|
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 SB2234 Introduced 2/27/2019, by Sen. Steven M. Landek SYNOPSIS AS INTRODUCED: |
| 40 ILCS 5/1-109.1 | from Ch. 108 1/2, par. 1-109.1 | 40 ILCS 5/1-110 | from Ch. 108 1/2, par. 1-110 | 40 ILCS 5/1-113.1 | | 40 ILCS 5/1-113.2 | | 40 ILCS 5/1-113.3 | | 40 ILCS 5/1-113.4 | | 40 ILCS 5/1-113.4a | | 40 ILCS 5/1-113.14 | | 40 ILCS 5/1-113.16 | | 40 ILCS 5/1-113.20 | | 40 ILCS 5/1-150 | | 40 ILCS 5/3-135 | from Ch. 108 1/2, par. 3-135 |
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Amends the General Provisions and Downstate Police Articles of the Illinois Pension Code. Removes provisions specifying, based on the net assets of the downstate police pension fund, types of investments that a downstate police pension fund may make. Removes certain limitations on the percentage of a downstate police pension fund's net assets that may be invested in certain types of investments. Provides that the board of a downstate police pension fund shall invest funds with the care, skill, prudence, and diligence that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of like character with like aims. Makes conforming changes. Effective immediately.
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| | FISCAL NOTE ACT MAY APPLY | | PENSION IMPACT NOTE ACT MAY APPLY |
| | A BILL FOR |
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| | SB2234 | | LRB101 10777 RPS 55899 b |
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1 | | AN ACT concerning public employee benefits.
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2 | | Be it enacted by the People of the State of Illinois,
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3 | | represented in the General Assembly:
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4 | | Section 5. The Illinois Pension Code is amended by changing |
5 | | Sections 1-109.1, 1-113.2, 1-113.3, 1-109.1, 1-110, 1-110.6, |
6 | | 1-113.1, 1-113.4, 1-113.4a, 1-113.14, 1-113.16, 1-113.20, |
7 | | 1-150, and 3-135 as follows:
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8 | | (40 ILCS 5/1-109.1) (from Ch. 108 1/2, par. 1-109.1)
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9 | | Sec. 1-109.1. Allocation and delegation of fiduciary |
10 | | duties.
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11 | | (1) Subject to the provisions of Section 22A-113 of this |
12 | | Code and
subsections (2) and (3) of this Section, the board of |
13 | | trustees of a
retirement system or pension fund established |
14 | | under this Code may:
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15 | | (a) Appoint one or more investment managers as |
16 | | fiduciaries to manage
(including the power to acquire and |
17 | | dispose of) any assets of the
retirement system or pension |
18 | | fund; and
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19 | | (b) Allocate duties among themselves and designate |
20 | | others as fiduciaries
to carry out specific fiduciary |
21 | | activities other than the management of the
assets of the |
22 | | retirement system or pension fund.
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23 | | (2) The board of trustees of a pension fund established |
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1 | | under Article 5, 6,
8, 9, 10, 11, 12 or 17 of this Code may not |
2 | | transfer its investment authority,
nor transfer the assets of |
3 | | the fund to any other person or entity for the
purpose of |
4 | | consolidating or merging its assets and management with any |
5 | | other
pension fund or public investment authority, unless the |
6 | | board resolution
authorizing such transfer is submitted for |
7 | | approval to the contributors and
pensioners of the fund at |
8 | | elections held not less than 30 days after the
adoption of such |
9 | | resolution by the board, and such resolution is approved by a
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10 | | majority of the votes cast on the question in both the |
11 | | contributors election
and the pensioners election. The |
12 | | election procedures and qualifications
governing the election |
13 | | of trustees shall govern the submission of resolutions
for |
14 | | approval under this paragraph, insofar as they may be made |
15 | | applicable.
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16 | | (3) Pursuant to subsections (h) and (i) of Section 6 of |
17 | | Article VII of
the Illinois Constitution, the investment |
18 | | authority of boards of trustees
of retirement systems and |
19 | | pension funds established under this Code is declared
to be a |
20 | | subject of exclusive State jurisdiction, and the concurrent |
21 | | exercise
by a home rule unit of any power affecting such |
22 | | investment authority is
hereby specifically denied and |
23 | | preempted.
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24 | | (4) For the purposes of this Code, "emerging investment |
25 | | manager" means a
qualified investment adviser that manages an |
26 | | investment portfolio of at
least $10,000,000 but less than |
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1 | | $10,000,000,000 and is a
"minority-owned business", |
2 | | "women-owned business" or "business owned by a person with a |
3 | | disability" as those terms are
defined in the Business |
4 | | Enterprise for Minorities, Women, and Persons with |
5 | | Disabilities Act.
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6 | | It is hereby declared to be the public policy of the State |
7 | | of Illinois to
encourage the trustees of public employee |
8 | | retirement systems, pension funds, and investment boards
to use |
9 | | emerging investment managers in managing their system's |
10 | | assets, encompassing all asset classes, and increase the |
11 | | racial, ethnic, and gender diversity of its fiduciaries, to the
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12 | | greatest extent feasible within the bounds of financial and |
13 | | fiduciary
prudence, and to take affirmative steps to remove any |
14 | | barriers to the full
participation in investment opportunities
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15 | | afforded by those retirement systems, pension funds, and |
16 | | investment boards.
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17 | | A On or before January 1, 2010, a retirement system, |
18 | | pension fund, or investment board subject to this Code, except |
19 | | those under Article 3 or 4 whose investments are restricted by |
20 | | Section 1-113.2 of this Code , shall adopt a policy that sets |
21 | | forth goals for utilization of emerging investment managers. |
22 | | This policy shall include quantifiable goals for the management |
23 | | of assets in specific asset classes by emerging investment |
24 | | managers. The retirement system, pension fund, or investment |
25 | | board shall establish 3 separate goals for: (i) emerging |
26 | | investment managers that are minority-owned businesses; (ii) |
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1 | | emerging investment managers that are women-owned businesses; |
2 | | and (iii) emerging investment managers that are businesses |
3 | | owned by a person with a disability. The goals established |
4 | | shall be based on the percentage of total dollar amount of |
5 | | investment service contracts let to minority-owned businesses, |
6 | | women-owned businesses, and businesses owned by a person with a |
7 | | disability, as those terms are defined in the Business |
8 | | Enterprise for Minorities, Women, and Persons with |
9 | | Disabilities Act. The retirement system, pension fund, or |
10 | | investment board shall annually review the goals established |
11 | | under this subsection. |
12 | | If in any case an emerging investment manager meets the |
13 | | criteria established by a board for a specific search and meets |
14 | | the criteria established by a consultant for that search, then |
15 | | that emerging investment manager shall receive an invitation by |
16 | | the board of trustees, or an investment committee of the board |
17 | | of trustees, to present his or her firm for final consideration |
18 | | of a contract. In the case where multiple emerging investment |
19 | | managers meet the criteria of this Section, the staff may |
20 | | choose the most qualified firm or firms to present to the |
21 | | board.
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22 | | The use of an emerging investment manager does not |
23 | | constitute a transfer
of investment authority for the purposes |
24 | | of subsection (2) of this Section.
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25 | | (5) Each retirement system, pension fund, or investment |
26 | | board subject to this Code, except those under Article 3 or 4 |
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1 | | whose investments are restricted by Section 1-113.2 of this |
2 | | Code , shall establish a policy that sets forth goals for |
3 | | increasing the racial, ethnic, and gender diversity of its |
4 | | fiduciaries, including its consultants and senior staff. Each |
5 | | retirement system, pension fund, or
investment board shall make |
6 | | its best efforts to ensure that
the racial and ethnic makeup of |
7 | | its senior administrative
staff represents the racial and |
8 | | ethnic makeup of its
membership. Each system, fund, and |
9 | | investment board shall annually review the goals established |
10 | | under this subsection. |
11 | | (6) A On or before January 1, 2010, a retirement system, |
12 | | pension fund, or investment board subject to this Code, except |
13 | | those under Article 3 or 4 whose investments are restricted by |
14 | | Section 1-113.2 of this Code , shall adopt a policy that sets |
15 | | forth goals for utilization of businesses owned by minorities, |
16 | | women, and persons with disabilities for all contracts and |
17 | | services. The goals established shall be based on the |
18 | | percentage of total dollar amount of all contracts let to |
19 | | minority-owned businesses, women-owned businesses, and |
20 | | businesses owned by a person with a disability, as those terms |
21 | | are defined in the Business Enterprise for Minorities, Women, |
22 | | and Persons with Disabilities Act. The retirement system, |
23 | | pension fund, or investment board shall annually review the |
24 | | goals established under this subsection. |
25 | | (7) A On or before January 1, 2010, a retirement system, |
26 | | pension fund, or investment board subject to this Code, except |
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1 | | those under Article 3 or 4 whose investments are restricted by |
2 | | Section 1-113.2 of this Code , shall adopt a policy that sets |
3 | | forth goals for increasing the utilization of minority |
4 | | broker-dealers. For the purposes of this Code, "minority |
5 | | broker-dealer" means a qualified broker-dealer who meets the |
6 | | definition of "minority-owned business", "women-owned |
7 | | business", or "business owned by a person with a disability", |
8 | | as those terms are defined in the Business Enterprise for |
9 | | Minorities, Women, and Persons with Disabilities Act. The |
10 | | retirement system, pension fund, or investment board shall |
11 | | annually review the goals established under this Section. |
12 | | (8) Each retirement system, pension fund, and investment |
13 | | board subject to this Code, except those under Article 3 or 4 |
14 | | whose investments are restricted by Section 1-113.2 of this |
15 | | Code , shall submit a report to the Governor and the General |
16 | | Assembly by January 1 of each year that includes the following: |
17 | | (i) the policy adopted under subsection (4) of this Section, |
18 | | including the names and addresses of the emerging investment |
19 | | managers used, percentage of the assets under the investment |
20 | | control of emerging investment managers for the 3 separate |
21 | | goals, and the actions it has undertaken to increase the use of |
22 | | emerging investment managers, including encouraging other |
23 | | investment managers to use emerging investment managers as |
24 | | subcontractors when the opportunity arises; (ii) the policy |
25 | | adopted under subsection (5) of this Section; (iii) the policy |
26 | | adopted under subsection (6) of this Section; (iv) the policy |
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1 | | adopted under subsection (7) of this Section, including |
2 | | specific actions undertaken to increase the use of minority |
3 | | broker-dealers; and (v) the policy adopted under subsection (9) |
4 | | of this Section. |
5 | | (9) A On or before February 1, 2015, a retirement system, |
6 | | pension fund, or investment board subject to this Code, except |
7 | | those under Article 3 or 4 whose investments are restricted by |
8 | | Section 1-113.2 of this Code , shall adopt a policy that sets |
9 | | forth goals for increasing the utilization of minority |
10 | | investment managers. For the purposes of this Code, "minority |
11 | | investment manager" means a qualified investment manager that |
12 | | manages an investment portfolio and meets the definition of |
13 | | "minority-owned business", "women-owned business", or |
14 | | "business owned by a person with a disability", as those terms |
15 | | are defined in the Business Enterprise for Minorities, Women, |
16 | | and Persons with Disabilities Act. |
17 | | It is hereby declared to be the public policy of the State |
18 | | of Illinois to
encourage the trustees of public employee |
19 | | retirement systems, pension funds, and investment boards
to use |
20 | | minority investment managers in managing their systems' |
21 | | assets, encompassing all asset classes, and to increase the |
22 | | racial, ethnic, and gender diversity of their fiduciaries, to |
23 | | the
greatest extent feasible within the bounds of financial and |
24 | | fiduciary
prudence, and to take affirmative steps to remove any |
25 | | barriers to the full
participation in investment opportunities
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26 | | afforded by those retirement systems, pension funds, and |
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1 | | investment boards. |
2 | | The retirement system, pension fund, or investment board |
3 | | shall establish 3 separate goals for: (i) minority investment |
4 | | managers that are minority-owned businesses; (ii) minority |
5 | | investment managers that are women-owned businesses; and (iii) |
6 | | minority investment managers that are businesses owned by a |
7 | | person with a disability. The retirement system, pension fund, |
8 | | or investment board shall annually review the goals established |
9 | | under this Section. |
10 | | If in any case a minority investment manager meets the |
11 | | criteria established by a board for a specific search and meets |
12 | | the criteria established by a consultant for that search, then |
13 | | that minority investment manager shall receive an invitation by |
14 | | the board of trustees, or an investment committee of the board |
15 | | of trustees, to present his or her firm for final consideration |
16 | | of a contract. In the case where multiple minority investment |
17 | | managers meet the criteria of this Section, the staff may |
18 | | choose the most qualified firm or firms to present to the |
19 | | board. |
20 | | The use of a minority investment manager does not |
21 | | constitute a transfer
of investment authority for the purposes |
22 | | of subsection (2) of this Section. |
23 | | (10) It Beginning January 1, 2016, it shall be the |
24 | | aspirational goal for a retirement system, pension fund, or |
25 | | investment board subject to this Code to use emerging |
26 | | investment managers for not less than 20% of the total funds |
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1 | | under management. Furthermore, it shall be the aspirational |
2 | | goal that not less than 20% of investment advisors be |
3 | | minorities, women, and persons with disabilities as those terms |
4 | | are defined in the Business Enterprise for Minorities, Women, |
5 | | and Persons with Disabilities Act. It shall be the aspirational |
6 | | goal to utilize businesses owned by minorities, women, and |
7 | | persons with disabilities for not less than 20% of contracts |
8 | | awarded for "information technology services", "accounting |
9 | | services", "insurance brokers", "architectural and engineering |
10 | | services", and "legal services" as those terms are defined in |
11 | | the Act. |
12 | | (Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17; |
13 | | 100-902, eff. 8-17-18.)
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14 | | (40 ILCS 5/1-110) (from Ch. 108 1/2, par. 1-110)
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15 | | Sec. 1-110. Prohibited Transactions.
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16 | | (a) A fiduciary with respect to a retirement system, |
17 | | pension fund, or investment board shall
not cause the |
18 | | retirement system or pension fund to engage in a transaction if
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19 | | he or she knows or should know that such transaction |
20 | | constitutes a direct or
indirect:
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21 | | (1) Sale or exchange, or leasing of any property from |
22 | | the retirement
system
or pension fund to a party in |
23 | | interest for less than adequate consideration,
or from a |
24 | | party in interest to a retirement system or pension fund |
25 | | for more
than adequate consideration.
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1 | | (2) Lending of money or other extension of credit from |
2 | | the retirement
system or pension fund to a party in |
3 | | interest without the receipt of adequate
security and a |
4 | | reasonable rate of interest, or from a party in interest to
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5 | | a retirement system or pension fund with the provision of |
6 | | excessive security
or an unreasonably high rate of |
7 | | interest.
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8 | | (3) Furnishing of goods, services or facilities from |
9 | | the retirement
system or pension fund to a party in |
10 | | interest for less than adequate
consideration, or from a |
11 | | party in interest to a retirement system or
pension fund |
12 | | for more than adequate consideration.
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13 | | (4) Transfer to, or use by or for the benefit of, a |
14 | | party in interest
of any assets of a retirement system or |
15 | | pension fund for less than adequate
consideration.
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16 | | (b) A fiduciary with respect to a retirement system or |
17 | | pension fund
established under this Code shall not:
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18 | | (1) Deal with the assets of the retirement system or |
19 | | pension fund in his
own interest or for his own account;
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20 | | (2) In his individual or any other capacity act in any |
21 | | transaction
involving the retirement system or pension |
22 | | fund on behalf of a party whose
interests are adverse to |
23 | | the interests of the retirement system or pension fund
or |
24 | | the interests of its participants or beneficiaries; or
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25 | | (3) Receive any consideration for his own personal |
26 | | account from any party
dealing with the retirement system |
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1 | | or pension fund in connection with a
transaction involving |
2 | | the assets of the retirement system or pension
fund.
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3 | | (c) Nothing in this Section shall be construed to prohibit |
4 | | any trustee from:
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5 | | (1) Receiving any benefit to which he may be entitled |
6 | | as a participant
or beneficiary in the retirement system or |
7 | | pension fund.
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8 | | (2) Receiving any reimbursement of expenses properly |
9 | | and actually incurred
in the performance of his duties with |
10 | | the retirement system or pension fund.
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11 | | (3) Serving as a trustee in addition to being an |
12 | | officer, employee, agent
or other representative of a party |
13 | | in interest.
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14 | | (d) A fiduciary of a pension fund established under Article |
15 | | 3 or 4 shall
not knowingly cause or advise the pension fund to |
16 | | engage in an investment transaction when the fiduciary (i) has |
17 | | any direct interest in
the income, gains, or profits of the |
18 | | investment adviser through which the investment transaction is |
19 | | made or (ii) has a business relationship with that investment |
20 | | adviser that would result in a pecuniary benefit to the |
21 | | fiduciary as a result of the investment transaction. |
22 | | Violation of this subsection (d) is a Class 4 felony.
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23 | | (e) A board member, employee, or consultant with respect to |
24 | | a retirement system, pension fund, or investment board subject |
25 | | to this Code, except those under Article 3 or 4 whose |
26 | | investments are restricted by Section 1-113.2 , shall not |
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1 | | knowingly cause or advise the retirement system, pension fund, |
2 | | or investment board to engage in an investment transaction with |
3 | | an investment adviser when the board member, employee, |
4 | | consultant, or their spouse (i) has any direct interest in the |
5 | | income, gains, or profits of the investment adviser through |
6 | | which the investment transaction is made or (ii) has a |
7 | | relationship with that investment adviser that would result in |
8 | | a pecuniary benefit to the board member, employee, or |
9 | | consultant or spouse of such board member, employee, or |
10 | | consultant as a result of the investment transaction. For |
11 | | purposes of this subsection (e), a consultant includes an |
12 | | employee or agent of a consulting firm who has greater than |
13 | | 7.5% ownership of the consulting firm. |
14 | | Violation of this subsection (e) is a Class 4 felony. |
15 | | (Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)
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16 | | (40 ILCS 5/1-113.1)
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17 | | Sec. 1-113.1.
Investment authority of pension funds |
18 | | established under
Article 3 or 4. The board of trustees of a |
19 | | police pension fund established
under Article 3 of this Code or |
20 | | firefighter pension fund established under
Article 4 of this |
21 | | Code shall draw pension funds from the treasurer of the
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22 | | municipality and, beginning January 1, 1998, invest any part |
23 | | thereof in the
name of the board in the items listed in |
24 | | Sections 1-113.2 through 1-113.4
according to the limitations |
25 | | and requirements of this Article. These
investments shall be |
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1 | | made with the care, skill, prudence, and diligence that a
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2 | | prudent person acting in like capacity and familiar with such |
3 | | matters would use
in the conduct of an enterprise of like |
4 | | character with like aims.
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5 | | Interest and any other income from the investments shall be |
6 | | credited to the
pension fund.
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7 | | For the purposes of Sections 1-113.2 through 1-113.11, the |
8 | | "net assets" of a
pension fund include both the cash and |
9 | | invested assets of the pension fund.
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10 | | (Source: P.A. 90-507, eff. 8-22-97.)
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11 | | (40 ILCS 5/1-113.2)
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12 | | Sec. 1-113.2.
List of permitted investments for all Article |
13 | | 3 or 4 pension
funds. Any pension fund established under |
14 | | Article 3 or 4 may invest in the
following items:
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15 | | (1) Interest bearing direct obligations of the United |
16 | | States of America.
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17 | | (2) Interest bearing obligations to the extent that they |
18 | | are fully
guaranteed or insured as to payment of principal and |
19 | | interest by the United
States of America.
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20 | | (3) Interest bearing bonds, notes, debentures, or other |
21 | | similar obligations
of agencies of the United States of |
22 | | America. For the purposes of this Section,
"agencies of the |
23 | | United States of America" includes: (i) the Federal National
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24 | | Mortgage Association and the Student Loan Marketing |
25 | | Association; (ii) federal
land banks, federal intermediate |
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1 | | credit banks,
federal farm credit banks, and any other entity |
2 | | authorized to
issue direct debt obligations of the United |
3 | | States of America under the Farm
Credit Act of 1971 or |
4 | | amendments to that Act; (iii) federal home loan banks and
the |
5 | | Federal Home Loan Mortgage Corporation; and (iv) any agency |
6 | | created
by Act of Congress that is authorized to issue direct |
7 | | debt obligations of the
United States of America.
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8 | | (4) Interest bearing savings accounts or certificates of |
9 | | deposit, issued by
federally chartered banks or savings and |
10 | | loan associations, to the extent that
the deposits are insured |
11 | | by agencies or instrumentalities of the federal
government.
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12 | | (5) Interest bearing savings accounts or certificates of |
13 | | deposit, issued by
State of Illinois chartered banks or savings |
14 | | and loan associations, to the
extent that the deposits are |
15 | | insured by agencies or instrumentalities of the
federal |
16 | | government.
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17 | | (6) Investments in credit unions, to the extent that the |
18 | | investments are
insured by agencies or instrumentalities of the |
19 | | federal government.
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20 | | (7) Interest bearing bonds of the State of Illinois.
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21 | | (8) Pooled interest bearing accounts managed by the |
22 | | Illinois Public
Treasurer's Investment Pool in accordance with |
23 | | the Deposit of State Moneys Act,
interest bearing funds or |
24 | | pooled accounts of the Illinois Metropolitan Investment Funds, |
25 | | and interest bearing funds or pooled accounts managed, |
26 | | operated, and
administered by banks, subsidiaries of banks, or |
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1 | | subsidiaries of bank holding
companies in accordance with the |
2 | | laws of the State of Illinois.
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3 | | (9) Interest bearing bonds or tax anticipation warrants of |
4 | | any county,
township, or municipal corporation of the State of |
5 | | Illinois.
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6 | | (10) Direct obligations of the State of Israel, subject to |
7 | | the conditions
and limitations of item (5.1) of Section 1-113.
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8 | | (11) Money market mutual funds managed by investment |
9 | | companies that are
registered under the federal Investment |
10 | | Company Act of 1940 and the Illinois
Securities Law of 1953 and |
11 | | are diversified, open-ended management investment
companies; |
12 | | provided that the portfolio of the money market mutual fund is
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13 | | limited to the following:
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14 | | (i) bonds, notes, certificates of indebtedness, |
15 | | treasury bills, or other
securities that are guaranteed by |
16 | | the full faith and credit of the United
States of America |
17 | | as to principal and interest;
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18 | | (ii) bonds, notes, debentures, or other similar |
19 | | obligations of the United
States of America or its |
20 | | agencies; and
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21 | | (iii) short term obligations of corporations organized |
22 | | in the United
States with assets exceeding $400,000,000, |
23 | | provided that (A) the obligations
mature no later than 180 |
24 | | days from the date of purchase, (B) at the time of
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25 | | purchase, the obligations are rated by at least 2 standard |
26 | | national rating
services at one of their 3 highest |
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1 | | classifications, and (C) the obligations
held by the mutual |
2 | | fund do not exceed 10% of the corporation's outstanding
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3 | | obligations.
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4 | | (12) General accounts of life insurance companies |
5 | | authorized to transact
business in Illinois.
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6 | | (13) Any combination of the following, not to exceed 10% of |
7 | | the pension
fund's net assets:
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8 | | (i) separate accounts that are managed by life |
9 | | insurance companies
authorized to transact business in |
10 | | Illinois and are comprised of diversified
portfolios |
11 | | consisting of common or preferred stocks, bonds, or money |
12 | | market
instruments;
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13 | | (ii) separate accounts that are managed by insurance |
14 | | companies authorized
to transact business in Illinois, and |
15 | | are comprised of real estate
or loans upon real estate |
16 | | secured by first or second mortgages; and
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17 | | (iii) mutual funds that meet the following |
18 | | requirements:
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19 | | (A) the mutual fund is managed by an investment |
20 | | company as defined and
registered under the federal |
21 | | Investment Company Act of 1940 and registered
under the |
22 | | Illinois Securities Law of 1953;
|
23 | | (B) the mutual fund has been in operation for at |
24 | | least 5 years;
|
25 | | (C) the mutual fund has total net assets of $250 |
26 | | million or more; and
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1 | | (D) the mutual fund is comprised of diversified |
2 | | portfolios of
common or preferred stocks, bonds, or |
3 | | money market instruments.
|
4 | | (14) Corporate bonds managed through an investment advisor |
5 | | must meet all of the following requirements: |
6 | | (1) The bonds must be rated as investment grade by one |
7 | | of the 2 largest rating services at the time of purchase. |
8 | | (2) If subsequently downgraded below investment grade, |
9 | | the bonds must be liquidated from the portfolio within 90 |
10 | | days after being downgraded by the manager. |
11 | | (Source: P.A. 96-1495, eff. 1-1-11.)
|
12 | | (40 ILCS 5/1-113.3)
|
13 | | Sec. 1-113.3.
List of additional permitted investments for |
14 | | pension funds
with net assets of $2,500,000 or more.
|
15 | | (a) In addition to the items in Section
3-113.2, a pension |
16 | | fund established under Article 3 or 4 that has net assets of
at |
17 | | least $2,500,000 may invest a portion of its net assets in the |
18 | | following
items:
|
19 | | (1) Separate accounts that are managed by life |
20 | | insurance companies
authorized to transact business in |
21 | | Illinois and are comprised of diversified
portfolios |
22 | | consisting of common or preferred stocks, bonds, or money |
23 | | market
instruments.
|
24 | | (2) Mutual funds that meet the following requirements:
|
25 | | (i) the mutual fund is managed by an investment |
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1 | | company as defined and
registered under the federal |
2 | | Investment Company Act of 1940 and registered
under the |
3 | | Illinois Securities Law of 1953;
|
4 | | (ii) the mutual fund has been in operation for at |
5 | | least 5 years;
|
6 | | (iii) the mutual fund has total net assets of $250 |
7 | | million or more; and
|
8 | | (iv) the mutual fund is comprised of diversified |
9 | | portfolios of common or
preferred stocks, bonds, or |
10 | | money market instruments.
|
11 | | (b) A pension fund's total investment in the items |
12 | | authorized under this
Section shall not exceed 35% of the |
13 | | market value of the pension fund's net
present assets stated in |
14 | | its most recent annual report on file with the
Illinois |
15 | | Department of Insurance.
|
16 | | (Source: P.A. 90-507, eff. 8-22-97.)
|
17 | | (40 ILCS 5/1-113.4)
|
18 | | Sec. 1-113.4. List of additional permitted investments for |
19 | | pension funds
with net assets of $5,000,000 or more. |
20 | | (a) In addition to the items in Sections 1-113.2 and |
21 | | 1-113.3, a pension fund
established under Article 3 or 4 that |
22 | | has net assets of at least $5,000,000 and
has appointed an |
23 | | investment adviser under Section 1-113.5 may, through that
|
24 | | investment adviser, invest a portion of its assets in common |
25 | | and preferred
stocks authorized for investments of trust funds |
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1 | | under the laws of the State
of Illinois. The stocks must meet |
2 | | all of the following requirements:
|
3 | | (1) The common stocks are listed on a national |
4 | | securities exchange or
board of trade (as defined in the |
5 | | federal Securities Exchange Act of 1934 and
set forth in |
6 | | subdivision G of Section 3 of the Illinois Securities Law |
7 | | of 1953) or quoted in
the National Association of |
8 | | Securities Dealers Automated Quotation System
National |
9 | | Market System (NASDAQ NMS).
|
10 | | (2) The securities are of a corporation created or |
11 | | existing under the laws
of the United States or any state, |
12 | | district, or territory thereof and the
corporation has been |
13 | | in existence for at least 5 years.
|
14 | | (3) The corporation has not been in arrears on payment |
15 | | of dividends on its
preferred stock during the preceding 5 |
16 | | years.
|
17 | | (4) The market value of stock in any one corporation |
18 | | does not exceed 5% of
the cash and invested assets of the |
19 | | pension fund, and the investments in the
stock of any one |
20 | | corporation do not exceed 5% of the total outstanding stock |
21 | | of
that corporation.
|
22 | | (5) The straight preferred stocks or convertible |
23 | | preferred stocks are
issued or guaranteed by a corporation |
24 | | whose common stock qualifies for
investment by the board.
|
25 | | (6) The issuer of the stocks has been subject to the |
26 | | requirements of
Section 12 of the federal Securities |
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1 | | Exchange Act of 1934 and has been current
with the filing |
2 | | requirements of Sections 13 and 14 of that Act during the
|
3 | | preceding 3 years.
|
4 | | (b) A pension fund's total investment in the items |
5 | | authorized under this
Section and Section 1-113.3 shall not |
6 | | exceed 35% of the market value of the
pension fund's net |
7 | | present assets stated in its most recent annual report on
file |
8 | | with the Illinois Department of Insurance.
|
9 | | (c) A pension fund that invests funds under this Section |
10 | | shall
electronically file with the Division any reports of its |
11 | | investment activities
that the Division may require, at the |
12 | | times and in the format required by the
Division.
|
13 | | (Source: P.A. 100-201, eff. 8-18-17.)
|
14 | | (40 ILCS 5/1-113.4a) |
15 | | Sec. 1-113.4a. List of additional permitted investments |
16 | | for Article 3 and 4 pension funds with net assets of |
17 | | $10,000,000 or more. |
18 | | (a) In addition to the items in Sections 1-113.2 and |
19 | | 1-113.3, a pension fund established under Article 3 or 4 that |
20 | | has net assets of at least $10,000,000 and has appointed an |
21 | | investment adviser, as defined under Sections 1-101.4 and |
22 | | 1-113.5, may, through that investment adviser, invest an |
23 | | additional portion of its assets in common and preferred stocks |
24 | | and mutual funds. |
25 | | (b) The stocks must meet all of the following requirements: |
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1 | | (1) The common stocks must be listed on a national |
2 | | securities exchange or board of trade (as defined in the |
3 | | Federal Securities Exchange Act of 1934 and set forth in |
4 | | paragraph G of Section 3 of the Illinois Securities Law of |
5 | | 1953) or quoted in the National Association of Securities |
6 | | Dealers Automated Quotation System National Market System. |
7 | | (2) The securities must be of a corporation in |
8 | | existence for at least 5 years. |
9 | | (3) The market value of stock in any one corporation |
10 | | may not exceed 5% of the cash and invested assets of the |
11 | | pension fund, and the investments in the stock of any one |
12 | | corporation may not exceed 5% of the total outstanding |
13 | | stock of that corporation. |
14 | | (4) The straight preferred stocks or convertible |
15 | | preferred stocks must be issued or guaranteed by a |
16 | | corporation whose common stock qualifies for investment by |
17 | | the board. |
18 | | (c) The mutual funds must meet the following requirements: |
19 | | (1) The mutual fund must be managed by an investment |
20 | | company registered under the Federal Investment Company |
21 | | Act of 1940 and registered under the Illinois Securities |
22 | | Law of 1953. |
23 | | (2) The mutual fund must have been in operation for at |
24 | | least 5 years. |
25 | | (3) The mutual fund must have total net assets of |
26 | | $250,000,000 or more. |
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1 | | (4) The mutual fund must be comprised of a diversified |
2 | | portfolio of common or preferred stocks, bonds, or money |
3 | | market instruments. |
4 | | (d) A pension fund's total investment in the items |
5 | | authorized under this Section and Section 1-113.3 shall not |
6 | | exceed 50% effective July 1, 2011 and 55% effective July 1, |
7 | | 2012 of the market value of the pension fund's net present |
8 | | assets stated in its most recent annual report on file with the |
9 | | Department of Insurance. |
10 | | (e) A pension fund that invests funds under this Section |
11 | | shall electronically file with the Division any reports of its |
12 | | investment activities that the Division may require, at the |
13 | | time and in the format required by the Division.
|
14 | | (Source: P.A. 96-1495, eff. 1-1-11.) |
15 | | (40 ILCS 5/1-113.14)
|
16 | | Sec. 1-113.14. Investment services for retirement systems, |
17 | | pension funds, and investment boards, except those funds |
18 | | established under Articles 3 and 4. |
19 | | (a) For the purposes of this Section, "investment services" |
20 | | means services provided by an investment adviser or a |
21 | | consultant other than qualified fund-of-fund management |
22 | | services as defined in Section 1-113.15. |
23 | | (b) The selection and appointment of an investment adviser |
24 | | or consultant for investment services by the board of a |
25 | | retirement system, pension fund, or investment board subject to |
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1 | | this Code, except those under Article 3 or 4 whose investments |
2 | | are restricted by Section 1-113.2 , shall be made and awarded in |
3 | | accordance with this Section. All contracts for investment |
4 | | services shall be awarded by the board using a competitive |
5 | | process that is substantially similar to the process required |
6 | | for the procurement of professional and artistic services under |
7 | | Article 35 of the Illinois Procurement Code. Each board of |
8 | | trustees shall adopt a policy in accordance with this |
9 | | subsection (b) within 60 days after the effective date of this |
10 | | amendatory Act of the 96th General Assembly. The policy shall |
11 | | be posted on its web site and filed with the Illinois |
12 | | Procurement Policy Board. Exceptions to this Section are |
13 | | allowed for (i) sole source procurements, (ii) emergency |
14 | | procurements, (iii) at the discretion of the pension fund, |
15 | | retirement system, or board of investment, contracts that are |
16 | | nonrenewable and one year or less in duration, so long as the |
17 | | contract has a value of less than $20,000, and (iv) in the |
18 | | discretion of the pension fund, retirement system, or |
19 | | investment board, contracts for follow-on funds with the same |
20 | | fund sponsor through closed-end funds.
All exceptions granted |
21 | | under this Section must be published on the system's, fund's, |
22 | | or board's web site, shall name the person authorizing the |
23 | | procurement, and shall include a brief explanation of the |
24 | | reason for the exception. |
25 | | A person, other than a trustee or an employee of a |
26 | | retirement system, pension fund, or investment board, may not |
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1 | | act as a consultant or investment adviser under this Section |
2 | | unless that person is registered as an investment adviser under |
3 | | the federal Investment Advisers Act of 1940 (15 U.S.C. 80b-1, |
4 | | et seq.) or a bank, as defined in the federal Investment |
5 | | Advisers Act of 1940 (15 U.S.C. 80b-1, et seq.). |
6 | | (c) Investment services provided by an investment adviser |
7 | | or a consultant appointed under this Section shall be rendered |
8 | | pursuant to a written contract between the investment adviser |
9 | | or consultant and the board. |
10 | | The contract shall include all of the following: |
11 | | (1) Acknowledgement in writing by the investment |
12 | | adviser or consultant that he or she is a fiduciary with |
13 | | respect to the pension fund or retirement system. |
14 | | (2) The description of the board's investment policy |
15 | | and notice that the policy is subject to change. |
16 | | (3) (i) Full disclosure of direct and indirect fees, |
17 | | commissions, penalties, and other compensation, including |
18 | | reimbursement for expenses, that may be paid by or on |
19 | | behalf of the consultant in connection with the provision |
20 | | of services to the pension fund or retirement system and |
21 | | (ii) a requirement that the consultant update the |
22 | | disclosure promptly after a modification of those payments |
23 | | or an additional payment. |
24 | | (4) A requirement that the investment adviser or |
25 | | consultant, in conjunction with the board's staff, submit |
26 | | periodic written reports, on at least a quarterly basis, |
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1 | | for the board's review at its regularly scheduled meetings. |
2 | | All returns on investment shall be reported as net returns |
3 | | after payment of all fees, commissions, and any other |
4 | | compensation. |
5 | | (5) Disclosure of the names and addresses of (i) the |
6 | | consultant or investment adviser; (ii) any entity that is a |
7 | | parent of, or owns a controlling interest in, the |
8 | | consultant or investment adviser; (iii) any entity that is |
9 | | a subsidiary of, or in which a controlling interest is |
10 | | owned by, the consultant or investment adviser; (iv) any |
11 | | persons who have an ownership or distributive income share |
12 | | in the consultant or investment adviser that is in excess |
13 | | of 7.5%; or (v) serves as an executive officer of the |
14 | | consultant or investment adviser. |
15 | | (6) A disclosure of the names and addresses of all |
16 | | subcontractors, if applicable, and the expected amount of |
17 | | money each will receive under the contract, including an |
18 | | acknowledgment that the contractor must promptly make |
19 | | notification, in writing, if at any time during the term of |
20 | | the contract a contractor adds or changes any |
21 | | subcontractors. For purposes of this subparagraph (6), |
22 | | "subcontractor" does not include non-investment related |
23 | | professionals or professionals offering services that are |
24 | | not directly related to the investment of assets, such as |
25 | | legal counsel, actuary, proxy-voting services, services |
26 | | used to track compliance with legal standards, and |
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1 | | investment fund of funds where the board has no direct |
2 | | contractual relationship with the investment advisers or |
3 | | partnerships. |
4 | | (7) A description of service to be performed. |
5 | | (8) A description of the need for the service. |
6 | | (9) A description of the plan for post-performance |
7 | | review. |
8 | | (10) A description of the qualifications necessary. |
9 | | (11) The duration of the contract. |
10 | | (12) The method for charging and measuring cost. |
11 | | (d) Notwithstanding any other provision of law, a |
12 | | retirement system, pension fund, or investment board subject to |
13 | | this Code, except those under Article 3 or 4 whose investments |
14 | | are restricted by Section 1-113.2 of this Code , shall not enter |
15 | | into a contract with a consultant that exceeds 5 years in |
16 | | duration. No contract to provide consulting services may be |
17 | | renewed or extended. At the end of the term of a contract, |
18 | | however, the consultant is eligible to compete for a new |
19 | | contract as provided in this Section. No retirement system, |
20 | | pension fund, or investment board shall attempt to avoid or |
21 | | contravene the restrictions of this subsection (d) by any |
22 | | means. |
23 | | (e) Within 60 days after the effective date of this |
24 | | amendatory Act of the 96th General Assembly, each investment |
25 | | adviser or consultant currently providing services or subject |
26 | | to an existing contract for the provision of services must |
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1 | | disclose to the board of trustees all direct and indirect fees, |
2 | | commissions, penalties, and other compensation paid by or on |
3 | | behalf of the investment adviser or consultant in connection |
4 | | with the provision of those services and shall update that |
5 | | disclosure promptly after a modification of those payments or |
6 | | an additional payment. The person shall update the disclosure |
7 | | promptly after a modification of those payments or an |
8 | | additional payment. The disclosures required by this |
9 | | subsection (e) shall be in writing and shall include the date |
10 | | and amount of each payment and the name and address of each |
11 | | recipient of a payment. |
12 | | (f) The retirement system, pension fund, or board of |
13 | | investment shall develop uniform documents that shall be used |
14 | | for the solicitation, review, and acceptance of all investment |
15 | | services. The form shall include the terms contained in |
16 | | subsection (c) of this Section. All such uniform documents |
17 | | shall be posted on the retirement system's, pension fund's, or |
18 | | investment board's web site. |
19 | | (g) A description of every contract for investment services |
20 | | shall be posted in a conspicuous manner on the web site of the |
21 | | retirement system, pension fund, or investment board. The |
22 | | description must include the name of the person or entity |
23 | | awarded a contract, the total amount applicable to the |
24 | | contract, the total fees paid or to be paid, and a disclosure |
25 | | approved by the board describing the factors that contributed |
26 | | to the selection of an investment adviser or consultant.
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1 | | (Source: P.A. 98-433, eff. 8-16-13.) |
2 | | (40 ILCS 5/1-113.16)
|
3 | | Sec. 1-113.16. Investment transparency. |
4 | | (a) The purpose of this Section is to provide for |
5 | | transparency in the investment of retirement or pension funds |
6 | | and require the reporting of full and complete information |
7 | | regarding the investments by pension funds, retirement |
8 | | systems, and investment boards. |
9 | | (b) A retirement system, pension fund, or investment board |
10 | | subject to this Code and any committees established by such |
11 | | system, fund, or board must comply with the Open Meetings Act. |
12 | | (c) Any retirement system, pension fund, or investment |
13 | | board subject to this Code that establishes a committee shall |
14 | | ensure that the majority of the members on such committee are |
15 | | board members. If any member of a committee is not a member of |
16 | | the board for the system, fund, or board, then that committee |
17 | | member shall be a fiduciary. |
18 | | (d) A retirement system, pension fund, or investment board |
19 | | subject to this Code, except those under Article 3 or 4 whose |
20 | | investments are restricted by Section 1-113.2 , shall maintain |
21 | | an official web site and make available in a clear and |
22 | | conspicuous manner, and update at least quarterly, all of the |
23 | | following information concerning the investment of funds: |
24 | | (1) The total amount of funds held by the pension fund, |
25 | | retirement system, or investment board. |
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1 | | (2) The asset allocation for the investments made by |
2 | | the pension fund, retirement system, or investment board. |
3 | | (3) Current and historic return information. |
4 | | (4) A detailed listing of the investment advisers for |
5 | | all asset classes. |
6 | | (5) Performance of investments compared against |
7 | | established benchmarks. |
8 | | (6) A detailed list of all consultants doing business |
9 | | with the retirement system, pension fund, or investment |
10 | | board. |
11 | | (7) A detailed list of all contractors, other than |
12 | | investment advisers and consultants, doing business with |
13 | | the retirement system, pension fund, or investment board. |
14 | | (8) Any requests for investment services. |
15 | | (9) The names and email addresses of all board members, |
16 | | directors, and senior staff. |
17 | | (10) The report required under Section 1-109.1 of this |
18 | | Code, if applicable. |
19 | | (11) The description of each contract required under |
20 | | subsection (g) of Section 1-113.14 of this Code, if |
21 | | applicable. |
22 | | (e) A pension fund under Article 3 or 4 whose investments |
23 | | are restricted by Section 1-113.2 of this Code shall make the |
24 | | information required in subsection (d) of this Section |
25 | | available on its web site or in a location that allows the |
26 | | information to be available for inspection by the public. |
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1 | | (f) Nothing in this Section requires the pension fund, |
2 | | retirement system, or investment board to make information |
3 | | available on the Internet that is exempt from inspection and |
4 | | copying under the Freedom of Information Act.
|
5 | | (Source: P.A. 96-6, eff. 4-3-09.) |
6 | | (40 ILCS 5/1-113.20) |
7 | | Sec. 1-113.20. Investment strategies; explicit and |
8 | | implicit costs. Every pension fund, retirement system, and |
9 | | investment board created under this Code, except those under |
10 | | Article 3 or 4 whose investments are restricted by Section |
11 | | 1-113.2 of this Code , shall instruct the fund's, system's, or |
12 | | board's investment advisors to utilize investment strategies |
13 | | designed to ensure that all securities transactions are |
14 | | executed in such a manner that the total explicit and implicit |
15 | | costs and total proceeds in every transaction are the most |
16 | | favorable under the circumstances.
|
17 | | (Source: P.A. 96-753, eff. 8-25-09.) |
18 | | (40 ILCS 5/1-150)
|
19 | | Sec. 1-150. Approval of travel or educational mission. The |
20 | | expenses for travel or educational missions of a board member |
21 | | of a retirement system, pension fund, or investment board |
22 | | created under this Code, except those under Article 3 or 4 |
23 | | whose investments are restricted by Section 1-113.2 of this |
24 | | Code , must be approved by a majority of the board prior to the |
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1 | | travel or educational mission.
|
2 | | (Source: P.A. 96-6, eff. 4-3-09.)
|
3 | | (40 ILCS 5/3-135) (from Ch. 108 1/2, par. 3-135)
|
4 | | Sec. 3-135. To invest funds. The board shall invest funds |
5 | | with the care, skill, prudence, and diligence that a prudent |
6 | | person acting in like capacity and familiar with such matters |
7 | | would use in the conduct of an enterprise of like character |
8 | | with like aims Beginning January 1, 1998, the
board shall |
9 | | invest funds in accordance with Sections 1-113.1 through |
10 | | 1-113.10
of this Code .
|
11 | | (Source: P.A. 90-507, eff. 8-22-97.)
|
12 | | Section 99. Effective date. This Act takes effect upon |
13 | | becoming law.
|