101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3391

 

Introduced 2/14/2020, by Sen. Laura Ellman

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Regulation of Public Pension Funds and the Downstate Firefighter Articles of the Illinois Pension Code. Provides that the Public Pension Division of the Department of Insurance or the Consolidated Fund may examine or investigate any downstate police or downstate firefighter pension fund as often as the Division or the Consolidated Fund deems appropriate but shall, at a minimum, conduct an examination of every downstate police and downstate firefighter pension fund not less frequently than once every 7 years (instead of once every 3 years). Provides that a pension fund shall request a hearing within 30 days after the receipt of the final report of examination and shall submit payment for the hearing cost, which shall not exceed $600. Establishes a penalty for a pension fund that fails, without just cause, to submit requested examination documentation. In a provision establishing penalties for pension funds that fail to file certain statements, specifies that a pension fund shall comply with the notice of noncompliance within 15 days. Provides that the Director of Insurance may assess a civil penalty of up to $4,000 (instead of $2,000) for each noncompliance with an order of the Director. In a provision of the Downstate Firefighter Article concerning the calculation of retirement pensions and automatic annual increases for eligible firefighters who participated in more than one pension fund, removes language limiting application of the provision to Tier 1 retirement pension amounts and Tier 1 automatic annual increases. Makes other changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB101 20442 RPS 70000 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

SB3391LRB101 20442 RPS 70000 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 changing
5Sections 1A-104, 1A-113, and 4-109.3 as follows:
 
6    (40 ILCS 5/1A-104)
7    Sec. 1A-104. Examinations and investigations.
8    (a) Except as described in the following paragraph with
9respect to pension funds established under Article 3 or 4 of
10this Code, the Division shall make periodic examinations and
11investigations of all pension funds established under this Code
12and maintained for the benefit of employees and officers of
13governmental units in the State of Illinois. However, in lieu
14of making an examination and investigation, the Division may
15accept and rely upon a report of audit or examination of any
16pension fund made by an independent certified public accountant
17pursuant to the provisions of the Article of this Code
18governing the pension fund. The acceptance of the report of
19audit or examination does not bar the Division from making a
20further audit, examination, and investigation if deemed
21necessary by the Division.
22    For pension funds established under Article 3 or 4 of this
23Code: (i) prior to the conclusion of the transition period, the

 

 

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1Division shall make the periodic examinations and
2investigations described in the preceding paragraph; and (ii)
3after the conclusion of the transition period, the Division may
4accept and rely upon a report of audit or examination of such
5pension fund made by an independent certified public accountant
6retained by the Consolidated Fund. The acceptance of the report
7of audit or examination does not bar the Division from making a
8further audit, examination, and investigation if deemed
9necessary by the Division.
10    The Department may implement a flexible system of
11examinations under which it directs resources as it deems
12necessary or appropriate. In consultation with the pension fund
13being examined, the Division may retain attorneys, independent
14actuaries, independent certified public accountants, and other
15professionals and specialists as examiners, the cost of which
16(except in the case of pension funds established under Article
173 or 4) shall be borne by the pension fund that is the subject
18of the examination.
19    (b) The Division or the Consolidated Fund, as appropriate,
20may shall examine or investigate any each pension fund
21established under Article 3 or Article 4 of this Code as often
22as the Division or the Consolidated Fund deems appropriate but
23shall, at a minimum, conduct an examination of every pension
24fund established under Article 3 or Article 4 of this Code not
25less frequently than once every 7 years. In determining the
26nature, scope, and frequency of the examinations, the Division

 

 

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1or the Consolidated Fund, whichever is applicable, shall use a
2risk-focused approach that may consider, but is not limited to,
3the following: The schedule of each examination shall be such
4that each fund shall be examined once every 3 years.
5    Each examination shall include the following:
6        (1) an audit of financial transactions, investment
7    policies, and procedures;
8        (2) an examination of books, records, documents,
9    files, and other pertinent memoranda relating to
10    financial, statistical, and administrative operations;
11        (3) a review of policies and procedures maintained for
12    the administration and operation of the pension fund;
13        (4) a determination of whether or not full effect is
14    being given to the statutory provisions governing the
15    operation of the pension fund;
16        (5) a determination of whether or not the
17    administrative policies in force are in accord with the
18    purposes of the statutory provisions and effectively
19    protect and preserve the rights and equities of the
20    participants;
21        (6) a determination of whether or not proper financial
22    and statistical records have been established and adequate
23    documentary evidence is recorded and maintained in support
24    of the several types of annuity and benefit payments being
25    made; and
26        (7) a determination of whether or not the calculations

 

 

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1    made by the fund for the payment of all annuities and
2    benefits are accurate.
3    In addition, the Division or the Consolidated Fund, as
4appropriate, may conduct investigations, which shall be
5identified as such and which may include one or more of the
6items listed in this subsection.
7    Pension funds selected for examination shall have the
8period of time prescribed by rule after the date of receipt of
9the warrant of examiners to submit all requested documentation,
10subject to a penalty of $100 for each day of noncompliance.
11    A copy of the report of examination or investigation as
12prepared by the Division or the Consolidated Fund, as
13appropriate, shall be submitted to the secretary of the board
14of trustees of the pension fund examined or investigated and to
15the chief executive officer of the municipality. The Director,
16upon request, shall grant a hearing to the officers or trustees
17of the pension fund and to the officers or trustees of the
18Consolidated Fund, as appropriate, or their duly appointed
19representatives, upon any facts contained in the report of
20examination. The pension fund shall request such a hearing
21within 30 days after the receipt of the final report of
22examination and shall submit payment for the hearing cost,
23which shall not exceed $600. The hearing shall be conducted
24before filing the report or making public any information
25contained in the report. The Director may withhold the report
26from public inspection for up to 60 days following the hearing.

 

 

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1    Pursuant to this Section, the Division and the Board of the
2Consolidated Fund shall adopt rules that ensure consistency and
3due process in the examination process as necessary to
4accomplish the purposes of this Article.
5(Source: P.A. 101-610, eff. 1-1-20.)
 
6    (40 ILCS 5/1A-113)
7    Sec. 1A-113. Penalties.
8    (a) A pension fund that fails, without just cause, to file
9its annual statement within the time prescribed under Section
101A-109 shall pay to the Department a penalty to be determined
11by the Department, which shall not exceed $100 for each day's
12delay, and the pension fund shall comply within 15 days after
13the receipt of the notice of noncompliance.
14    (a-5) A pension fund that fails, without just cause, to
15submit the requested examination documentation within the time
16prescribed in the written notice requesting the examination
17documentation shall pay to the Department a penalty to be
18determined by the Department, which shall not exceed $100 for
19each day's delay, and the pension fund shall comply within 15
20days after the receipt of the notice of noncompliance.
21    (b) A pension fund that fails, without just cause, to file
22its actuarial statement within the time prescribed under
23Section 1A-110 or 1A-111 shall pay to the Department a penalty
24to be determined by the Department, which shall not exceed $100
25for each day's delay, and the pension fund shall comply within

 

 

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115 days after the receipt of the notice of noncompliance.
2    (c) A pension fund that fails to pay a fee within the time
3prescribed under Section 1A-112 shall pay to the Department a
4penalty of 5% of the amount of the fee for each month or part of
5a month that the fee is late. The entire penalty shall not
6exceed 25% of the fee due, and the pension fund shall comply
7within 15 days after receipt of the notice of noncompliance.
8    (d) This subsection applies to any governmental unit, as
9defined in Section 1A-102, that is subject to any law
10establishing a pension fund or retirement system for the
11benefit of employees of the governmental unit.
12    Whenever the Division determines by examination,
13investigation, or in any other manner that the governing body
14or any elected or appointed officer or official of a
15governmental unit has failed to comply with any provision of
16that law:
17        (1) The Director shall notify in writing the governing
18    body, officer, or official of the specific provision or
19    provisions of the law with which the person has failed to
20    comply.
21        (2) Upon receipt of the notice, the person notified
22    shall take immediate steps to comply with the provisions of
23    law specified in the notice.
24        (3) If the person notified fails to comply within a
25    reasonable time after receiving the notice, the Director
26    may hold a hearing at which the person notified may show

 

 

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1    cause for noncompliance with the law.
2        (4) If upon hearing the Director determines that good
3    and sufficient cause for noncompliance has not been shown,
4    the Director may order the person to submit evidence of
5    compliance within a specified period of not less than 30
6    days.
7        (5) If evidence of compliance has not been submitted to
8    the Director within the period of time prescribed in the
9    order and no administrative appeal from the order has been
10    initiated by the pension fund, the Director may assess a
11    civil penalty of up to $4,000 $2,000 against the governing
12    body, officer, or official for each noncompliance with an
13    order of the Director. The pension fund shall immediately
14    comply with the Director's order, shall post on the pension
15    fund's website all orders received, and shall note the
16    order in the quarterly board minutes.
17    The Director shall develop by rule, with as much
18specificity as practicable, the standards and criteria to be
19used in assessing penalties and their amounts. The standards
20and criteria shall include, but need not be limited to,
21consideration of evidence of efforts made in good faith to
22comply with applicable legal requirements. This rulemaking is
23subject to the provisions of the Illinois Administrative
24Procedure Act.
25    If a penalty is not paid within 30 days of the date of
26assessment or there is no compliance within 30 days after the

 

 

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1date of the order, the Director without further notice shall
2report the act of noncompliance to the Attorney General of this
3State. It shall be the duty of the Attorney General or, if the
4Attorney General so designates, the State's Attorney of the
5county in which the governmental unit is located to apply
6promptly by complaint on relation of the Director of Insurance
7in the name of the people of the State of Illinois, as
8plaintiff, to the circuit court of the county in which the
9governmental unit is located for enforcement of the penalty
10prescribed in this Section subsection or for such additional
11relief as the nature of the case and the interest of the
12employees of the governmental unit or the public may require.
13The Attorney General or State's Attorney may order a pension
14fund's compliance with this Code.
15    (e) Whoever knowingly makes a false certificate, entry, or
16memorandum upon any of the books or papers pertaining to any
17pension fund or upon any statement, report, or exhibit filed or
18offered for file with the Division or the Director of Insurance
19in the course of any examination, inquiry, or investigation,
20with intent to deceive the Director, the Division, or any of
21its employees is guilty of a Class A misdemeanor.
22    (f) Subsections (b) and (c) shall apply to pension funds
23established under Article 3 or Article 4 of this Code only
24prior to the conclusion of the transition period, and this
25Section shall not apply to the Consolidated Funds.
26(Source: P.A. 101-610, eff. 1-1-20.)
 

 

 

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1    (40 ILCS 5/4-109.3)
2    Sec. 4-109.3. Employee creditable service.
3    (a) As used in this Section:
4    "Final monthly salary" means the monthly salary attached to
5the rank held by the firefighter at the time of his or her last
6withdrawal from service under a particular pension fund.
7    "Last pension fund" means the pension fund in which the
8firefighter was participating at the time of his or her last
9withdrawal from service.
10    (b) The benefits provided under this Section are available
11only to a firefighter who:
12        (1) is a firefighter at the time of withdrawal from the
13    last pension fund and for at least the final 3 years of
14    employment prior to that withdrawal;
15        (2) has established service credit with at least one
16    pension fund established under this Article other than the
17    last pension fund;
18        (3) has a total of at least 20 years of service under
19    the various pension funds established under this Article
20    and has attained age 50; and
21        (4) is in service on or after the effective date of
22    this amendatory Act of the 93rd General Assembly.
23    (c) A firefighter who is eligible for benefits under this
24Section may elect to receive a retirement pension from each
25pension fund under this Article in which the firefighter has at

 

 

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1least one year of service credit but has not received a refund
2under Section 4-116 (unless the firefighter repays that refund
3under subsection (g)) or subsection (c) of Section 4-118.1, by
4applying in writing and paying the contribution required under
5subsection (i).
6    (d) From each such pension fund other than the last pension
7fund, in lieu of any retirement pension otherwise payable under
8this Article, a firefighter to whom this Section applies may
9elect to receive a monthly pension of 1/12th of 2.5% of his or
10her final monthly salary under that fund for each month of
11service in that fund, subject to a maximum of 75% of that final
12monthly salary.
13    (e) From the last pension fund, in lieu of any retirement
14pension otherwise payable under this Article, a firefighter to
15whom this Section applies may elect to receive a monthly
16pension calculated as follows:
17    The last pension fund shall calculate the retirement
18pension that would be payable to the firefighter under
19subsection (a) of Section 4-109 as if he or she had
20participated in that last pension fund during his or her entire
21period of service under all pension funds established under
22this Article (excluding any period of service for which the
23firefighter has received a refund under Section 4-116, unless
24the firefighter repays that refund under subsection (g), or for
25which the firefighter has received a refund under subsection
26(c) of Section 4-118.1). From this hypothetical pension there

 

 

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1shall be subtracted the original amounts of the retirement
2pensions payable to the firefighter by all other pension funds
3under subsection (d). The remainder is the retirement pension
4payable to the firefighter by the last pension fund under this
5subsection (e).
6    (f) Pensions elected under this Section shall be subject to
7increases as provided in subsection (d) of Section 4-109.1.
8    (g) A current firefighter may reinstate creditable service
9in a pension fund established under this Article that was
10terminated upon receipt of a refund, by payment to that pension
11fund of the amount of the refund together with interest thereon
12at the rate of 6% per year, compounded annually, from the date
13of the refund to the date of payment. A repayment of a refund
14under this Section may be made in equal installments over a
15period of up to 10 years, but must be paid in full prior to
16retirement.
17    (h) As a condition of being eligible for the benefits
18provided in this Section, a person who is hired to a position
19as a firefighter on or after July 1, 2004 must, within 21
20months after being hired, notify the new employer, all of his
21or her previous employers under this Article, and the Public
22Pension Division of the Division of Insurance of the Department
23of Financial and Professional Regulation of his or her intent
24to receive the benefits provided under this Section.
25    (i) In order to receive a pension under this Section or an
26occupational disease disability pension for which he or she

 

 

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1becomes eligible due to the application of subsection (m) of
2this Section, a firefighter must pay to each pension fund from
3which he or she has elected to receive a pension under this
4Section a contribution equal to 1% of monthly salary for each
5month of service credit that the firefighter has in that fund
6(other than service credit for which the firefighter has
7already paid the additional contribution required under
8subsection (c) of Section 4-118.1), together with interest
9thereon at the rate of 6% per annum, compounded annually, from
10the firefighter's first day of employment with that fund or the
11first day of the fiscal year of that fund that immediately
12precedes the firefighter's first day of employment with that
13fund, whichever is earlier.
14    In order for a firefighter who, as of the effective date of
15this amendatory Act of the 93rd General Assembly, has not begun
16to receive a pension under this Section or an occupational
17disease disability pension under subsection (m) of this Section
18and who has contributed 1/12th of 1% of monthly salary for each
19month of service credit that the firefighter has in that fund
20(other than service credit for which the firefighter has
21already paid the additional contribution required under
22subsection (c) of Section 4-118.1), together with the required
23interest thereon, to receive a pension under this Section or an
24occupational disease disability pension for which he or she
25becomes eligible due to the application of subsection (m) of
26this Section, the firefighter must, within one year after the

 

 

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1effective date of this amendatory Act of the 93rd General
2Assembly, make an additional contribution equal to 11/12ths of
31% of monthly salary for each month of service credit that the
4firefighter has in that fund (other than service credit for
5which the firefighter has already paid the additional
6contribution required under subsection (c) of Section
74-118.1), together with interest thereon at the rate of 6% per
8annum, compounded annually, from the firefighter's first day of
9employment with that fund or the first day of the fiscal year
10of that fund that immediately precedes the firefighter's first
11day of employment with the fund, whichever is earlier. A
12firefighter who, as of the effective date of this amendatory
13Act of the 93rd General Assembly, has not begun to receive a
14pension under this Section or an occupational disease
15disability pension under subsection (m) of this Section and who
16has contributed 1/12th of 1% of monthly salary for each month
17of service credit that the firefighter has in that fund (other
18than service credit for which the firefighter has already paid
19the additional contribution required under subsection (c) of
20Section 4-118.1), together with the required interest thereon,
21in order to receive a pension under this Section or an
22occupational disease disability pension under subsection (m)
23of this Section, may elect, within one year after the effective
24date of this amendatory Act of the 93rd General Assembly to
25forfeit the benefits provided under this Section and receive a
26refund of that contribution.

 

 

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1    (j) A retired firefighter who is receiving pension payments
2under Section 4-109 may reenter active service under this
3Article. Subject to the provisions of Section 4-117, the
4firefighter may receive credit for service performed after the
5reentry if the firefighter (1) applies to receive credit for
6that service, (2) suspends his or her pensions under this
7Section, and (3) makes the contributions required under
8subsection (i).
9    (k) A firefighter who is newly hired or promoted to a
10position as a firefighter shall not be denied participation in
11a fund under this Article based on his or her age.
12    (l) If a firefighter who elects to make contributions under
13subsection (c) of Section 4-118.1 for the pension benefits
14provided under this Section becomes entitled to a disability
15pension under Section 4-110, the last pension fund is
16responsible to pay that disability pension and the amount of
17that disability pension shall be based only on the
18firefighter's service with the last pension fund.
19    (m) Notwithstanding any provision in Section 4-110.1 to the
20contrary, if a firefighter who elects to make contributions
21under subsection (c) of Section 4-118.1 for the pension
22benefits provided under this Section becomes entitled to an
23occupational disease disability pension under Section 4-110.1,
24each pension fund to which the firefighter has made
25contributions under subsection (c) of Section 4-118.1 must pay
26a portion of that occupational disease disability pension equal

 

 

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1to the proportion that the firefighter's service credit with
2that pension fund for which the contributions under subsection
3(c) of Section 4-118.1 have been made bears to the
4firefighter's total service credit with all of the pension
5funds for which the contributions under subsection (c) of
6Section 4-118.1 have been made. A firefighter who has made
7contributions under subsection (c) of Section 4-118.1 for at
8least 5 years of creditable service shall be deemed to have met
9the 5-year creditable service requirement under Section
104-110.1, regardless of whether the firefighter has 5 years of
11creditable service with the last pension fund.
12    (n) If a firefighter who elects to make contributions under
13subsection (c) of Section 4-118.1 for the pension benefits
14provided under this Section becomes entitled to a disability
15pension under Section 4-111, the last pension fund is
16responsible to pay that disability pension, provided that the
17firefighter has at least 7 years of creditable service with the
18last pension fund. In the event a firefighter began employment
19with a new employer as a result of an intergovernmental
20agreement that resulted in the elimination of the previous
21employer's fire department, the firefighter shall not be
22required to have 7 years of creditable service with the last
23pension fund to qualify for a disability pension under Section
244-111. Under this circumstance, a firefighter shall be required
25to have 7 years of total combined creditable service time to
26qualify for a disability pension under Section 4-111. The

 

 

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1disability pension received pursuant to this Section shall be
2paid by the previous employer and new employer in proportion to
3the firefighter's years of service with each employer.
4(Source: P.A. 95-1032, eff. 2-17-09; 95-1036, eff. 2-17-09.)
 
5    Section 90. The State Mandates Act is amended by adding
6Section 8.44 as follows:
 
7    (30 ILCS 805/8.44 new)
8    Sec. 8.44. Exempt mandate. Notwithstanding Sections 6 and 8
9of this Act, no reimbursement by the State is required for the
10implementation of any mandate created by this amendatory Act of
11the 101st General Assembly.
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    40 ILCS 5/1A-104
4    40 ILCS 5/1A-113
5    40 ILCS 5/4-109.3
6    30 ILCS 805/8.44 new