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1 | AN ACT concerning public employee benefits.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Pension Code is amended by changing | ||||||||||||||||||||||||
5 | Section 2-117 and by adding Sections 2-105.3 and 2-167 as | ||||||||||||||||||||||||
6 | follows: | ||||||||||||||||||||||||
7 | (40 ILCS 5/2-105.3 new) | ||||||||||||||||||||||||
8 | Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier | ||||||||||||||||||||||||
9 | 3 participant. | ||||||||||||||||||||||||
10 | "Tier 1 participant": A participant who first became a | ||||||||||||||||||||||||
11 | participant before January 1, 2011. | ||||||||||||||||||||||||
12 | In the case of a Tier 1 participant who elects to | ||||||||||||||||||||||||
13 | participate in the self-directed retirement plan under Section | ||||||||||||||||||||||||
14 | 2-167, that participant shall be deemed a Tier 1 participant | ||||||||||||||||||||||||
15 | only with respect to service performed or established before | ||||||||||||||||||||||||
16 | the effective date of that election. | ||||||||||||||||||||||||
17 | "Tier 2 participant": A participant who first became a | ||||||||||||||||||||||||
18 | participant on or after January 1, 2011 and before the | ||||||||||||||||||||||||
19 | effective date of this amendatory Act of the 100th General | ||||||||||||||||||||||||
20 | Assembly. | ||||||||||||||||||||||||
21 | In the case of a Tier 2 participant who elects to | ||||||||||||||||||||||||
22 | participate in the self-directed retirement plan under Section | ||||||||||||||||||||||||
23 | 2-167, that participant shall be deemed a Tier 2 participant |
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1 | only with respect to service performed or established before | ||||||
2 | the effective date of that election. | ||||||
3 | "Tier 3 participant": A participant who first becomes a | ||||||
4 | participant on or after the effective date of this amendatory | ||||||
5 | Act of the 100th General Assembly; or a Tier 1 or Tier 2 | ||||||
6 | participant who elects to participate in the self-directed | ||||||
7 | retirement plan under Section 2-167 of this Code, but only with | ||||||
8 | respect to service performed or established on or after the | ||||||
9 | effective date of that election.
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10 | (40 ILCS 5/2-117) (from Ch. 108 1/2, par. 2-117)
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11 | Sec. 2-117. Participants - Election not to participate.
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12 | (a) Every person who was a member on November 1, 1947, or | ||||||
13 | in military
service on such date, is subject to the provisions | ||||||
14 | of this system beginning
upon such date, unless prior to such | ||||||
15 | date he or she filed with the board a
written notice of | ||||||
16 | election not to participate.
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17 | Every person who becomes a member after November 1, 1947, | ||||||
18 | and who is
then not a participant becomes a participant | ||||||
19 | beginning upon the date of
becoming a member unless, within 24 | ||||||
20 | months from that date, he or she has
filed with the board a | ||||||
21 | written notice of election not to participate.
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22 | (b) A member who has filed notice of an election not to | ||||||
23 | participate
(and a former member who has not yet begun to | ||||||
24 | receive a retirement
annuity under this Article) may become a | ||||||
25 | participant with respect to the period
for which the member |
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1 | elected not to participate upon filing with the board,
before | ||||||
2 | April 1, 1993, a written rescission of the election not to | ||||||
3 | participate.
Upon contributing an amount equal to the | ||||||
4 | contributions he or she would have
made as a participant from | ||||||
5 | November 1, 1947, or the date of becoming a member,
whichever | ||||||
6 | is later, to the date of becoming a participant, with interest | ||||||
7 | at the
rate of 4% per annum until the contributions are paid, | ||||||
8 | the participant shall
receive credit for service as a member | ||||||
9 | prior to the date of the rescission,
both before and after | ||||||
10 | November 1, 1947. The required contributions shall be
made | ||||||
11 | before commencement of the retirement annuity; otherwise no | ||||||
12 | credit for
service prior to the date of participation shall be | ||||||
13 | granted.
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14 | (c) A member who has filed notice of an election not to | ||||||
15 | participate may become a Tier 3 participant without making a | ||||||
16 | contribution under subsection (b) by filing with the board a | ||||||
17 | written rescission of the election not to participate if he or | ||||||
18 | she elects to participate in the self-directed retirement plan | ||||||
19 | under subsection (d) of Section 2-167. A member who files the | ||||||
20 | written rescission pursuant to this subsection may not receive | ||||||
21 | credit for service as a member prior to the date of the | ||||||
22 | rescission. | ||||||
23 | (Source: P.A. 86-273; 87-1265.)
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24 | (40 ILCS 5/2-167 new) | ||||||
25 | Sec. 2-167. Self-directed retirement plan. |
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1 | (a) For the purposes of this Section: | ||||||
2 | "Active participant" means a participant who is in | ||||||
3 | active service in the System. | ||||||
4 | "Consumer price index-u" means the index published by | ||||||
5 | the Bureau of Labor Statistics of the United States | ||||||
6 | Department of Labor that measures the average change in | ||||||
7 | prices of goods and services purchased by all urban | ||||||
8 | consumers, United States city average, all items, 1982-84 = | ||||||
9 | 100. | ||||||
10 | "Defined benefit plan" means the retirement plan | ||||||
11 | available under this Article to Tier 1 or Tier 2 | ||||||
12 | participants who have not made the election authorized | ||||||
13 | under this Section. | ||||||
14 | "Employer" means the State. | ||||||
15 | "Pensionable salary" means the amount of salary used by | ||||||
16 | the System to calculate the amount of an individual's | ||||||
17 | retirement annuity. | ||||||
18 | (b) On and after the effective date of this amendatory Act | ||||||
19 | of the 100th General Assembly, a Tier 3 participant's | ||||||
20 | participation in the System shall be limited to participation | ||||||
21 | in the self-directed retirement plan established under | ||||||
22 | subsection (d) of this Section. | ||||||
23 | An active Tier 1 or Tier 2 participant of this System may | ||||||
24 | elect to cease accruing benefits in the defined benefit plan | ||||||
25 | and begin accruing benefits for future service in the | ||||||
26 | self-directed retirement plan established under subsection |
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1 | (d). The election to participate in the self-directed | ||||||
2 | retirement plan is voluntary and irrevocable. | ||||||
3 | For an active Tier 1 or Tier 2 participant who elects to | ||||||
4 | participate in the self-directed retirement plan, all service | ||||||
5 | credit under the System (including service under any | ||||||
6 | participating system if the participant elects to use the | ||||||
7 | reciprocal provisions of Article 20) shall be considered for | ||||||
8 | purposes of vesting in the benefits provided prior to the | ||||||
9 | effective date of this Section, but only service earned and | ||||||
10 | contributions made before that effective date shall be | ||||||
11 | considered in determining the amount of those benefits. In lieu | ||||||
12 | of receiving any such benefits, an active Tier 1 or Tier 2 | ||||||
13 | participant who elects to participate in the self-directed | ||||||
14 | retirement plan may elect to have an account balance | ||||||
15 | established in his or her self-directed retirement plan account | ||||||
16 | in an amount equal to the amount of the contribution refund | ||||||
17 | that the participant would be eligible to receive if he or she | ||||||
18 | withdrew from service on the effective date of this Section and | ||||||
19 | elected a refund of contributions, except that this | ||||||
20 | hypothetical refund shall include interest at the effective | ||||||
21 | rate for the respective years. The System shall make these | ||||||
22 | transfers of assets to the self-directed plan as tax-free | ||||||
23 | transfers in accordance with Internal Revenue Service | ||||||
24 | guidelines. | ||||||
25 | (c) The pensionable salary of an active participant shall | ||||||
26 | be equal to the average final monthly salary of the |
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1 | participant. For a participant who first becomes a participant | ||||||
2 | of this System on or after the effective date of this | ||||||
3 | amendatory Act of the 100th General Assembly, the average final | ||||||
4 | monthly salary determined by dividing the total salary of the | ||||||
5 | participant during the 96 consecutive months of service within | ||||||
6 | the last 120 months of service in which the total compensation | ||||||
7 | was the highest by the number of months of service in that | ||||||
8 | period; however, the highest salary for annuity purposes may | ||||||
9 | not exceed $106,800, except that that amount shall annually | ||||||
10 | thereafter be increased by the lesser of (i) 3% of that amount, | ||||||
11 | including all previous adjustments, or (ii) the annual | ||||||
12 | unadjusted percentage increase (but not less than zero) in the | ||||||
13 | consumer price index-u for the 12 months ending with the | ||||||
14 | September preceding each November 1. The new amount resulting | ||||||
15 | from each annual adjustment shall be determined by the Public | ||||||
16 | Pension Division of the Department of Insurance and made | ||||||
17 | available to the Board by November 1 of each year. | ||||||
18 | (d) As soon as practicable after the effective date of this | ||||||
19 | amendatory Act of the 100th General Assembly, the System shall | ||||||
20 | establish a self-directed retirement plan that allows Tier 3 | ||||||
21 | participants the opportunity to accumulate assets for | ||||||
22 | retirement through a combination of employee and employer | ||||||
23 | contributions that may be invested in mutual funds, collective | ||||||
24 | investment funds, or other investment products and used to | ||||||
25 | purchase annuity contracts, either fixed or variable or a | ||||||
26 | combination thereof. The plan must be qualified under the |
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1 | Internal Revenue Code of 1986. | ||||||
2 | At any time after withdrawal from service, a participant in | ||||||
3 | the self-directed plan shall be entitled to a benefit that is | ||||||
4 | based on the account values attributable to his or her | ||||||
5 | participant contributions and the employer contributions, as | ||||||
6 | well as any investment returns attributable to those | ||||||
7 | contributions. Upon a participant's first day of participation | ||||||
8 | in the self-directed retirement plan, the participant becomes | ||||||
9 | vested in his or her contributions to the self-directed | ||||||
10 | retirement plan, the employer's contributions to the | ||||||
11 | self-directed retirement plan, and the investment returns | ||||||
12 | attributable to those contributions credited to his or her | ||||||
13 | account. | ||||||
14 | (e) All persons who begin to participate in this System on | ||||||
15 | or after the effective date of this amendatory Act of the 100th | ||||||
16 | General Assembly and any active Tier 1 or Tier 2 participant | ||||||
17 | who makes the election provided in subsection (b) shall | ||||||
18 | participate in the self-directed retirement plan established | ||||||
19 | under subsection (d) and, in lieu of the contributions | ||||||
20 | otherwise provided for in this Article, shall contribute 8% of | ||||||
21 | salary to the plan. The employer of each of those participants | ||||||
22 | shall contribute 7% of salary to that plan on behalf of the | ||||||
23 | participant. | ||||||
24 | (f) The provisions of this amendatory Act of the 100th | ||||||
25 | General Assembly apply notwithstanding any other law, | ||||||
26 | including Section 1-160 of this Code. If there is a conflict |
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1 | between the provisions of this amendatory Act of the 100th | |||||||||||||||||||||||||||||||||||||||||||||
2 | General Assembly and any other law, the provisions of this | |||||||||||||||||||||||||||||||||||||||||||||
3 | Section shall control.
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4 | (40 ILCS 5/2-105.1 rep.) | |||||||||||||||||||||||||||||||||||||||||||||
5 | Section 10. The Illinois Pension Code is amended by | |||||||||||||||||||||||||||||||||||||||||||||
6 | repealing Section 2-105.1.
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