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

HB 4684
- SURS Comptroller Intercept
Sponsor(s): Representative Robert Martwick and Senator Omar Aquino

HB 4684 amends the State Universities Retirement System’s Article of the Illinois Pension Code. It enhances SURS’ ability to obtain delinquent employer payments that are owed under the law by intercepting them through the state Comptroller and/or the county treasurer for the county in which the employer is located.

Under current law, SURS has the ability to obtain delinquent employer payments through the state Comptroller under the return to work law for affected annuitants (Section 15-139.5) and under legal requirements that employers provide information necessary for the administration of the System and employer audits (Sections 15-168 and 15-168.2). HB 4684 permits SURS to obtain delinquent employer payments under these laws from the county treasurer for the county in which the employer is located. HB 4684 also permits SURS to obtain delinquent employer payments through the state Comptroller and/or the county treasurer for amounts owed under other employer contribution laws, such as those pertaining to the 6% Rule (Section 15-155(g)), the Governor’s Salary Rule (Section 15-155(j-5)), employer normal cost contributions from certain employers (Section 15-155(b)), employee contributions that are “picked-up” by the employer (Sections 15-181 and 15-157.1), and employer contributions under the Self-Managed Plan (Section 15-158.2).

HB 4684 takes effect immediately upon becoming law.

HB 5137 became Public Act 100-0769 on August 10, 2018.

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HB 4839
- Pension Reform
Sponsor(s): Representative Jeanne M. Ives

HB 4839 amends the General Provisions, General Assembly Retirement System, Illinois Municipal Retirement Fund, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System, Judges Retirement System, and Reciprocal Retirement System articles of the Illinois Pension Code.  

Restrictions on Pensionable Earnings and Service Credit

HB 4839 prohibits payments for unused sick or vacation time from counting towards the final rate of earnings of individuals who first become participants in SURS on or after the effective date of the legislation.  HB 4839 also prohibits individuals who first become participants in SURS on or after the effective date of the legislation from receiving service credit for unused sick leave.

Employee Non-Participation in SURS

HB 4839 establishes that a person is not required to participate in SURS.  An active employee may terminate his or her participation in SURS (including active participation in the Tier III Plan, if applicable) by notifying SURS in writing.  An active employee terminating participation in SURS is entitled to a refund of his or her contributions (other than contributions to the Self-Managed Plan or the Tier III Plan) minus the benefits received prior to the termination of participation.

Tier III Defined Contribution Plan

HB 4839 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2019.  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, 2019, 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.

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 an amount to cover the cost of any defined disability benefits offered under the defined contribution plan).   Tier III participants must have one year 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.

Accelerated Pension Benefit Payment Option

HB 4839 creates an accelerated pension benefit payment option.  Eligible SURS members may elect the accelerated pension benefit payment option between January 1, 2019, and July 1, 2019.  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, 2019, 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. 

Employer Funding Changes

HB 4839 ends the requirement that the employer pay the present value of the increase in benefits resulting from earnings increases above 6% during the final rate of earnings period to SURS.  Instead, HB 4839 provides that, beginning in fiscal year 2020, if a contract or collective bargaining agreement entered into, amended, or renewed on or after the effective date of the legislation provides for earnings to exceed the salaries provided under the preceding contract or collective bargaining agreement, then the employer must pay the current value of the projected amount of the resulting increase in benefits, reflecting whether the participants are Tier I or Tier II members, to SURS.  

Repeal of Public Act 100-0023

HB 4839 repeals many of the provisions of Public Act 100-0023, which created the Optional Hybrid Plan.  It does not repeal the provisions that became effective on July 6, 2017, which were: the Governor’s salary rule, the smoothing of the costs of any changes in actuarial assumptions, and the recertification of the FY 2018 state contribution.

Effective Date

HB 4839 takes effect immediately upon becoming law.

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HB 5013
- Downstate Police and Firefighters Investment Consolidation
Sponsor(s): Representative Ryan Spain

HB 5013 amends the General Provisions, Regulation of Public Pension Fund, Downstate Policemen’s Pension Fund and Downstate Firefighters’ Pension Fund articles of the Illinois Pension Code. It also adds two new articles to the Illinois Pension Code: the Downstate Police Pension Investment Board article and the Downstate Firefighter Pension Investment Board article.

HB 5013 increases the amount of the annual compliance fee paid by public pension funds and retirement systems (except for Downstate Police and Firefighters Pension Funds) to the Department of Insurance from $8,000 to $16,000. (For Downstate Police and Firefighters Pension Funds, the amount of the annual compliance fee is increased from two basis points to four basis points of the total assets of the pension fund, but not more than $16,000).

HB 5013 also extends laws governing penalties for non-compliance with the Illinois Pension Code to apply to any pension fund (currently, such laws only apply to any governmental unit) that is subject to any law establishing a pension fund or retirement system for the benefit of employees of the governmental unit. Specifically, HB 5013 provides that whenever the Public Pension Division of the Illinois Department of Insurance determines that the governing body or any elected or appointed official or official of a governmental unit has failed to comply with any provision of the Illinois Pension Code, then the director of the Illinois Department of Insurance must notify the governing body, officer, or official of the specific provisions of the law with which the person has failed to comply. Upon receiving such notice, the person must take immediate steps to comply with the provisions of law specified in the notice. If the person fails to comply within a reasonable time after receiving the notice, then the director may hold a hearing at which the person may show cause for noncompliance with the law. If upon hearing the director determines that good and sufficient cause for noncompliance has not been shown, the director may order the person to submit evidence of compliance within a specified period of not less than 30 days. If evidence of compliance has not been submitted to the director within the period of time prescribed in the order and no administrative appeal from the order has been initiated, then the director may assess a civil penalty of up to $2,000 against the governing body, officer, or official for each noncompliance with an order of the director. If a penalty is not paid within 30 days of the date of assessment, then the director must report the act of noncompliance to the Illinois attorney general, who is responsible for ensuring application is made to the circuit court of the county in which the governmental unit is located for enforcement of the penalty or for such additional relief as may be required.

HB 5013 takes effect immediately upon becoming law.

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HB 5019
- Withholdings for Tuition Programs and ABLE Programs
Sponsor(s): Representative Natalie A. Manley and Senator Melinda Bush

As it relates to SURS, HB 5019 amends the State Salary and Annuity Withholding Act. It allows an employee or annuitant to authorize the withholding of a portion of his or her salary, wages or annuity for investment purchases made as a participant or contributor to qualified tuition programs established pursuant to Section 529 of the Internal Revenue Code or qualified ABLE programs established pursuant to Section 529A of the Internal Revenue Code. (Under current law, an employee or annuitant may authorize the withholding of a portion of his or her salary, wages or annuity for investment purchases made as a participant in College Savings Programs established pursuant to Section 30-15.8a of the School Code.) HB 5019 also makes other changes.

HB 5019 takes effect immediately upon becoming law.

HB 5019 became Public Act 100-0763 on August 10, 2018.

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HB 5028
- 50% of Hydraulic Fracturing Revenues to Fund Pensions
Sponsor(s): Representative Charles Meier

HB 5028 amends the Illinois Hydraulic Fracturing Tax Act.

HB 5028 provides that 50 percent of the moneys received from hydraulic fracturing must be paid into the Pension Relief Fund and must be used to make required employer contributions required to the State Employees Retirement System, State Universities Retirement System and Teachers Retirement System. The remaining 50 percent of moneys received from hydraulic fracturing must be paid into the General Revenue Fund. (Currently, 100 percent of the moneys received from hydraulic fracturing must be paid into the General Revenue Fund.)

HB 5028 takes effect in accordance with the Effective Date of Laws Act.

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HB 5114
- SURS Tier 2 Police Officer and Firefighter Retirement Age
Sponsor(s): Representative Chad Hays

HB 5114 amends the Downstate Policemen’s Pension Fund and State Universities Retirement System articles of the Illinois Pension Code.

As it relates to SURS, HB 5114 provides that a Tier 2 member who has at least 20 years of service in SURS as a police officer or firefighter can retire at age 60 under the alternative formula for police officers and firefighters. Under current law, a Tier 2 member can only retire under the alternative formula for police officers and firefighters with 20 years of service credit at age 67 or at age 62 (with a reduction in the amount of his or her retirement annuity equal to 0.5% for each full month that his or her age is under 67).

HB 5114 takes effect immediately upon becoming law.

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HB 5137
- SURS and TRS Optional Defined Contribution Benefit
Sponsor(s): Representative Robert Martwick and Senator Dan McConchie

HB 5137 amends the State Universities Retirement System and Teachers’ Retirement System articles of the Illinois Pension Code.

HB 5137 requires each system to offer a defined contribution benefit to its active members, as soon as practicable after the effective date of the legislation. The defined contribution benefit must be an optional benefit to any member who chooses to participate. The defined contribution benefit must collect optional employee and optional employer contributions into an account and offer investment options to the participant. The benefit must be operated in full compliance with any applicable state and federal laws, and each system must utilize generally accepted practices in creating and maintaining the benefit for the best interest of the participants. Each system may use funds from the employee and employer contributions to defray any and all costs of creating and maintaining the benefit. Each system must produce an annual report on the participation in the benefit and must make the report public.

HB 5137 takes effect immediately upon becoming law.

HB 5137 became Public Act 100-0769 on August 10, 2018.

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HB 5138
- Governor’s Salary Rule Full-Time Equivalent Elimination
Sponsor(s): Representative Robert Martwick

HB 5138 amends the State Universities Retirement System and Teachers Retirement System articles of the Illinois Pension Code.

HB 5138 eliminates the requirement that the governor’s salary rule applies to a participant’s earnings as determined on a full-time equivalent basis. Under current law, if a participant’s earnings, as determined on a full-time equivalent basis, exceed the amount of salary set for the governor, then the participant’s employer must pay the employer normal cost on the portion of the participant’s earnings in excess of the governor’s salary to SURS or TRS (as applicable). HB 5138 provides that only the pensionable earnings received by the participant can be used when determining whether a participant’s earnings exceed the amount of salary set for the governor.

HB 5138 takes effect immediately upon becoming law.

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HB 5404
- Governor's Introduced FY 2019 Budget
Sponsor(s): Representative Jim Durkin

HB 5404 appropriates $1,554,498,000 for the annual required state contribution to SURS for fiscal year 2019. Of this amount, $1,414,498,000 is appropriated from the General Revenue Fund, and $140,000,000 is appropriated from the State Pensions Fund. The certified fiscal year 2019 state contribution to SURS is $1,655,154,000.

HB 5404 also appropriates $0 from the Education Assistance Fund for the state contribution to the College Insurance Program (“CIP”) for fiscal year 2019. The certified fiscal year 2019 state contribution to CIP is $4,390,811.

HB 5404 is identical to Senate Bill 3382 of the 100th General Assembly.

HB 5404 takes effect on July 1, 2018.

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HB 5472
- Accelerated Pension Benefit Payment Option
Sponsor(s): Representative Robert Martwick

HB 5472 amends the State Employees Retirement System, State Universities Retirement System and Teachers Retirement System articles of the Illinois Pension Code.

HB 5472 creates an accelerated pension benefit payment option for retirement-eligible Tier 1 members. Specifically, an eligible SURS member must: be a Tier 1 member (i.e., a person who first became a participant in SURS or a certain reciprocal retirement system before January 1, 2011); have submitted an application for a retirement annuity under SURS; meet the age and service credit requirements for retirement under SURS; not have received any retirement annuity from SURS; not be a participant in the Self-Managed Plan; and not have a QILDRO in effect against him or her under SURS. As soon as practical on or after the effective date of the legislation, SURS must calculate an accelerated pension benefit payment amount for each eligible person and offer him or her the opportunity to accept the Tier 2 automatic annual increase in retirement (the lesser of 3 percent or ½ of the percentage increase in CPI-U, simple interest, beginning on the January 1 occurring or after the later of age 67 or the first anniversary of retirement) in exchange for an accelerated pension benefit payment. The accelerated pension benefit payment is a lump-sum payment equal to 70 percent of the difference of the present value of the automatic annual increases on the Tier 1 member’s retirement annuity under the Tier 1 formula (i.e., 3 percent compounded annually, applied beginning on the January 1 occurring after retirement) and the present value of the automatic annual increases on the Tier 1 member’s retirement annuity under the Tier 2 formula (i.e., the lesser of 3 percent or ½ of the percentage increase in CPI-U, non-compounded, applied beginning on the January 1 occurring on or after the later of age 67 or the first anniversary of retirement). The accelerated pension benefit payment must be rolled into another retirement plan or account qualified under the Internal Revenue Code of 1986, as amended. If a Tier 1 member who has received an accelerated pension benefit payment subsequently returns to active service under SURS, then the calculation of any future automatic annual increase in retirement annuity must be calculated under the Tier 2 formula (i.e., the lesser of 3 percent or ½ of the percentage increase in CPI-U, non-compounded, applied beginning on the January 1 occurring on or after the later of age 67 or the first anniversary of retirement) and the accelerated pension benefit payment cannot be repaid to SURS.

HB 5472 takes effect immediately upon becoming law.

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HB 5611
- Department of Innovation and Technology Act
Sponsor(s): Representative Jaime M. Andrade, Jr. and Senator Iris Y. Martinez

HB 5611 creates the Department of Innovation and Technology Act. As it relates to SURS, HB 5611 establishes that the Department of Central Management Services is an employer with respect to persons employed by the State Board of Higher Education in positions with the Illinois Century Network as of June 30, 2004, who remain continuously employed after that date by the Department of Central Management Services in positions with the Department of Innovation and Technology. This change reflects the statutory codification of the Department of Innovation and Technology under HB 5611.

HB 5611 takes effect immediately upon becoming law.

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HB 5674
- State-Funded Retirement Systems Annuitant Database
Sponsor(s): Representative Grant Wehrli

HB 5674 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.

HB 5674 requires each state-funded retirement system, by July 1, 2019, to establish and post on its website a searchable database of the names of all persons receiving an annuity from the System and the amount of the annuity paid by the System to that person each month. Each System’s database must be updated on a monthly basis. No database can include the name of an annuitant under the age of 18 nor any identifying information other than the annuitant’s name and the amount of the annuity paid to him or her each month.

HB 5674 takes effect immediately upon becoming law.

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HB 5850
- No Investments in Ford Motor Company
Sponsor(s): Representative Mary E. Flowers

HB 5850 amends the General Provisions article of the Illinois Pension Code.

HB 5850 prohibits the state-funded retirement systems from investing in Ford Motor Company and its subsidiaries. By July 1, 2019, the Illinois Investment Policy Board must make its best efforts to identify all subsidiaries of the Ford Motor Company and include those companies in the list of restricted companies distributed to each retirement system for this purpose.

HB 5850 takes effect in accordance with the Effective Date of Laws Act.

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HB 5926
- No Investments in Companies that Contract to Shelter Migrant Children
Sponsor(s): Representative Elizabeth Hernandez

HB 5926 amends the General Provisions article of the Illinois Pension Code to prohibit the state-funded retirement systems from investing in companies that contract to shelter migrant children.  HB 5926 defines “contract to shelter migrant children” as entering into a contract with the federal government to shelter migrant children under the federal Unaccompanied Alien Children Program or a substantially similar federal program.

Specifically, HB 5926 adds companies that contract to shelter migrant children to the list of restricted companies under the Illinois Pension Code.  By July 1, 2019, the Illinois Investment Policy Board must make its best efforts to identify all companies that contract to shelter migrant children and include those companies in the list of restricted companies distributed to each state-funded retirement system.   These efforts must include the following, as appropriate in the Illinois Investment Policy Board’s judgment: (1) reviewing and relying on publicly available information regarding companies that contract to shelter migrant children, including information provided by nonprofit organizations, research firms, and government entities; (2) contacting asset managers contracted by the state-funded retirement systems that invest in companies that contract to shelter migrant children; (3) contacting other institutional investors that have divested from or engaged with companies that contract to shelter migrant children; and (4) retaining an independent research firm to identify companies that contract to shelter migrant children. 

Under existing law, each state-funded retirement system must adhere to the following procedures for restricted companies: (1) the retirement system must identify those companies on the  list of restricted companies in which the retirement system owns direct holdings and indirect holdings; (2) the retirement system must instruct its investment advisors to sell, redeem, divest, or withdraw all direct holdings of restricted companies from the retirement system’s assets under management in an orderly and fiduciarially responsible manner within 12 months after the company’s most recent appearance on the list of restricted companies; and (3) the retirement system may not acquire securities of restricted companies.  These requirements for divestiture do not apply to the retirement system’s indirect holdings or private market funds.  The Illinois Investment Policy Board must submit letters to the managers of those investment funds containing restricted companies requesting that they consider removing the companies from the fund or create a similar actively managed fund having indirect holdings devoid of the companies.  If the manager creates a similar fund, the retirement system must replace all applicable investments with investments in the similar fund in an expedited timeframe consistent with prudent investing standards.  Furthermore, a retirement system may cease from divesting in companies if clear and convincing evidence shows that the value of investments in such companies becomes equal to or less than 0.5% of the market value of all assets under management by the retirement system.  For any cessation of divestment, the retirement system must provide a written notice to the Illinois Investment Policy Board in advance of the cessation of divestment, setting forth the reasons and justification, supported by clear and convincing evidence, for its decision to cease divestment.

HB 5926 takes effect immediately upon becoming law.

Filed with the Clerk on July 2, 2018.

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HB 5937
- Repeal 3% Rule and Re-Enact 6% Rule
Sponsor(s): Representative Phelps Finnie

HB 5937 amends the State Universities Retirement System and Teachers’ Retirement System articles of the Illinois Pension Code.

HB 5937 repeals the 3% Rule and re-enacts the 6% Rule. Specifically, HB 5937 repeals provisions requiring employers to pay the present value of the resulting increase in benefits attributable to earnings increases in excess of 3 percent during an employee’s final rate of earnings period to SURS. The 3% Rule became effective for academic years beginning on or after July 1, 2018. HB 5937 re-enacts provisions requiring employers to pay the present value of the resulting increase in benefits attributable to earnings increases in excess of 6 percent during an employee’s final rate of earnings period to SURS. The 6% Rule was effective for academic years beginning on or after June 1, 2005, and before July 1, 2018. Under HB 5937, the employer must pay the present value of the resulting increase in benefits attributable to earnings increases in excess of 6 percent (instead of 3 percent) to SURS. HB 5937 makes the same changes to TRS.

HB 5937 takes effect immediately upon becoming law.

HB 5937 is identical to SB 3622 of the 100th General Assembly.

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