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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,
| ||||||||||||||||||||||||
3 | represented in the General Assembly:
| ||||||||||||||||||||||||
4 | Section 5. The Illinois Pension Code is amended by adding | ||||||||||||||||||||||||
5 | Sections 2-103.1, 2-103.2, 2-117.4, 2-126.2, 2-162.1, | ||||||||||||||||||||||||
6 | 14-103.40, 14-103.41, 14-105.8, 14-133.2, 15-198.1, 16-104.1, | ||||||||||||||||||||||||
7 | 16-104.2, 16-131.7, 16-158.2, 16-203.1, 18-105.1, 18-105.2, | ||||||||||||||||||||||||
8 | 18-123.3, 18-133.2, and 18-169.1 and changing Sections 2-126, | ||||||||||||||||||||||||
9 | 14-133, 14-152.2, 15-103.3, 15-134.5, 15-158.2, 16-152, and | ||||||||||||||||||||||||
10 | 18-133 as follows: | ||||||||||||||||||||||||
11 | (40 ILCS 5/2-103.1 new)
| ||||||||||||||||||||||||
12 | Sec. 2-103.1. Traditional benefit package. "Traditional | ||||||||||||||||||||||||
13 | benefit
package" means the defined benefit retirement program | ||||||||||||||||||||||||
14 | maintained by the System, which
includes retirement annuities | ||||||||||||||||||||||||
15 | payable directly from the System, as provided in
Sections | ||||||||||||||||||||||||
16 | 2-119, 2-119.01, 2-119.1, and 2-120; survivor's annuities | ||||||||||||||||||||||||
17 | payable directly from the System, as provided in
Sections | ||||||||||||||||||||||||
18 | 2-121, 2-121.1, 2-121.2, and 2-121.3; and contribution | ||||||||||||||||||||||||
19 | refunds, as provided in Section
2-123. | ||||||||||||||||||||||||
20 | (40 ILCS 5/2-103.2 new)
| ||||||||||||||||||||||||
21 | Sec. 2-103.2. Self-managed plan. "Self-managed plan" means | ||||||||||||||||||||||||
22 | the defined
contribution retirement program maintained by the |
| |||||||
| |||||||
1 | System, as described in
Section 2-126.2. The self-managed plan | ||||||
2 | does not
include retirement annuities or survivor's benefits
| ||||||
3 | payable directly from the System, as provided in Sections | ||||||
4 | 2-119, 2-119.01, 2-119.1, 2-120, 2-121, 2-121.1, 2-121.2, and | ||||||
5 | 2-121.3 or refunds determined under Section 2-123. | ||||||
6 | (40 ILCS 5/2-117.4 new)
| ||||||
7 | Sec. 2-117.4. Retirement program elections. | ||||||
8 | (a) For the purposes of this Section: | ||||||
9 | "Eligible participant" means either a currently eligible | ||||||
10 | participant or a newly eligible
participant of the System. | ||||||
11 | "Currently eligible participant"
means a person who is a | ||||||
12 | participant under this Article on the date on which
the System | ||||||
13 | first offers the
self-managed plan as an alternative to the | ||||||
14 | traditional benefit package. | ||||||
15 | "Newly
eligible participant" means a person who first | ||||||
16 | becomes a participant
after the date on which the System first | ||||||
17 | offers the self-managed plan as an alternative to the
| ||||||
18 | traditional benefit package.
| ||||||
19 | (b) When the System offers to participants under this | ||||||
20 | Article a
self-managed plan as an alternative to the | ||||||
21 | traditional benefit package, each currently eligible | ||||||
22 | participant shall be
given the choice to elect which retirement | ||||||
23 | program he or she wishes to
participate in with respect to all | ||||||
24 | periods of covered employment occurring on,
before, and after | ||||||
25 | the effective date of the participant's election. The |
| |||||||
| |||||||
1 | retirement
program election made by a currently eligible | ||||||
2 | participant must be made in writing, in the
manner prescribed | ||||||
3 | by the System, and within the time period described in
this | ||||||
4 | Section. | ||||||
5 | If a currently eligible participant elects the | ||||||
6 | self-managed plan, then that election is irrevocable. If a | ||||||
7 | currently eligible participant who elected to participate or | ||||||
8 | participated by default in the traditional benefit plan | ||||||
9 | terminates employment under this Article, then the | ||||||
10 | participant, upon his or her subsequent
re-employment under | ||||||
11 | this Article, may make an election under this Section. | ||||||
12 | A currently eligible participant who fails to make an | ||||||
13 | election under this Section shall, by default,
participate in | ||||||
14 | the traditional benefit package.
| ||||||
15 | (c) A currently eligible participant may elect to
| ||||||
16 | participate in the traditional benefit package
or the | ||||||
17 | self-managed plan.
| ||||||
18 | A currently eligible participant must make this election | ||||||
19 | within 5 years
after the effective date of the adoption of the | ||||||
20 | self-managed plan under Section 2-126.2 or, in the case of a | ||||||
21 | currently eligible participant who terminates employment under | ||||||
22 | this Article, within 6 months after his or her re-employment | ||||||
23 | under this Article.
| ||||||
24 | A newly eligible participant is automatically enrolled in | ||||||
25 | the self-managed plan under Section 2-162.2.
| ||||||
26 | (d) If the currently eligible participant elects to |
| |||||||
| |||||||
1 | participate in the self-managed plan, the system shall fund | ||||||
2 | their account as stated in subsection (f) of Section 2-126.2.
| ||||||
3 | (e) A currently eligible participant shall be provided with | ||||||
4 | written information prepared
or prescribed by the System that | ||||||
5 | describes the participant's retirement program
choices. The | ||||||
6 | eligible participant shall be offered an opportunity to
receive | ||||||
7 | counseling from the System prior to making his or her election. | ||||||
8 | This
counseling may consist of videotaped materials, group | ||||||
9 | presentations, individual
consultation with an employee or | ||||||
10 | authorized representative of the System in
person or by | ||||||
11 | telephone or other electronic means, or any combination of | ||||||
12 | these
methods.
| ||||||
13 | (40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)
| ||||||
14 | Sec. 2-126. Contributions by participants.
| ||||||
15 | (a) Each participant shall contribute toward the cost of | ||||||
16 | his or her
retirement annuity a percentage of each payment of | ||||||
17 | salary received by him or
her for service as a member as | ||||||
18 | follows: for service between October 31, 1947
and January 1, | ||||||
19 | 1959, 5%; for service between January 1, 1959 and June 30, | ||||||
20 | 1969,
6%; for service between July 1, 1969 and January 10, | ||||||
21 | 1973, 6 1/2%; for service
after January 10, 1973, 7%; for | ||||||
22 | service after December 31, 1981, 8 1/2%.
| ||||||
23 | (b) Beginning August 2, 1949, each male participant, and | ||||||
24 | from July 1,
1971, each female participant shall contribute | ||||||
25 | towards the cost of the
survivor's annuity 2% of salary.
|
| |||||||
| |||||||
1 | A participant who has no eligible survivor's annuity | ||||||
2 | beneficiary may elect
to cease making contributions for | ||||||
3 | survivor's annuity under this subsection.
A survivor's annuity | ||||||
4 | shall not be payable upon the death of a person who has
made | ||||||
5 | this election, unless prior to that death the election has been | ||||||
6 | revoked
and the amount of the contributions that would have | ||||||
7 | been paid under this
subsection in the absence of the election | ||||||
8 | is paid to the System, together
with interest at the rate of 4% | ||||||
9 | per year from the date the contributions
would have been made | ||||||
10 | to the date of payment.
| ||||||
11 | Notwithstanding any provision in this subsection (b) to the | ||||||
12 | contrary, in the case of an employee who participates in the | ||||||
13 | self-managed plan under Section 2-126.2, contributions for a | ||||||
14 | survivor's annuity shall instead be used to finance the | ||||||
15 | benefits available under Section 2-126.2.
| ||||||
16 | (c) Beginning July 1, 1967, each participant shall | ||||||
17 | contribute 1% of
salary towards the cost of automatic increase | ||||||
18 | in annuity provided in
Section 2-119.1. These contributions | ||||||
19 | shall be made concurrently with
contributions for retirement | ||||||
20 | annuity purposes.
| ||||||
21 | (d) In addition, each participant serving as an officer of | ||||||
22 | the General
Assembly shall contribute, for the same purposes | ||||||
23 | and at the same rates
as are required of a regular participant, | ||||||
24 | on each additional payment
received as an officer. If the | ||||||
25 | participant serves as an
officer for at least 2 but less than 4 | ||||||
26 | years, he or she shall
contribute an amount equal to the amount |
| |||||||
| |||||||
1 | that would have been contributed
had the participant served as | ||||||
2 | an officer for 4 years. Persons who serve
as officers in the | ||||||
3 | 87th General Assembly but cannot receive the additional
payment | ||||||
4 | to officers because of the ban on increases in salary during | ||||||
5 | their
terms may nonetheless make contributions based on those | ||||||
6 | additional payments
for the purpose of having the additional | ||||||
7 | payments included in their highest
salary for annuity purposes; | ||||||
8 | however, persons electing to make these
additional | ||||||
9 | contributions must also pay an amount representing the
| ||||||
10 | corresponding employer contributions, as calculated by the | ||||||
11 | System.
| ||||||
12 | (Source: P.A. 90-766, eff. 8-14-98.)
| ||||||
13 | (40 ILCS 5/2-126.2 new)
| ||||||
14 | Sec. 2-126.2. Self-managed plan. | ||||||
15 | (a) The General Assembly finds that the State should have | ||||||
16 | the flexibility to provide a defined contribution
| ||||||
17 | (self-managed) plan for eligible participants.
Accordingly, | ||||||
18 | the General Assembly Retirement System is hereby authorized to
| ||||||
19 | establish and administer a self-managed plan, which shall offer | ||||||
20 | participants the opportunity to accumulate assets for | ||||||
21 | retirement through a
combination of participant and State | ||||||
22 | contributions that may be invested in
mutual funds, collective | ||||||
23 | investment funds, or other investment products and
used to | ||||||
24 | purchase annuity contracts, either fixed or variable or a | ||||||
25 | combination of fixed and variable. The plan must be qualified |
| |||||||
| |||||||
1 | under the Internal Revenue Code of 1986. | ||||||
2 | (b) The Board shall
adopt the self-managed plan established | ||||||
3 | under this Section for participants under this Article. The | ||||||
4 | adoption of the self-managed
plan makes available to the | ||||||
5 | eligible participants under this Article the elections
| ||||||
6 | described in Section 2-117.4.
| ||||||
7 | The General Assembly Retirement System shall be the plan | ||||||
8 | sponsor for the
self-managed plan and shall prepare a plan | ||||||
9 | document and adopt any rules
and procedures as are considered | ||||||
10 | necessary or desirable for the administration
of the | ||||||
11 | self-managed plan. Consistent with its fiduciary duty to the
| ||||||
12 | participants and beneficiaries of the self-managed plan, the | ||||||
13 | Board of Trustees
of the System may delegate aspects of plan | ||||||
14 | administration as it sees fit to
companies authorized to do | ||||||
15 | business in this State.
| ||||||
16 | (c) The System shall solicit proposals to provide
| ||||||
17 | administrative services and funding vehicles for the | ||||||
18 | self-managed plan from
insurance and annuity companies and | ||||||
19 | mutual fund companies, banks, trust
companies, or other | ||||||
20 | financial institutions authorized to do business in this
State. | ||||||
21 | In reviewing the proposals received and approving and | ||||||
22 | contracting with
no fewer than 2 and no more than 7 companies, | ||||||
23 | the Board of Trustees of the System shall
consider, among other | ||||||
24 | things, the following criteria:
| ||||||
25 | (1) the nature and extent of the benefits that would be | ||||||
26 | provided
to the participants;
|
| |||||||
| |||||||
1 | (2) the reasonableness of the benefits in relation to | ||||||
2 | the premium
charged;
| ||||||
3 | (3) the suitability of the benefits to the needs and
| ||||||
4 | interests of the participants and the State; and | ||||||
5 | (4) the ability of the company to provide benefits | ||||||
6 | under the contract and
the financial stability of the | ||||||
7 | company.
| ||||||
8 | The System shall periodically review
each approved | ||||||
9 | company. A company may continue to provide administrative
| ||||||
10 | services and funding vehicles for the self-managed plan only so | ||||||
11 | long as
it continues to be an approved company under contract | ||||||
12 | with the Board.
| ||||||
13 | In addition to the companies approved by the System under | ||||||
14 | this subsection (c), the System may offer its participants an | ||||||
15 | investment fund managed by the System.
| ||||||
16 | (d) Participants in the program
must be allowed to direct | ||||||
17 | the transfer of their account balances among the
various | ||||||
18 | investment options offered, subject to applicable contractual
| ||||||
19 | provisions.
The participant shall not be deemed a fiduciary by | ||||||
20 | reason of providing such
investment direction. A person who is | ||||||
21 | a fiduciary shall not be liable for any
loss resulting from | ||||||
22 | that investment direction and shall not be deemed to have
| ||||||
23 | breached any fiduciary duty by acting in accordance with that | ||||||
24 | direction.
Neither the System nor the State shall guarantee any | ||||||
25 | of the investments in the
participant's account balances.
| ||||||
26 | (e) A currently eligible participant, as defined in Section |
| |||||||
| |||||||
1 | 2-117.4, must make a written election to participate in the
| ||||||
2 | self-managed plan in accordance with the
provisions of Section | ||||||
3 | 2-117.4 and the procedures established by the System.
| ||||||
4 | Participation in the self-managed plan shall begin
on the first | ||||||
5 | day of the month immediately following the month in which the
| ||||||
6 | currently eligible participant's election is filed with the | ||||||
7 | System or when a newly eligible participant, as defined in | ||||||
8 | Section 2-117.4, enters the System, but not sooner than the | ||||||
9 | effective date of
the self-managed
plan. The System shall make | ||||||
10 | the self-managed plan available under this Article by
January | ||||||
11 | 1, 2012. A member's participation in the traditional retirement | ||||||
12 | package under this Article shall terminate on the date that
| ||||||
13 | participation in the self-managed plan begins.
| ||||||
14 | A member who has elected to participate in the self-managed | ||||||
15 | plan under
this Section must continue participation while he or | ||||||
16 | she remains a participant under this Article, and may not | ||||||
17 | participate in the traditional benefit package.
| ||||||
18 | Participation in the self-managed plan under this Section | ||||||
19 | shall constitute
participation in the General Assembly | ||||||
20 | Retirement System.
| ||||||
21 | A participant under this Section shall be entitled to the | ||||||
22 | benefits of
Article 20 of this Code.
| ||||||
23 | (f) If, at the time a participant
elects to participate in | ||||||
24 | the self-managed plan, the participant has rights and credits
| ||||||
25 | in the System due to previous participation in the traditional | ||||||
26 | benefit package,
the System shall establish for the participant |
| |||||||
| |||||||
1 | an opening account balance in the
self-managed plan, equal to | ||||||
2 | (1) the amount of the contribution refund that the participant
| ||||||
3 | would be eligible to receive under Section 2-123 if the | ||||||
4 | participant terminated
employment on that date and elected a | ||||||
5 | refund of contributions and (2) an amount equal to the regular | ||||||
6 | employer contribution that would be required to fund the actual | ||||||
7 | regular cost incurred for each year of service credit earned, | ||||||
8 | provided that the total opening account balance does not exceed | ||||||
9 | 7.6% of the participant's salary for that year, plus interest. | ||||||
10 | The interest used in this subsection (f) is calculated as the | ||||||
11 | average annual rate of return that the System has earned over | ||||||
12 | the past 20 fiscal years and is compounded. The System shall | ||||||
13 | transfer assets from the defined benefit
retirement program to | ||||||
14 | the self-managed plan, as a tax-free transfer in
accordance | ||||||
15 | with Internal Revenue Service guidelines, for purposes of | ||||||
16 | funding
the participant's opening account balance.
| ||||||
17 | (g) Notwithstanding any other provision
of this Article, a | ||||||
18 | participant may not purchase or receive service or service
| ||||||
19 | credit applicable to the traditional benefit package
under this | ||||||
20 | Article for any period during which the employee was a | ||||||
21 | participant
in the self-managed plan established under this | ||||||
22 | Section.
| ||||||
23 | (h) The self-managed plan shall be funded by contributions
| ||||||
24 | from participants in the self-managed plan and State
| ||||||
25 | contributions as provided in this Section.
| ||||||
26 | The contribution rate for participants in the self-managed |
| |||||||
| |||||||
1 | plan
under this Section shall be equal to the member | ||||||
2 | contribution rate for other
participants in the System, as | ||||||
3 | provided in Section 2-126. This required
contribution shall be | ||||||
4 | made as an employer pick-up under Section 414(h) of the
| ||||||
5 | Internal Revenue Code of 1986 or any successor Section thereof. | ||||||
6 | Any participant in the System's traditional benefit package | ||||||
7 | prior to his or her
election to participate in the self-managed | ||||||
8 | plan shall continue to have the
employer pick up the | ||||||
9 | contributions required under Section 2-126. However, the
| ||||||
10 | amounts picked up after the election of the self-managed plan | ||||||
11 | shall be remitted
to and treated as assets of the self-managed | ||||||
12 | plan. In no event shall a participant have the option of | ||||||
13 | receiving these amounts in cash. Participants may make
| ||||||
14 | additional contributions to the
self-managed plan in | ||||||
15 | accordance with procedures prescribed by the System, to
the | ||||||
16 | extent permitted under rules adopted by the System.
| ||||||
17 | The program shall provide for State contributions to be | ||||||
18 | credited to each self-managed plan participant
in an amount | ||||||
19 | equal to the regular employer contribution that would be | ||||||
20 | required to fund the actual regular cost incurred for each year | ||||||
21 | of service credit earned had the participant chosen to enroll | ||||||
22 | in the traditional benefit plan. The amounts so credited
shall | ||||||
23 | be paid into the participant's self-managed plan accounts in a | ||||||
24 | manner
to be prescribed by the System.
| ||||||
25 | The State of Illinois shall make contributions by | ||||||
26 | appropriations to the
System for participants in
the |
| |||||||
| |||||||
1 | self-managed plan under this Section.
The amount required shall
| ||||||
2 | be certified by the Board of Trustees of the System and paid by | ||||||
3 | the State in
accordance with Section 2-134. The System shall | ||||||
4 | not be obligated to remit the
required State contributions to | ||||||
5 | any of the insurance and annuity
companies, mutual fund
| ||||||
6 | companies, banks, trust companies, financial institutions, or | ||||||
7 | other sponsors
of any of the funding vehicles offered under the | ||||||
8 | self-managed plan
until it has received the required State | ||||||
9 | contributions from the State.
| ||||||
10 | (i) A participant in the
self-managed plan becomes vested | ||||||
11 | in the State contributions credited to his
or her accounts in | ||||||
12 | the self-managed plan on the earliest to occur of the
| ||||||
13 | following: (1) attainment of 5 years of service credit; (2) the | ||||||
14 | death of the participating member while employed under this | ||||||
15 | Article, if the member has completed at
least 1.5 years of | ||||||
16 | service; or (3) the member's election to retire and
apply the | ||||||
17 | reciprocal provisions of Article 20 of this Code.
| ||||||
18 | A participant in the self-managed plan who receives a | ||||||
19 | distribution of his or
her vested amounts from the self-managed | ||||||
20 | plan
while not yet eligible for retirement under this Article
| ||||||
21 | (and Article 20, if applicable) shall forfeit all service | ||||||
22 | credit
and accrued rights in the System; if he or she | ||||||
23 | subsequently becomes a participant under this Article again, he | ||||||
24 | or she
shall be considered a new
participant. If a former | ||||||
25 | participant again becomes a participating member (or
becomes | ||||||
26 | employed by a participating system under Article 20 of this |
| |||||||
| |||||||
1 | Code) and
continues as such for at least 2 years, all rights, | ||||||
2 | service credits, and
previous status as a participant shall be | ||||||
3 | restored upon repayment of the amount
of the distribution, | ||||||
4 | without interest.
| ||||||
5 | (j) If a participant in the self-managed plan who is vested | ||||||
6 | in State
contributions terminates employment, the participant | ||||||
7 | shall be entitled to a
benefit that is based on the
account | ||||||
8 | values attributable to both State and
member contributions and | ||||||
9 | any
investment return thereon.
| ||||||
10 | If a participant in the self-managed plan who is not vested | ||||||
11 | in State contributions terminates
employment, the participant | ||||||
12 | shall be entitled to a benefit based solely on the
account | ||||||
13 | values attributable to the participant's contributions and any | ||||||
14 | investment
return thereon, and the State contributions and any | ||||||
15 | investment return
thereon shall be forfeited. Any State | ||||||
16 | contributions that are forfeited
shall be held in escrow by the
| ||||||
17 | company investing those contributions and shall be used, as | ||||||
18 | directed by the
System, for future allocations of State | ||||||
19 | contributions or for the restoration
of amounts previously | ||||||
20 | forfeited by former participants who again become
| ||||||
21 | participating members.
| ||||||
22 | (40 ILCS 5/2-162.1 new)
| ||||||
23 | Sec. 2-162.1. New benefit increases. To the extent that the | ||||||
24 | changes made to this Article by this amendatory Act of the 96th | ||||||
25 | General Assembly authorizing the System to offer a self-managed |
| |||||||
| |||||||
1 | plan are determined to be a new benefit increase within the | ||||||
2 | meaning of Section 2-162, the changes made by this amendatory | ||||||
3 | Act are exempt from the provisions of subsection (d) of Section | ||||||
4 | 2-162. | ||||||
5 | (40 ILCS 5/14-103.40 new)
| ||||||
6 | Sec. 14-103.40. Traditional benefit package. "Traditional | ||||||
7 | benefit
package" means the defined benefit retirement program | ||||||
8 | maintained by the System, which
includes retirement annuities | ||||||
9 | payable directly from the System, as provided in
Sections | ||||||
10 | 14-107, 14-108, 14-108.3, 14-108.4, 14-109, 14-110, 14-112, | ||||||
11 | 14-113, 14-114, and 14-115; disability
benefits payable under | ||||||
12 | Sections 14-123, 14-123.1, 14-124, 14-125, 14-125.1, and | ||||||
13 | 14-126; death benefits payable
directly from the System, as | ||||||
14 | provided in Sections 14-116, 14-117, and 14-128; widow or | ||||||
15 | survivors annuities payable directly from the System, as | ||||||
16 | provided in
Sections 14-118, 14-119, 14-120, 14-121, 14-121.1, | ||||||
17 | and 14-122; and contribution refunds, as provided in Section
| ||||||
18 | 14-130. | ||||||
19 | (40 ILCS 5/14-103.41 new)
| ||||||
20 | Sec. 14-103.41. Self-managed plan. "Self-managed plan" | ||||||
21 | means the defined
contribution retirement program maintained | ||||||
22 | under the System, as described in
Section 14-133.2. The | ||||||
23 | self-managed plan also includes disability benefits, as
| ||||||
24 | provided in Sections 14-123, 14-123.1, 14-124, 14-125, |
| |||||||
| |||||||
1 | 14-125.1, and 14-126. The self-managed plan does not
include | ||||||
2 | retirement annuities, death benefits, widow or survivors | ||||||
3 | annuities
payable directly from the System, as provided in | ||||||
4 | Sections 14-107, 14-108, 14-108.3, 14-108.4, 14-109, 14-110, | ||||||
5 | 14-112, 14-113, 14-114, 14-115, 14-116, 14-117, 14-118, | ||||||
6 | 14-119, 14-120, 14-121, 14-121.1, 14-122, and 14-128 or refunds | ||||||
7 | determined under Section 14-130.
| ||||||
8 | (40 ILCS 5/14-105.8 new)
| ||||||
9 | Sec. 14-105.8. Retirement program elections. | ||||||
10 | (a) For the purposes of this Section: | ||||||
11 | "Eligible employee" means either a currently eligible | ||||||
12 | employee or a newly eligible
employee. | ||||||
13 | "Currently eligible employee"
means an employee who is | ||||||
14 | employed by the State on the date on which
the System first | ||||||
15 | offers the self-managed plan as an alternative to the | ||||||
16 | traditional benefit package. | ||||||
17 | "Newly
eligible employee" means an employee who first | ||||||
18 | becomes employed under this Article
after the date on which the | ||||||
19 | System first offers the
self-managed plan as an alternative to | ||||||
20 | the
traditional benefit package. | ||||||
21 | (b) When the System offers to employees under this Article | ||||||
22 | the
self-managed plan as an alternative to the traditional | ||||||
23 | benefit package, each currently eligible employee shall be
| ||||||
24 | given the choice to elect which retirement program he or she | ||||||
25 | wishes to
participate in with respect to all periods of covered |
| |||||||
| |||||||
1 | employment occurring on, before,
and after the effective date | ||||||
2 | of the employee's election. The retirement
program election | ||||||
3 | made by a currently eligible employee must be made in writing, | ||||||
4 | in the
manner prescribed by the System, and within the time | ||||||
5 | period described in this Section. | ||||||
6 | If a currently eligible employee elects the self-managed | ||||||
7 | plan, then that election is irrevocable. If a currently | ||||||
8 | eligible employee who elected to participate or participated by | ||||||
9 | default in the traditional benefit plan terminates employment | ||||||
10 | under this Article, then the employee, upon his or her | ||||||
11 | subsequent
re-employment under this Article, may make an | ||||||
12 | election under this Section. | ||||||
13 | A currently eligible employee who fails to make an election | ||||||
14 | under this Section shall, by default,
participate in the | ||||||
15 | traditional benefit package.
| ||||||
16 | (c) A currently eligible employee may elect to
participate | ||||||
17 | in the traditional benefit package
or the self-managed plan. | ||||||
18 | A currently eligible employee must make this election | ||||||
19 | within 5 years
after the effective date of the adoption of the | ||||||
20 | self-managed plan under Section 14-133.2 or, in the case of a | ||||||
21 | currently eligible employee who terminates employment under | ||||||
22 | this Article, within 6 months after his or her re-employment | ||||||
23 | under this Article. | ||||||
24 | A newly eligible employee is automatically enrolled in the | ||||||
25 | self-managed plan under Section 14-133.2. | ||||||
26 | (d) If a currently eligible participant elects to |
| |||||||
| |||||||
1 | participate in the self-managed plan, the System shall fund | ||||||
2 | their account as stated in subsection (f) of Section 14-133.2.
| ||||||
3 | (e) A currently eligible employee shall be provided with | ||||||
4 | written information prepared
or prescribed by the System that | ||||||
5 | describes the employee's retirement program
choices. Each | ||||||
6 | eligible employee shall be offered an opportunity to
receive | ||||||
7 | counseling from the System prior to making his or her election. | ||||||
8 | This
counseling may consist of videotaped materials, group | ||||||
9 | presentations, individual
consultation with an employee or | ||||||
10 | authorized representative of the System in
person or by | ||||||
11 | telephone or other electronic means, or any combination of | ||||||
12 | these
methods.
| ||||||
13 | (40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)
| ||||||
14 | Sec. 14-133. Contributions on behalf of members.
| ||||||
15 | (a) Each participating employee shall make contributions | ||||||
16 | to the System,
based on the employee's compensation, as | ||||||
17 | follows:
| ||||||
18 | (1) Covered employees, except as indicated below, 3.5% | ||||||
19 | for
retirement annuity, and 0.5% for a widow or survivors
| ||||||
20 | annuity;
| ||||||
21 | (2) Noncovered employees, except as indicated below, | ||||||
22 | 7% for retirement
annuity and 1% for a widow or survivors | ||||||
23 | annuity;
| ||||||
24 | (3) Noncovered employees serving in a position in which | ||||||
25 | "eligible
creditable service" as defined in Section 14-110 |
| |||||||
| |||||||
1 | may be earned, 1% for a widow
or survivors annuity
plus the | ||||||
2 | following amount for retirement annuity: 8.5% through | ||||||
3 | December 31,
2001; 9.5% in 2002; 10.5% in 2003; and 11.5% | ||||||
4 | in 2004 and thereafter;
| ||||||
5 | (4) Covered employees serving in a position in which | ||||||
6 | "eligible creditable
service" as defined in Section 14-110 | ||||||
7 | may be earned, 0.5% for a widow or survivors annuity
plus | ||||||
8 | the following amount for retirement annuity: 5% through | ||||||
9 | December 31,
2001; 6% in 2002; 7% in 2003; and 8% in 2004 | ||||||
10 | and thereafter;
| ||||||
11 | (5) Each security employee of the Department of | ||||||
12 | Corrections
or of the Department of Human Services who is a | ||||||
13 | covered employee, 0.5% for a widow or survivors annuity
| ||||||
14 | plus the following amount for retirement annuity: 5% | ||||||
15 | through December 31,
2001; 6% in 2002; 7% in 2003; and 8% | ||||||
16 | in 2004 and thereafter;
| ||||||
17 | (6) Each security employee of the Department of | ||||||
18 | Corrections
or of the Department of Human Services who is | ||||||
19 | not a covered employee, 1% for a widow or survivors annuity
| ||||||
20 | plus the following amount for retirement annuity: 8.5% | ||||||
21 | through December 31,
2001; 9.5% in 2002; 10.5% in 2003; and | ||||||
22 | 11.5% in 2004 and thereafter.
| ||||||
23 | Notwithstanding any provision in this subsection (a) to the | ||||||
24 | contrary, in the case of an employee who participates in the | ||||||
25 | self-managed plan under Section 14-133.2, contributions for | ||||||
26 | widow or survivors annuities shall instead be used by the |
| |||||||
| |||||||
1 | System to fund the benefits in Sections 14-123, 14-123.1, | ||||||
2 | 14-124, 14-125, 14-125.1, and 14-126.
| ||||||
3 | (b) Contributions shall be in the form of a deduction from
| ||||||
4 | compensation and shall be made notwithstanding that the | ||||||
5 | compensation
paid in cash to the employee shall be reduced | ||||||
6 | thereby below the minimum
prescribed by law or regulation. Each | ||||||
7 | member is deemed to consent and
agree to the deductions from | ||||||
8 | compensation provided for in this Article,
and shall receipt in | ||||||
9 | full for salary or compensation.
| ||||||
10 | (Source: P.A. 92-14, eff. 6-28-01.)
| ||||||
11 | (40 ILCS 5/14-133.2 new) | ||||||
12 | Sec. 14-133.2. Self-managed plan. | ||||||
13 | (a) The General Assembly finds that it is important for | ||||||
14 | Illinois to be able to attract and retain the most qualified | ||||||
15 | employees
and that in order to attract and retain these | ||||||
16 | employees, the State of Illinois should have the flexibility to | ||||||
17 | provide the defined contribution
(self-managed) plan for | ||||||
18 | eligible employees.
Accordingly, the State Employees | ||||||
19 | Retirement System of Illinois is hereby authorized to
establish | ||||||
20 | and administer a self-managed plan, which shall offer | ||||||
21 | participating
employees the opportunity to accumulate assets | ||||||
22 | for 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 |
| |||||||
| |||||||
1 | combination
of fixed and variable. The plan must be qualified | ||||||
2 | under the Internal Revenue Code of 1986. | ||||||
3 | (b) The Board shall
adopt the self-managed plan established | ||||||
4 | under this Section for members under this Article. The State's | ||||||
5 | election to adopt the self-managed
plan makes available to the | ||||||
6 | eligible employees of the State of Illinois the elections
| ||||||
7 | described in Section 14-105.8.
| ||||||
8 | The State Employees Retirement System of Illinois shall be | ||||||
9 | the plan sponsor for the
self-managed plan and shall prepare a | ||||||
10 | plan document and adopt such rules
and procedures as are | ||||||
11 | considered necessary or desirable for the administration
of the | ||||||
12 | self-managed plan. Consistent with its fiduciary duty to the
| ||||||
13 | participants and beneficiaries of the self-managed plan, the | ||||||
14 | Board of Trustees
of the System may delegate aspects of plan | ||||||
15 | administration as it sees fit to
companies authorized to do | ||||||
16 | business in this State.
| ||||||
17 | (c) The System shall solicit proposals to provide
| ||||||
18 | administrative services and funding vehicles for the | ||||||
19 | self-managed plan from
insurance and annuity companies and | ||||||
20 | mutual fund companies, banks, trust
companies, or other | ||||||
21 | financial institutions authorized to do business in this
State. | ||||||
22 | In reviewing the proposals received and approving and | ||||||
23 | contracting with
no fewer than 2 and no more than 7 companies, | ||||||
24 | the Board of Trustees of the System shall
consider, among other | ||||||
25 | things, the following criteria:
| ||||||
26 | (1) the nature and extent of the benefits that would be |
| |||||||
| |||||||
1 | provided
to the participants;
| ||||||
2 | (2) the reasonableness of the benefits in relation to | ||||||
3 | the premium
charged;
| ||||||
4 | (3) the suitability of the benefits to the needs and
| ||||||
5 | interests of the participating employees and the State;
| ||||||
6 | (4) the ability of the company to provide benefits | ||||||
7 | under the contract and
the financial stability of the | ||||||
8 | company; and
| ||||||
9 | (5) the efficacy of the contract in the recruitment and | ||||||
10 | retention of
employees.
| ||||||
11 | The System shall periodically review
each approved | ||||||
12 | company. A company may continue to provide administrative
| ||||||
13 | services and funding vehicles for the self-managed plan only so | ||||||
14 | long as
it continues to be an approved company under contract | ||||||
15 | with the Board.
| ||||||
16 | In addition to the companies approved by the System under | ||||||
17 | this subsection (c), the System may offer its participants an | ||||||
18 | investment fund managed by the System.
| ||||||
19 | (d) Employees who are participating in the program
must be | ||||||
20 | allowed to direct the transfer of their account balances among | ||||||
21 | the
various investment options offered, subject to applicable | ||||||
22 | contractual
provisions.
The participant shall not be deemed a | ||||||
23 | fiduciary by reason of providing such
investment direction. A | ||||||
24 | person who is a fiduciary shall not be liable for any
loss | ||||||
25 | resulting from such investment direction and shall not be | ||||||
26 | deemed to have
breached any fiduciary duty by acting in |
| |||||||
| |||||||
1 | accordance with that direction.
Neither the System nor the | ||||||
2 | employer shall guarantee any of the investments in the
| ||||||
3 | employee's account balances.
| ||||||
4 | (e) A currently eligible employee, as defined in Section | ||||||
5 | 14-105.8, must make a written election to participate in the
| ||||||
6 | self-managed plan in accordance with the
provisions of Section | ||||||
7 | 14-105.8 and the procedures established by the System.
| ||||||
8 | Participation in the self-managed plan shall begin
on the first | ||||||
9 | day of the month immediately following the month in which the
| ||||||
10 | currently eligible employee's election is filed with the System | ||||||
11 | or when a newly eligible employee, as defined in Section | ||||||
12 | 14-105.8, enters the System, but not sooner than the effective | ||||||
13 | date of
the self-managed
plan. The System shall make the | ||||||
14 | self-managed plan available under this Article by
January 1, | ||||||
15 | 2012. An employee's participation in the traditional | ||||||
16 | retirement package under this Article shall terminate on the | ||||||
17 | date that
participation in the self-managed plan begins.
| ||||||
18 | An employee who has elected to participate in the | ||||||
19 | self-managed plan under
this Section must continue | ||||||
20 | participation while employed in an eligible
position, and may | ||||||
21 | not participate in the traditional benefit package | ||||||
22 | administered
by the System under this Article while employed by | ||||||
23 | the State under this Article.
| ||||||
24 | Participation in the self-managed plan under this Section | ||||||
25 | shall constitute
membership in the State Employees' Retirement | ||||||
26 | System of Illinois.
|
| |||||||
| |||||||
1 | A participant under this Section shall be entitled to the | ||||||
2 | benefits of
Article 20 of this Code.
| ||||||
3 | (f) If, at the time an employee
elects to participate in | ||||||
4 | the self-managed plan, the employee has rights and credits
in | ||||||
5 | the System due to previous participation in the traditional | ||||||
6 | benefit package,
the System shall establish for the employee an | ||||||
7 | opening account balance in the
self-managed plan, equal to (i) | ||||||
8 | the amount of the contribution refund that the employee
would | ||||||
9 | be eligible to receive under Section 14-130 if the employee | ||||||
10 | terminated
employment on that date and elected a refund of | ||||||
11 | contributions, plus (ii) an amount equal to the regular | ||||||
12 | employer contribution that would be required to fund the actual | ||||||
13 | regular cost incurred for each year of service credit earned, | ||||||
14 | provided that the total opening account balance does not exceed | ||||||
15 | 7.6% of that participant's salary for that year, plus interest. | ||||||
16 | The interest used in this subsection (f) is calculated as the | ||||||
17 | average annual rate of return that the System has earned over | ||||||
18 | the past 20 fiscal years and is compounded. The System shall | ||||||
19 | transfer assets from the defined benefit
retirement program to | ||||||
20 | the self-managed plan, as a tax-free transfer in
accordance | ||||||
21 | with Internal Revenue Service guidelines, for purposes of | ||||||
22 | funding
the employee's opening account balance.
| ||||||
23 | (g) Notwithstanding any other provision
of this Article, an | ||||||
24 | employee may not purchase or receive service or service
credit | ||||||
25 | applicable to the traditional benefit package
under this | ||||||
26 | Article for any period during which the employee was a |
| |||||||
| |||||||
1 | participant
in the self-managed plan established under this | ||||||
2 | Section.
| ||||||
3 | (h) The self-managed plan shall be funded by contributions
| ||||||
4 | from employees participating in the self-managed plan and State
| ||||||
5 | contributions as provided in this Section.
| ||||||
6 | The contribution rate for employees participating in the | ||||||
7 | self-managed plan
under this Section shall be equal to the | ||||||
8 | employee contribution rate applicable to participants of the | ||||||
9 | same class under Section 14-133. This required
contribution | ||||||
10 | shall be made as an employer pick-up under Section 414(h) of | ||||||
11 | the
Internal Revenue Code of 1986 or any successor Section | ||||||
12 | thereof. Any employee
participating in the System's | ||||||
13 | traditional benefit package prior to his or her
election to | ||||||
14 | participate in the self-managed plan shall continue to have the
| ||||||
15 | employer pick up the contributions required under Section | ||||||
16 | 14-133. However, the
amounts picked up after the election of | ||||||
17 | the self-managed plan shall be remitted
to and treated as | ||||||
18 | assets of the self-managed plan. In no event shall the
employee | ||||||
19 | have an option of receiving these amounts in cash. Employees | ||||||
20 | may make
additional contributions to the
self-managed plan in | ||||||
21 | accordance with procedures prescribed by the System, to
the | ||||||
22 | extent permitted under rules adopted by the System.
| ||||||
23 | The program shall provide for State contributions to be | ||||||
24 | credited to each self-managed plan participant in an amount | ||||||
25 | equal to the regular employer contribution that would be | ||||||
26 | required to fund the actual regular cost incurred for each year |
| |||||||
| |||||||
1 | of service credit earned had the participant chosen to enroll | ||||||
2 | in the traditional benefit plan.
| ||||||
3 | The System shall not be obligated to remit the
required | ||||||
4 | employer contributions to any of the insurance and annuity
| ||||||
5 | companies, mutual fund
companies, banks, trust companies, | ||||||
6 | financial institutions, or other sponsors
of any of the funding | ||||||
7 | vehicles offered under the self-managed plan
until it has | ||||||
8 | received the required employer contributions from the State. In
| ||||||
9 | the event of a deficiency in the amount of State contributions, | ||||||
10 | the System
shall implement any procedures
to obtain the | ||||||
11 | required funding from the General Revenue
Fund.
| ||||||
12 | An amount of employer contribution, not exceeding 1% of the | ||||||
13 | participating
employee's salary, shall be used for the purpose | ||||||
14 | of providing the disability
benefits of the System to the | ||||||
15 | employee. Prior to the beginning of each plan
year under the | ||||||
16 | self-managed plan, the Board of Trustees shall determine, as a
| ||||||
17 | percentage of salary, the amount of employer contributions to | ||||||
18 | be allocated
during that plan year for providing disability | ||||||
19 | benefits for employees in the
self-managed plan. The provisions | ||||||
20 | of this paragraph shall work in conjunction with the provisions | ||||||
21 | of subsection (a-1) of Section 14-133.
| ||||||
22 | (i) A participant in the
self-managed plan becomes vested | ||||||
23 | in the employer contributions credited to his
or her accounts | ||||||
24 | in the self-managed plan on the earliest to occur of the
| ||||||
25 | following: (1) completion of 5 years of service credit under | ||||||
26 | this Article; (2) the death of the participating employee while |
| |||||||
| |||||||
1 | employed by
an employer under this Article, if the participant | ||||||
2 | has completed at
least 1.5 years of service; or (3) the | ||||||
3 | participant's election to retire and
apply the reciprocal | ||||||
4 | provisions of Article 20 of this Code.
| ||||||
5 | A participant in the self-managed plan who receives a | ||||||
6 | distribution of his or
her vested amounts from the self-managed | ||||||
7 | plan
while not yet eligible for retirement under this Article
| ||||||
8 | (and Article 20, if applicable) shall forfeit all service | ||||||
9 | credit
and accrued rights in the System; if subsequently | ||||||
10 | re-employed, the participant
shall be considered a new
| ||||||
11 | employee. If a former participant again becomes a participating | ||||||
12 | employee (or
becomes employed by a participating system under | ||||||
13 | Article 20 of this Code) and
continues as such for at least 2 | ||||||
14 | years, all rights, service credits, and
previous status as a | ||||||
15 | participant shall be restored upon repayment of the amount
of | ||||||
16 | the distribution, without interest.
| ||||||
17 | (j) If an employee participating in the self-managed plan | ||||||
18 | who is vested in employer
contributions terminates employment, | ||||||
19 | the employee shall be entitled to a
benefit which is based on | ||||||
20 | the
account values attributable to both employer and
employee | ||||||
21 | contributions and any
investment return thereon.
| ||||||
22 | If an employee participating in the self-managed plan who | ||||||
23 | is not vested in employer contributions terminates
employment, | ||||||
24 | the employee shall be entitled to a benefit based solely on the
| ||||||
25 | account values attributable to the employee's contributions | ||||||
26 | and any investment
return thereon, and the employer |
| |||||||
| |||||||
1 | contributions and any investment return
thereon shall be | ||||||
2 | forfeited. Any employer contributions which are forfeited
| ||||||
3 | shall be held in escrow by the
company investing those | ||||||
4 | contributions and shall be used, as directed by the
System, for | ||||||
5 | future allocations of employer contributions or for the | ||||||
6 | restoration
of amounts previously forfeited by former | ||||||
7 | participants who again become
participating employees.
| ||||||
8 | (40 ILCS 5/14-152.2)
| ||||||
9 | Sec. 14-152.2. New benefit increases. | ||||||
10 | (a) The General Assembly finds and declares that the | ||||||
11 | amendment to Section 14-104 made by this amendatory Act of the | ||||||
12 | 95th General Assembly that allows members to establish | ||||||
13 | creditable service for certain participation in the University | ||||||
14 | of Illinois Government Public Service Internship Program | ||||||
15 | (GPSI) constitutes a new benefit increase within the meaning of | ||||||
16 | Section 14-152.1. Funding for this new benefit increase will be | ||||||
17 | provided by additional employee contributions under subsection | ||||||
18 | (r) of Section 14-104.
| ||||||
19 | (b) To the extent that the changes made to this Article by | ||||||
20 | this amendatory Act of the 96th General Assembly authorizing | ||||||
21 | the System to offer a self-managed plan are determined to be a | ||||||
22 | new benefit increase within the meaning of Section 14-152.1, | ||||||
23 | the changes made by this amendatory Act are exempt from the | ||||||
24 | provisions of subsection (d) of Section 14-152.1. | ||||||
25 | (Source: P.A. 95-652, eff. 10-11-07.)
|
| |||||||
| |||||||
1 | (40 ILCS 5/15-103.3)
| ||||||
2 | Sec. 15-103.3. Self-Managed Plan. "Self-managed plan": The | ||||||
3 | defined
contribution retirement program maintained under the | ||||||
4 | System as described in
Section 15-158.2. The self-managed plan | ||||||
5 | also includes disability benefits as
provided in Sections | ||||||
6 | 15-150 through 15-153.3 (but disregarding disability
| ||||||
7 | retirement annuities under Section 15-153.2). The self-managed | ||||||
8 | plan does not
include retirement annuities, death benefits, or | ||||||
9 | survivors insurance benefits
payable directly from the System | ||||||
10 | as provided in Sections 15-135 through 15-149
and Section | ||||||
11 | 15-153.2, or refunds determined under Section 15-154.
| ||||||
12 | (Source: P.A. 90-766, eff. 8-14-98.)
| ||||||
13 | (40 ILCS 5/15-134.5)
| ||||||
14 | Sec. 15-134.5. Retirement program elections.
| ||||||
15 | (a) All participating employees are participants under the | ||||||
16 | traditional
benefit package prior to January 1, 1998.
| ||||||
17 | Effective as of the date that the System offers
an employer | ||||||
18 | elects, as described in Section
15-158.2, to offer to its | ||||||
19 | employees the portable benefit package and the
self-managed | ||||||
20 | plan as alternatives to the traditional benefit package, each | ||||||
21 | of
that employer's eligible employee
employees (as defined in | ||||||
22 | subsection (b)) shall be
given the choice to elect which | ||||||
23 | retirement program he or she wishes to
participate in with | ||||||
24 | respect to all periods of covered employment occurring on
and |
| |||||||
| |||||||
1 | after the effective date of the employee's election. The | ||||||
2 | retirement
program election made by an eligible employee must | ||||||
3 | be made in writing, in the
manner prescribed by the System, and | ||||||
4 | within the time period described in
subsection (d) or (d-1).
| ||||||
5 | If a currently eligible employee elects the self-managed | ||||||
6 | plan, then that election is irrevocable.
The employee election | ||||||
7 | authorized by this Section is a one-time, irrevocable
election.
| ||||||
8 | If an employee who elected to participate or participated by | ||||||
9 | default in the traditional benefit plan terminates employment | ||||||
10 | after making the election
provided under this subsection (a) , | ||||||
11 | then upon his or her subsequent
re-employment under this | ||||||
12 | Article the employee may make an election under this Section
| ||||||
13 | with an employer the original election shall automatically | ||||||
14 | apply
to him or her, provided that the employer is then a | ||||||
15 | participating employer as
described in Section 15-158.2 .
| ||||||
16 | An eligible employee who fails to make this election shall, | ||||||
17 | by default,
participate in the traditional benefit package.
| ||||||
18 | (b) "Eligible employee" means an employee (as defined in | ||||||
19 | Section
15-107) who is either a currently eligible employee or | ||||||
20 | a newly eligible
employee. For purposes of this Section, a | ||||||
21 | "currently eligible employee"
is an employee who is employed | ||||||
22 | under this Article on the date on which
the System first offers | ||||||
23 | the self-managed plan as an alternative to the traditional | ||||||
24 | benefit package
an employee who is employed by an employer on | ||||||
25 | the effective date on which
the employer offers to its | ||||||
26 | employees the portable benefit package and the
self-managed |
| |||||||
| |||||||
1 | plan as alternatives to the traditional benefit package . A | ||||||
2 | "newly
eligible employee" is an employee who first becomes an | ||||||
3 | employee after the date on which
the System first offers the | ||||||
4 | self-managed plan as an alternative to the traditional benefit | ||||||
5 | package.
an employee who first becomes employed by an employer
| ||||||
6 | after the effective date on which the employer offers its | ||||||
7 | employees the
portable benefit package and the self-managed | ||||||
8 | plan as alternatives to the
traditional benefit package.
A | ||||||
9 | newly eligible employee participates in the traditional | ||||||
10 | benefit package
until he or she makes an election to | ||||||
11 | participate in the portable benefit
package or the self-managed | ||||||
12 | plan. If an employee does not elect to participate
in the | ||||||
13 | portable benefit package or the self-managed plan, he or she | ||||||
14 | shall
continue to participate in the
traditional benefit | ||||||
15 | package by default.
| ||||||
16 | (c) A currently
An eligible employee who at the time he or | ||||||
17 | she is first eligible to
make the election described in | ||||||
18 | subsection (a) does not have sufficient age and
service to | ||||||
19 | qualify for a retirement annuity under Section 15-135 may elect | ||||||
20 | to
participate in the traditional benefit package, the portable | ||||||
21 | benefit package,
or the self-managed plan. An eligible employee | ||||||
22 | who has sufficient age and
service to qualify for a retirement | ||||||
23 | annuity under Section 15-135 at the time he
or she is first | ||||||
24 | eligible to make the election described in subsection (a) may
| ||||||
25 | elect to participate in the traditional benefit package or the | ||||||
26 | portable benefit
package, but may not elect to participate in |
| |||||||
| |||||||
1 | the self-managed plan.
| ||||||
2 | (d) A currently eligible employee must make this election | ||||||
3 | within 5 years
one year
after the effective date of the | ||||||
4 | employer's adoption of the self-managed plan.
| ||||||
5 | A currently
newly eligible employee who terminates | ||||||
6 | employment under this Article must make this election within
6 | ||||||
7 | months after his or her re-employment under this Article.
the | ||||||
8 | date on which the System receives the report of status
| ||||||
9 | certification from the employer.
If an employee elects to | ||||||
10 | participate in the self-managed plan, no employer
| ||||||
11 | contributions shall be remitted to the self-managed plan when | ||||||
12 | the employee's
account balance transfer is made. Employer | ||||||
13 | contributions to the self-managed
plan shall commence as of the | ||||||
14 | first pay period that begins after the System
receives the | ||||||
15 | employee's election.
| ||||||
16 | (d-1) A newly eligible employee is automatically enrolled | ||||||
17 | in the self-managed plan under Section 15-158.2.
who, prior to | ||||||
18 | the effective date of this
amendatory Act of the 91st General | ||||||
19 | Assembly, fails to make the election within
the period provided | ||||||
20 | under subsection (d) and participates by default in the
| ||||||
21 | traditional benefit package may make a late election to | ||||||
22 | participate in the
portable benefit package or the self-managed | ||||||
23 | plan instead of the traditional
benefit package at any time | ||||||
24 | within 6 months after the effective date of this
amendatory Act | ||||||
25 | of the 91st General Assembly.
| ||||||
26 | (e) (Blank)
If a currently eligible employee elects the |
| |||||||
| |||||||
1 | portable benefit
package, that
election shall not become | ||||||
2 | effective until the one-year anniversary of the date
on which | ||||||
3 | the election is filed with the System, provided the employee | ||||||
4 | remains
continuously employed by the employer throughout the | ||||||
5 | one-year waiting period,
and any benefits payable to or on | ||||||
6 | account of the employee before such one-year
waiting period has | ||||||
7 | ended shall not be determined under the provisions
applicable | ||||||
8 | to the portable benefit package but shall instead be determined | ||||||
9 | in
accordance with the traditional benefit package. If a | ||||||
10 | currently
eligible employee who
has elected the portable | ||||||
11 | benefit package terminates employment covered by the
System | ||||||
12 | before the one-year waiting period has ended, then no
benefits | ||||||
13 | shall be determined under the portable benefit package | ||||||
14 | provisions
while he or she is inactive in the System and upon | ||||||
15 | re-employment with an
employer covered by the System he or she | ||||||
16 | shall begin a new one-year waiting
period before the provisions | ||||||
17 | of the portable benefit
package become effective .
| ||||||
18 | (f) An eligible employee shall be provided with written | ||||||
19 | information prepared
or prescribed by the System which | ||||||
20 | describes the employee's retirement program
choices. The | ||||||
21 | eligible employee shall be offered an opportunity to
receive | ||||||
22 | counseling from the System prior to making his or her election. | ||||||
23 | This
counseling may consist of videotaped materials, group | ||||||
24 | presentations, individual
consultation with an employee or | ||||||
25 | authorized representative of the System in
person or by | ||||||
26 | telephone or other electronic means, or any combination of |
| |||||||
| |||||||
1 | these
methods.
| ||||||
2 | (Source: P.A. 90-766, eff. 8-14-98; 91-887, eff. 7-6-00.)
| ||||||
3 | (40 ILCS 5/15-158.2)
| ||||||
4 | Sec. 15-158.2. Self-managed plan.
| ||||||
5 | (a) Purpose. The General Assembly finds that it is | ||||||
6 | important for colleges
and universities to be able to attract | ||||||
7 | and retain the most qualified employees
and that in order to | ||||||
8 | attract and retain these employees, colleges and
universities | ||||||
9 | should have the flexibility to provide a defined contribution
| ||||||
10 | (self-managed) plan as an alternative for eligible employees | ||||||
11 | who elect not to participate
in a defined benefit retirement | ||||||
12 | program provided under this Article.
Accordingly, the State | ||||||
13 | Universities Retirement System is hereby authorized to
| ||||||
14 | establish and administer a self-managed plan, which shall offer | ||||||
15 | participating
employees the opportunity to accumulate assets | ||||||
16 | for retirement through a
combination of employee and employer | ||||||
17 | contributions that may be invested in
mutual funds, collective | ||||||
18 | investment funds, or other investment products and
used to | ||||||
19 | purchase annuity contracts, either fixed or variable or a | ||||||
20 | combination
thereof. The plan must be qualified under the | ||||||
21 | Internal Revenue Code of 1986.
| ||||||
22 | (b) The Board shall adopt the self-managed plan established | ||||||
23 | under this Section for participants under this Article. The | ||||||
24 | adoption of
Adoption by employers. Each employer subject to | ||||||
25 | this Article may
elect to adopt the self-managed plan |
| |||||||
| |||||||
1 | established under this Section; this
election is irrevocable. | ||||||
2 | An employer's election to adopt the self-managed
plan makes | ||||||
3 | available to the eligible employees of that employer the | ||||||
4 | elections
described in Section 15-134.5.
| ||||||
5 | The State Universities Retirement System shall be the plan | ||||||
6 | sponsor for the
self-managed plan and shall prepare a plan | ||||||
7 | document and prescribe such rules
and procedures as are | ||||||
8 | considered necessary or desirable for the administration
of the | ||||||
9 | self-managed plan. Consistent with its fiduciary duty to the
| ||||||
10 | participants and beneficiaries of the self-managed plan, the | ||||||
11 | Board of Trustees
of the System may delegate aspects of plan | ||||||
12 | administration as it sees fit to
companies authorized to do | ||||||
13 | business in this State, to the employers, or to a
combination | ||||||
14 | of both.
| ||||||
15 | (c) Selection of service providers and funding vehicles. | ||||||
16 | The System, in
consultation with the employers, shall solicit | ||||||
17 | proposals to provide
administrative services and funding | ||||||
18 | vehicles for the self-managed plan from
insurance and annuity | ||||||
19 | companies and mutual fund companies, banks, trust
companies, or | ||||||
20 | other financial institutions authorized to do business in this
| ||||||
21 | State. In reviewing the proposals received and approving and | ||||||
22 | contracting with
no fewer than 2 and no more than 7 companies, | ||||||
23 | the Board of Trustees of the System shall
consider, among other | ||||||
24 | things, the following criteria:
| ||||||
25 | (1) the nature and extent of the benefits that would be | ||||||
26 | provided
to the participants;
|
| |||||||
| |||||||
1 | (2) the reasonableness of the benefits in relation to | ||||||
2 | the premium
charged;
| ||||||
3 | (3) the suitability of the benefits to the needs and
| ||||||
4 | interests of the participating employees and the employer;
| ||||||
5 | (4) the ability of the company to provide benefits | ||||||
6 | under the contract and
the financial stability of the | ||||||
7 | company; and
| ||||||
8 | (5) the efficacy of the contract in the recruitment and | ||||||
9 | retention of
employees.
| ||||||
10 | The System, in consultation with the employers, shall | ||||||
11 | periodically review
each approved company. A company may | ||||||
12 | continue to provide administrative
services and funding | ||||||
13 | vehicles for the self-managed plan only so long as
it continues | ||||||
14 | to be an approved company under contract with the Board. | ||||||
15 |
In addition to the companies approved by the System under | ||||||
16 | this subsection (c), the System may offer its participants an | ||||||
17 | investment fund managed by the System.
| ||||||
18 | (d) Employee Direction. Employees who are participating in | ||||||
19 | the program
must be allowed to direct the transfer of their | ||||||
20 | account balances among the
various investment options offered, | ||||||
21 | subject to applicable contractual
provisions.
The participant | ||||||
22 | shall not be deemed a fiduciary by reason of providing such
| ||||||
23 | investment direction. A person who is a fiduciary shall not be | ||||||
24 | liable for any
loss resulting from such investment direction | ||||||
25 | and shall not be deemed to have
breached any fiduciary duty by | ||||||
26 | acting in accordance with that direction.
Neither the System |
| |||||||
| |||||||
1 | nor the employer guarantees any of the investments in the
| ||||||
2 | employee's account balances.
| ||||||
3 | (e) Participation. A currently eligible
An employee | ||||||
4 | eligible to participate in the
self-managed plan must make a | ||||||
5 | written election in accordance with the
provisions of Section | ||||||
6 | 15-134.5 and the procedures established by the System.
| ||||||
7 | Participation in the self-managed plan by an electing employee | ||||||
8 | shall begin
on the first day of the first pay period following | ||||||
9 | the later of the date the
employee's election is filed with the | ||||||
10 | System or the effective date as of
which the employee's | ||||||
11 | employer begins to offer participation in the self-managed
| ||||||
12 | plan. Employers may not make the self-managed plan available | ||||||
13 | earlier than
January 1, 1998. An employee's participation in | ||||||
14 | any other retirement program
administered by the System under | ||||||
15 | this Article shall terminate on the date that
participation in | ||||||
16 | the self-managed plan begins.
| ||||||
17 | An employee who has elected to participate in the | ||||||
18 | self-managed plan under
this Section must continue | ||||||
19 | participation while employed in an eligible
position, and may | ||||||
20 | not participate in any other retirement program administered
by | ||||||
21 | the System under this Article while employed by that employer | ||||||
22 | or any other
employer that has adopted the self-managed plan, | ||||||
23 | unless the self-managed plan
is terminated in accordance with | ||||||
24 | subsection (i).
| ||||||
25 | Participation in the self-managed plan under this Section | ||||||
26 | shall constitute
membership in the State Universities |
| |||||||
| |||||||
1 | Retirement System.
| ||||||
2 | A participant under this Section shall be entitled to the | ||||||
3 | benefits of
Article 20 of this Code.
| ||||||
4 | (f) Establishment of Initial Account Balance. If at the | ||||||
5 | time an employee
elects to participate in the self-managed plan | ||||||
6 | he or she has rights and credits
in the System due to previous | ||||||
7 | participation in the traditional benefit package,
the System | ||||||
8 | shall establish for the employee an opening account balance in | ||||||
9 | the
self-managed plan, equal to the amount of contribution | ||||||
10 | refund that the employee
would be eligible to receive under | ||||||
11 | Section 15-154 if the employee terminated
employment on that | ||||||
12 | date and elected a refund of contributions, except that this
| ||||||
13 | hypothetical refund shall include interest at the effective | ||||||
14 | rate for the
respective years. The System shall transfer assets | ||||||
15 | from the defined benefit
retirement program to the self-managed | ||||||
16 | plan, as a tax free transfer in
accordance with Internal | ||||||
17 | Revenue Service guidelines, for purposes of funding
the | ||||||
18 | employee's opening account balance.
| ||||||
19 | (g) No Duplication of Service Credit. Notwithstanding any | ||||||
20 | other provision
of this Article, an employee may not purchase | ||||||
21 | or receive service or service
credit applicable to any other | ||||||
22 | retirement program administered by the System
under this | ||||||
23 | Article for any period during which the employee was a | ||||||
24 | participant
in the self-managed plan established under this | ||||||
25 | Section.
| ||||||
26 | (h) Contributions. The self-managed plan shall be funded by |
| |||||||
| |||||||
1 | contributions
from employees participating in the self-managed | ||||||
2 | plan and employer
contributions as provided in this Section.
| ||||||
3 | The contribution rate for employees participating in the | ||||||
4 | self-managed plan
under this Section shall be equal to the | ||||||
5 | employee contribution rate for other
participants in the | ||||||
6 | System, as provided in Section 15-157. This required
| ||||||
7 | contribution shall be made as an "employer pick-up" under | ||||||
8 | Section 414(h) of the
Internal Revenue Code of 1986 or any | ||||||
9 | successor Section thereof. Any employee
participating in the | ||||||
10 | System's traditional benefit package prior to his or her
| ||||||
11 | election to participate in the self-managed plan shall continue | ||||||
12 | to have the
employer pick up the contributions required under | ||||||
13 | Section 15-157. However, the
amounts picked up after the | ||||||
14 | election of the self-managed plan shall be remitted
to and | ||||||
15 | treated as assets of the self-managed plan. In no event shall | ||||||
16 | an
employee have an option of receiving these amounts in cash. | ||||||
17 | Employees may make
additional contributions to the
| ||||||
18 | self-managed plan in accordance with procedures prescribed by | ||||||
19 | the System, to
the extent permitted under rules prescribed by | ||||||
20 | the System.
| ||||||
21 | The program shall provide for employer contributions to be | ||||||
22 | credited to each
self-managed plan participant in an amount | ||||||
23 | equal to the regular employer contribution that would be | ||||||
24 | required to fund the actual regular cost incurred for each year | ||||||
25 | of service credit earned had the participant chosen to enroll | ||||||
26 | in the traditional benefit plan.
at a rate of 7.6%
of the |
| |||||||
| |||||||
1 | participating employee's salary, less the amount used by
the | ||||||
2 | System to provide disability benefits for the employee.
The | ||||||
3 | amounts so credited
shall be paid into the participant's | ||||||
4 | self-managed plan accounts in a manner
to be prescribed by the | ||||||
5 | System.
| ||||||
6 | An amount of employer contribution, not exceeding 1% of the | ||||||
7 | participating
employee's salary, shall be used for the purpose | ||||||
8 | of providing the disability
benefits of the System to the | ||||||
9 | employee. Prior to the beginning of each plan
year under the | ||||||
10 | self-managed plan, the Board of Trustees shall determine, as a
| ||||||
11 | percentage of salary, the amount of employer contributions to | ||||||
12 | be allocated
during that plan year for providing disability | ||||||
13 | benefits for employees in the
self-managed plan.
| ||||||
14 | The State of Illinois shall make contributions by | ||||||
15 | appropriations to the
System of the employer contributions | ||||||
16 | required for employees who participate in
the self-managed plan | ||||||
17 | under this Section.
The amount required shall
be certified by | ||||||
18 | the Board of Trustees of the System and paid by the State in
| ||||||
19 | accordance with Section 15-165. The System shall not be | ||||||
20 | obligated to remit the
required employer contributions to any | ||||||
21 | of the insurance and annuity
companies, mutual fund
companies, | ||||||
22 | banks, trust companies, financial institutions, or other | ||||||
23 | sponsors
of any of the funding vehicles offered under the | ||||||
24 | self-managed plan
until it has received the required employer | ||||||
25 | contributions from the State. In
the event of a deficiency in | ||||||
26 | the amount of State contributions, the System
shall implement |
| |||||||
| |||||||
1 | those procedures described in subsection (c) of Section 15-165
| ||||||
2 | to obtain the required funding from the General Revenue
Fund.
| ||||||
3 | (i) (Blank)
Termination. The self-managed plan authorized | ||||||
4 | under this
Section may be terminated by the System, subject to | ||||||
5 | the terms
of any relevant
contracts, and the System shall have | ||||||
6 | no obligation to
reestablish the self-managed plan under this | ||||||
7 | Section. This Section does not
create a right
to continued | ||||||
8 | participation in any self-managed plan set up by the System | ||||||
9 | under
this Section. If the self-managed plan is terminated,
the | ||||||
10 | participants shall have the right to participate in one of the | ||||||
11 | other
retirement programs offered by the System and receive | ||||||
12 | service credit in such
other retirement program for any years | ||||||
13 | of employment following the termination .
| ||||||
14 | (j) Vesting; Withdrawal; Return to Service. A participant | ||||||
15 | in the
self-managed plan becomes vested in the employer | ||||||
16 | contributions credited to his
or her accounts in the | ||||||
17 | self-managed plan on the earliest to occur of the
following: | ||||||
18 | (1) completion of 5 years of service with an employer described | ||||||
19 | in
Section 15-106; (2) the death of the participating employee | ||||||
20 | while employed by
an employer described in Section 15-106, if | ||||||
21 | the participant has completed at
least 1 1/2 years of service; | ||||||
22 | or (3) the participant's election to retire and
apply the | ||||||
23 | reciprocal provisions of Article 20 of this Code.
| ||||||
24 | A participant in the self-managed plan who receives a | ||||||
25 | distribution of his or
her vested amounts from the self-managed | ||||||
26 | plan
while not yet eligible for retirement under this Article
|
| |||||||
| |||||||
1 | (and Article 20, if applicable) shall forfeit all service | ||||||
2 | credit
and accrued rights in the System; if subsequently | ||||||
3 | re-employed, the participant
shall be considered a new
| ||||||
4 | employee. If a former participant again becomes a participating | ||||||
5 | employee (or
becomes employed by a participating system under | ||||||
6 | Article 20 of this Code) and
continues as such for at least 2 | ||||||
7 | years, all such rights, service credits, and
previous status as | ||||||
8 | a participant shall be restored upon repayment of the amount
of | ||||||
9 | the distribution, without interest.
| ||||||
10 | (k) Benefit amounts. If an employee who is vested in | ||||||
11 | employer
contributions terminates employment, the employee | ||||||
12 | shall be entitled to a
benefit which is based on the
account | ||||||
13 | values attributable to both employer and
employee | ||||||
14 | contributions and any
investment return thereon.
| ||||||
15 | If an employee who is not vested in employer contributions | ||||||
16 | terminates
employment, the employee shall be entitled to a | ||||||
17 | benefit based solely on the
account values attributable to the | ||||||
18 | employee's contributions and any investment
return thereon, | ||||||
19 | and the employer contributions and any investment return
| ||||||
20 | thereon shall be forfeited. Any employer contributions which | ||||||
21 | are forfeited
shall be held in escrow by the
company investing | ||||||
22 | those contributions and shall be used as directed by the
System | ||||||
23 | for future allocations of employer contributions or for the | ||||||
24 | restoration
of amounts previously forfeited by former | ||||||
25 | participants who again become
participating employees.
| ||||||
26 | (Source: P.A. 93-347, eff. 7-24-03.)
|
| |||||||
| |||||||
1 | (40 ILCS 5/15-198.1 new)
| ||||||
2 | Sec. 15-198.1. New benefit increases. To the extent that | ||||||
3 | the changes made to this Article by this amendatory Act of the | ||||||
4 | 96th General Assembly authorizing the System to offer a | ||||||
5 | self-managed plan are determined to be a new benefit increase | ||||||
6 | within the meaning of Section 15-198, the changes made by this | ||||||
7 | amendatory Act are exempt from the provisions of subsection (d) | ||||||
8 | of Section 15-198.
| ||||||
9 | (40 ILCS 5/16-104.1 new)
| ||||||
10 | Sec. 16-104.1. Traditional benefit package. "Traditional | ||||||
11 | benefit
package" means the defined benefit retirement program | ||||||
12 | maintained by the System, which
includes retirement annuities | ||||||
13 | payable directly from the System, as provided in
Sections | ||||||
14 | 16-132 through 16-136.4; disability
benefits payable under | ||||||
15 | Sections 16-149 through 16-149.5; survivor's benefits payable | ||||||
16 | directly from the System, as provided in
Sections 16-140 | ||||||
17 | through 16-143.1; and contribution refunds, as provided in | ||||||
18 | Sections 16-138, 16-143.2, and 16-151.
| ||||||
19 | (40 ILCS 5/16-104.2 new)
| ||||||
20 | Sec. 16-104.2. Self-managed plan. "Self-managed plan" | ||||||
21 | means the defined
contribution retirement program maintained | ||||||
22 | by the System, as described in
Section 16-158.2. The | ||||||
23 | self-managed plan also includes disability benefits, as
|
| |||||||
| |||||||
1 | provided in Sections 16-149 through 16-149.5 (but disregarding | ||||||
2 | disability
retirement annuities under Section 16-149.2). The | ||||||
3 | self-managed plan does not
include retirement annuities or | ||||||
4 | survivor's benefits
payable directly from the System as | ||||||
5 | provided in Sections 16-132 through 16-136.4, Sections 16-140 | ||||||
6 | through 16-143.1, and Section 16-149.2, or refunds determined | ||||||
7 | under Sections 16-138, 16-143.2, and 16-151.
| ||||||
8 | (40 ILCS 5/16-131.7 new)
| ||||||
9 | Sec. 16-131.7. Retirement program elections.
| ||||||
10 | (a) For the purposes of this Act: | ||||||
11 | "Eligible member" means a either a currently eligible | ||||||
12 | member or a newly eligible
member. | ||||||
13 | "Currently eligible member"
means a member who is employed | ||||||
14 | by an employer on the date on which
the employer first offers | ||||||
15 | to its employees the
self-managed plan as an alternative to the | ||||||
16 | traditional benefit package. | ||||||
17 | "Newly
eligible member" is a member who first becomes | ||||||
18 | employed by an employer
after the date on which the employer | ||||||
19 | first offers its members the
self-managed plan as an | ||||||
20 | alternative to the
traditional benefit package.
| ||||||
21 | (b) Effective as of the date that an employer adopts the | ||||||
22 | self-managed plan as described in Section 16-158.2 as an | ||||||
23 | alternative to the traditional benefit package, each of
that | ||||||
24 | employer's currently eligible members shall be
given the choice | ||||||
25 | to elect which retirement program he or she wishes to
|
| |||||||
| |||||||
1 | participate in with respect to all periods of covered | ||||||
2 | employment occurring on
and after the effective date of the | ||||||
3 | employee's election. The retirement
program election made by a | ||||||
4 | currently eligible member must be made in writing, in the
| ||||||
5 | manner prescribed by the System, and within the time period | ||||||
6 | described in
this Section.
| ||||||
7 | If a currently eligible member elects the self-managed | ||||||
8 | plan, then that election is irrevocable. If a currently | ||||||
9 | eligible member who elected to participate or participated by | ||||||
10 | default in the traditional benefit plan terminates employment | ||||||
11 | under this Article, then the member, upon his or her subsequent
| ||||||
12 | re-employment under this Article, may make an election under | ||||||
13 | this Section. | ||||||
14 | A currently eligible member who fails to make an election | ||||||
15 | under this Section shall, by default,
participate in the | ||||||
16 | traditional benefit package.
| ||||||
17 | (c) A currently eligible member may elect to
participate in | ||||||
18 | the traditional benefit package
or the self-managed plan.
| ||||||
19 | A currently eligible member must make this election within | ||||||
20 | 5 years
after the effective date of the employer's adoption of | ||||||
21 | the self-managed plan or, in the case of a currently eligible | ||||||
22 | member who terminates employment under this Article, within 6 | ||||||
23 | months after his or her re-employment under this Article.
| ||||||
24 | A newly eligible member is automatically enrolled in the | ||||||
25 | self-managed plan under Section 16-158.2.
| ||||||
26 | (d) If a currently eligible member elects to participate in |
| |||||||
| |||||||
1 | the self-managed plan, the System shall fund their account as | ||||||
2 | stated in subsection (f) of Section 16-158.2. Employer | ||||||
3 | contributions to the self-managed
plan shall commence as of the | ||||||
4 | first pay period that begins after the System
receives the | ||||||
5 | member's election.
| ||||||
6 | (e) A currently eligible member shall be provided with | ||||||
7 | written information prepared
or prescribed by the System that | ||||||
8 | describes the member's retirement program
choices. The | ||||||
9 | eligible member shall be offered an opportunity to
receive | ||||||
10 | counseling from the System prior to making his or her election. | ||||||
11 | This
counseling may consist of videotaped materials, group | ||||||
12 | presentations, individual
consultation with an employee or | ||||||
13 | authorized representative of the System in
person or by | ||||||
14 | telephone or other electronic means, or any combination of | ||||||
15 | these
methods.
| ||||||
16 | (40 ILCS 5/16-152) (from Ch. 108 1/2, par. 16-152)
| ||||||
17 | Sec. 16-152. Contributions by members.
| ||||||
18 | (a) Each member shall make contributions for membership | ||||||
19 | service to this
System as follows:
| ||||||
20 | (1) Effective July 1, 1998, contributions of 7.50% of | ||||||
21 | salary towards the
cost of the retirement annuity. Such | ||||||
22 | contributions shall be deemed "normal
contributions".
| ||||||
23 | (2) Effective July 1, 1969, contributions of 1/2 of 1% | ||||||
24 | of salary toward
the cost of the automatic annual increase | ||||||
25 | in retirement annuity provided
under Section 16-133.1.
|
| |||||||
| |||||||
1 | (3) Effective July 24, 1959, contributions of 1% of | ||||||
2 | salary towards the
cost of survivor benefits. Such | ||||||
3 | contributions shall not be credited to
the individual | ||||||
4 | account of the member and shall not be subject to refund
| ||||||
5 | except as provided under Section 16-143.2.
| ||||||
6 | (4) Effective July 1, 2005, contributions of 0.40% of | ||||||
7 | salary toward the cost of the early retirement without | ||||||
8 | discount option provided under Section 16-133.2. This | ||||||
9 | contribution shall cease upon termination of the early | ||||||
10 | retirement without discount option as provided in Section | ||||||
11 | 16-176.
The contributions made under this paragraph (4) | ||||||
12 | shall be used by the System to fund benefits under Sections | ||||||
13 | 16-149 through 16-149.5 for those that participate in the | ||||||
14 | self-managed plan. | ||||||
15 | (b) The minimum required contribution for any year of | ||||||
16 | full-time
teaching service shall be $192.
| ||||||
17 | (c) Contributions shall not be required of any annuitant | ||||||
18 | receiving
a retirement annuity who is given employment as | ||||||
19 | permitted under Section 16-118 or 16-150.1.
| ||||||
20 | (d) A person who (i) was a member before July 1, 1998, (ii) | ||||||
21 | retires with
more than 34 years of creditable service, and | ||||||
22 | (iii) does not elect to qualify
for the augmented rate under | ||||||
23 | Section 16-129.1 shall be entitled, at the time
of retirement, | ||||||
24 | to receive a partial refund of contributions made under this
| ||||||
25 | Section for service occurring after the later of June 30, 1998 | ||||||
26 | or attainment
of 34 years of creditable service, in an amount |
| |||||||
| |||||||
1 | equal to 1.00% of the salary
upon which those contributions | ||||||
2 | were based.
| ||||||
3 | (e) A member's contributions toward the cost of early | ||||||
4 | retirement without discount made under item (a)(4) of this | ||||||
5 | Section shall not be refunded if the member has elected early | ||||||
6 | retirement without discount under Section 16-133.2 and has | ||||||
7 | begun to receive a retirement annuity under this Article | ||||||
8 | calculated in accordance with that election. Otherwise, a | ||||||
9 | member's contributions toward the cost of early retirement | ||||||
10 | without discount made under item (a)(4) of this Section shall | ||||||
11 | be refunded according to whichever one of the following | ||||||
12 | circumstances occurs first: | ||||||
13 | (1) The contributions shall be refunded to the member, | ||||||
14 | without interest, within 120 days after the member's | ||||||
15 | retirement annuity commences, if the member does not elect | ||||||
16 | early retirement without discount under Section 16-133.2. | ||||||
17 | (2) The contributions shall be included, without | ||||||
18 | interest, in any refund claimed by the member under Section | ||||||
19 | 16-151. | ||||||
20 | (3) The contributions shall be refunded to the member's | ||||||
21 | designated beneficiary (or if there is no beneficiary, to | ||||||
22 | the member's estate), without interest, if the member dies | ||||||
23 | without having begun to receive a retirement annuity under | ||||||
24 | this Article. | ||||||
25 | (4) The contributions shall be refunded to the member, | ||||||
26 | without interest, within 120 days after the early |
| |||||||
| |||||||
1 | retirement without discount option provided under Section | ||||||
2 | 16-133.2 is terminated under Section 16-176.
| ||||||
3 | (Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)
| ||||||
4 | (40 ILCS 5/16-158.2 new)
| ||||||
5 | Sec. 16-158.2. Self-managed plan.
| ||||||
6 | (a) The General Assembly finds that it is important for | ||||||
7 | schools to be able to attract and retain the most qualified | ||||||
8 | employees
and that in order to attract and retain these | ||||||
9 | employees, schools should have the flexibility to provide a | ||||||
10 | defined contribution
(self-managed) plan for eligible members.
| ||||||
11 | Accordingly, the Teachers' Retirement System of the State of | ||||||
12 | Illinois is hereby authorized to
establish and administer a | ||||||
13 | self-managed plan, which shall offer participating
members the | ||||||
14 | opportunity to accumulate assets for retirement through a
| ||||||
15 | combination of member and employer contributions that may be | ||||||
16 | invested in
mutual funds, collective investment funds, or other | ||||||
17 | investment products and
used to purchase annuity contracts, | ||||||
18 | either fixed or variable or a combination
of fixed and | ||||||
19 | variable. The plan must be qualified under the Internal Revenue | ||||||
20 | Code of 1986.
| ||||||
21 | (b) Each employer subject to this Article shall adopt the | ||||||
22 | self-managed plan established under this Section. This
| ||||||
23 | election is irrevocable. An employer's election to adopt the | ||||||
24 | self-managed
plan makes available to the eligible members of | ||||||
25 | that employer the elections
described in Section 16-131.7.
|
| |||||||
| |||||||
1 | The Teachers' Retirement System of the State of Illinois | ||||||
2 | shall be the plan sponsor for the
self-managed plan and shall | ||||||
3 | prepare a plan document and adopt any rules
and procedures as | ||||||
4 | are considered necessary or desirable for the administration
of | ||||||
5 | the self-managed plan. Consistent with its fiduciary duty to | ||||||
6 | the
participants and beneficiaries of the self-managed plan, | ||||||
7 | the Board of Trustees
of the System may delegate aspects of | ||||||
8 | plan administration as it sees fit to
companies authorized to | ||||||
9 | do business in this State, to the employers, or to a
| ||||||
10 | combination of both.
| ||||||
11 | (c) Selection of service providers and funding vehicles. | ||||||
12 | The System shall solicit proposals to provide
administrative | ||||||
13 | services and funding vehicles for the self-managed plan from
| ||||||
14 | insurance and annuity companies and mutual fund companies, | ||||||
15 | banks, trust
companies, or other financial institutions | ||||||
16 | authorized to do business in this
State. In reviewing the | ||||||
17 | proposals received and approving and contracting with
no fewer | ||||||
18 | than 2 and no more than 7 companies, the Board of Trustees of | ||||||
19 | the System shall
consider, among other things, the following | ||||||
20 | criteria:
| ||||||
21 | (1) the nature and extent of the benefits that would be | ||||||
22 | provided
to the participants;
| ||||||
23 | (2) the reasonableness of the benefits in relation to | ||||||
24 | the premium
charged;
| ||||||
25 | (3) the suitability of the benefits to the needs and
| ||||||
26 | interests of the participating members and employers;
|
| |||||||
| |||||||
1 | (4) the ability of the company to provide benefits | ||||||
2 | under the contract and
the financial stability of the | ||||||
3 | company; and
| ||||||
4 | (5) the efficacy of the contract in the recruitment and | ||||||
5 | retention of
employees.
| ||||||
6 | The System shall periodically review
each approved | ||||||
7 | company. A company may continue to provide administrative
| ||||||
8 | services and funding vehicles for the self-managed plan only so | ||||||
9 | long as
it continues to be an approved company under contract | ||||||
10 | with the Board.
| ||||||
11 | In addition to the companies approved by the System under | ||||||
12 | this subsection (c), the System may offer its participants an | ||||||
13 | investment fund managed by the System.
| ||||||
14 | (d) Participants in the program
must be allowed to direct | ||||||
15 | the transfer of their account balances among the
various | ||||||
16 | investment options offered, subject to applicable contractual
| ||||||
17 | provisions.
The participant shall not be deemed a fiduciary by | ||||||
18 | reason of providing such
investment direction. A person who is | ||||||
19 | a fiduciary shall not be liable for any
loss resulting from | ||||||
20 | such investment direction and shall not be deemed to have
| ||||||
21 | breached any fiduciary duty by acting in accordance with that | ||||||
22 | direction.
Neither the System nor the employer guarantees any | ||||||
23 | of the investments in the
participant's account balances.
| ||||||
24 | (e) A currently eligible member, as defined in Section | ||||||
25 | 16-131.7, must make a written election to participate in the
| ||||||
26 | self-managed plan in accordance with the
provisions of Section |
| |||||||
| |||||||
1 | 16-131.7 and the procedures established by the System.
| ||||||
2 | Participation in the self-managed plan shall begin
on the first | ||||||
3 | day of the month immediately following the month in which the
| ||||||
4 | currently eligible member's election is filed with the System | ||||||
5 | or when a newly eligible member, as defined in Section | ||||||
6 | 16-131.7, enters the System, but not sooner than the effective | ||||||
7 | date of
the self-managed
plan. The System shall make the | ||||||
8 | self-managed plan available under this Article by
January 1, | ||||||
9 | 2012. A member's participation in the traditional retirement | ||||||
10 | package under this Article shall terminate on the date that
| ||||||
11 | participation in the self-managed plan begins.
| ||||||
12 | A member who has elected to participate in the self-managed | ||||||
13 | plan under
this Section must continue participation while he or | ||||||
14 | she remains a member, and may not participate in the | ||||||
15 | traditional benefit package while employed by that employer or | ||||||
16 | any other
employer under this Article.
| ||||||
17 | Participation in the self-managed plan under this Section | ||||||
18 | shall constitute
membership in the Teachers' Retirement System | ||||||
19 | of the State of Illinois.
| ||||||
20 | A participant under this Section shall be entitled to the | ||||||
21 | benefits of
Article 20 of this Code.
| ||||||
22 | (f) If, at the time an employee
elects to participate in | ||||||
23 | the self-managed plan, the employee has rights and credits
in | ||||||
24 | the System due to previous participation in the traditional | ||||||
25 | benefit package,
the System shall establish for the employee an | ||||||
26 | opening account balance in the
self-managed plan, equal to (i) |
| |||||||
| |||||||
1 | the amount of the contribution refund that the employee
would | ||||||
2 | be eligible to receive under Section 16-143.2 and 16-151 if the | ||||||
3 | employee terminated
employment on that date and elected a | ||||||
4 | refund of contributions, plus (ii) an amount equal to the | ||||||
5 | regular employer contribution that would be required to fund | ||||||
6 | the actual regular cost incurred for each year of service | ||||||
7 | credit earned, provided that the total opening account balance | ||||||
8 | does not exceed 7.6% of that participant's salary for that | ||||||
9 | year, plus interest. The interest used in this subsection (f) | ||||||
10 | is calculated as the average annual rate of return that the | ||||||
11 | System has earned over the past 20 fiscal years and is | ||||||
12 | compounded. The System shall transfer assets from the defined | ||||||
13 | benefit
retirement program to the self-managed plan, as a | ||||||
14 | tax-free transfer in
accordance with Internal Revenue Service | ||||||
15 | guidelines, for purposes of funding
the employee's opening | ||||||
16 | account balance.
| ||||||
17 | (g) Notwithstanding any other provision
of this Article, a | ||||||
18 | member may not purchase or receive service or service
credit | ||||||
19 | applicable to the traditional benefit package
under this | ||||||
20 | Article for any period during which the member was a | ||||||
21 | participant
in the self-managed plan established under this | ||||||
22 | Section.
| ||||||
23 | (h) The self-managed plan shall be funded by contributions
| ||||||
24 | from participants in the self-managed plan and employer
| ||||||
25 | contributions as provided in this Section.
| ||||||
26 | The contribution rate for participants in the self-managed |
| |||||||
| |||||||
1 | plan
under this Section shall be equal to the member | ||||||
2 | contribution rate for all
participants in the System, as | ||||||
3 | provided in Section 16-152. This required
contribution shall be | ||||||
4 | made as an employer pick-up under Section 414(h) of the
| ||||||
5 | Internal Revenue Code of 1986 or any successor Section thereof. | ||||||
6 | A participant in the System's traditional benefit package prior | ||||||
7 | to his or her
election to participate in the self-managed plan | ||||||
8 | shall continue to have the
employer pick up the contributions | ||||||
9 | required under Section 16-152. However, the
amounts picked up | ||||||
10 | after the election of the self-managed plan shall be remitted
| ||||||
11 | to and treated as assets of the self-managed plan. In no event | ||||||
12 | shall a member have the option of receiving these amounts in | ||||||
13 | cash. Members may make
additional contributions to the
| ||||||
14 | self-managed plan in accordance with procedures prescribed by | ||||||
15 | the System, to
the extent permitted under rules prescribed by | ||||||
16 | the System.
| ||||||
17 | The program shall provide for State contributions to be | ||||||
18 | credited to each self-managed plan participant in an amount | ||||||
19 | equal to the regular employer contribution that would be | ||||||
20 | required to fund the actual regular cost incurred for each year | ||||||
21 | of service credit earned had the participant chosen to enroll | ||||||
22 | in the traditional benefit plan.
| ||||||
23 | An amount of employer contribution, not exceeding 1% of the | ||||||
24 | participating
member's salary, shall be used for the purpose of | ||||||
25 | providing the disability
benefits of the System to the member. | ||||||
26 | Prior to the beginning of each plan
year under the self-managed |
| |||||||
| |||||||
1 | plan, the Board of Trustees shall determine, as a
percentage of | ||||||
2 | salary, the amount of member contributions to be allocated
| ||||||
3 | during that plan year for providing disability benefits for | ||||||
4 | members in the
self-managed plan. The provisions of this | ||||||
5 | paragraph shall be administered in conjunction with the | ||||||
6 | provisions of Section 16-132.
| ||||||
7 | The State of Illinois shall make contributions by | ||||||
8 | appropriations to the
System of the employer contributions | ||||||
9 | required for participants in
the self-managed plan under this | ||||||
10 | Section.
The amount required shall
be certified by the Board of | ||||||
11 | Trustees of the System and paid by the State in
accordance with | ||||||
12 | Section 16-158. The System shall not be obligated to remit the
| ||||||
13 | required employer contributions to any of the insurance and | ||||||
14 | annuity
companies, mutual fund
companies, banks, trust | ||||||
15 | companies, financial institutions, or other sponsors
of any of | ||||||
16 | the funding vehicles offered under the self-managed plan
until | ||||||
17 | it has received the required employer contributions from the | ||||||
18 | State. In
the event of a deficiency in the amount of State | ||||||
19 | contributions, the System
shall implement those procedures | ||||||
20 | described in subsection (b-1) of Section 16-158
to obtain the | ||||||
21 | required funding from the Common School
Fund.
| ||||||
22 | (i) A participant in the
self-managed plan becomes vested | ||||||
23 | in the employer contributions credited to his
or her accounts | ||||||
24 | in the self-managed plan on the earliest to occur of the
| ||||||
25 | following: (1) attainment of at least 5 years of creditable | ||||||
26 | service under this Article; (2) the death of the participating |
| |||||||
| |||||||
1 | member while employed under this Article, if the participant | ||||||
2 | has completed at
least 1.5 years of service; or (3) the | ||||||
3 | participant's election to retire and
apply the reciprocal | ||||||
4 | provisions of Article 20 of this Code.
| ||||||
5 | A participant in the self-managed plan who receives a | ||||||
6 | distribution of his or
her vested amounts from the self-managed | ||||||
7 | plan
while not yet eligible for retirement under this Article
| ||||||
8 | (and Article 20, if applicable) shall forfeit all service | ||||||
9 | credit
and accrued rights in the System; if subsequently | ||||||
10 | re-employed under this Article, the participant
shall be | ||||||
11 | considered a new
member. If a former participant in the | ||||||
12 | self-managed plan again becomes a member (or
becomes employed | ||||||
13 | by a participating system under Article 20 of this Code) and
| ||||||
14 | continues as such for at least 2 years, all such rights, | ||||||
15 | service credits, and
previous status as a participant shall be | ||||||
16 | restored upon repayment of the amount
of the distribution, | ||||||
17 | without interest.
| ||||||
18 | (j) If a member participating in the self-managed plan who | ||||||
19 | is vested in employer
contributions terminates employment, the | ||||||
20 | member shall be entitled to a
benefit that is based on the
| ||||||
21 | account values attributable to both employer and
member | ||||||
22 | contributions and any
investment return thereon.
| ||||||
23 | If a member participating in the self-managed plan who is | ||||||
24 | not vested in employer contributions terminates
employment, | ||||||
25 | the member shall be entitled to a benefit based solely on the
| ||||||
26 | account values attributable to the member's contributions and |
| |||||||
| |||||||
1 | any investment
return thereon, and the employer contributions | ||||||
2 | and any investment return
thereon shall be forfeited. Any | ||||||
3 | employer contributions that are forfeited
shall be held in | ||||||
4 | escrow by the
company investing those contributions and shall | ||||||
5 | be used, as directed by the
System, for future allocations of | ||||||
6 | employer contributions or for the restoration
of amounts | ||||||
7 | previously forfeited by former participants who again become
| ||||||
8 | participants in the self-managed plan.
| ||||||
9 | (40 ILCS 5/16-203.1 new)
| ||||||
10 | Sec. 16-203.1. New benefit increases. To the extent that | ||||||
11 | the changes made to this Article by this amendatory Act of the | ||||||
12 | 96th General Assembly authorizing the System to offer a | ||||||
13 | self-managed plan are determined to be a new benefit increase | ||||||
14 | within the meaning of Section 16-203, the changes made by this | ||||||
15 | amendatory Act are exempt from the provisions of subsection (d) | ||||||
16 | of Section 16-203.
| ||||||
17 | (40 ILCS 5/18-105.1 new)
| ||||||
18 | Sec. 18-105.1. Traditional benefit package. "Traditional | ||||||
19 | benefit
package" means the defined benefit retirement program | ||||||
20 | maintained by the System, which
includes retirement annuities | ||||||
21 | payable directly from the System, as provided in
Sections | ||||||
22 | 18-124 through 18-125.1; disability
retirement annuities | ||||||
23 | payable under Sections 18-126 and 18-126.1; survivor's | ||||||
24 | annuities payable directly from the System, as provided in
|
| |||||||
| |||||||
1 | Section 18-123 and Sections 18-128 through 18-128.1 and Section | ||||||
2 | 18-128.3; and contribution refunds as provided in Section
| ||||||
3 | 18-129.
| ||||||
4 | (40 ILCS 5/18-105.2 new)
| ||||||
5 | Sec. 18-105.2. Self-managed plan. "Self-managed plan" | ||||||
6 | means the defined
contribution retirement program maintained | ||||||
7 | by the System, as described in
Section 18-133.2. The | ||||||
8 | self-managed plan also includes disability benefits, as
| ||||||
9 | provided in Section 18-126.1. The self-managed plan does not
| ||||||
10 | include retirement annuities or survivor's annuities
payable | ||||||
11 | directly from the System, as provided in Section 18-123, | ||||||
12 | Sections 18-124 through 18-126, Sections 18-128 through | ||||||
13 | 18-128.1, and Section 18-128.3 or refunds determined under | ||||||
14 | Section 18-129.
| ||||||
15 | (40 ILCS 5/18-123.3 new)
| ||||||
16 | Sec. 18-123.3. Retirement program elections.
| ||||||
17 | (a) For the purposes of this Section: | ||||||
18 | "Eligible participant" means either a currently eligible | ||||||
19 | participant or a newly eligible
participant. | ||||||
20 | "Currently eligible participant"
means a participant who | ||||||
21 | is employed as a judge on the date on which
the System first | ||||||
22 | offers the
self-managed plan as an alternative to the | ||||||
23 | traditional benefit package. | ||||||
24 | "Newly
eligible participant" means a participant who first |
| |||||||
| |||||||
1 | becomes employed as a judge
after the date on which the System | ||||||
2 | first offers the self-managed plan as an alternative to the
| ||||||
3 | traditional benefit package.
| ||||||
4 | (b) When the System offers to participants the
self-managed | ||||||
5 | plan as an alternative to the traditional benefit package, each | ||||||
6 | currently eligible participant shall be
given the choice to | ||||||
7 | elect which retirement program he or she wishes to
participate | ||||||
8 | in with respect to all periods of covered employment occurring | ||||||
9 | on
or after the effective date of the participant's election. | ||||||
10 | The retirement
program election made by a currently eligible | ||||||
11 | participant must be made in writing, in the
manner prescribed | ||||||
12 | by the System, and within the time period described in
this | ||||||
13 | Section.
| ||||||
14 | If a currently eligible participant elects the | ||||||
15 | self-managed plan, then that election is irrevocable. If a | ||||||
16 | currently eligible participant who elected to participate or | ||||||
17 | participated by default in the traditional benefit plan | ||||||
18 | terminates employment under this Article, then the | ||||||
19 | participant, upon his or her subsequent
re-employment under | ||||||
20 | this Article, may make an election under this Section. | ||||||
21 | A currently eligible participant who fails to make an | ||||||
22 | election under this Section shall, by default,
participate in | ||||||
23 | the traditional benefit package.
| ||||||
24 | (c) A currently eligible participant may elect to
| ||||||
25 | participate in the traditional benefit package
or the | ||||||
26 | self-managed plan.
|
| |||||||
| |||||||
1 | A currently eligible participant must make this election | ||||||
2 | within 5 years
after the effective date of the employer's | ||||||
3 | adoption of the self-managed plan or, in the case of a | ||||||
4 | currently eligible participant who terminates employment under | ||||||
5 | this Article, within 6 months after his or her re-employment | ||||||
6 | under this Article.
| ||||||
7 | A newly eligible participant is automatically enrolled in | ||||||
8 | the self-managed plan under Section 18-133.2.
| ||||||
9 | (d) If a currently eligible participant elects to | ||||||
10 | participate in the self-managed plan, the System shall fund | ||||||
11 | their account as stated in subsection (f) of Section 18-133.2. | ||||||
12 | Employer contributions to the self-managed
plan shall commence | ||||||
13 | as of the first pay period that begins after the System
| ||||||
14 | receives the member's election.
| ||||||
15 | (e) A currently eligible participant shall be provided with | ||||||
16 | written information prepared
or prescribed by the System that | ||||||
17 | describes the participant's retirement program
choices. The | ||||||
18 | eligible participant shall be offered an opportunity to
receive | ||||||
19 | counseling from the System prior to making his or her election. | ||||||
20 | This
counseling may consist of videotaped materials, group | ||||||
21 | presentations, individual
consultation with an employee or | ||||||
22 | authorized representative of the System in
person or by | ||||||
23 | telephone or other electronic means, or any combination of | ||||||
24 | these
methods.
| ||||||
25 | (40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)
|
| |||||||
| |||||||
1 | Sec. 18-133. Financing; employee contributions.
| ||||||
2 | (a) Effective July 1, 1967, each participant is required to | ||||||
3 | contribute
7 1/2% of each payment of salary toward the | ||||||
4 | retirement annuity. Such
contributions shall continue during | ||||||
5 | the entire time the participant is in
service, with the | ||||||
6 | following exceptions:
| ||||||
7 | (1) Contributions for the retirement annuity are not | ||||||
8 | required on salary
received after 18 years of service by | ||||||
9 | persons who were participants before
January 2, 1954.
| ||||||
10 | (2) A participant who continues to serve as a judge | ||||||
11 | after becoming
eligible to receive the maximum rate of | ||||||
12 | annuity may elect, through a written
direction filed with | ||||||
13 | the Board, to discontinue contributing to the System.
Any | ||||||
14 | such option elected by a judge shall be irrevocable unless | ||||||
15 | prior to
January 1, 2000, and while continuing to
serve as | ||||||
16 | judge, the judge (A) files with the Board a letter | ||||||
17 | cancelling the
direction to discontinue contributing to | ||||||
18 | the System and requesting that such
contributing resume, | ||||||
19 | and (B) pays into the System an amount equal to the total
| ||||||
20 | of the discontinued contributions plus interest thereon at | ||||||
21 | 5% per annum.
Service credits earned in any other | ||||||
22 | "participating system" as defined in
Article 20 of this | ||||||
23 | Code shall be considered for purposes of determining a
| ||||||
24 | judge's eligibility to discontinue contributions under | ||||||
25 | this subdivision
(a)(2).
| ||||||
26 | (3) A participant who (i) has attained age 60, (ii) |
| |||||||
| |||||||
1 | continues to serve
as a judge after becoming eligible to | ||||||
2 | receive the maximum rate of annuity,
and (iii) has not | ||||||
3 | elected to discontinue contributing to the System under
| ||||||
4 | subdivision (a)(2) of this Section (or has revoked any such | ||||||
5 | election) may
elect, through a written direction filed with | ||||||
6 | the Board, to make contributions
to the System based only | ||||||
7 | on the amount of the increases in salary received by
the | ||||||
8 | judge on or after the date of the election, rather than the | ||||||
9 | total salary
received. If a judge who is making | ||||||
10 | contributions to the System on the
effective date of this | ||||||
11 | amendatory Act of the 91st General Assembly makes an
| ||||||
12 | election to limit contributions under this subdivision | ||||||
13 | (a)(3) within 90 days
after that effective date, the | ||||||
14 | election shall be deemed to become
effective on that | ||||||
15 | effective date and the judge shall be entitled to receive a
| ||||||
16 | refund of any excess contributions paid to the System | ||||||
17 | during that 90-day
period; any other election under this | ||||||
18 | subdivision (a)(3) becomes effective
on the first of the | ||||||
19 | month following the date of the election. An election to
| ||||||
20 | limit contributions under this subdivision (a)(3) is | ||||||
21 | irrevocable. Service
credits earned in any other | ||||||
22 | participating system as defined in Article 20 of
this Code | ||||||
23 | shall be considered for purposes of determining a judge's | ||||||
24 | eligibility
to make an election under this subdivision | ||||||
25 | (a)(3).
| ||||||
26 | (b) Beginning July 1, 1969, each participant is required to |
| |||||||
| |||||||
1 | contribute
1% of each payment of salary towards the automatic | ||||||
2 | increase in annuity
provided in Section 18-125.1. However, such | ||||||
3 | contributions need not be made
by any participant who has | ||||||
4 | elected prior to September 15, 1969, not to be
subject to the | ||||||
5 | automatic increase in annuity provisions.
| ||||||
6 | (c) Effective July 13, 1953, each married participant | ||||||
7 | subject to the
survivor's annuity provisions is required to | ||||||
8 | contribute 2 1/2% of each
payment of salary, whether or not he | ||||||
9 | or she is required to make any other
contributions under this | ||||||
10 | Section. Such contributions shall be made
concurrently with the | ||||||
11 | contributions made for annuity purposes.
| ||||||
12 | Notwithstanding any provision in this subsection (c) to the | ||||||
13 | contrary, in the case of an employee who participates in the | ||||||
14 | self-managed plan under Section 18-133.2, contributions for | ||||||
15 | survivor's annuity shall be used to fund benefits under Section | ||||||
16 | 18-133.2.
| ||||||
17 | (Source: P.A. 91-653, eff. 12-10-99.)
| ||||||
18 | (40 ILCS 5/18-133.2 new)
| ||||||
19 | Sec. 18-133.2. Self-managed plan.
| ||||||
20 | (a) The General Assembly finds that it is important to be | ||||||
21 | able to attract and retain the most qualified judges
and that | ||||||
22 | in order to attract and retain these judges, the System should | ||||||
23 | have the flexibility to provide a defined contribution
| ||||||
24 | (self-managed) plan for eligible participants.
Accordingly, | ||||||
25 | the Judges Retirement System of Illinois is hereby authorized |
| |||||||
| |||||||
1 | to
establish and administer a self-managed plan, which shall | ||||||
2 | offer participants the opportunity to accumulate assets for | ||||||
3 | retirement through a
combination of participant and employer | ||||||
4 | contributions that may be invested in
mutual funds, collective | ||||||
5 | investment funds, or other investment products and
used to | ||||||
6 | purchase annuity contracts, either fixed or variable or a | ||||||
7 | combination
thereof. The plan must be qualified under the | ||||||
8 | Internal Revenue Code of 1986.
| ||||||
9 | (b) The Board shall adopt the self-managed plan established | ||||||
10 | under this Section. An employer's election to adopt the | ||||||
11 | self-managed
plan makes available to the eligible participants | ||||||
12 | of that employer the elections
described in Section 18-133.2.
| ||||||
13 | The Judges Retirement System of Illinois shall be the plan | ||||||
14 | sponsor for the
self-managed plan and shall prepare a plan | ||||||
15 | document and prescribe such rules
and procedures as are | ||||||
16 | considered necessary or desirable for the administration
of the | ||||||
17 | self-managed plan. Consistent with its fiduciary duty to the
| ||||||
18 | participants and beneficiaries of the self-managed plan, the | ||||||
19 | Board of Trustees
of the System may delegate aspects of plan | ||||||
20 | administration as it sees fit to
companies authorized to do | ||||||
21 | business in this State.
| ||||||
22 | (c) The System shall solicit proposals to provide
| ||||||
23 | administrative services and funding vehicles for the | ||||||
24 | self-managed plan from
insurance and annuity companies and | ||||||
25 | mutual fund companies, banks, trust
companies, or other | ||||||
26 | financial institutions authorized to do business in this
State. |
| |||||||
| |||||||
1 | In reviewing the proposals received and approving and | ||||||
2 | contracting with
no fewer than 2 and no more than 7 companies, | ||||||
3 | the Board of Trustees of the System shall
consider, among other | ||||||
4 | things, the following criteria:
| ||||||
5 | (1) the nature and extent of the benefits that would be | ||||||
6 | provided
to the participants;
| ||||||
7 | (2) the reasonableness of the benefits in relation to | ||||||
8 | the premium
charged;
| ||||||
9 | (3) the suitability of the benefits to the needs and
| ||||||
10 | interests of the participants and the employer;
| ||||||
11 | (4) the ability of the company to provide benefits | ||||||
12 | under the contract and
the financial stability of the | ||||||
13 | company; and
| ||||||
14 | (5) the efficacy of the contract in the recruitment and | ||||||
15 | retention of
judges.
| ||||||
16 | The System shall periodically review
each approved | ||||||
17 | company. A company may continue to provide administrative
| ||||||
18 | services and funding vehicles for the self-managed plan only so | ||||||
19 | long as
it continues to be an approved company under contract | ||||||
20 | with the Board.
| ||||||
21 | In addition to the companies approved by the System under | ||||||
22 | this subsection (c), the System may offer its participants an | ||||||
23 | investment fund managed by the System.
| ||||||
24 | (d) Participants who are under the self-managed plan
must | ||||||
25 | be allowed to direct the transfer of their account balances | ||||||
26 | among the
various investment options offered, subject to |
| |||||||
| |||||||
1 | applicable contractual
provisions.
The participant shall not | ||||||
2 | be deemed a fiduciary by reason of providing such
investment | ||||||
3 | direction. A person who is a fiduciary shall not be liable for | ||||||
4 | any
loss resulting from such investment direction and shall not | ||||||
5 | be deemed to have
breached any fiduciary duty by acting in | ||||||
6 | accordance with that direction.
Neither the System nor the | ||||||
7 | State guarantees any of the investments in the
participant's | ||||||
8 | account balances.
| ||||||
9 | (e) A currently eligible participant, as defined in Section | ||||||
10 | 18-123.3, must make a written election to participate in the
| ||||||
11 | self-managed plan in accordance with the
provisions of Section | ||||||
12 | 18-133.2 and the procedures established by the System.
| ||||||
13 | Participation in the self-managed plan shall begin
on the first | ||||||
14 | day of the month immediately following the month in which the
| ||||||
15 | currently eligible participant's election is filed with the | ||||||
16 | System or when a newly eligible participant, as defined in | ||||||
17 | Section 18-123.3, enters the System, but not sooner than the | ||||||
18 | effective date of
the self-managed
plan. The System shall make | ||||||
19 | the self-managed plan available under this Article by January | ||||||
20 | 1, 2012. A participant's participation in the traditional | ||||||
21 | retirement package under this Article shall terminate on the | ||||||
22 | date that
participation in the self-managed plan begins.
| ||||||
23 | A participant who has elected to participate in the | ||||||
24 | self-managed plan under
this Section must continue | ||||||
25 | participation while employed as a judge, and may not | ||||||
26 | participate in the traditional benefit package administered
by |
| |||||||
| |||||||
1 | the System under this Article while employed as a judge.
| ||||||
2 | Participation in the self-managed plan under this Section | ||||||
3 | shall constitute
membership in the Judges Retirement System of | ||||||
4 | Illinois.
| ||||||
5 | A participant under this Section shall be entitled to the | ||||||
6 | benefits of
Article 20 of this Code.
| ||||||
7 | (f) If, at the time a participant
elects to participate in | ||||||
8 | the self-managed plan, the participant rights and credits
in | ||||||
9 | the System due to previous participation in the traditional | ||||||
10 | benefit package,
the System shall establish for the participant | ||||||
11 | an opening account balance in the
self-managed plan, equal to | ||||||
12 | (i) the amount of the contribution refund that the participant
| ||||||
13 | would be eligible to receive under Section 18-129 if the | ||||||
14 | participant terminated
employment on that date and elected a | ||||||
15 | refund of contributions, plus (ii) an amount equal to the | ||||||
16 | regular employer contribution that would be required to fund | ||||||
17 | the actual regular cost incurred for each year of service | ||||||
18 | credit earned, provided that the total opening account balance | ||||||
19 | does not exceed 7.6% of that participant's salary for that | ||||||
20 | year, plus interest. The interest used in this subsection (f) | ||||||
21 | is calculated as the average annual rate of return that the | ||||||
22 | System has earned over the past 20 fiscal years and is | ||||||
23 | compounded. The System shall transfer assets from the defined | ||||||
24 | benefit
retirement program to the self-managed plan, as a | ||||||
25 | tax-free transfer in
accordance with Internal Revenue Service | ||||||
26 | guidelines, for purposes of funding
the participant's opening |
| |||||||
| |||||||
1 | account balance.
| ||||||
2 | (g) Notwithstanding any other provision
of this Article, a | ||||||
3 | participant may not purchase or receive service or service
| ||||||
4 | credit applicable to the traditional benefit package
under this | ||||||
5 | Article for any period during which the participant was covered | ||||||
6 | under the self-managed plan established under this Section.
| ||||||
7 | (h) The self-managed plan shall be funded by contributions
| ||||||
8 | from participants participating in the self-managed plan and | ||||||
9 | State
contributions as provided in this Section.
| ||||||
10 | The contribution rate for persons participating in the | ||||||
11 | self-managed plan
under this Section shall be equal to the | ||||||
12 | participant contribution rate for other
participants in the | ||||||
13 | System, as provided in Section 18-133. This required | ||||||
14 | contribution shall be made as an employer pick-up under Section | ||||||
15 | 414(h) of the
Internal Revenue Code of 1986 or any successor | ||||||
16 | Section thereof. Any employee
participating in the System's | ||||||
17 | traditional benefit package prior to his or her
election to | ||||||
18 | participate in the self-managed plan shall continue to have the
| ||||||
19 | employer pick up that contribution. However, the
amounts picked | ||||||
20 | up after the election of the self-managed plan shall be | ||||||
21 | remitted
to and treated as assets of the self-managed plan. In | ||||||
22 | no event shall a participant have the option of receiving these | ||||||
23 | amounts in cash. Participants may make
additional | ||||||
24 | contributions to the
self-managed plan in accordance with | ||||||
25 | procedures prescribed by the System, to
the extent permitted | ||||||
26 | under rules prescribed by the System.
|
| |||||||
| |||||||
1 | The program shall provide for State contributions to be | ||||||
2 | credited to each self-managed plan participant in an amount | ||||||
3 | equal to the regular employer contribution that would be | ||||||
4 | required to fund the actual regular cost incurred for each year | ||||||
5 | of service credit earned had the participant chosen to enroll | ||||||
6 | in the traditional benefit plan.
| ||||||
7 | An amount of participant contribution, not exceeding 1% of | ||||||
8 | the participant's salary, shall be used for the purpose of | ||||||
9 | providing the disability
benefits of the System to the | ||||||
10 | employee. Prior to the beginning of each plan
year under the | ||||||
11 | self-managed plan, the Board of Trustees shall determine, as a
| ||||||
12 | percentage of salary, the amount of participant contributions | ||||||
13 | to be allocated
during that plan year for providing disability | ||||||
14 | benefits for participants in the
self-managed plan. The | ||||||
15 | provisions of this paragraph shall be administered in | ||||||
16 | conjunction with the provisions of Section 18-124.
| ||||||
17 | The State of Illinois shall make contributions by | ||||||
18 | appropriations to the
System of the employer contributions | ||||||
19 | required for participants who are covered under the | ||||||
20 | self-managed plan under this Section.
The amount required shall
| ||||||
21 | be certified by the Board of Trustees of the System and paid by | ||||||
22 | the State in
accordance with Section 18-140. The System shall | ||||||
23 | not be obligated to remit the
required employer contributions | ||||||
24 | to any of the insurance and annuity
companies, mutual fund
| ||||||
25 | companies, banks, trust companies, financial institutions, or | ||||||
26 | other sponsors
of any of the funding vehicles offered under the |
| |||||||
| |||||||
1 | self-managed plan
until it has received the required employer | ||||||
2 | contributions from the State. In
the event of a deficiency in | ||||||
3 | the amount of State contributions, the System
shall implement | ||||||
4 | those procedures described in subsection (b) of Section 18-140
| ||||||
5 | to obtain the required funding from the General Revenue
Fund.
| ||||||
6 | (i) A participant in the
self-managed plan becomes vested | ||||||
7 | in the employer contributions credited to his
or her accounts | ||||||
8 | in the self-managed plan on the earliest to occur of the
| ||||||
9 | following: (1) attainment of 5 years of service credit; (2) the | ||||||
10 | death of the participant while employed as a judge, if the | ||||||
11 | participant has completed at
least 1.5 years of service; or (3) | ||||||
12 | the participant's election to retire and
apply the reciprocal | ||||||
13 | provisions of Article 20 of this Code.
| ||||||
14 | A participant in the self-managed plan who receives a | ||||||
15 | distribution of his or
her vested amounts from the self-managed | ||||||
16 | plan
while not yet eligible for retirement under this Article
| ||||||
17 | (and Article 20, if applicable) shall forfeit all service | ||||||
18 | credit
and accrued rights in the System; if subsequently | ||||||
19 | re-employed as a judge, the participant
shall be considered a | ||||||
20 | new
employee. If a former participant again becomes a | ||||||
21 | participating employee (or
becomes employed by a participating | ||||||
22 | system under Article 20 of this Code) and
continues as such for | ||||||
23 | at least 2 years, all such rights, service credits, and
| ||||||
24 | previous status as a participant shall be restored upon | ||||||
25 | repayment of the amount
of the distribution, without interest.
| ||||||
26 | (j) If a participant who is vested in employer
|
| |||||||
| |||||||
1 | contributions terminates employment, the participant shall be | ||||||
2 | entitled to a
benefit which is based on the
account values | ||||||
3 | attributable to both employer and
participant contributions | ||||||
4 | and any
investment return thereon.
| ||||||
5 | If a participant who is not vested in employer | ||||||
6 | contributions terminates
employment, the participant shall be | ||||||
7 | entitled to a benefit based solely on the
account values | ||||||
8 | attributable to the participant's contributions and any | ||||||
9 | investment
return thereon, and the employer contributions and | ||||||
10 | any investment return
thereon shall be forfeited. Any employer | ||||||
11 | contributions which are forfeited
shall be held in escrow by | ||||||
12 | the
company investing those contributions and shall be used, as | ||||||
13 | directed by the
System, for future allocations of employer | ||||||
14 | contributions or for the restoration
of amounts previously | ||||||
15 | forfeited by former participants who again become
| ||||||
16 | participating employees.
| ||||||
17 | (40 ILCS 5/18-169.1 new)
| ||||||
18 | Sec. 18-169.1. New benefit increases. To the extent that | ||||||
19 | the changes made to this Article by this amendatory Act of the | ||||||
20 | 96th General Assembly authorizing the System to offer a | ||||||
21 | self-managed plan are determined to be a new benefit increase | ||||||
22 | within the meaning of Section 18-169, the changes made by this | ||||||
23 | amendatory Act are exempt from the provisions of subsection (d) | ||||||
24 | of Section 18-169.
| ||||||
25 | Section 99. Effective date. This Act takes effect upon |
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