SB3463 102ND GENERAL ASSEMBLY

LRB102 25276 RPS 34549 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB3463

Introduced 1/18/2022, by Sen. Robert F. Martwick

SYNOPSIS AS INTRODUCED:

40 ILCS 5/16-204

Amends the Downstate Teacher Article of the Illinois Pension Code. Provides that beginning July 1, 2023, the System shall have the authority to enroll in the defined contribution benefit all employees who first became active members of the System before January 1, 2022 in accordance with specified automatic enrollment provisions. Provides that the System shall enroll all such employees as soon as practicable, but no later than January 1, 2025. Provides that the System: shall protect employers from liability and expenses arising out of investment loss claims by participants, except to the extent the claims are the fault of the employer; shall determine and resolve contribution limitations that arise out of a participant's participation in both the System's defined contribution benefit and an employer-offered plan; shall compensate employers for their administrative costs on a per participant basis at a rate reasonably determined by the System; and shall not require an employer to undertake any task or assume any responsibility that creates a fiduciary duty on the part of the employer to a participant. Effective immediately.

A BILL FOR

AN ACT concerning public employee benefits.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Pension Code is amended by changing Section 16-204 as follows:

(40 ILCS 5/16-204)

Sec. 16-204. Optional defined contribution benefit. As soon as practicable after the effective date of this amendatory Act of the 100th General Assembly, the System shall offer a defined contribution benefit to active members of the System. The defined contribution benefit shall be an optional benefit to any member who chooses to participate. The defined contribution benefit shall collect optional employee and optional employer contributions into an account and shall offer investment options to the participant. The benefit under this Section shall be operated in full compliance with any applicable State and federal laws, and the System shall utilize generally accepted practices in creating and maintaining the benefit for the best interest of the participants. The System may use funds from the employee and employer contributions to defray any and all costs of creating and maintaining the benefit. In addition, the System may use funds provided under Section 16-158 of this Code to defray any and all costs of creating and maintaining the benefit and then shall reimburse those costs from funds received from the employee and employer contributions under this Section. All employers must comply with the reporting and administrative functions established by the System and are required to implement the benefits established under this Section. The System: (1) shall protect employers from liability and expenses arising out of investment loss claims by participants, except to the extent the claims are the fault of the employer; (2) shall determine and resolve contribution limitations that arise out of a participant's participation in both the System's defined contribution benefit and an employer-offered plan; (3) shall compensate employers for their administrative costs on a per participant basis at a rate reasonably determined by the System; and (4) shall not require an employer to undertake any task or assume any responsibility that creates a fiduciary duty on the part of the employer to a participant. The System shall produce an annual report on the participation in the benefit and shall make the report public.

As soon as is practicable on or after January 1, 2022, the System shall automatically enroll any employee who first becomes an active member or participant in the System. A member automatically enrolled under this Section shall have 3% of his or her pre-tax gross compensation for each compensation period deferred into his or her deferred compensation account, unless the member otherwise instructs the System on forms approved by the System. A member may elect, in a manner provided for by the System, to not participate in the defined contribution benefit or to increase or reduce the amount of pre-tax gross compensation contributed, consistent with State or federal law. A member shall be automatically enrolled in the benefit beginning the first day of the pay period following the member's 30th day of employment. A member who has been automatically enrolled in the benefit may elect, within 90 days of enrollment, to withdraw from the benefit and receive a refund of amounts deferred, plus or minus any applicable earnings, investment fees, and administrative fees. Any refunded amount shall be included in the member's gross income for the taxable year in which the refund is issued.

Beginning July 1, 2023, the System shall have the authority to enroll in the defined contribution benefit all employees who first became active members of the System before January 1, 2022 in accordance with the automatic enrollment provisions in this Section. The System shall enroll all such employees pursuant to the procedure established in this Section as soon as practicable, but no later than January 1, 2025.

On or after January 1, 2023, the System may elect to increase the automatic annual contributions under this Section. The increase in the rate of contribution, however, shall not exceed 2% of a member's pre-tax gross compensation per year, and at no time shall any total contribution exceed any contribution limits established by State or federal law.

(Source: P.A. 102-540, eff. 8-20-21.)

Section 99. Effective date. This Act takes effect upon becoming law.