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91_SB0851
LRB9105991EGfg
1 AN ACT to amend the Illinois Pension Code.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Pension Code is amended by
5 changing Section 1-113 as follows:
6 (40 ILCS 5/1-113) (from Ch. 108 1/2, par. 1-113)
7 Sec. 1-113. Investment authority of certain pension funds
8 other than, not including those established under Article 3
9 or 4. The investment authority of a board of trustees of a
10 retirement system or pension fund established under this Code
11 shall, if so provided in the Article establishing such
12 retirement system or pension fund, embrace the following
13 investments:
14 (1) Bonds, notes and other direct obligations of the
15 United States Government; bonds, notes and other obligations
16 of any United States Government agency or instrumentality,
17 whether or not guaranteed; and obligations the principal and
18 interest of which are guaranteed unconditionally by the
19 United States Government or by an agency or instrumentality
20 thereof.
21 (2) Obligations of the Inter-American Development Bank,
22 the International Bank for Reconstruction and Development,
23 the African Development Bank, the International Finance
24 Corporation, and the Asian Development Bank.
25 (3) Obligations of any state, or of any political
26 subdivision in Illinois, or of any county or city in any
27 other state having a population as shown by the last federal
28 census of not less than 30,000 inhabitants provided that such
29 political subdivision is not permitted by law to become
30 indebted in excess of 10% of the assessed valuation of
31 property therein and has not defaulted for a period longer
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1 than 30 days in the payment of interest and principal on any
2 of its general obligations or indebtedness during a period of
3 10 calendar years immediately preceding such investment.
4 (4) Nonconvertible bonds, debentures, notes and other
5 corporate obligations of any corporation created or existing
6 under the laws of the United States or any state, district or
7 territory thereof, provided there has been no default on the
8 obligations of the corporation or its predecessor(s) during
9 the 5 calendar years immediately preceding the purchase. Up
10 to 5% of the assets of a pension fund established under
11 Article 9 of this Code may be invested in nonconvertible
12 bonds, debentures, notes, and other corporate obligations of
13 corporations created or existing under the laws of a foreign
14 country, provided there has been no default on the
15 obligations of the corporation or its predecessors during the
16 5 calendar years immediately preceding the date of purchase.
17 (5) Obligations guaranteed by the Government of Canada,
18 or by any Province of Canada, or by any Canadian city with a
19 population of not less than 150,000 inhabitants, provided (a)
20 they are payable in United States currency and are exempt
21 from any Canadian withholding tax; (b) the investment in any
22 one issue of bonds shall not exceed 10% of the amount
23 outstanding; and (c) the total investments at book value in
24 Canadian securities shall be limited to 5% of the total
25 investment account of the board at book value.
26 (5.1) Direct obligations of the State of Israel for the
27 payment of money, or obligations for the payment of money
28 which are guaranteed as to the payment of principal and
29 interest by the State of Israel, or common or preferred stock
30 or notes issued by a bank owned or controlled in whole or in
31 part by the State of Israel, on the following conditions:
32 (a) The total investments in such obligations shall
33 not exceed 5% of the book value of the aggregate
34 investments owned by the board;
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1 (b) The State of Israel shall not be in default in
2 the payment of principal or interest on any of its direct
3 general obligations on the date of such investment;
4 (c) The bonds, stock or notes, and interest thereon
5 shall be payable in currency of the United States;
6 (d) The bonds shall (1) contain an option for the
7 redemption thereof after 90 days from date of purchase or
8 (2) either become due 5 years from the date of their
9 purchase or be subject to redemption 120 days after the
10 date of notice for redemption;
11 (e) The investment in these obligations has been
12 approved in writing by investment counsel employed by the
13 board, which counsel shall be a national or state bank or
14 trust company authorized to do a trust business in the
15 State of Illinois, or an investment advisor qualified
16 under the Federal Investment Advisors Act of 1940 and
17 registered under the Illinois Securities Act of 1953;
18 (f) The fund or system making the investment shall
19 have at least $5,000,000 of net present assets.
20 (6) Notes secured by mortgages under Sections 203, 207,
21 220 and 221 of the National Housing Act which are insured by
22 the Federal Housing Commissioner, or his successor assigns,
23 or debentures issued by such Commissioner, which are
24 guaranteed as to principal and interest by the Federal
25 Housing Administration, or agency of the United States
26 Government, provided the aggregate investment shall not
27 exceed 20% of the total investment account of the board at
28 book value, and provided further that the investment in such
29 notes under Sections 220 and 221 shall in no event exceed
30 one-half of the maximum investment in notes under this
31 paragraph.
32 (7) Loans to veterans guaranteed in whole or part by the
33 United States Government pursuant to Title III of the Act of
34 Congress known as the "Servicemen's Readjustment Act of
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1 1944," 58 Stat. 284, 38 U.S.C. 693, as amended or
2 supplemented from time to time, provided such guaranteed
3 loans are liens upon real estate.
4 (8) Common and preferred stocks and convertible debt
5 securities authorized for investment of trust funds under the
6 laws of the State of Illinois, provided:
7 (a) the common stocks, except as provided in
8 subparagraph (g), are listed on a national securities
9 exchange or board of trade, as defined in the federal
10 Securities Exchange Act of 1934, or quoted in the
11 National Association of Securities Dealers Automated
12 Quotation System (NASDAQ);
13 (b) the securities are of a corporation created or
14 existing under the laws of the United States or any
15 state, district or territory thereof, except that up to
16 5% of the assets of a pension fund established under
17 Article 9 of this Code may be invested in securities
18 issued by corporations created or existing under the laws
19 of a foreign country, if those securities are otherwise
20 in conformance with this paragraph (8);
21 (c) the corporation is not in arrears on payment of
22 dividends on its preferred stock;
23 (d) the total book value of all stocks and
24 convertible debt owned by any pension fund or retirement
25 system shall not exceed 40% of the aggregate book value
26 of all investments of such pension fund or retirement
27 system, except for a pension fund or retirement system
28 governed by Article 9, 13, or 17, where the total of all
29 stocks and convertible debt shall not exceed 50% of the
30 aggregate book value of all fund investments;
31 (e) the book value of stock and convertible debt
32 investments in any one corporation shall not exceed 5% of
33 the total investment account at book value in which such
34 securities are held, determined as of the date of the
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1 investment, and the investments in the stock of any one
2 corporation shall not exceed 5% of the total outstanding
3 stock of such corporation, and the investments in the
4 convertible debt of any one corporation shall not exceed
5 5% of the total amount of such debt that may be
6 outstanding;
7 (f) the straight preferred stocks or convertible
8 preferred stocks and convertible debt securities are
9 issued or guaranteed by a corporation whose common stock
10 qualifies for investment by the board; and
11 (g) that any common stocks not listed or quoted as
12 provided in subdivision 8(a) above be limited to the
13 following types of institutions: (a) any bank which is a
14 member of the Federal Deposit Insurance Corporation
15 having capital funds represented by capital stock,
16 surplus and undivided profits of at least $20,000,000;
17 (b) any life insurance company having capital funds
18 represented by capital stock, special surplus funds and
19 unassigned surplus totalling at least $50,000,000; and
20 (c) any fire or casualty insurance company, or a
21 combination thereof, having capital funds represented by
22 capital stock, net surplus and voluntary reserves of at
23 least $50,000,000.
24 (9) Withdrawable accounts of State chartered and federal
25 chartered savings and loan associations insured by the
26 Federal Savings and Loan Insurance Corporation; deposits or
27 certificates of deposit in State and national banks insured
28 by the Federal Deposit Insurance Corporation; and share
29 accounts or share certificate accounts in a State or federal
30 credit union, the accounts of which are insured as required
31 by The Illinois Credit Union Act or the Federal Credit Union
32 Act, as applicable.
33 No bank or savings and loan association shall receive
34 investment funds as permitted by this subsection (9), unless
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1 it has complied with the requirements established pursuant to
2 Section 6 of the Public Funds Investment Act.
3 (10) Trading, purchase or sale of listed options on
4 underlying securities owned by the board.
5 (11) Contracts and agreements supplemental thereto
6 providing for investments in the general account of a life
7 insurance company authorized to do business in Illinois.
8 (12) Conventional mortgage pass-through securities which
9 are evidenced by interests in Illinois owner-occupied
10 residential mortgages, having not less than an "A" rating
11 from at least one national securities rating service. Such
12 mortgages may have loan-to-value ratios up to 95%, provided
13 that any amount over 80% is insured by private mortgage
14 insurance. The pool of such mortgages shall be insured by
15 mortgage guaranty or equivalent insurance, in accordance with
16 industry standards.
17 (13) Pooled or commingled funds managed by a national or
18 State bank which is authorized to do a trust business in the
19 State of Illinois, shares of registered investment companies
20 as defined in the federal Investment Company Act of 1940
21 which are registered under that Act, and separate accounts of
22 a life insurance company authorized to do business in
23 Illinois, where such pooled or commingled funds, shares, or
24 separate accounts are comprised of common or preferred
25 stocks, bonds, or money market instruments.
26 (14) Pooled or commingled funds managed by a national or
27 state bank which is authorized to do a trust business in the
28 State of Illinois, separate accounts managed by a life
29 insurance company authorized to do business in Illinois, and
30 commingled group trusts managed by an investment adviser
31 registered under the federal Investment Advisors Act of 1940
32 (15 U.S.C. 80b-1 et seq.) and under the Illinois Securities
33 Law of 1953, where such pooled or commingled funds, separate
34 accounts or commingled group trusts are comprised of real
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1 estate or loans upon real estate secured by first or second
2 mortgages. The total investment in such pooled or commingled
3 funds, commingled group trusts and separate accounts shall
4 not exceed 10% of the aggregate book value of all investments
5 owned by the fund.
6 (15) Investment companies which (a) are registered as
7 such under the Investment Company Act of 1940, (b) are
8 diversified, open-end management investment companies and (c)
9 invest only in money market instruments.
10 (16) Up to 10% of the assets of the fund may be invested
11 in investments not included in paragraphs (1) through (15) of
12 this Section, provided that such investments comply with the
13 requirements and restrictions set forth in Sections 1-109,
14 1-109.1, 1-109.2, 1-110 and 1-111 of this Code.
15 The board shall have the authority to enter into such
16 agreements and to execute such documents as it determines to
17 be necessary to complete any investment transaction.
18 Any limitations herein set forth shall be applicable only
19 at the time of purchase and shall not require the liquidation
20 of any investment at any time.
21 All investments shall be clearly held and accounted for
22 to indicate ownership by such board. Such board may direct
23 the registration of securities in its own name or in the name
24 of a nominee created for the express purpose of registration
25 of securities by a national or state bank or trust company
26 authorized to conduct a trust business in the State of
27 Illinois.
28 Investments shall be carried at cost or at a value
29 determined in accordance with generally accepted accounting
30 principles and accounting procedures approved by such board.
31 (Source: P.A. 90-12, eff. 6-13-97; 90-507, eff. 8-22-97;
32 90-511, eff. 8-22-97; 90-655, eff. 7-30-98.)