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90_HB0366eng
40 ILCS 5/1-116 from Ch. 108 1/2, par. 1-116
40 ILCS 5/1-118 new
40 ILCS 5/15-167 from Ch. 108 1/2, par. 15-167
40 ILCS 5/16-179 from Ch. 108 1/2, par. 16-179
40 ILCS 5/17-146 from Ch. 108 1/2, par. 17-146
40 ILCS 5/17-146.1 from Ch. 108 1/2, par. 17-146.1
40 ILCS 5/22A-112 from Ch. 108 1/2, par. 22A-112
40 ILCS 5/22A-114 from Ch. 108 1/2, par. 22A-114
Amends the Illinois Pension Code. Amends the General
Provisions Article to make the provisions relating to federal
limitations under Section 415 of the U.S. Internal Revenue
Code apply to all retirement systems subject to the Pension
Code. Permits each retirement system to define its own
Section 415 limitation year. Requires all public employee
pension funds to comply with the requirements imposed on them
by the federal Uniformed Services Employment and Reemployment
Rights Act. Amends the State Board of Investment Article,
the State Universities Article, and the Downstate and Chicago
Teacher Articles to require that investments be carried at
cost or a value determined in accordance with generally
accepted accounting principles. Also removes the 50%
investment limitation on equity investments by the Chicago
Teachers pension fund. Amends the State Board of Investment
Article to remove the requirement that a bank or trust
company used for the registration of securities be domiciled
in Illinois. Effective immediately.
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HB0366 Engrossed LRB9001590EGfg
1 AN ACT to amend the Illinois Pension Code.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Pension Code is amended by
5 changing Sections 1-116, 15-167, 16-179, 17-146, 17-146.1,
6 22A-112, and 22A-114 and adding Section 1-118 as follows:
7 (40 ILCS 5/1-116) (from Ch. 108 1/2, par. 1-116)
8 Sec. 1-116. Federal benefit limitation.
9 (a) This Section applies shall apply only to all pension
10 funds and retirement systems established under this Code
11 Article 2, 7, 8, 9, 11, 13, 14, 15, 16 or 18.
12 (b) If any benefit payable by a pension fund or
13 retirement system subject to this Section exceeds the
14 applicable benefit limits set by Section 415 of the U.S.
15 Internal Revenue Code of 1986 for tax qualified plans under
16 Section 401(a) of that Code, the excess shall be payable only
17 from an excess benefit fund established under this Section in
18 accordance with federal law.
19 (c) An excess benefit fund shall be established by any
20 pension fund or retirement system subject to this Section
21 that has any member eligible to receive a benefit that
22 exceeds the applicable benefit limits set by Section 415 of
23 the U.S. Internal Revenue Code of 1986 for tax qualified
24 plans under Section 401(a) of that Code. Amounts shall be
25 credited to the excess benefit fund, and payments for excess
26 benefits made from the excess benefit fund, in a manner
27 consistent with the applicable federal law.
28 (d) For purposes of matters relating to the benefit
29 limits set by Section 415 of the U.S. Internal Revenue Code
30 of 1986, the limitation year may be defined by each affected
31 pension fund or retirement system for that fund or system.
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1 (Source: P.A. 86-1488; 87-794; 87-1265.)
2 (40 ILCS 5/1-118 new)
3 Sec. 1-118. Veterans' rights. All pension funds and
4 retirement systems subject to this Code shall comply with the
5 requirements imposed on them by the federal Uniformed
6 Services Employment and Reemployment Rights Act (P.L.
7 103-353).
8 (40 ILCS 5/15-167) (from Ch. 108 1/2, par. 15-167)
9 Sec. 15-167. To invest money. To invest the funds of
10 the system, subject to the requirements and restrictions set
11 forth in Sections 1-109, 1-109.1, 1-109.2, 1-110, 1-111,
12 1-114 and 1-115 and to invest in real estate acquired by
13 purchase, gift, condemnation or otherwise, and any office
14 building or buildings existing or to be constructed thereon,
15 including any additions thereto or expansions thereof, for
16 the use of the system. The board may lease surplus space in
17 any of the buildings and use rental proceeds for operation,
18 maintenance, improving, expanding and furnishing of the
19 buildings or for any other lawful system purpose.
20 No bank or savings and loan association shall receive
21 investment funds as permitted by this Section, unless it has
22 complied with the requirements established pursuant to
23 Section 6 of "An Act relating to certain investments of
24 public funds by public agencies", approved July 23, 1943, as
25 now or hereafter amended. The limitations set forth in such
26 Section 6 shall be applicable only at the time of investment
27 and shall not require the liquidation of any investment at
28 any time.
29 The board shall have the authority to enter into such
30 agreements and to execute such documents as it determines to
31 be necessary to complete any investment transaction.
32 All investments shall be clearly held and accounted for
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1 to indicate ownership by the board. The board may direct the
2 registration of securities in its own name or in the name of
3 a nominee created for the express purpose of registration of
4 securities by a national or state bank or trust company
5 authorized to conduct a trust business in the State of
6 Illinois.
7 Investments shall be carried at cost or at a book value
8 determined in accordance with generally accepted accounting
9 principles and accounting procedures approved by the Board.
10 No adjustments shall be made in investment carrying values
11 for ordinary current market price fluctuations; but reserves
12 may be provided to account for possible losses or unrealized
13 gains as determined by the board.
14 The book value of investments held by the retirement
15 system in one or more commingled investment accounts shall be
16 the cost of its units of participation in such commingled
17 account or accounts as recorded on the books of the board.
18 All additions to assets from income, interest, and
19 dividends from investments shall be used to pay benefits,
20 operating and administrative expenses of the system, debt
21 service, including any redemption premium, on any bonds
22 issued by the board, expenses incurred or deposits required
23 in connection with such bonds, and such other costs as may be
24 provided in accordance with this Article.
25 (Source: P.A. 86-1034.)
26 (40 ILCS 5/16-179) (from Ch. 108 1/2, par. 16-179)
27 Sec. 16-179. To be trustee of reserves and to invest
28 funds. To be the trustee of the reserves created under this
29 Article, and to invest and reinvest such reserves, subject to
30 the requirements and restrictions set forth in Sections
31 1-109, 1-109.1, 1-109.2, 1-110, 1-111, 1-114 and 1-115.
32 No bank or savings and loan association shall receive
33 investment funds as permitted by this Section, unless it has
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1 complied with the requirements established pursuant to
2 Section 6 of "An Act relating to certain investments of
3 public funds by public agencies", approved July 23, 1943, as
4 now or hereafter amended. The limitations set forth in such
5 Section 6 shall be applicable only at the time of investment
6 and shall not require the liquidation of any investment at
7 any time.
8 The board shall have the authority to enter into such
9 agreements and to execute such documents as it determines to
10 be necessary to complete any investment transaction.
11 All investments shall be clearly held and accounted for
12 to indicate ownership by the system. The board may direct
13 the registration of securities or the holding in interests in
14 real property in the name of the system or in the name of a
15 nominee created for the express purpose of registration of
16 securities or holding interests in real property by a
17 national or state bank or trust company authorized to conduct
18 a trust business in the State of Illinois. The board may
19 hold title to interests in real property in the name of the
20 system or in the name of a title holding corporation created
21 for the express purpose of holding title to interests in real
22 property.
23 Investments shall be carried at cost or at a book value
24 determined in accordance with generally accepted accounting
25 principles. No adjustments shall be made in investment
26 carrying values for ordinary current market price
27 fluctuations; but reserves may be provided to account for
28 possible losses or unrealized gains.
29 The book value of investments held by the retirement
30 system in one or more commingled investment accounts shall be
31 the cost of its units of participation in such commingled
32 account or accounts.
33 (Source: P.A. 86-272.)
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1 (40 ILCS 5/17-146) (from Ch. 108 1/2, par. 17-146)
2 Sec. 17-146. To make investments. To invest the moneys
3 of the fund, subject to the requirements and restrictions set
4 forth in this Article and in Sections 1-109, 1-109.1,
5 1-109.2, 1-110, 1-111, 1-114 and 1-115. The total book value
6 of all stocks and convertible debt owned by the fund shall
7 not exceed 50% of the aggregate book value of all investments
8 of the fund, calculated on the basis of amortized cost.
9 No bank or savings and loan association shall receive
10 investment funds as permitted by this Section, unless it has
11 complied with the requirements established pursuant to
12 Section 6 of the Public Funds Investment Act. Those
13 requirements shall be applicable only at the time of
14 investment and shall not require the liquidation of any
15 investment at any time.
16 The board shall have the authority to enter into any
17 agreements and to execute any documents that it determines to
18 be necessary to complete any investment transaction.
19 All investments shall be clearly held and accounted for
20 to indicate ownership by the fund. The board may direct the
21 registration of securities or the holding of interests in
22 real property in the name of the fund or in the name of a
23 nominee created for the express purpose of registering
24 securities or holding interests in real property by a
25 national or state bank or trust company authorized to conduct
26 a trust business in the State of Illinois. The board may
27 hold title to interests in real property in the name of the
28 fund or in the name of a title holding corporation created
29 for the express purpose of holding title to interests in real
30 property.
31 Investments shall be carried at cost or at a book value
32 determined in accordance with generally accepted accounting
33 principles and accounting procedures approved by the board.
34 No adjustments shall be made in investment carrying values
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1 for ordinary current market price fluctuations, but reserves
2 may be provided to account for possible losses or unrealized
3 gains.
4 The book value of investments held by the fund in one or
5 more commingled investment accounts shall be determined in
6 accordance with generally accepted accounting principles the
7 cost of its units of participation in those commingled
8 account or accounts.
9 The board of trustees of any fund established under this
10 Article may not transfer its investment authority, nor
11 transfer the assets of the fund to any other person or entity
12 for the purpose of consolidating or merging its assets and
13 management with any other pension fund or public investment
14 authority, unless the board resolution authorizing such
15 transfer is submitted for approval to the contributors and
16 pensioners of the fund at elections held not less than 30
17 days after the adoption of such resolution by the board, and
18 such resolution is approved by a majority of the votes cast
19 on the question in both the contributors election and the
20 pensioners election. The election procedures and
21 qualifications governing the election of trustees shall
22 govern the submission of resolutions for approval under this
23 paragraph, insofar as they may be made applicable.
24 (Source: P.A. 89-636, eff. 8-9-96.)
25 (40 ILCS 5/17-146.1) (from Ch. 108 1/2, par. 17-146.1)
26 Sec. 17-146.1. Participation in commingled investment
27 funds; transfer of investment functions and securities.
28 (a) The retirement board may invest in any commingled
29 investment fund or funds established and maintained by the
30 Illinois State Board of Investment under the provisions of
31 Article 22A of this Code. The book value of all commingled
32 equity participations plus the book value of other stock
33 investments owned by this system shall not exceed the maximum
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1 permissible percentage rate for equity investments prescribed
2 in Section 17-146. All commingled fund participations shall
3 be subject to the law governing the Illinois State Board of
4 Investment and the rules, policies and directives of that
5 Board.
6 (b) The retirement board may, by resolution duly adopted
7 by a majority vote of its membership, transfer to the
8 Illinois State Board of Investment created by Article 22A of
9 this Code, for management and administration, all investments
10 owned by the Fund of every kind and character. Upon
11 completion of such transfer, the authority of the retirement
12 board to make investments shall terminate. Thereafter, all
13 investments of the reserves of the Fund shall be made by the
14 Illinois State Board of Investment in accordance with the
15 provisions of Article 22A of this Code.
16 Such transfer shall be made not later than the first day
17 of the fourth month next following the date of such
18 resolution. Before such transfer an audit of such investments
19 shall be completed by a certified public accountant selected
20 by the Illinois State Board of Investment and approved by the
21 Auditor General of the State of Illinois. The expense of such
22 audit shall be defrayed by the retirement board.
23 (Source: P. A. 78-645.)
24 (40 ILCS 5/22A-112) (from Ch. 108 1/2, par. 22A-112)
25 Sec. 22A-112. Investment authority. The board shall have
26 the authority to invest funds, subject to the requirements
27 and restrictions set forth in Sections 1-109, 1-109.1,
28 1-109.2, 1-110, 1-111, 1-114 and 1-115 of this Code.
29 No bank or savings and loan association shall receive
30 investment funds as permitted by this Section, unless it has
31 complied with the requirements established pursuant to
32 Section 6 of "An Act relating to certain investments of
33 public funds by public agencies", approved July 23, 1943, as
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1 now or hereafter amended. The limitations set forth in such
2 Section 6 shall be applicable only at the time of investment
3 and shall not require the liquidation of any investment at
4 any time.
5 The board shall have the authority to enter into such
6 agreements and to execute such documents as it determines to
7 be necessary to complete any investment transaction.
8 All investments shall be clearly held and accounted for
9 to indicate ownership by the board. The board may direct the
10 registration of securities in its own name or in the name of
11 a nominee created for the express purpose of registration of
12 securities by a national or state bank or trust company
13 authorized to conduct a trust business and domiciled in the
14 State of Illinois.
15 Investments shall be carried at cost or at a book value
16 determined in accordance with generally accepted accounting
17 principles and accounting procedures approved by the board.
18 No adjustments shall be made in investment carrying values
19 for ordinary current market price fluctuations; but reserves
20 may be provided to account for possible losses or unrealized
21 gains as determined by the board.
22 The book value of investments held by any pension fund,
23 retirement system or education fund in one or more commingled
24 investment accounts shall be determined in accordance with
25 generally accepted accounting principles the cost of its
26 units of participation in such commingled account or accounts
27 as recorded on the books of the board.
28 (Source: P.A. 84-1127.)
29 (40 ILCS 5/22A-114) (from Ch. 108 1/2, par. 22A-114)
30 Sec. 22A-114. Accounting. In the management of pension
31 and education funds the board:
32 (1) may, for investment purposes, commingle all or a
33 part of the invested assets of one or more pension or
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1 education funds under its jurisdiction and authority;
2 (2) shall, unless it directs otherwise, carry assets of
3 all funds at amortized cost or a book value determined in
4 accordance with generally accepted accounting principles and
5 accounting procedures approved by the board as to fixed
6 income securities and original cost as to common and
7 preferred stock or other equity property. Each investment
8 initially transferred to the board by a pension fund or
9 monies transferred to the board by an education fund shall be
10 similarly valued except that the board may elect to place
11 such value on any investment conditionally in which case the
12 amount of any later realization of such asset in cash that is
13 in excess of or is less than the amount so credited shall be
14 credited or charged to the fund that made the transfer;
15 (3) shall keep proper books of account which shall
16 reflect at all times the value of all investments held by the
17 board for a pension fund or education fund whether for the
18 separate account of the fund or in a commingled fund;
19 (4) shall charge each pension fund or education fund
20 with its share of all expenses of the board (including those
21 repayable under Section 22A-116) at quarter-yearly periods
22 pro rata according to the value of the investments held for
23 the respective funds at the beginning of the quarter or any
24 other equitable formula;
25 (5) shall charge all distributions made by the board to
26 or for a pension fund or education fund to the account
27 maintained for that fund.
28 (Source: P.A. 84-1127.)
29 Section 99. Effective date. This Act takes effect upon
30 becoming law.