17        participant's vested account balances and are not subject
18        to a maximum annuity benefit limitation or any adjustment
19        pursuant   to   the   proportional   retirement   annuity
20        provisions  of  Article  20.   If  a  participant  in the
21        self-managed plan under this Section elects to apply  the
22        provisions  of  Article  20,  the  dollar  amount  of the
23        proportional retirement annuity payable from  the  System
24        shall  be  deemed  to  be  zero and the provisions of the
25        second paragraph of Section 20-131 shall not  apply  with
26        respect to the retirement annuity benefits payable to the
27        participant under this Section.
28             (2)  For  purposes  of  Section 20-123 of this Code,
29        the self-managed plan shall be  treated  as  if  it  were
30        provided by a participating system that has no survivor's
31        annuity benefit.
32             (3)  Notwithstanding  Section  20-125  of this Code,
33        upon reemployment by a participating system of a  retired
34        participant  in  the  self-managed  plan,  the retirement
                            -39-               LRB9011087EGfg
 1        annuity payment made to such participant from any annuity
 2        contracts acquired from  the  participant's  self-managed
 3        plan account balances shall not be suspended.
 4        (f)  Establishment of Initial Account Balance.  If at the
 5    time  an  employee  elects to participate in the self-managed
 6    plan he or she has rights and credits in the  System  due  to
 7    previous  participation  in  the traditional benefit package,
 8    the System  shall  establish  for  the  employee  an  opening
 9    account balance in the self-managed plan, equal to the amount
10    of contribution refund that the employee would be eligible to
11    receive  under  Section  15-154  if  the  employee terminated
12    employment  on  that   date   and   elected   a   refund   of
13    contributions,  except  that  this  hypothetical refund shall
14    include interest at the effective  rate  for  the  respective
15    years.   The  System  shall  transfer assets from the defined
16    benefit retirement program to the self-managed plan, as a tax
17    free transfer in accordance  with  Internal  Revenue  Service
18    guidelines,  for  purposes  of funding the employee's opening
19    account balance.
20        (g)  No Duplication of Service  Credit.   Notwithstanding
21    any  other  provision  of  this  Article, an employee may not
22    purchase or receive service or service credit  applicable  to
23    any other retirement program administered by the System under
24    this  Article  for any period during which the employee was a
25    participant in the self-managed plan established  under  this
26    Section.
27        (e)  System  Conflict  of Interest.  In order to preclude
28    any conflict of interest by the System,  only  insurance  and
29    annuity   companies   and  mutual  fund  companies  that  are
30    authorized to do business in this State may be  approved,  in
31    accordance   with   the  procedures  of  subsection  (d),  to
32    participate in this program and offer investment options  for
33    program participants.
34        (f)  Account   Balance   Transfers.   Employees  who  are
                            -40-               LRB9011087EGfg
 1    participating in the program  must  be  allowed  to  transfer
 2    their account balances from the investment options offered by
 3    one  of  the  companies  selected  by  the  employer  to  the
 4    investment  options  offered  by another company so selected,
 5    subject to applicable contractual provisions.
 6        (g)  Participation.  Any eligible employee may  elect  to
 7    participate in the optional retirement program offered by the
 8    employer  under subsection (c).  The election must be made in
 9    writing and in  the  manner  prescribed  by  the  System.   A
10    currently  eligible  employee  must make this election within
11    one year after the effective date of the employer's  optional
12    retirement program.  A newly eligible employee must make this
13    election  within 60 days after becoming an eligible employee.
14    A  person  may  make  the   one-time   irrevocable   election
15    authorized  under  this  Section  or  the election authorized
16    under Section 15-154(a-1), but may not make  both  elections.
17    The  employer  shall  not  remit contributions on behalf of a
18    newly eligible employee to the State Universities  Retirement
19    System  until the 60-day period has run unless an election by
20    the employee has been made earlier.   Any  eligible  employee
21    interested   in  electing  the  optional  retirement  program
22    provided under this Section must be given a consultation with
23    the State Universities Retirement System before  making  that
24    election.
25        Participation  in  the  optional retirement program shall
26    begin on the first day of the first pay period following  the
27    date  of  election, but no earlier than January 1, 1998.  The
28    employee's participation  in  any  other  retirement  program
29    administered by the System under this Article shall terminate
30    on  the  date  that  participation in the optional retirement
31    program begins, and the employee shall thereby be  deemed  to
32    have elected to receive a refund of contributions as provided
33    in  Section  15-154,  except  that  such  deemed refund shall
34    include interest at the effective  rate  for  the  respective
                            -41-               LRB9011087EGfg
 1    years,  and  except  that  any  funds  which  would have been
 2    received  shall  instead  be  transferred  directly  to   the
 3    optional  retirement  program  as  a  tax  free  transfer  in
 4    accordance with Internal Revenue Service guidelines.
 5        Notwithstanding  any  other  provision  of  this Code, an
 6    employee may not  purchase  or  receive  service  or  service
 7    credit   applicable   to   any   other   retirement   program
 8    administered  by the System under this Article for any period
 9    during which the employee was a participant in  the  optional
10    retirement program established under this Section.
11        An  employee  who  has  elected  to  participate  in  the
12    optional  retirement program under this Section must continue
13    participation while employed in an eligible position, and may
14    not participate in any other retirement program  administered
15    by  the  System  under  this  Article  while employed by that
16    employer,  unless  the   optional   retirement   program   is
17    terminated in accordance with subsection (i).
18        Participation  in  the  optional retirement program under
19    this  Section  shall  constitute  membership  in  the   State
20    Universities  Retirement System, although a participant under
21    this Section shall not be entitled to  receive  any  benefits
22    under  any  other  provisions of Article 15 or of Article 20.
23    An employee who receives a disability benefit or a retirement
24    benefit under this Section or an employee who receives a lump
25    sum distribution  from  a  mutual  fund  company  under  this
26    Section and uses the lump sum to purchase an annuity shall be
27    considered  an  employee or an annuitant under Article 15 for
28    purposes of the State Employees Group Insurance Act of  1971.
29    Participation  in  the optional retirement program under this
30    Section creates a contractual relationship  with  respect  to
31    the  investment of the employee's account balance between the
32    employee and the company providing the investment options for
33    the  employee's  account  balance.   Participation  does  not
34    create a contractual relationship between  the  employee  and
                            -42-               LRB9011087EGfg
 1    the System or between the employee and his or her employer.
 2        (h)  Contributions.    The  self-managed  plan  shall  be
 3    funded by contributions from employees participating  in  the
 4    self-managed  plan  and employer contributions as provided in
 5    this Section.
 6        The contribution rate for employees participating in  the
 7    self-managed  plan  optional  retirement  program  under this
 8    Section shall be equal to the employee contribution rate  for
 9    other  participants  in  the  System,  as provided in Section
10    15-157.  This required contribution shall may be made  as  an
11    "employer  pick-up"  under  Section  414(h)  of  the Internal
12    Revenue Code of 1986 or any successor Section  thereof.   Any
13    employee  participating  in  the System's traditional benefit
14    package prior to his or her election System or who elects  to
15    participate  in  the  self-managed  plan  optional retirement
16    program shall continue to have the employer pick up "pick-up"
17    the contributions required under Section 15-157 contribution.
18    However, the amounts picked up  after  the  election  of  the
19    self-managed   plan  optional  retirement  program  shall  be
20    remitted to and treated as assets  of  the  self-managed  the
21    optional retirement plan.  In no event shall an employee have
22    an  option of receiving these amounts in cash.  Employees may
23    make additional contributions to  the  self-managed  plan  in
24    accordance  with  procedures prescribed by the System, to the
25    extent permitted under rules prescribed by the System.
26        The program shall provide for employer  contributions  to
27    be  credited  to each self-managed plan participant at a rate
28    of no more than 7.6% of the participating employee's  salary,
29    less  the  amount  used  by  the System to provide disability
30    benefits for the employee.  The amounts so credited shall  be
31    paid  into  the participant's self-managed plan accounts in a
32    manner to be prescribed by the System.
33        An amount of employer contribution, not exceeding  1%  of
34    the  participating  employee's  salary, shall be used for the
                            -43-               LRB9011087EGfg
 1    purpose of providing the disability benefits of the System to
 2    the employee.  Prior to the beginning of each plan year under
 3    the self-managed plan, the Board of Trustees shall determine,
 4    as  a  percentage  of  salary,   the   amount   of   employer
 5    contributions  to  be  allocated  during  that  plan year for
 6    providing  disability   benefits   for   employees   in   the
 7    self-managed plan.
 8    The   optional   retirement   program   shall  be  funded  by
 9    contributions from employees participating in the program and
10    employer contributions as required by  the  plan.   The  plan
11    shall  be funded in a manner consistent with the requirements
12    of  Internal  Revenue  Code  Section  412,  and   regulations
13    promulgated  thereunder,  as  that  Section  applies to money
14    purchase plans.
15        The  State  of  Illinois  shall  make  contributions   by
16    appropriations  to  the  System of the employer contributions
17    required for employees who participate  in  the  self-managed
18    plan  optional  retirement  program  under this Section.  The
19    amount required shall be certified by the Board  of  Trustees
20    of  the  System  and  paid  by  the  State in accordance with
21    Section 15-165.  The System shall not be obligated  to  remit
22    the  required  employer contributions to any of the insurance
23    and annuity companies,  and  mutual  fund  companies,  banks,
24    trust companies, financial institutions, or other sponsors of
25    any  of  the  funding vehicles offered under the self-managed
26    plan participating in the optional retirement  program  under
27    subsection  (d)  until  it has received the required employer
28    contributions from the State.  In the event of  a  deficiency
29    in  the  amount  of  State  contributions,  the  System shall
30    implement those procedures described  in  subsection  (c)  of
31    Section  15-165  to  obtain  the  required  funding  from the
32    General Revenue Fund.
33        The contributions and interest thereon, and any  benefits
34    based  upon them, shall be treated as provided in the funding
                            -44-               LRB9011087EGfg
 1    vehicles for this plan.  An  amount  of  up  to  1%  of  each
 2    participating  employee's  salary  shall  be  taken  from the
 3    employer contribution to the optional retirement program  and
 4    shall  be  contributed,  on  the employee's behalf, to a plan
 5    which the System offers to provide for disability benefits.
 6        (i)  Termination.  The  self-managed  plan  An   optional
 7    retirement  program  authorized  under  this  Section  may be
 8    terminated by the System employer, subject to  the  terms  of
 9    any relevant contracts, and the System employer shall have no
10    obligation  to  reestablish the self-managed plan an optional
11    retirement program under this Section.  This Section does not
12    create a right to continued participation in any self-managed
13    plan optional retirement program set  up  by  the  System  an
14    employer  under  this  Section.   If the self-managed plan an
15    optional retirement program is terminated,  the  participants
16    shall  have  the  right  to  participate  in one of the other
17    retirement programs offered by the System and receive service
18    credit in such other retirement  program  for  any  years  of
19    employment following the termination.
20        (j)  Vesting;   Withdrawal;   Return   to   Service.    A
21    participant  in  the  self-managed plan becomes vested in the
22    employer contributions credited to his or her accounts in the
23    self-managed plan on the earliest to occur of the  following:
24    (1)  completion  of  5  years  of  service  with  an employer
25    described  in  Section  15-106;  (2)   the   death   of   the
26    participating   employee   while   employed  by  an  employer
27    described in Section 15-106, if the participant has completed
28    at least 1 1/2 years of service;  or  (3)  the  participant's
29    election  to  retire  and  apply the reciprocal provisions of
30    Article 20 of this Code.
31        A participant in the self-managed  plan  who  receives  a
32    distribution   of   his   or  her  vested  amounts  from  the
33    self-managed plan upon or  after  termination  of  employment
34    shall  forfeit  all  service credit and accrued rights in the
                            -45-               LRB9011087EGfg
 1    System; if subsequently re-employed, the participant shall be
 2    considered a new employee.  If  a  former  participant  again
 3    becomes  a  participating  employee (or becomes employed by a
 4    participating system under  Article  20  of  this  Code)  and
 5    continues  as  such  for  at  least 2 years, all such rights,
 6    service credits, and previous status as a  participant  shall
 7    be restored upon repayment of the amount of the distribution,
 8    without  interest.  Employer  contributions  shall  be vested
 9    after five years of employment.
10        (k)  Benefit amounts.  If an employee who  is  vested  in
11    employer   contributions   terminates   employment  prior  to
12    completing five years  of  service,  the  employee  shall  be
13    entitled  to  a  benefit  in accordance with the terms of the
14    employer's retirement plan which  is  based  on  the  account
15    values  accumulation  value attributable to both employer and
16    employee the  employee's  contributions  and  any  investment
17    return thereon.
18        If   an   employee   who   is   not  vested  in  employer
19    contributions terminates employment, the  employee  shall  be
20    entitled  to  a  benefit  based  solely on the account values
21    Benefits for employees who terminate with at least five years
22    of service shall be in  accordance  with  the  terms  of  the
23    optional  retirement plan and based on the accumulation value
24    attributable  to  both  the  employer  and   the   employee's
25    contributions  and  any  investment  return  thereon, and the
26    employer contributions  and  any  investment  return  thereon
27    shall  be  forfeited.   Any  employer contributions which are
28    forfeited shall be held in escrow by  the  company  investing
29    those  contributions  and  shall  be  used as directed by the
30    System for future allocations of to reduce the  next  premium
31    payment  due  from  the  employer  contributions  or  for the
32    restoration  of  amounts  previously  forfeited   by   former
33    participants who again become participating employees.
34    (Source: P.A. 89-430, eff. 12-15-95; 90-448, eff. 8-16-97.)
                            -46-               LRB9011087EGfg
 1        (40 ILCS 5/15-158.3)
 2        Sec.  15-158.3.   Reports  on  cost  reduction; effect on
 3    retirement at any age with 30 years of service.
 4        (a)  On or before November 15,  2001  and  on  or  before
 5    November  15th  of each year thereafter, the Board shall have
 6    the System's actuary prepare a report showing,  on  a  fiscal
 7    year  by  fiscal year basis, the actual rate of participation
 8    in  the  self-managed  plan   optional   retirement   program
 9    authorized  by  Section  15-158.2,  (i)  by  employees of the
10    System's covered higher  educational  institutions  who  were
11    hired on or after the implementation date of the self-managed
12    plan  optional  retirement  program  and (ii) by other System
13    participants.
14        The actuary's report must also  quantify  the  extent  to
15    which  employee  optional  retirement  plan participation has
16    reduced the State's required  contributions  to  the  System,
17    expressed  both  in  dollars  and  as a percentage of covered
18    payroll, in relation to what the State's contributions to the
19    System would have been (1) if the self-managed plan  optional
20    retirement  program  had not been implemented, and (2) if 45%
21    of employees  of  the  System's  covered  higher  educational
22    institutions  who  were  hired on or after the implementation
23    date of the self-managed plan optional retirement program had
24    elected to participate  in  the  self-managed  plan  optional
25    retirement  program  and 10% of other System participants had
26    transferred to  the  self-managed  plan  optional  retirement
27    program following its implementation.
28        (b)  On  or before November 15th of 2001 and on or before
29    November 15th of each year thereafter, the Illinois Board  of
30    Higher  Education,  in  conjunction  with  the  Bureau of the
31    Budget, shall prepare a report showing, on a fiscal  year  by
32    fiscal  year  basis, the amount by which the costs associated
33    with compensable sick leave have been reduced as a result  of
34    the  termination  of  compensable  sick  leave accrual on and
                            -47-               LRB9011087EGfg
 1    after January  1,  1998  by  employees  of  higher  education
 2    institutions who are participants in the System.
 3        (c)  On  or  before  November 15 of 2001 and on or before
 4    November 15th of each  year  thereafter,  the  Department  of
 5    Central  Management  Services shall prepare a report showing,
 6    on a fiscal year by fiscal year basis, the  amount  by  which
 7    the  State's  cost  for  health  insurance coverage under the
 8    State Employees Group Insurance Act of 1971 for  retirees  of
 9    the  State's universities and their survivors has declined as
10    a result of requiring some of those retirees and survivors to
11    contribute to the  cost  of  their  basic  health  insurance.
12    These year-by-year reductions in cost must be quantified both
13    in  dollars  and  as a level percentage of payroll covered by
14    the System.
15        (d)  The reports required under subsections (a), (b), and
16    (c) shall be disseminated to  the  Board,  the  Pension  Laws
17    Commission,  the Illinois Economic and Fiscal Commission, the
18    Illinois Board of Higher Education, and the Governor.
19        (e)  The reports required under subsections (a), (b), and
20    (c)  shall  be  taken  into  account  by  the  Pension   Laws
21    Commission   in   making  any  recommendation  to  extend  by
22    legislation beyond  December  31,  2002  the  provision  that
23    allows  a  System participant to retire at any age with 30 or
24    more years of service as authorized in Section  15-135.    If
25    that  provision  is extended beyond December 31, 2002, and if
26    the most recent report under subsection  (a)  indicates  that
27    actual  State  contributions  to  the  System  for the period
28    during  which  the  self-managed  plan  optional   retirement
29    program  has  been  in  operation have exceeded the projected
30    State contributions under the assumptions in  clause  (2)  of
31    subsection  (a),  then  any extension of the provision beyond
32    December 31, 2002  must  require  that  the  System's  higher
33    educational  institutions  and  agencies  cover  any  funding
34    deficiency  through  an  annual  payment to the System out of
                            -48-               LRB9011087EGfg
 1    appropriate resources of their own.
 2    (Source: P.A. 90-9, eff. 7-1-97.)
 3        (40 ILCS 5/15-165) (from Ch. 108 1/2, par. 15-165)
 4        Sec. 15-165.  To certify amounts and submit vouchers.
 5        (a)  The Board shall certify to the Governor on or before
 6    November 15 of each  year  the  appropriation  required  from
 7    State funds for the purposes of this System for the following
 8    fiscal  year.   The certification shall include a copy of the
 9    actuarial recommendations upon which it is based.
10        (b)  The Board shall certify to the State Comptroller  or
11    employer,  as  the  case  may  be,  from time to time, by its
12    president and secretary, with its seal attached, the  amounts
13    payable to the System from the various funds.
14        (c)  Beginning  in  State fiscal year 1996, on or as soon
15    as possible after the 15th day of each month the Board  shall
16    submit  vouchers  for  payment  of State contributions to the
17    System, in a total  monthly  amount  of  one-twelfth  of  the
18    required annual State contribution certified under subsection
19    (a).   These  vouchers shall be paid by the State Comptroller
20    and Treasurer by warrants drawn on the funds appropriated  to
21    the System for that fiscal year.
22        If  in any month the amount remaining unexpended from all
23    other appropriations to the System for the applicable  fiscal
24    year  (including  the  appropriations  to  the  System  under
25    Section  8.12  of  the State Finance Act and Section 1 of the
26    State Pension Funds Continuing  Appropriation  Act)  is  less
27    than  the  amount  lawfully vouchered under this Section, the
28    difference shall be paid from the General Revenue Fund  under
29    the  continuing  appropriation  authority provided in Section
30    1.1 of the State Pension Funds Continuing Appropriation Act.
31        (d)  So long as the payments received are the full amount
32    lawfully vouchered under this Section, payments  received  by
33    the  System  under this Section shall be applied first toward
                            -49-               LRB9011087EGfg
 1    the employer contribution to the self-managed  plan  optional
 2    retirement   program   established  under  Section  15-158.2.
 3    Payments  shall  be  applied  second  toward  the  employer's
 4    portion of the normal costs of  the  System,  as  defined  in
 5    subsection  (f)  of  Section  15-155.   The  balance shall be
 6    applied toward the  unfunded  actuarial  liabilities  of  the
 7    System.
 8        (e)  In  the event that the System does not receive, as a
 9    result  of  legislative  enactment  or  otherwise,   payments
10    sufficient  to  fully  fund  the employer contribution to the
11    self-managed plan  optional  retirement  program  established
12    under  Section 15-158.2 and to fully fund that portion of the
13    employer's portion of the normal  costs  of  the  System,  as
14    calculated  in  accordance with Section 15-155(a-1), then any
15    payments received shall be  applied  proportionately  to  the
16    optional   retirement   program   established  under  Section
17    15-158.2 and to the employer's portion of the normal costs of
18    the  System,  as  calculated  in  accordance   with   Section
19    15-155(a-1).
20    (Source: P.A. 90-448, eff. 8-16-97.)
21        (40 ILCS 5/15-167) (from Ch. 108 1/2, par. 15-167)
22        Sec.  15-167.   To  invest money.  To invest the funds of
23    the system, subject to the requirements and restrictions  set
24    forth  in  Sections  1-109,  1-109.1,  1-109.2, 1-110, 1-111,
25    1-114, and 1-115, and 15-158.2(d) of this Code and to  invest
26    in  real  estate  acquired by purchase, gift, condemnation or
27    otherwise, and any office building or buildings  existing  or
28    to be constructed thereon, including any additions thereto or
29    expansions thereof, for the use of the system.  The board may
30    lease  surplus  space  in any of the buildings and use rental
31    proceeds for operation, maintenance, improving, expanding and
32    furnishing of the buildings or for any  other  lawful  system
33    purpose.
                            -50-               LRB9011087EGfg
 1        No  bank  or  savings  and loan association shall receive
 2    investment funds as permitted by this Section, unless it  has
 3    complied   with  the  requirements  established  pursuant  to
 4    Section 6 of "An  Act  relating  to  certain  investments  of
 5    public  funds by public agencies", approved July 23, 1943, as
 6    now or hereafter amended.  The limitations set forth in  such
 7    Section  6 shall be applicable only at the time of investment
 8    and shall not require the liquidation of  any  investment  at
 9    any time.
10        The  board  shall  have  the authority to enter into such
11    agreements and to execute such documents as it determines  to
12    be necessary to complete any investment transaction.
13        All  investments  shall be clearly held and accounted for
14    to indicate ownership by the board. The board may direct  the
15    registration  of securities in its own name or in the name of
16    a nominee created for the express purpose of registration  of
17    securities  by  a  national  or  state  bank or trust company
18    authorized to conduct  a  trust  business  in  the  State  of
19    Illinois.
20        Investments  shall  be  carried  at  cost  or  at a value
21    determined in accordance with generally  accepted  accounting
22    principles and accounting procedures approved by the Board.
23        All  additions  to  assets  from  income,  interest,  and
24    dividends  from  investments  shall  be used to pay benefits,
25    operating and administrative expenses  of  the  system,  debt
26    service,  including  any  redemption  premium,  on  any bonds
27    issued by the board, expenses incurred or  deposits  required
28    in connection with such bonds, and such other costs as may be
29    provided in accordance with this Article.
30    (Source: P.A. 90-19, eff. 6-20-97.)
31        Section  90.  The State Mandates Act is amended by adding
32    Section 8.22 as follows:
                            -51-               LRB9011087EGfg
 1        (30 ILCS 805/8.22 new)
 2        Sec. 8.22. Exempt mandate.   Notwithstanding  Sections  6
 3    and  8 of this Act, no reimbursement by the State is required
 4    for  the  implementation  of  any  mandate  created  by  this
 5    amendatory Act of 1998.
 6        Section 99. Effective date.  This Act takes  effect  upon
 7    becoming law.

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