101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB2745

 

Introduced , by Rep. Thomas Morrison

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/2-105.3 new
40 ILCS 5/2-167 new
40 ILCS 5/2-105.1 rep.

    Amends the General Assembly Article of the Illinois Pension Code. Requires the General Assembly Retirement System to establish a self-directed retirement plan. Provides that for persons who become participants on or after the effective date of the amendatory Act, participation in the System shall be limited to participation in the self-directed retirement plan. Allows a Tier 1 or Tier 2 participant to make an irrevocable election to participate in the self-directed retirement plan instead of the defined benefit plan. Makes changes to the pensionable salary for active participants. Provides that upon a participant's first day of participation in the self-directed retirement plan, the participant becomes vested in his or her contributions to the self-directed retirement plan, the employer's contributions to the self-directed retirement plan, and the investment returns attributable to those contributions credited to his or her account.


LRB101 09216 RPS 54310 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2745LRB101 09216 RPS 54310 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by adding
5Sections 2-105.3 and 2-167 as follows:
 
6    (40 ILCS 5/2-105.3 new)
7    Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier
83 participant. "Tier 1 participant": A participant who first
9became a participant before January 1, 2011.
10    In the case of a Tier 1 participant who elects to
11participate in the self-directed retirement plan under Section
122-167, that participant shall be deemed a Tier 1 participant
13only with respect to service performed or established before
14the effective date of that election.
15    "Tier 2 participant": A participant who first became a
16participant on or after January 1, 2011 and before the
17effective date of this amendatory Act of the 101st General
18Assembly.
19    In the case of a Tier 2 participant who elects to
20participate in the self-directed retirement plan under Section
212-167, that participant shall be deemed a Tier 2 participant
22only with respect to service performed or established before
23the effective date of that election.

 

 

HB2745- 2 -LRB101 09216 RPS 54310 b

1    "Tier 3 participant": A participant who first becomes a
2participant on or after the effective date of this amendatory
3Act of the 101st General Assembly; or a Tier 1 or Tier 2
4participant who elects to participate in the self-directed
5retirement under Section 2-167 of this Code, but only with
6respect to service performed or established on or after the
7effective date of that election.
 
8    (40 ILCS 5/2-167 new)
9    Sec. 2-167. Self-directed retirement plan.
10    (a) For the purposes of this Section:
11    "Active participant" means a participant who is in active
12service in the System.
13    "Consumer price index-u" means the index published by the
14Bureau of Labor Statistics of the United States Department of
15Labor that measures the average change in prices of goods and
16services purchased by all urban consumers, United States city
17average, all items, 1982-84 = 100.
18    "Defined benefit plan" means the retirement plan available
19under this Article to Tier 1 or Tier 2 participants who have
20not made the election authorized under this Section.
21    "Employer" means the State.
22    "Pensionable salary" means the amount of salary used by the
23System to calculate the amount of an individual's retirement
24annuity.
25    (b) On and after the effective date of this amendatory Act

 

 

HB2745- 3 -LRB101 09216 RPS 54310 b

1of the 101st General Assembly, a Tier 3 participant's
2participation in the System shall be limited to participation
3in the self-directed retirement plan established under
4subsection (d) of this Section.
5    An active Tier 1 or Tier 2 participant of this System may
6elect to cease accruing benefits in the defined benefit plan
7and begin accruing benefits for future service in the
8self-directed retirement plan established under subsection
9(d). The election to participate in the self-directed
10retirement plan is voluntary and irrevocable.
11    For an active Tier 1 or Tier 2 participant who elects to
12participate in the self-directed retirement plan, all service
13credit under the System (including service under any
14participating system if the participant elects to use the
15reciprocal provisions of Article 20) shall be considered for
16purposes of vesting in the benefits provided prior to the
17effective date of this Section, but only service earned and
18contributions made before that effective date shall be
19considered in determining the amount of those benefits. In lieu
20of receiving any such benefits, an active Tier 1 or Tier 2
21participant who elects to participate in the self-directed
22retirement plan may elect to have an account balance
23established in his or her self-directed retirement plan account
24in an amount equal to the amount of the contribution refund
25that the participant would be eligible to receive if he or she
26withdrew from service on the effective date of this Section and

 

 

HB2745- 4 -LRB101 09216 RPS 54310 b

1elected a refund of contributions, except that this
2hypothetical refund shall include interest at the effective
3rate for the respective years. The System shall make these
4transfers of assets to the self-directed plan as tax-free
5transfers in accordance with Internal Revenue Service
6guidelines.
7    (c) The pensionable salary of an active participant shall
8be equal to the average final monthly salary of the
9participant. For a participant who first becomes a participant
10of this System on or after the effective date of this
11amendatory Act of the 101st General Assembly, the average final
12monthly salary determined by dividing the total salary of the
13participant during the 96 consecutive months of service within
14the last 120 months of service in which the total compensation
15was the highest by the number of months of service in that
16period; however, the highest salary for annuity purposes may
17not exceed $106,800, except that that amount shall annually
18thereafter be increased by the lesser of (i) 3% of that amount,
19including all previous adjustments, or (ii) the annual
20unadjusted percentage increase (but not less than zero) in the
21consumer price index-u for the 12 months ending with the
22September preceding each November 1. The new amount resulting
23from each annual adjustment shall be determined by the Public
24Pension Division of the Department of Insurance and made
25available to the Board by November 1 of each year.
26    (d) As soon as practicable after the effective date of this

 

 

HB2745- 5 -LRB101 09216 RPS 54310 b

1amendatory Act of the 101st General Assembly, the System shall
2establish a self-directed retirement plan that allows Tier 3
3participants the opportunity to accumulate assets for
4retirement through a combination of employee and employer
5contributions that may be invested in mutual funds, collective
6investment funds, or other investment products and used to
7purchase annuity contracts, either fixed or variable or a
8combination thereof. The plan must be qualified under the
9Internal Revenue Code of 1986.
10    At any time after withdrawal from service, a participant in
11the self-directed plan shall be entitled to a benefit that is
12based on the account values attributable to his or her
13participant contributions and the employer contributions, as
14well as any investment returns attributable to those
15contributions. Upon a participant's first day of participation
16in the self-directed retirement plan, the participant becomes
17vested in his or her contributions to the self-directed
18retirement plan, the employer's contributions to the
19self-directed retirement plan, and the investment returns
20attributable to those contributions credited to his or her
21account.
22    (e) All persons who begin to participate in this System on
23or after the effective date of this amendatory Act of the 101st
24General Assembly and any active Tier 1 or Tier 2 participant
25who makes the election provided in subsection (b) shall
26participate in the self-directed retirement plan established

 

 

HB2745- 6 -LRB101 09216 RPS 54310 b

1under subsection (d) and, in lieu of the contributions
2otherwise provided for in this Article, shall contribute 8% of
3salary to the plan. The employer of each of those participants
4shall contribute 7% of salary to that plan on behalf of the
5participant.
6    (f) The provisions of this amendatory Act of the 101st
7General Assembly apply notwithstanding any other law. If there
8is a conflict between the provisions of this amendatory Act of
9the 101st General Assembly and any other law, the provisions of
10this Section shall control.
 
11    (40 ILCS 5/2-105.1 rep.)
12    Section 10. The Illinois Pension Code is amended by
13repealing Section 2-105.1.