State of Illinois
92nd General Assembly
Legislation

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92_HB4043

 
                                               LRB9212213EGfg

 1        AN ACT in relation to public employee benefits.

 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 Section 1-109.1 as follows:

 6        (40 ILCS 5/1-109.1) (from Ch. 108 1/2, par. 1-109.1)
 7        Sec.  1-109.1.  Allocation  and  Delegation  of Fiduciary
 8    Duties.
 9        (1)  Subject to the provisions of Section 22A-113 of this
10    Code and subsections (2) and (3) of this Section,  the  board
11    of   trustees   of   a  retirement  system  or  pension  fund
12    established under this Code may:
13             (a)  Appoint one  or  more  investment  managers  as
14        fiduciaries to manage (including the power to acquire and
15        dispose  of)  any  assets  of  the  retirement  system or
16        pension fund; and
17             (b)  Allocate duties among themselves and  designate
18        others  as  fiduciaries  to  carry out specific fiduciary
19        activities other than the management of the assets of the
20        retirement system or pension fund.
21        (2)  The board of trustees of a pension fund  established
22    under  Article  5, 6, 8, 9, 10, 11, 12 or 17 of this Code may
23    not transfer  its  investment  authority,  nor  transfer  the
24    assets  of  the  fund  to  any other person or entity for the
25    purpose of consolidating or merging its assets and management
26    with any other pension fund or public  investment  authority,
27    unless  the  board  resolution  authorizing  such transfer is
28    submitted for approval to the contributors and pensioners  of
29    the  fund  at  elections held not less than 30 days after the
30    adoption of such resolution by the board, and such resolution
31    is approved by a majority of the votes cast on  the  question
 
                            -2-                LRB9212213EGfg
 1    in   both   the  contributors  election  and  the  pensioners
 2    election.   The  election   procedures   and   qualifications
 3    governing   the   election   of  trustees  shall  govern  the
 4    submission of resolutions for approval under this  paragraph,
 5    insofar as they may be made applicable.
 6        (3)  Pursuant  to subsections (h) and (i) of Section 6 of
 7    Article VII of  the  Illinois  Constitution,  the  investment
 8    authority  of  boards  of  trustees of retirement systems and
 9    pension funds established under this Code is declared to be a
10    subject of exclusive State jurisdiction, and  the  concurrent
11    exercise  by  a  home  rule  unit of any power affecting such
12    investment  authority  is  hereby  specifically  denied   and
13    preempted.
14        (4)  For the purposes of this Code:,
15        "Emerging   investment   manager"   means   a   qualified
16    investment adviser that manages an investment portfolio of at
17    least  $10,000,000  but  less than $400,000,000 on January 1,
18    1993 and is a minority-owned  or  female-owned  business,  as
19    those  terms  are  defined  in  this Section. "minority owned
20    business" or "female  owned  business"  as  those  terms  are
21    defined  in  the Business Enterprise for Minorities, Females,
22    and Persons with Disabilities Act.
23        "Minority-owned" means that a business is  at  least  51%
24    owned  by  one  or more minority persons or, in the case of a
25    corporation, that at least 51% of the stock is owned  by  one
26    or  more  minority persons; and that the management and daily
27    business operations of the business are controlled by one  or
28    more of the minority persons who own it.
29        "Female-owned"  means  that  a  business  is at least 51%
30    owned  by  one  or  more  females  or,  in  the  case  of   a
31    corporation,  that  at least 51% of the stock is owned by one
32    or more females; and that the management and  daily  business
33    operations  of  the business are controlled by one or more of
34    the females who own it.
 
                            -3-                LRB9212213EGfg
 1        "Minority person" and "female" have  the  meanings  given
 2    them  in the Business Enterprise for Minorities, Females, and
 3    Persons with Disabilities Act.
 4        "Illinois brokerage or investment banking firm"  means  a
 5    brokerage  or  investment  banking  firm that is at least 51%
 6    owned by one or more persons residing in Illinois or, in  the
 7    case  of  a  corporation,  that  operates  under  articles of
 8    incorporation that were originally filed in Illinois.
 9        It is hereby declared to be  the  public  policy  of  the
10    State  of  Illinois  to  encourage  the  trustees  of  public
11    employee   retirement  systems  to  use  emerging  investment
12    managers in managing their systems' system's  assets  to  the
13    greatest  extent  feasible within the bounds of financial and
14    fiduciary prudence, and to take affirmative steps  to  remove
15    any barriers to the full participation of emerging investment
16    managers   in  investment  opportunities  afforded  by  those
17    retirement systems.
18        It is further declared to be the  public  policy  of  the
19    State  of  Illinois  to  encourage  the  trustees  of  public
20    employee  retirement  systems  to  use Illinois brokerage and
21    investment  banking  firms,  minority-owned   brokerage   and
22    investment  banking  firms,  and  female-owned  brokerage and
23    investment banking firms  to  the  greatest  extent  feasible
24    within the bounds of financial and fiduciary prudence, and to
25    take  affirmative  steps  to  remove any barriers to the full
26    participation of those firms in the investment  opportunities
27    afforded  by  those  retirement  systems.   To  this end, the
28    Illinois State Board of Investment and the board of  trustees
29    of  each  retirement system or pension fund established under
30    this  Code  is  strongly  urged  to  allocate  its  brokerage
31    business, on an annual basis, as follows:
32             (i)  At least  30%  of  its  brokerage  business  to
33        Illinois brokerage or investment banking firms.
34             (ii)  At  least  25%  of  its  brokerage business to
 
                            -4-                LRB9212213EGfg
 1        Illinois brokerage or investment banking firms  that  are
 2        minority-owned.
 3             (iii)  At  least  5%  of  its  brokerage business to
 4        Illinois brokerage or investment banking firms  that  are
 5        female-owned.
 6             (iv)  To the extent practicable, at least 25% of its
 7        non-Illinois   brokerage   business   to   brokerage   or
 8        investment  banking  firms  that  are  minority-owned  or
 9        female-owned.
10        Each retirement system subject to this Code shall prepare
11    a  report  to  be  submitted  to the Governor and the General
12    Assembly by September 1  of  each  year.   The  report  shall
13    identify the emerging investment managers, Illinois brokerage
14    and  investment  banking  firms, minority-owned brokerage and
15    investment banking  firms,  and  female-owned  brokerage  and
16    investment  banking  firms used by the system, the percentage
17    of the system's assets under the investment control of  those
18    emerging  investment  managers  and firms, and the actions it
19    has  undertaken  to  increase  the  use  of   such   emerging
20    investment  managers  and  firms, including encouraging other
21    investment managers to use emerging  investment  managers  as
22    subcontractors when the opportunity arises.
23        The  use  of  an  emerging  investment  manager  does not
24    constitute  a  transfer  of  investment  authority  for   the
25    purposes of subsection (2) of this Section.
26    (Source: P.A. 92-16, eff. 6-28-01.)

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

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