Legislation

Legislation

Please note: SURS does not endorse specific pension reform legislation. Our goal is to update and educate SURS members concerning legislation that may affect their retirement benefits.

House

HR 0076
- Urge Repeal of Federal Government Pension Offset and Windfall Elimination Provision
Sponsor(s): Representative Mary E. Flowers

HR 76 resolves that the Illinois House of Representatives urges the U.S. Congress to introduce and pass legislation that eliminates both the Government Pension Offset and the Windfall Elimination Provision.

HR 76 further resolves that suitable copies of the resolution be delivered to President Donald Trump, U.S. Senate Majority Leader Mitch McConnell, U.S. Senate Minority Leader Chuck Schumer, U.S. Speaker of the House Paul Ryan, U.S. House of Representatives Minority Leader Nancy Pelosi, and all members of the Illinois Congressional Delegation.

The resolution was adopted on 6/22/2017.

Status:

Click Here

HR 0542
- Urge Solution to Windfall Elimination Provision Problems
Sponsor(s): Representative Mary E. Flowers

HR 542 resolves that the Illinois House of Representatives urges President Trump and the United States Congress to continue to work to find a solution to the problems created by the Windfall Elimination Provision.

HR 542 further resolves that suitable copies of the resolution be delivered to President Donald Trump, U.S. Senate Majority Leader Mitch McConnell, U.S. Senate Minority Leader Chuck Schumer, U.S. Speaker of the House Paul Ryan, U.S. House of Representatives Minority Leader Nancy Pelosi, and all members of the Illinois Congressional Delegation.

Status:

Click Here

Senate

SB 0011
- Pension Reform
Sponsor(s): Senator John J. Cullerton

***Senate Bill 11 was called for a vote on Feb. 8, 2017.  It received 18 “yes” votes, 29 “no” votes and 10 “present” votes.  It needed 30 “yes” votes to pass the Senate.***

SB 11 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System, Chicago Teachers Retirement System and Judges Retirement System Articles of the Illinois Pension Code.  (The changes to the State Employees Retirement System pertain to state funding and an accelerated pension benefit payment option, and the changes to the Judges Retirement System Article only pertain to state funding.)

Benefit Changes

SB 11 requires each Tier I employee (i.e., each employee who first became a participant of SURS before Jan. 1, 2011, and who is not in the Self-Managed Plan) to elect one of two options:

(1)  To accept a reduced and delayed automatic annual increase in retirement (the lesser of 3 percent or ½ of the increase in CPI-U, non-compounded, beginning the January on or after the earlier of age 67 or five years after retirement); or

(2)  To keep the current Tier I automatic annual increase in retirement (3 percent compounded, beginning the January after retirement).

Each Tier I employee who elects to accept the reduced and delayed automatic annual increase in retirement will: receive a payment of 10 percent of his or her employee contributions made before the effective date of the election (which will not count towards his or her pension); pay reduced employee contributions moving forward (7.2 percent for regular employees and 8.55 percent for public safety employees); and have his or her future earnings increases count towards his or her pension.

Each Tier I employee who elects to keep the current Tier I automatic annual increase in retirement will not have his or her future earnings increases count towards his or her pension.

Generally, the election for Tier I employees will occur between Jan. 1, 2018, and March 31, 2018, and will become effective on July 1, 2018.  A Tier I employee who fails to make an election within the required time period is deemed to have chosen to keep the current Tier I automatic annual increase in retirement.

Retirees, Tier II employees (i.e., employees who first became participants of SURS on or after Jan. 1, 2011), and employees in the Self-Managed Plan are not required to make an election.

SB 11 creates an accelerated pension benefit payment option for the first 10 percent of eligible SURS members each year.  An eligible SURS member is a person who has terminated service; has accrued the necessary service credit for retirement; has not received a retirement annuity from SURS; does not have a QILDRO in effect against him or her under SURS; and is not a participant in the Self-Managed Plan.  By January 1, 2018, and annually thereafter, SURS must calculate the net present value of pension benefits for each eligible person.  SURS must offer each eligible person the opportunity to irrevocably elect to receive an accelerated pension benefit payment equal to 70 percent of the net present value of his or her pension benefits in lieu of receiving any pension benefit from SURS.   The accelerated pension benefit payment must be rolled into another retirement plan or account qualified under the Internal Revenue Code of 1986, as amended.  Upon receipt of an accelerated pension benefit payment, credits and creditable service under SURS are terminated.  If the member subsequently returns to active service under SURS, then any subsequent pension benefits are based on the credits and creditable service accrued after the return to active service.  The accelerated pension benefit payment cannot be repaid to SURS and previously terminated credits and creditable service cannot be reinstated under SURS.  A SURS member who receives an accelerated pension benefit payment will still receive any applicable retiree health insurance benefits.

SB 11 requires SURS to provide a voluntary defined contribution plan for up to 5 percent of Tier I employees by July 1, 2018.  Under the defined contribution plan, a Tier 1 employee could elect to stop accruing benefits in the defined benefit plan and start accruing benefits for future service in the defined contribution plan.  Participants in the defined contribution plan pay employee contributions at the same rate as other participants in SURS.  State contributions to the defined contribution plan are made at a uniform rate, no higher than the employer’s normal cost for Tier 1 employees in the defined benefit plan for that year and no lower than 3 percent of earnings. The rate of state contributions to the defined contribution plan is adjusted annually.  The defined contribution plan requires five years of service in order for the participant to vest in state contributions.  Failure to vest in state contributions results in the forfeiture of state contributions and any earnings on the state contributions. The defined contribution plan must provide a variety of options for investments and a variety of options for payouts to retirees and their survivors.

State Funding Changes

SB 11 makes three changes to the funding formula for SURS:  First, it requires the state contribution for fiscal year 2018 through fiscal year 2045 to be based on total payroll (which includes payroll that is not pensionable), but excluding payroll attributable to participants in the voluntary defined contribution plan.  Second, beginning in fiscal year 2018, it requires any increases or decreases attributable to changes in the System’s actuarial and investment assumptions to be phased-in over a five-year period.  Third, it requires the fiscal year 2018 and fiscal year 2019 state contributions to be recertified based on changes made by the legislation.

Employer Funding Changes
 
SB 11 provides that, for academic years beginning on or after July 1, 2018, if a participant’s earnings exceed the amount of his or her earnings with the same employer for the previous academic year by more than the increase in CPI-U for any year during the final rate of earnings period, then the employer must pay the present value of the resulting increase in benefits to SURS.  Earnings increases under contracts or collective bargaining agreements entered into, amended or renewed before the effective date of the legislation are excluded from this provision.  (Current law provides that if a participant’s earnings exceed the amount of his or her earnings with the same employer for the previous academic year by more than 6 percent during the final rate of earnings period, then the employer must pay the present value of the resulting increase in benefits to SURS.)

Additionally, for academic years beginning on or after July 1, 2018, if a participant’s earnings exceed $140,000, then the employer must pay a contribution to SURS for the portion of earnings in excess of that amount. The employer contribution equals the amount of earnings in excess of $140,000 multiplied by the level percentage of payroll needed for SURS to become 90 percent funded by fiscal year 2045.

SB 11 takes effect immediately upon becoming law, but it does not take effect unless Senate Bills 1-10 and 12-13 of the 100th General Assembly also become law.

Status:

Click Here

SB 0016
- Pension Reform
Sponsor(s): Senator John J. Cullerton

SB 16 amends the General Provisions, General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System, Chicago Teachers Pension Fund and Judges Retirement System articles of the Illinois Pension Code.   

Optional Hybrid Plan

SB 16 creates an optional hybrid plan for individuals who first become participants of SURS on or after six months after the effective date of the legislation (and who are not participants in the Self-Managed Plan).   Individuals who first become participants of SURS on or after six months after the effective date of the legislation (and who are not participants in the Self-Managed Plan) can irrevocably elect to participate in Tier II within 30 days after becoming a participant.

For the defined benefit portion of the optional hybrid plan:

  • Final average salary (FAS) equals the average monthly (or annual) salary during the period of service in which earnings were the highest during the last 120 months (or 10 years) of service.
  • Pensionable earnings are capped at the federal Social Security Wage Base.
  • Age and service credits for retirement are the normal Social Security retirement age applicable to that member, but no earlier than age 67, with 10 years of service credit.
  • Retirement annuities are calculated using the following formula: 1.25 percent x each year of service credit x FAS.
  • Automatic annual increases are applied beginning one year after retirement, calculated at ½ of the percentage increase in the CPI-W.
  • Survivor benefits are equal to 66 2/3 percent of the member’s retirement annuity on the date of death, or 66 2/3 percent of the member’s earned annuity without an age reduction if the member was not retired on the date of death.
  • Employee contributions are equal to the lower of 6.2 percent of salary or the normal cost of benefits under the defined benefit portion of the plan.

For the defined contribution portion of the optional hybrid plan:

  • Employee contributions are equal to a minimum of 4 percent of salary.
  • Employer contributions for employees with at least one year of service with the same employer are equal to a rate set for individual employees, but no higher than 6 percent of salary and no lower than 2 percent of salary.
  • The participant vests in employer contributions when they are paid into his or her account.
  • The plan must provide a variety of investment options (including investments handled by the Illinois State Board of Investment) and a variety of options for payouts to retirees and their survivors.

Future benefits under the optional hybrid plan can be modified.  Benefit increases under the optional hybrid plan cannot take effect unless they are approved by a resolution or ordinance of the governing body of the unit of local government responsible for those employees.  

The actual employer (university or community college) must contribute an amount equal to the normal cost of the defined benefit portion of the optional hybrid plan, minus the employee contributions, plus 2 percent.  SURS must annually certify the amount of unfunded liability accrued in each employer’s account to be paid by the employer so that SURS becomes 90 percent funded by fiscal year 2045.  The actual employer must also contribute an amount equal to the employer portion of the defined contribution portion of the optional hybrid plan, as set on an individual employee basis.

Beginning November 1, 2019, SURS must annually determine the amount of the state contribution that would have been required for the next fiscal year if the optional hybrid plan had not taken effect, based on the law in effect on May 31, 2019.  Beginning in fiscal year 2021, the an amount equal to the annual savings of the optional hybrid plan must be transferred from the General Revenue Fund to the Pension Stabilization Fund for distribution to the state-funded retirement systems until the earlier of fiscal year 2045 or until each system becomes 100 percent funded.

Tier I Offer and Consideration Pension Reform

SB 16 requires each Tier I employee (i.e., each employee who first became a participant of SURS before Jan. 1, 2011, and who is not in the Self-Managed Plan) to elect one of two options: 

(1) To accept a reduced and delayed automatic annual increase in retirement (the lesser of 3 percent or ½ of the increase in CPI-U, non-compounded, beginning the January on or after the earlier of age 67 or five years after retirement); or 

(2) To keep the current Tier I automatic annual increase in retirement (3 percent compounded, beginning the January after retirement).

Each Tier I employee who elects to accept the reduced and delayed automatic annual increase in retirement will: receive a payment equal to 10 percent of his or her employee contributions made before the effective date of the election (which will not count towards his or her pension); pay reduced employee contributions moving forward (7.2 percent for regular employees and 8.55 percent for public safety employees); and have his or her future earnings increases count towards his or her pension.

Each Tier I employee who elects to keep the current Tier I automatic annual increase in retirement will not have his or her future earnings increases count towards his or her pension.

Generally, the election for Tier I employees will occur between Jan. 1, 2018 and March 31, 2018, and will become effective on July 1, 2018.  A Tier I employee who fails to make an election within the required time period is deemed to have chosen to keep the current Tier I automatic annual increase in retirement.

Retirees, Tier II employees (i.e., employees who first became participants of SURS on or after Jan. 1, 2011) and employees in the Self-Managed Plan are not required to make an election.

Accelerated Pension Benefit Payment Option

SB 16 creates an accelerated pension benefit payment option for the first 10 percent of eligible SURS members each year.  An eligible SURS member is a person who has terminated service; has accrued the necessary service credit for retirement; has not received a retirement annuity from SURS; does not have a QILDRO in effect against him or her under SURS; and is not a participant in the Self-Managed Plan.  By January 1, 2018, and annually thereafter, SURS must calculate the net present value of pension benefits for each eligible person.  SURS must offer each eligible person the opportunity to irrevocably elect to receive an accelerated pension benefit payment equal to 70 percent of the net present value of his or her pension benefits in lieu of receiving any pension benefit from SURS.   The accelerated pension benefit payment must be rolled into another retirement plan or account qualified under the Internal Revenue Code of 1986, as amended.  Upon receipt of an accelerated pension benefit payment, credits and creditable service under SURS are terminated.  If the member subsequently returns to active service under SURS, then any subsequent pension benefits are based on the credits and creditable service accrued after the return to active service.  The accelerated pension benefit payment cannot be repaid to SURS and previously terminated credits and creditable service cannot be reinstated under SURS.  A SURS member who receives an accelerated pension benefit payment will still receive any applicable retiree health insurance benefits. 

Voluntary Defined Contribution Plan

SB 16 requires SURS to provide a voluntary defined contribution plan for up to 5 percent of Tier I employees by July 1, 2018.  Under the defined contribution plan, a Tier 1 employee could elect to stop accruing benefits in the defined benefit plan and start accruing benefits for future service in the defined contribution plan.  Participants in the defined contribution plan pay employee contributions at the same rate as other participants in SURS.  State contributions to the defined contribution plan are made at a uniform rate, no higher than the employer’s normal cost for Tier 1 employees in the defined benefit plan for that year and no lower than 3 percent of earnings. The rate of state contributions to the defined contribution plan is adjusted annually.  The defined contribution plan requires five years of service in order for the participant to vest in state contributions.  Failure to vest in state contributions results in the forfeiture of state contributions and any earnings on the state contributions. The defined contribution plan must provide a variety of options for investments and a variety of options for payouts to retirees and their survivors.  

State Funding Changes

SB 16 makes three changes to the funding formula for SURS:  First, it requires the state contribution for fiscal year 2018 through fiscal year 2045 to be based on total payroll (which includes payroll that is not pensionable), but excluding payroll attributable to participants in the voluntary defined contribution plan.  Second, beginning in fiscal year 2018, it requires any increases or decreases attributable to changes in the System’s actuarial and investment assumptions to be phased-in over a five-year period.  Third, it requires the fiscal year 2018 and fiscal year 2019 state contributions to be recertified based on changes made by the legislation.

Employer Funding Changes

SB 16 provides that, for academic years beginning on or after July 1, 2018, if a participant’s earnings exceed the amount of his or her earnings with the same employer for the previous academic year by more than the increase in CPI-U for any year during the final rate of earnings period, then the employer must pay the present value of the resulting increase in benefits to SURS.  Earnings increases under contracts or collective bargaining agreements entered into, amended or renewed before the effective date of the legislation are excluded from this provision.  (Current law provides that if a participant’s earnings exceed the amount of his or her earnings with the same employer for the previous academic year by more than 6 percent during the final rate of earnings period, then the employer must pay the present value of the resulting increase in benefits to SURS.)

Additionally, for academic years beginning on or after July 1, 2018, if a participant’s earnings exceed $140,000, then the employer must pay a contribution to SURS for the portion of earnings in excess of that amount.  The employer contribution equals the amount of earnings in excess of $140,000 multiplied by the level percentage of payroll needed for SURS to become 90 percent funded by fiscal year 2045.

Effective Date

SB 16 takes effect immediately upon becoming law.

Status:

Click Here

SB 0363
- No Pensions for Private Employment
Sponsor(s): Senator Julie Morrison

Senate Amendment #1 to SB 363 amends the General Provisions Article of the Illinois Pension Code. It establishes that, beginning on and after the effective date of the legislation, a person is not eligible to become a member or participant in any pension fund or retirement system with respect to private employment. A person who first becomes a participant or member of any of the following pension funds or retirement systems on or after the effective date of the legislation cannot establish service credit under that fund or system with respect to private employment: the General Assembly Retirement System; Downstate Policemen’s Pension Funds; Downstate Firefighters’ Pension Funds; the Chicago Policemen’s Pension Fund; the Chicago Firefighters’ Pension Fund; the Illinois Municipal Retirement Fund; the Chicago Municipal Pension Fund; the Cook County Pension Fund; the Cook County Forest Preserve District Pension Fund; the Chicago Laborers’ Pension Fund; the Chicago Park District Pension Fund; the Metropolitan Water Reclamation District Pension Fund; the State Employees Retirement System; the State Universities Retirement System; the Teachers Retirement System; the Chicago Teachers Pension Fund and the Judges Retirement System.

SA #1 to SB 363 defines “private employment” as including any employment that is not compensated with funds under the control of a state agency, school district, public institution of higher education, unit of local government, municipal government, or county government or a body politic established under such government and also includes employment by a labor union or an organization representing governments, regardless of whether the organization receives dues from units of government.

SA #1 to SB 363 takes effect in accordance with the Effective Date of Laws Act.

Status:

Click Here

SB 0654
- SURS Administrative and Technical Changes
Sponsor(s): Senator Daniel Biss and Representative Elaine Nekritz

SB 654 amends the State Universities Retirement System Article of the Illinois Pension Code to enhance the efficient administration of SURS.  It has no impact to member benefits.  It makes one substantive change and five technical changes.

Substantive Change:

SB 654 authorizes the System to issue subpoenas in connection with an attempt to obtain information to assist in the collection of sums due to the System, all personal identifying information necessary for the administration of benefits and the determination of the death of a benefit recipient or a potential benefit recipient.  

Technical Changes:

SB 654 codifies the long-standing practice of SURS in which a disability retirement annuity recipient is prevented from backdating his or her retirement annuity prior to the termination of the disability retirement annuity.  

SB 654 codifies the long-standing practice of SURS in which a participant’s disability benefits are discontinued upon failure to provide an earnings verification necessary to determine continued eligibility for disability benefits.

SB 654 codifies the long-standing practice of SURS in which a disability retirement annuity is discontinued upon a recipient’s refusal to submit to a reasonable physical examination or failure to provide an earnings verification necessary to determine continued eligibility for the disability retirement annuity.

SB 654 codifies the long-standing practice of SURS in which the costs incurred in a claim for a disability retirement annuity are allocated in a similar way as the costs incurred in a claim for disability benefits.

SB 654 corrects the definition of “service” to reflect the enactment of Public Act 99-0897.  

SB 654 takes effect immediately upon becoming law.

Status:

Click Here

SB 0662
- Pension Buyout Act
Sponsor(s): Senator Michael E. Hastings

SB 662 creates the Pension Buyout Act. It applies to eligible retirees of the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System.

SB 662 authorizes the Illinois Department of Central Management Services to enter into contracts with approved vendors to provide lump-sum payments to eligible retirees pursuant to a pension buyout option. Approved vendors must provide, at no cost to the eligible retiree, a minimum amount of certified financial planning services before the eligible retiree makes an election pursuant to a pension buyout option.

To be eligible to elect a pension buyout option, a SURS retiree must (1) have elected to receive a retirement annuity; (2) be eligible to receive a retirement annuity; (3) have terminated service; (4) not be subject to a QILDRO under SURS; (4) not be a participant in the Self-Managed Plan; (5) have received at least the minimum amount of financial planning services provided by the approved vendor; and (6) not retire reciprocally with another retirement system or pension fund under the Illinois Pension Code.

An eligible SURS retiree who elects a pension buyout option relinquishes all rights and benefits under the Illinois Pension Code in exchange for a lump-sum payment equal to the present value of his or her retirement annuity under SURS. An eligible SURS retiree may elect a pension buyout option at any time after he or she has elected to retire and has terminated service. SURS retirees who elect to participate in a pension buyout option will still receive any applicable retiree health insurance benefits.

SB 662 takes effect on July 1, 2018.

Status:

Click Here

SB 0778
- FOIA - No Exemption for Alternative Investment Contracts
Sponsor(s): Senator Daniel Biss

SB 778 amends the Freedom of Information Act (the Act) to establish that the texts of new agreements entered into by a public pension fund or retirement system after January 1, 2018, to invest in a private equity fund, hedge fund, or absolute return fund are not exempt from disclosure under the Act. However, trade secrets contained in the text of such new agreements remain exempt under the Act.

SB 778 takes effect immediately upon becoming law.

Status:

Click Here

SB 0779
- Alternative Investment Contract and Fee Transparency
Sponsor(s): Senator Daniel Biss and Representative Robert Martwick

House Amendment #2 to SB 779 deletes the provisions of the legislation as it originally passed the Senate.  It contains technical and administrative changes necessary for the state-funded retirement systems (SERS, SURS, and TRS) to implement the provisions of Senate Bill 42/Public Act 100-0023.  As it relates to SURS, HA #2 to SB 779 makes the following changes:

IRS Compliance:

  • Revised the language regarding the creation of the defined contribution program to resolve conflicts between the original bill and the Internal Revenue Code.

Technical and Administrative Amendments:

  • Clarified that the employer will pay the cost of all new hires, including SMP members.
  • Simplified the employer billing process under the Governor’s salary limitation.
  • Detailed the process for collecting the 2% additional contributions from the State.
  • Established a number of dates, deadlines and processes that will enable staff to comply with the provisions of the law after the optional hybrid plan is created.
  • Allowed Tier 2 members to retain benefits previously earned in a manner consistent with the Retirement Systems Reciprocal Act.
  • Determined that the Tier 2 employee and employer contribution rates shall be charged until a plan election is made.
  • Clarified that after the normal cost is adjusted downward, it can be readjusted upward in an amount that is less than 6.2%.
  • Clarified that minimum retirement annuities, minimum survivor annuities, and service credit purchases are unavailable under the optional hybrid plan.
  • Made other technical changes including: removal of the full-time equivalent basis terminology, removal of individual employer accounts, and clarification that the UAAL payments will be calculated on an aggregate basis. 

Codification of Existing Practices:

  • Clarified that the Tier 2 return to work limitations continue to apply to new members.
  • Clarified that the plan elections will continue to apply for employees who leave the System, upon return to work with an employer under the System.
  • Clarified that the Governor’s salary limitation will be calculated on a fiscal year basis, consistent with the calculation of the normal cost and annual required State contribution.
  • Extended the current mechanism in place to permit SURS to obtain payments from delinquent employers via the Comptroller’s Office to the new payments defined in the law.
  • Clarified that a member cannot receive a disability retirement annuity and a retirement annuity for the same period of time.

Fiduciary Protections:

  • Added protections to the Board and the System from any liability associated with the elections under Public Act 100-0023.

House Amendment #1 to SB 779 deletes the provisions of the legislation as it originally passed the Senate.  It makes a technical change in the General Provisions article of the Illinois Pension Code.

As it originally passed the Senate:

SB 779 amends the General Provisions article of the Illinois Pension Code to require the disclosure of certain information related to the investments of public pension funds, retirement systems, and investment boards in alternative investment funds.

SB 779 defines an “alternative investment fund” as a private equity fund, hedge fund, or absolute return fund.

SB 779 requires all pension funds, retirement systems, and investment boards under the Illinois Pension Code to disclose the following information within 90 days after entering into an agreement to invest in an alternative investment fund: (1) all management fee waiver provisions; (2) all indemnification provisions; (3) all clawback provisions; and (4) the cover page and signature block of the agreement.  These disclosures must be filed with the Public Pension Division of the Illinois Department of Insurance and the Illinois Secretary of State.  They must also be posted and maintained on the website of the pension fund, retirement system, or investment board.

SB 779 further requires all pension funds, retirement systems, and investment boards under the Illinois Pension Code to require their alternative investment fund external managers and general partners to disclose the following information annually for each alternative investment fund: (1) direct fees and expenses; (2) all other fees and expenses, including carried interest; (3) the amount of all management fee waivers; and (4) the total amount of portfolio holding fees.  The disclosure of this information may be satisfied by the completion of the Institutional Limited Partners Association (“ILPA”) template for the relevant category of investment for the applicable year.  These disclosures must be filed with the Public Pension Division of the Illinois Department of Insurance and posted and maintained on the website of the public pension fund, retirement system, or investment board.

SB 779 applies to agreements after January 1, 2018.

SB 779 takes effect immediately upon becoming law.

SB 779 is similar to House Amendment #1 to House Bill 163 of the 100th General Assembly.

Status:

Click Here

SB 0896
- Survivors Felony Forfeiture
Sponsor(s): Senator Pamela J. Althoff and Representative Lindsay Parkhurst

SB 896 amends the General Assembly Retirement System, Downstate Policemen’s Pension Fund, Downstate Firefighters’ Pension Fund, Chicago Policemen’s Pension Fund, Chicago Firefighters’ Pension Fund, Illinois Municipal Retirement Fund, Chicago Municipal Pension Fund, Cook County Pension Fund, Cook County Forest Preserve District Pension Fund, Chicago Laborers’ Pension Fund, Chicago Park District Pension Fund, Metropolitan Water Reclamation District Pension Fund, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System, Chicago Teachers Pension Fund and Judges Retirement System articles of the Illinois Pension Code.

SB 896 prohibits any benefits from being paid to a person who otherwise would receive a survivor benefit but is convicted of a felony relating to, arising out of, or in connection with the service of the employee from whom the benefit results. SB 896 applies to the survivors of individuals who first become participants in SURS after the effective date of the legislation.

SB 896 is identical to House Bill 250 of the 100th General Assembly, as introduced.

SB 896 takes effect immediately upon becoming law.

Status:

Click Here

SB 1012
- Tier III Defined Contribution Plan
Sponsor(s): Senator Dale A. Righter

Senate Amendment #2 to SB 1012 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System articles of the Illinois Pension Code.

SA #2 to SB 1012 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2018. SURS must utilize the framework of the Self-Managed Plan and must endeavor to adapt the benefits and structure of the Self-Managed Plan to the Tier III plan. Tier I participants and Tier II participants may make a voluntary, irrevocable election to stop accruing benefits in the defined benefit plan and start accruing benefits for future service in the Tier III defined contribution plan. Additionally, all persons who first become participants in SURS on or after July 1, 2018, must participate in the Tier III defined contribution plan. Participants in the Tier III defined contribution plan will receive any applicable retiree health insurance benefits upon retirement.

A Tier I or Tier II member who elects to participate in the Tier III defined contribution plan may irrevocably elect to terminate all participation in the defined benefit plan. Upon such election, SURS must transfer an amount equal to the amount of the contribution refund that the member would be eligible to receive, including interest at the effective rate for the respective years, to the member’s individual account in the defined contribution plan.

Participant contributions to the Tier III defined contribution plan are at the rate of 8 percent of earnings. State contributions to the Tier III defined contribution plan are at the rate of 7.6 percent of earnings (minus up to 1 percent of earnings to cover the cost of any defined disability benefits offered under the defined contribution plan). Tier III participants must have five years of service credit in the defined contribution plan to vest in state contributions. Failure to vest results in the forfeiture of state contributions and any earnings thereon.

The Tier III defined contribution plan must offer a variety of options for investments, including investments handled by SURS as well as private sector investment options; provide a variety of options for payouts to inactive participants and their survivors; and, to the extent authorized under federal law and as authorized by SURS, allow former participants to transfer or roll over employee and vested state contributions, and the earnings thereon, from the Tier III defined contribution plan into other qualified retirement plans.

SURS, in consultation with employers, must solicit proposals to provide administrative services and funding vehicles for the Tier III defined contribution plan from insurance and annuity companies and mutual fund companies, banks, trust companies or other financial institutions authorized to do business in Illinois. SURS must contract with no fewer than two and no more than seven companies to provide administrative services and funding vehicles for the Tier III defined contribution plan. Each approved company must be periodically reviewed by SURS in consultation with the employers.

SA #2 takes effect immediately upon becoming law.

Senate Amendment #1 to SB 1012 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System articles of the Illinois Pension Code.

SA #1 to SB 1012 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2018. Tier I participants and Tier II participants may make a voluntary, irrevocable election to become Tier III participants, stopping participation in the defined benefit plan and starting participation in the defined contribution plan for future service. Additionally, all persons who first become participants in SURS on or after July 1, 2018, must participate in the Tier III defined contribution plan.

Tier III participants may irrevocably elect to terminate all participation in the defined benefit plan. Upon such election, SURS must transfer an amount equal to the amount of the contribution refund that the member would be eligible to receive, including interest at the effective rate, to the member’s individual account in the defined contribution plan. Participants in the Tier III defined contribution plan will receive any applicable retiree health insurance benefits upon retirement.

Tier III employee contributions to the defined contribution plan are set at a rate determined by the participant, but not less than 3 percent of earnings and not more than a percentage of earnings determined by the board in accordance with the requirements of state and federal law. State contributions to the defined contribution plan are set at a uniform rate, but not higher than 7.6 percent of earnings and not lower than 3 percent of earnings. The state must adjust this rate annually. Tier III participants must have five years of service in the defined contribution plan to vest in state contributions. Failure to vest results in the forfeiture of state contributions and any earnings thereon. Disability benefits may be provided under the Tier III defined contribution plan, and Tier III employee contributions to the defined contribution plan may be reduced by an amount to cover the cost of offering such disability benefits.

The Tier III defined contribution plan must offer a variety of options for investments, including investments handled by SURS as well as private sector investment options; provide a variety of options for payouts to inactive members and their survivors; and, to the extent permitted under federal law and as authorized by SURS, allow former participants to transfer or roll over employee and vested state contributions, and the earnings thereon, from the Tier III defined contribution plan into other qualified retirement plans.

The Tier III defined contribution plan contained in SA #1 to SB 1012 is identical to the Tier III defined contribution plan contained in House Bill 2405 of the 100th General Assembly.

SA #1 SB 1012 takes effect immediately upon becoming law.

Status:

Click Here

SB 1345
- Public Act 100-0023 Trailer Bill – Tier Clarification
Sponsor(s): Senator Donne E. Trotter and Representative Robert Martwick

SB 1345 clarifies that individuals who first become members of SURS on or after January 1, 2011, and prior to the implementation date of the Optional Hybrid Plan will participate in SURS as Tier II members.

Public Act 100-0023 (effective July 6, 2017) closed Tier II for individuals who first become members of SURS on or after January 6, 2018.   As a result, under Public Act 100-0023, individuals who first become members of SURS on or after January 6, 2018 would not have a benefit “Tier” assigned to them, meaning that the retirement benefits for those members would not be clearly defined in statute.  SB 1345 provides that individuals who first become members of SURS on or after January 6, 2018, and until the implementation date of the Optional Hybrid Plan will participate in SURS as Tier II members.  

SB 1345 takes effect immediately upon becoming law.

Became Public Act 100-0563 effective December 8, 2017.

Status:

Click here

SB 1714
- Investment Consultant Disclosures
Sponsor(s): Senator James F. Clayborne, Jr. and Representative Arthur Turner

SB 1714 amends the General Provisions article of the Illinois Pension Code.

SB 1714 requires each consultant retained by the board of a retirement system, pension fund or investment board to disclose the following information by Jan. 1, 2018, and each Jan. 1 thereafter:

  • The total number of searches for investment services made by the consultant in the prior calendar year;

  • The total number of searches for investment services made by the consultant in the prior calendar year that included: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability;

  • The total number of searches for investment services made by the consultant in the prior calendar year in which the consultant recommended for selection: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability;

  • The total number of searches for investment services made by the consultant in the prior calendar year that resulted in the selection of: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability; and

  • The total dollar amount of investment made in the previous calendar year with: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability that was selected after a search for investment services performed by the consultant.

Beginning Jan. 1, 2018, the board of a retirement system, pension fund or investment board is prohibited from awarding a contract, oral or written, for consulting services without first requiring the consultant to make these disclosures.  These disclosures must be considered, within the bounds of financial and fiduciary prudence, prior to the awarding of a contract, oral or written, for consulting services.

SB 1714 also requires each consultant retained by the board of a retirement system, pension fund or investment board to disclose the following information by Jan. 1, 2018, and each Jan. 1 thereafter: all compensation and economic opportunity received in the last 24 months from investment advisors retained by the board of a retirement system, pension fund or investment board.  

Finally, SB 1714 requires each consultant to disclose the following information to the board of a retirement system, pension fund or investment board beginning Jan. 1, 2018: any compensation or economic opportunity received in the last 24 months from an investment advisor that is recommended for selection by the consultant.  The consultant must make this disclosure prior to the board selecting an investment advisor for appointment.  Beginning Jan. 1, 2018, the board of a retirement system, pension fund or investment board is prohibited from awarding a contract, oral or written, for consulting services without first requiring the consultant to make these disclosures.

SB 1714 takes effect immediately upon becoming law.

Became Public Act 100-0542 effective November 8, 2017.

Status:

Click Here

SB 1798
- No Investments in Expatriate Corporations
Sponsor(s): Senator Michael E. Hastings

Senate Amendment #1 to SB 1798 amends the General Provisions article of the Illinois Pension Code to authorize the state-funded retirement systems to use shareholder activism prior to divestment to impact the behavior of expatriated entities.  

An expatriated entity is defined as “a foreign incorporated entity which is treated as an inverted domestic corporation under subsection (b) of Section 835 of the Homeland Security Act of 2002, 6 U.S.C. 395(b), or any subsidiary of such an entity.”

By April 1, 2018, the Illinois Investment Policy Board must make its best efforts to identify all expatriated entities and include those companies in the list of restricted companies distributed to each retirement system and the state treasurer.

To the extent the retirement system believes that shareholder activism would be more impactful than divestment, the retirement system has the authority to engage with an expatriated entity prior to divesting from it.  Methods of shareholder activism utilized by the retirement system may include, but are not limited to, bringing shareholder resolutions and proxy voting on shareholder resolutions. The retirement system must report on its shareholder activism and the outcome of such efforts to the Illinois Investment Policy Board by April 1 of each year.  However, if the engagement efforts of the retirement system are unsuccessful, then it must adhere to the normal procedures for divestment.

If a company ceases activity that designates it as an expatriated entity, then it is removed from the list of restricted companies (and is not subject to shareholder activism or divestment), unless it resumes such activities.

Senate Amendment #2 to SB 1798 clarifies that if the retirement system determines that its engagement efforts with an expatriated entity are unsuccessful, then it must adhere to the normal procedures for divestment.

As introduced, SB 1798 amends the General Provisions article of the Illinois Pension Code to prohibit the state-funded retirement systems from investing in expatriate corporations.  

An expatriate corporation is defined as a foreign incorporated entity to which all of the following apply: (1) it is publicly traded in the United States; (2) it is incorporated in a foreign tax haven; (3) less than 10 percent of the gross income of the foreign entity is derived from activities in the tax haven; (4) less than 10 percent of the employees of the foreign entity are permanently located in the tax haven; and (5) either of the following applies:

  • The foreign entity was established in connection with a transaction or series of related transactions pursuant to which: (i) the foreign entity directly or indirectly acquired substantially all of the properties held by a domestic corporation or all of the properties constituting a trade or business of a domestic partnership or related foreign partnership; and (ii) immediately after the acquisition, more than 50 percent of the publicly traded stock, by vote or value, of the foreign entity is held by former shareholders of the domestic corporation or by former partners of the domestic partnership or related foreign partnership.  For purposes of item (ii), any stock sold in a public offering related to the transaction or a series of transactions is disregarded.
  • The foreign entity was established in connection with a transaction or series of related transactions pursuant to which (i) the foreign entity directly or indirectly acquired substantially all of the properties held by a domestic corporation or all of the properties constituting a trade or business of a domestic partnership or related foreign partnership and (ii) the acquiring foreign entity is more than 50 percent owned, by vote or value, by domestic shareholders or partners.

By April 1, 2018, the Illinois Investment Policy Board must make its best efforts to identify all expatriate corporations and include those companies in the list of restricted companies distributed to each retirement system for this purpose.  If a company ceases activity that designates it as an expatriate corporation, then it must be removed from the list of restricted companies, and is subject to investment by the state-funded retirement systems, unless it resumes such activities.

As introduced, SB 1798 is identical to House Bill 3419 of the 100th General Assembly.

SB 1798 takes effect in accordance with the Effective Date of Laws Act.

Status:

Click Here

SB 1801
- Supplemental Defined Contribution Plan
Sponsor(s): Senator William E. Brady

SB 1801 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System articles of the Illinois Pension Code.

SB 1801 requires the SURS Board of Trustees to establish and maintain a defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. The plan must be established within one year of the effective date of the legislation and must exist and serve in addition to other retirement, pension and benefit plans established under the Illinois Pension Code. All assets and income of the plan must be held in trust for the exclusive benefit of participants and their beneficiaries.

Each person who first became a participant of SURS before Jan. 1, 2011 (Tier I participants) and each person who first became a participant of SURS on or after Jan. 1, 2011 (Tier II participants) but prior to the creation of the supplemental defined contribution plan may voluntarily elect to enroll in the plan. Each person who becomes a Tier II participant after the creation of the supplemental defined contribution plan will be automatically enrolled in the plan at a contribution rate established by the Board, unless he or she opts out within 60 days after becoming a participant.

The supplemental defined contribution plan must be designed to enable participants to generate a stream of income to replace their pre-retirement income in retirement and must provide a variety of options for distributions to participants and their beneficiaries.

SB 1801 is identical to House Bill 3867 of the 100th General Assembly, as introduced.

SB 1801 takes effect immediately upon becoming law.

Status:

Click Here

Pages

Subscribe to Legislation