Bill Amendment: IL SB2767 | 2017-2018 | 100th General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: PUBLIC EMPLOYEE BENEFITS-TECH

Status: 2019-01-09 - Session Sine Die [SB2767 Detail]

Download: Illinois-2017-SB2767-Senate_Amendment_001.html

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Sen. Chuck Weaver

Filed: 4/11/2018

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AMENDMENT TO SENATE BILL 2767
AMENDMENT NO. ______. Amend Senate Bill 2767 by replacing
everything after the enacting clause with the following:
"Section 5. The Illinois Pension Code is amended by
changing Sections 1-109.1, 1-110, 1-110.6, 1-113.1, 1-113.4a,
1-113.5, 1-113.14, 1-113.16, 1-113.20, and 1-150 as follows:
(40 ILCS 5/1-109.1) (from Ch. 108 1/2, par. 1-109.1)
Sec. 1-109.1. Allocation and delegation of fiduciary
duties.
(1) Subject to the provisions of Section 22A-113 of this
Code and subsections (2) and (3) of this Section, the board of
trustees of a retirement system or pension fund established
under this Code may:
(a) Appoint one or more investment managers as
fiduciaries to manage (including the power to acquire and
dispose of) any assets of the retirement system or pension

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fund; and
(b) Allocate duties among themselves and designate
others as fiduciaries to carry out specific fiduciary
activities other than the management of the assets of the
retirement system or pension fund.
(2) The board of trustees of a pension fund established
under Article 5, 6, 8, 9, 10, 11, 12 or 17 of this Code may not
transfer its investment authority, nor transfer the assets of
the fund to any other person or entity for the purpose of
consolidating or merging its assets and management with any
other pension fund or public investment authority, unless the
board resolution authorizing such transfer is submitted for
approval to the contributors and pensioners of the fund at
elections held not less than 30 days after the adoption of such
resolution by the board, and such resolution is approved by a
majority of the votes cast on the question in both the
contributors election and the pensioners election. The
election procedures and qualifications governing the election
of trustees shall govern the submission of resolutions for
approval under this paragraph, insofar as they may be made
applicable.
(3) Pursuant to subsections (h) and (i) of Section 6 of
Article VII of the Illinois Constitution, the investment
authority of boards of trustees of retirement systems and
pension funds established under this Code is declared to be a
subject of exclusive State jurisdiction, and the concurrent

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exercise by a home rule unit of any power affecting such
investment authority is hereby specifically denied and
preempted.
(4) For the purposes of this Code, "emerging investment
manager" means a qualified investment adviser that manages an
investment portfolio of at least $10,000,000 but less than
$10,000,000,000 and is a "minority-owned business",
"women-owned business" or "business owned by a person with a
disability" as those terms are defined in the Business
Enterprise for Minorities, Women, and Persons with
Disabilities Act.
It is hereby declared to be the public policy of the State
of Illinois to encourage the trustees of public employee
retirement systems, pension funds, and investment boards to use
emerging investment managers in managing their system's
assets, encompassing all asset classes, and increase the
racial, ethnic, and gender diversity of its fiduciaries, to the
greatest extent feasible within the bounds of financial and
fiduciary prudence, and to take affirmative steps to remove any
barriers to the full participation in investment opportunities
afforded by those retirement systems, pension funds, and
investment boards.
On or before January 1, 2010, a retirement system, pension
fund, or investment board subject to this Code, except those
under Article 3 or 4 whose investments are restricted by
Section 1-113.2 of this Code, shall adopt a policy that sets

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forth goals for utilization of emerging investment managers.
This policy shall include quantifiable goals for the management
of assets in specific asset classes by emerging investment
managers. The retirement system, pension fund, or investment
board shall establish 3 separate goals for: (i) emerging
investment managers that are minority-owned businesses; (ii)
emerging investment managers that are women-owned businesses;
and (iii) emerging investment managers that are businesses
owned by a person with a disability. The goals established
shall be based on the percentage of total dollar amount of
investment service contracts let to minority-owned businesses,
women-owned businesses, and businesses owned by a person with a
disability, as those terms are defined in the Business
Enterprise for Minorities, Women, and Persons with
Disabilities Act. The retirement system, pension fund, or
investment board shall annually review the goals established
under this subsection.
If in any case an emerging investment manager meets the
criteria established by a board for a specific search and meets
the criteria established by a consultant for that search, then
that emerging investment manager shall receive an invitation by
the board of trustees, or an investment committee of the board
of trustees, to present his or her firm for final consideration
of a contract. In the case where multiple emerging investment
managers meet the criteria of this Section, the staff may
choose the most qualified firm or firms to present to the

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board.
The use of an emerging investment manager does not
constitute a transfer of investment authority for the purposes
of subsection (2) of this Section.
(5) Each retirement system, pension fund, or investment
board subject to this Code, except those under Article 3 or 4
whose investments are restricted by Section 1-113.2 of this
Code, shall establish a policy that sets forth goals for
increasing the racial, ethnic, and gender diversity of its
fiduciaries, including its consultants and senior staff. Each
system, fund, and investment board shall annually review the
goals established under this subsection.
(6) On or before January 1, 2010, a retirement system,
pension fund, or investment board subject to this Code, except
those under Article 3 or 4 whose investments are restricted by
Section 1-113.2 of this Code, shall adopt a policy that sets
forth goals for utilization of businesses owned by minorities,
women, and persons with disabilities for all contracts and
services. The goals established shall be based on the
percentage of total dollar amount of all contracts let to
minority-owned businesses, women-owned businesses, and
businesses owned by a person with a disability, as those terms
are defined in the Business Enterprise for Minorities, Women,
and Persons with Disabilities Act. The retirement system,
pension fund, or investment board shall annually review the
goals established under this subsection.

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(7) On or before January 1, 2010, a retirement system,
pension fund, or investment board subject to this Code, except
those under Article 3 or 4 whose investments are restricted by
Section 1-113.2 of this Code, shall adopt a policy that sets
forth goals for increasing the utilization of minority
broker-dealers. For the purposes of this Code, "minority
broker-dealer" means a qualified broker-dealer who meets the
definition of "minority-owned business", "women-owned
business", or "business owned by a person with a disability",
as those terms are defined in the Business Enterprise for
Minorities, Women, and Persons with Disabilities Act. The
retirement system, pension fund, or investment board shall
annually review the goals established under this Section.
(8) Each retirement system, pension fund, and investment
board subject to this Code, except those under Article 3 or 4
whose investments are restricted by Section 1-113.2 of this
Code, shall submit a report to the Governor and the General
Assembly by January 1 of each year that includes the following:
(i) the policy adopted under subsection (4) of this Section,
including the names and addresses of the emerging investment
managers used, percentage of the assets under the investment
control of emerging investment managers for the 3 separate
goals, and the actions it has undertaken to increase the use of
emerging investment managers, including encouraging other
investment managers to use emerging investment managers as
subcontractors when the opportunity arises; (ii) the policy

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adopted under subsection (5) of this Section; (iii) the policy
adopted under subsection (6) of this Section; (iv) the policy
adopted under subsection (7) of this Section, including
specific actions undertaken to increase the use of minority
broker-dealers; and (v) the policy adopted under subsection (9)
of this Section.
(9) On or before February 1, 2015, a retirement system,
pension fund, or investment board subject to this Code, except
those under Article 3 or 4 whose investments are restricted by
Section 1-113.2 of this Code, shall adopt a policy that sets
forth goals for increasing the utilization of minority
investment managers. For the purposes of this Code, "minority
investment manager" means a qualified investment manager that
manages an investment portfolio and meets the definition of
"minority-owned business", "women-owned business", or
"business owned by a person with a disability", as those terms
are defined in the Business Enterprise for Minorities, Women,
and Persons with Disabilities Act.
It is hereby declared to be the public policy of the State
of Illinois to encourage the trustees of public employee
retirement systems, pension funds, and investment boards to use
minority investment managers in managing their systems'
assets, encompassing all asset classes, and to increase the
racial, ethnic, and gender diversity of their fiduciaries, to
the greatest extent feasible within the bounds of financial and
fiduciary prudence, and to take affirmative steps to remove any

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barriers to the full participation in investment opportunities
afforded by those retirement systems, pension funds, and
investment boards.
The retirement system, pension fund, or investment board
shall establish 3 separate goals for: (i) minority investment
managers that are minority-owned businesses; (ii) minority
investment managers that are women-owned businesses; and (iii)
minority investment managers that are businesses owned by a
person with a disability. The retirement system, pension fund,
or investment board shall annually review the goals established
under this Section.
If in any case a minority investment manager meets the
criteria established by a board for a specific search and meets
the criteria established by a consultant for that search, then
that minority investment manager shall receive an invitation by
the board of trustees, or an investment committee of the board
of trustees, to present his or her firm for final consideration
of a contract. In the case where multiple minority investment
managers meet the criteria of this Section, the staff may
choose the most qualified firm or firms to present to the
board.
The use of a minority investment manager does not
constitute a transfer of investment authority for the purposes
of subsection (2) of this Section.
(10) Beginning January 1, 2016, it shall be the
aspirational goal for a retirement system, pension fund, or

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investment board subject to this Code to use emerging
investment managers for not less than 20% of the total funds
under management. Furthermore, it shall be the aspirational
goal that not less than 20% of investment advisors be
minorities, women, and persons with disabilities as those terms
are defined in the Business Enterprise for Minorities, Women,
and Persons with Disabilities Act. It shall be the aspirational
goal to utilize businesses owned by minorities, women, and
persons with disabilities for not less than 20% of contracts
awarded for "information technology services", "accounting
services", "insurance brokers", "architectural and engineering
services", and "legal services" as those terms are defined in
the Act.
(Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17.)
(40 ILCS 5/1-110) (from Ch. 108 1/2, par. 1-110)
Sec. 1-110. Prohibited Transactions.
(a) A fiduciary with respect to a retirement system,
pension fund, or investment board shall not cause the
retirement system or pension fund to engage in a transaction if
he or she knows or should know that such transaction
constitutes a direct or indirect:
(1) Sale or exchange, or leasing of any property from
the retirement system or pension fund to a party in
interest for less than adequate consideration, or from a
party in interest to a retirement system or pension fund

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for more than adequate consideration.
(2) Lending of money or other extension of credit from
the retirement system or pension fund to a party in
interest without the receipt of adequate security and a
reasonable rate of interest, or from a party in interest to
a retirement system or pension fund with the provision of
excessive security or an unreasonably high rate of
interest.
(3) Furnishing of goods, services or facilities from
the retirement system or pension fund to a party in
interest for less than adequate consideration, or from a
party in interest to a retirement system or pension fund
for more than adequate consideration.
(4) Transfer to, or use by or for the benefit of, a
party in interest of any assets of a retirement system or
pension fund for less than adequate consideration.
(b) A fiduciary with respect to a retirement system or
pension fund established under this Code shall not:
(1) Deal with the assets of the retirement system or
pension fund in his own interest or for his own account;
(2) In his individual or any other capacity act in any
transaction involving the retirement system or pension
fund on behalf of a party whose interests are adverse to
the interests of the retirement system or pension fund or
the interests of its participants or beneficiaries; or
(3) Receive any consideration for his own personal

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account from any party dealing with the retirement system
or pension fund in connection with a transaction involving
the assets of the retirement system or pension fund.
(c) Nothing in this Section shall be construed to prohibit
any trustee from:
(1) Receiving any benefit to which he may be entitled
as a participant or beneficiary in the retirement system or
pension fund.
(2) Receiving any reimbursement of expenses properly
and actually incurred in the performance of his duties with
the retirement system or pension fund.
(3) Serving as a trustee in addition to being an
officer, employee, agent or other representative of a party
in interest.
(d) A fiduciary of a pension fund established under Article
3 or 4 shall not knowingly cause or advise the pension fund to
engage in an investment transaction when the fiduciary (i) has
any direct interest in the income, gains, or profits of the
investment adviser through which the investment transaction is
made or (ii) has a business relationship with that investment
adviser that would result in a pecuniary benefit to the
fiduciary as a result of the investment transaction.
Violation of this subsection (d) is a Class 4 felony.
(e) A board member, employee, or consultant with respect to
a retirement system, pension fund, or investment board subject
to this Code, except those under Article 3 or 4 whose

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investments are restricted by Section 1-113.2, shall not
knowingly cause or advise the retirement system, pension fund,
or investment board to engage in an investment transaction with
an investment adviser when the board member, employee,
consultant, or their spouse (i) has any direct interest in the
income, gains, or profits of the investment adviser through
which the investment transaction is made or (ii) has a
relationship with that investment adviser that would result in
a pecuniary benefit to the board member, employee, or
consultant or spouse of such board member, employee, or
consultant as a result of the investment transaction. For
purposes of this subsection (e), a consultant includes an
employee or agent of a consulting firm who has greater than
7.5% ownership of the consulting firm.
Violation of this subsection (e) is a Class 4 felony.
(Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)
(40 ILCS 5/1-110.6)
Sec. 1-110.6. Transactions prohibited by retirement
systems; Republic of the Sudan.
(a) The Government of the United States has determined that
Sudan is a nation that sponsors terrorism and genocide. The
General Assembly finds that acts of terrorism have caused
injury and death to Illinois and United States residents who
serve in the United States military, and pose a significant
threat to safety and health in Illinois. The General Assembly

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finds that public employees and their families, including
police officers and firefighters, are more likely than others
to be affected by acts of terrorism. The General Assembly finds
that Sudan continues to solicit investment and commercial
activities by forbidden entities, including private market
funds. The General Assembly finds that investments in forbidden
entities are inherently and unduly risky, not in the interests
of public pensioners and Illinois taxpayers, and against public
policy. The General Assembly finds that Sudan's capacity to
sponsor terrorism and genocide depends on or is supported by
the activities of forbidden entities. The General Assembly
further finds and re-affirms that the people of the State,
acting through their representatives, do not want to be
associated with forbidden entities, genocide, and terrorism.
(b) For purposes of this Section:
"Business operations" means maintaining, selling, or
leasing equipment, facilities, personnel, or any other
apparatus of business or commerce in the Republic of the Sudan,
including the ownership or possession of real or personal
property located in the Republic of the Sudan.
"Certifying company" means a company that (1) directly
provides asset management services or advice to a retirement
system or (2) as directly authorized or requested by a
retirement system (A) identifies particular investment options
for consideration or approval; (B) chooses particular
investment options; or (C) allocates particular amounts to be

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invested. If no company meets the criteria set forth in this
paragraph, then "certifying company" shall mean the retirement
system officer who, as designated by the board, executes the
investment decisions made by the board, or, in the alternative,
the company that the board authorizes to complete the
certification as the agent of that officer.
"Company" is any entity capable of affecting commerce,
including but not limited to (i) a government, government
agency, natural person, legal person, sole proprietorship,
partnership, firm, corporation, subsidiary, affiliate,
franchisor, franchisee, joint venture, trade association,
financial institution, utility, public franchise, provider of
financial services, trust, or enterprise; and (ii) any
association thereof.
"Department" means the Public Pension Division of the
Department of Financial and Professional Regulation.
"Forbidden entity" means any of the following:
(1) The government of the Republic of the Sudan and any
of its agencies, including but not limited to political
units and subdivisions;
(2) Any company that is wholly or partially managed or
controlled by the government of the Republic of the Sudan
and any of its agencies, including but not limited to
political units and subdivisions;
(3) Any company (i) that is established or organized
under the laws of the Republic of the Sudan or (ii) whose

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principal place of business is in the Republic of the
Sudan;
(4) Any company (i) identified by the Office of Foreign
Assets Control in the United States Department of the
Treasury as sponsoring terrorist activities in the
Republic of the Sudan; or (ii) fined, penalized, or
sanctioned by the Office of Foreign Assets Control in the
United States Department of the Treasury for any violation
of any United States rules and restrictions relating to the
Republic of the Sudan that occurred at any time following
the effective date of this Act;
(5) Any publicly traded company that is individually
identified by an independent researching firm that
specializes in global security risk and that has been
retained by a certifying company as provided in subsection
(c) of this Section as being a company that owns or
controls property or assets located in, has employees or
facilities located in, provides goods or services to,
obtains goods or services from, has distribution
agreements with, issues credits or loans to, purchases
bonds or commercial paper issued by, or invests in (A) the
Republic of the Sudan; or (B) any company domiciled in the
Republic of the Sudan; and
(6) Any private market fund that fails to satisfy the
requirements set forth in subsections (d) and (e) of this
Section.

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Notwithstanding the foregoing, the term "forbidden entity"
shall exclude (A) mutual funds that (i) are managed by an
investment company as defined and registered under the federal
Investment Company Act of 1940 and registered under the
Illinois Securities Law of 1953, (ii) have been in operation
for at least 5 years, (iii) have total net assets of
$250,000,000 or more, and (iv) are comprised of diversified
portfolios of common or preferred stocks, bonds, or money
market instruments; meet the requirements of item (iii) of
paragraph (13) of Section 1-113.2 and (B) companies that
transact business in the Republic of the Sudan under the law,
license, or permit of the United States, including a license
from the United States Department of the Treasury, and
companies, except agencies of the Republic of the Sudan, who
are certified as Non-Government Organizations by the United
Nations, or who engage solely in (i) the provision of goods and
services intended to relieve human suffering or to promote
welfare, health, religious and spiritual activities, and
education or humanitarian purposes; or (ii) journalistic
activities.
"Private market fund" means any private equity fund,
private equity fund of funds, venture capital fund, hedge fund,
hedge fund of funds, real estate fund, or other investment
vehicle that is not publicly traded.
"Republic of the Sudan" means those geographic areas of the
Republic of Sudan that are subject to sanction or other

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restrictions placed on commercial activity imposed by the
United States Government due to an executive or congressional
declaration of genocide.
"Retirement system" means the State Employees' Retirement
System of Illinois, the Judges Retirement System of Illinois,
the General Assembly Retirement System, the State Universities
Retirement System, and the Teachers' Retirement System of the
State of Illinois.
(c) A retirement system shall not transfer or disburse
funds to, deposit into, acquire any bonds or commercial paper
from, or otherwise loan to or invest in any entity unless, as
provided in this Section, a certifying company certifies to the
retirement system that, (1) with respect to investments in a
publicly traded company, the certifying company has relied on
information provided by an independent researching firm that
specializes in global security risk and (2) 100% of the
retirement system's assets for which the certifying company
provides services or advice are not and have not been invested
or reinvested in any forbidden entity at any time after 4
months after the effective date of this Section.
The certifying company shall make the certification
required under this subsection (c) to a retirement system 6
months after the effective date of this Section and annually
thereafter. A retirement system shall submit the
certifications to the Department, and the Department shall
notify the Secretary of Financial and Professional Regulation

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if a retirement system fails to do so.
(d) With respect to a commitment or investment made
pursuant to a written agreement executed prior to the effective
date of this Section, each private market fund shall submit to
the appropriate certifying company, at no additional cost to
the retirement system:
(1) an affidavit sworn under oath in which an expressly
authorized officer of the private market fund avers that
the private market fund (A) does not own or control any
property or asset located in the Republic of the Sudan and
(B) does not conduct business operations in the Republic of
the Sudan; or
(2) a certificate in which an expressly authorized
officer of the private market fund certifies that the
private market fund, based on reasonable due diligence, has
determined that, other than direct or indirect investments
in companies certified as Non-Government Organizations by
the United Nations, the private market fund has no direct
or indirect investment in any company (A) organized under
the laws of the Republic of the Sudan; (B) whose principal
place of business is in the Republic of the Sudan; or (C)
that conducts business operations in the Republic of the
Sudan. Such certificate shall be based upon the periodic
reports received by the private market fund, and the
private market fund shall agree that the certifying
company, directly or through an agent, or the retirement

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system, as the case may be, may from time to time review
the private market fund's certification process.
(e) With respect to a commitment or investment made
pursuant to a written agreement executed after the effective
date of this Section, each private market fund shall, at no
additional cost to the retirement system:
(1) submit to the appropriate certifying company an
affidavit or certificate consistent with the requirements
pursuant to subsection (d) of this Section; or
(2) enter into an enforceable written agreement with
the retirement system that provides for remedies
consistent with those set forth in subsection (g) of this
Section if any of the assets of the retirement system shall
be transferred, loaned, or otherwise invested in any
company that directly or indirectly (A) has facilities or
employees in the Republic of the Sudan or (B) conducts
business operations in the Republic of the Sudan.
(f) In addition to any other penalties and remedies
available under the law of Illinois and the United States, any
transaction, other than a transaction with a private market
fund that is governed by subsections (g) and (h) of this
Section, that violates the provisions of this Act shall be
against public policy and voidable, at the sole discretion of
the retirement system.
(g) If a private market fund fails to provide the affidavit
or certification required in subsections (d) and (e) of this

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Section, then the retirement system shall, within 90 days,
divest, or attempt in good faith to divest, the retirement
system's interest in the private market fund, provided that the
Board of the retirement system confirms through resolution that
the divestment does not have a material and adverse impact on
the retirement system. The retirement system shall immediately
notify the Department, and the Department shall notify all
other retirement systems, as soon as practicable, by posting
the name of the private market fund on the Department's
Internet website or through e-mail communications. No other
retirement system may enter into any agreement under which the
retirement system directly or indirectly invests in the private
market fund unless the private market fund provides that
retirement system with the affidavit or certification required
in subsections (d) and (e) of this Section and complies with
all other provisions of this Section.
(h) If a private market fund fails to fulfill its
obligations under any agreement provided for in paragraph (2)
of subsection (e) of this Section, the retirement system shall
immediately take legal and other action to obtain satisfaction
through all remedies and penalties available under the law and
the agreement itself. The retirement system shall immediately
notify the Department, and the Department shall notify all
other retirement systems, as soon as practicable, by posting
the name of the private market fund on the Department's
Internet website or through e-mail communications, and no other

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retirement system may enter into any agreement under which the
retirement system directly or indirectly invests in the private
market fund.
(i) This Section shall have full force and effect during
any period in which the Republic of the Sudan, or the officials
of the government of that Republic, are subject to sanctions
authorized under any statute or executive order of the United
States or until such time as the State Department of the United
States confirms in the federal register or through other means
that the Republic of the Sudan is no longer subject to
sanctions by the government of the United States.
(j) If any provision of this Section or its application to
any person or circumstance is held invalid, the invalidity of
that provision or application does not affect other provisions
or applications of this Section that can be given effect
without the invalid provision or application.
(Source: P.A. 95-521, eff. 8-28-07.)
(40 ILCS 5/1-113.1)
Sec. 1-113.1. Investment authority of pension funds
established under Article 3 or 4. The board of trustees of a
police pension fund established under Article 3 of this Code or
firefighter pension fund established under Article 4 of this
Code shall draw pension funds from the treasurer of the
municipality and, beginning January 1, 1998, invest any part
thereof in the name of the board in the items listed in

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Sections 1-113.2 through 1-113.4 according to the limitations
and requirements of this Article. These investments shall be
made 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.
Interest and any other income from the investments shall be
credited to the pension fund.
For the purposes of Sections 1-113.2 through 1-113.11, the
"net assets" of a pension fund include both the cash and
invested assets of the pension fund.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/1-113.4a)
Sec. 1-113.4a. Pension fund investments in common and
preferred stocks and mutual funds List of additional permitted
investments for Article 3 and 4 pension funds with net assets
of $10,000,000 or more.
(a) A In addition to the items in Sections 1-113.2 and
1-113.3, a pension fund established under Article 3 or 4 that
has net assets of at least $10,000,000 and has appointed an
investment adviser, as defined under Sections 1-101.4 and
1-113.5, may, through that investment adviser, invest an
additional portion of its assets in common and preferred stocks
and mutual funds.
(b) The stocks must meet all of the following requirements:

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(1) The common stocks must be listed on a national
securities exchange or board of trade (as defined in the
Federal Securities Exchange Act of 1934 and set forth in
paragraph G of Section 3 of the Illinois Securities Law of
1953) or quoted in the National Association of Securities
Dealers Automated Quotation System National Market System.
(2) The securities must be of a corporation in
existence for at least 5 years.
(3) The market value of stock in any one corporation
may not exceed 5% of the cash and invested assets of the
pension fund, and the investments in the stock of any one
corporation may not exceed 5% of the total outstanding
stock of that corporation.
(4) The straight preferred stocks or convertible
preferred stocks must be issued or guaranteed by a
corporation whose common stock qualifies for investment by
the board.
(c) The mutual funds must meet the following requirements:
(1) The mutual fund must be managed by an investment
company registered under the Federal Investment Company
Act of 1940 and registered under the Illinois Securities
Law of 1953.
(2) The mutual fund must have been in operation for at
least 5 years.
(3) The mutual fund must have total net assets of
$250,000,000 or more.

10000SB2767sam001 - 24 - LRB100 17635 RPS 38080 a
(4) The mutual fund must be comprised of a diversified
portfolio of common or preferred stocks, bonds, or money
market instruments.
(d) (Blank). A pension fund's total investment in the items
authorized under this Section and Section 1-113.3 shall not
exceed 50% effective July 1, 2011 and 55% effective July 1,
2012 of the market value of the pension fund's net present
assets stated in its most recent annual report on file with the
Department of Insurance.
(e) A pension fund that invests funds under this Section
shall electronically file with the Division any reports of its
investment activities that the Division may require, at the
time and in the format required by the Division.
(Source: P.A. 96-1495, eff. 1-1-11.)
(40 ILCS 5/1-113.5)
Sec. 1-113.5. Investment advisers and investment services
for all Article 3 or 4 pension funds.
(a) The board of trustees of a pension fund may appoint
investment advisers as defined in Section 1-101.4. The board of
any pension fund investing in common or preferred stock under
Section 1-113.4 shall appoint an investment adviser before
making such investments.
The investment adviser shall be a fiduciary, as defined in
Section 1-101.2, with respect to the pension fund and shall be
one of the following:

10000SB2767sam001 - 25 - LRB100 17635 RPS 38080 a
(1) an investment adviser registered under the federal
Investment Advisers Act of 1940 and the Illinois Securities
Law of 1953;
(2) a bank or trust company authorized to conduct a
trust business in Illinois;
(3) a life insurance company authorized to transact
business in Illinois; or
(4) an investment company as defined and registered
under the federal Investment Company Act of 1940 and
registered under the Illinois Securities Law of 1953.
(a-5) Notwithstanding any other provision of law, a person
or entity that provides consulting services (referred to as a
"consultant" in this Section) to a pension fund with respect to
the selection of fiduciaries may not be awarded a contract to
provide those consulting services that is more than 5 years in
duration. No contract to provide such consulting services may
be renewed or extended. At the end of the term of a contract,
however, the contractor is eligible to compete for a new
contract. No person shall attempt to avoid or contravene the
restrictions of this subsection by any means. All offers from
responsive offerors shall be accompanied by disclosure of the
names and addresses of the following:
(1) The offeror.
(2) Any entity that is a parent of, or owns a
controlling interest in, the offeror.
(3) Any entity that is a subsidiary of, or in which a

10000SB2767sam001 - 26 - LRB100 17635 RPS 38080 a
controlling interest is owned by, the offeror.
Beginning on July 1, 2008, a person, other than a trustee
or an employee of a pension fund or retirement system, may not
act as a consultant under this Section unless that person is at
least one of the following: (i) registered as an investment
adviser under the federal Investment Advisers Act of 1940 (15
U.S.C. 80b-1, et seq.); (ii) registered as an investment
adviser under the Illinois Securities Law of 1953; (iii) a
bank, as defined in the Investment Advisers Act of 1940; or
(iv) an insurance company authorized to transact business in
this State.
(b) All investment advice and services provided by an
investment adviser or a consultant appointed under this Section
shall be rendered pursuant to a written contract between the
investment adviser and the board, and in accordance with the
board's investment policy.
The contract shall include all of the following:
(1) acknowledgement in writing by the investment
adviser that he or she is a fiduciary with respect to the
pension fund;
(2) the board's investment policy;
(3) full disclosure of direct and indirect fees,
commissions, penalties, and any other compensation that
may be received by the investment adviser, including
reimbursement for expenses; and
(4) a requirement that the investment adviser submit

10000SB2767sam001 - 27 - LRB100 17635 RPS 38080 a
periodic written reports, on at least a quarterly basis,
for the board's review at its regularly scheduled meetings.
All returns on investment shall be reported as net returns
after payment of all fees, commissions, and any other
compensation.
(b-5) Each contract described in subsection (b) shall also
include (i) full disclosure of direct and indirect fees,
commissions, penalties, and other compensation, including
reimbursement for expenses, that may be paid by or on behalf of
the investment adviser or consultant in connection with the
provision of services to the pension fund and (ii) a
requirement that the investment adviser or consultant update
the disclosure promptly after a modification of those payments
or an additional payment.
Within 30 days after the effective date of this amendatory
Act of the 95th General Assembly, each investment adviser and
consultant providing services on the effective date or subject
to an existing contract for the provision of services must
disclose to the board of trustees all direct and indirect fees,
commissions, penalties, and other compensation paid by or on
behalf of the investment adviser or consultant in connection
with the provision of those services and shall update that
disclosure promptly after a modification of those payments or
an additional payment.
A person required to make a disclosure under subsection (d)
is also required to disclose direct and indirect fees,

10000SB2767sam001 - 28 - LRB100 17635 RPS 38080 a
commissions, penalties, or other compensation that shall or may
be paid by or on behalf of the person in connection with the
rendering of those services. The person shall update the
disclosure promptly after a modification of those payments or
an additional payment.
The disclosures required by this subsection shall be in
writing and shall include the date and amount of each payment
and the name and address of each recipient of a payment.
(c) Within 30 days after appointing an investment adviser
or consultant, the board shall submit a copy of the contract to
the Division of Insurance of the Department of Financial and
Professional Regulation.
(d) Investment services provided by a person other than an
investment adviser appointed under this Section, including but
not limited to services provided by the kinds of persons listed
in items (1) through (4) of subsection (a), shall be rendered
only after full written disclosure of direct and indirect fees,
commissions, penalties, and any other compensation that shall
or may be received by the person rendering those services.
(e) The board of trustees of each pension fund shall retain
records of investment transactions in accordance with the rules
of the Department of Financial and Professional Regulation.
(Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)
(40 ILCS 5/1-113.14)
Sec. 1-113.14. Investment services for retirement systems,

10000SB2767sam001 - 29 - LRB100 17635 RPS 38080 a
pension funds, and investment boards, except those funds
established under Articles 3 and 4.
(a) For the purposes of this Section, "investment services"
means services provided by an investment adviser or a
consultant other than qualified fund-of-fund management
services as defined in Section 1-113.15.
(b) The selection and appointment of an investment adviser
or consultant for investment services by the board of a
retirement system, pension fund, or investment board subject to
this Code, except those under Article 3 or 4 whose investments
are restricted by Section 1-113.2, shall be made and awarded in
accordance with this Section. All contracts for investment
services shall be awarded by the board using a competitive
process that is substantially similar to the process required
for the procurement of professional and artistic services under
Article 35 of the Illinois Procurement Code. Each board of
trustees shall adopt a policy in accordance with this
subsection (b) within 60 days after the effective date of this
amendatory Act of the 96th General Assembly. The policy shall
be posted on its web site and filed with the Illinois
Procurement Policy Board. Exceptions to this Section are
allowed for (i) sole source procurements, (ii) emergency
procurements, (iii) at the discretion of the pension fund,
retirement system, or board of investment, contracts that are
nonrenewable and one year or less in duration, so long as the
contract has a value of less than $20,000, and (iv) in the

10000SB2767sam001 - 30 - LRB100 17635 RPS 38080 a
discretion of the pension fund, retirement system, or
investment board, contracts for follow-on funds with the same
fund sponsor through closed-end funds. All exceptions granted
under this Section must be published on the system's, fund's,
or board's web site, shall name the person authorizing the
procurement, and shall include a brief explanation of the
reason for the exception.
A person, other than a trustee or an employee of a
retirement system, pension fund, or investment board, may not
act as a consultant or investment adviser under this Section
unless that person is registered as an investment adviser under
the federal Investment Advisers Act of 1940 (15 U.S.C. 80b-1,
et seq.) or a bank, as defined in the federal Investment
Advisers Act of 1940 (15 U.S.C. 80b-1, et seq.).
(c) Investment services provided by an investment adviser
or a consultant appointed under this Section shall be rendered
pursuant to a written contract between the investment adviser
or consultant and the board.
The contract shall include all of the following:
(1) Acknowledgement in writing by the investment
adviser or consultant that he or she is a fiduciary with
respect to the pension fund or retirement system.
(2) The description of the board's investment policy
and notice that the policy is subject to change.
(3) (i) Full disclosure of direct and indirect fees,
commissions, penalties, and other compensation, including

10000SB2767sam001 - 31 - LRB100 17635 RPS 38080 a
reimbursement for expenses, that may be paid by or on
behalf of the consultant in connection with the provision
of services to the pension fund or retirement system and
(ii) a requirement that the consultant update the
disclosure promptly after a modification of those payments
or an additional payment.
(4) A requirement that the investment adviser or
consultant, in conjunction with the board's staff, submit
periodic written reports, on at least a quarterly basis,
for the board's review at its regularly scheduled meetings.
All returns on investment shall be reported as net returns
after payment of all fees, commissions, and any other
compensation.
(5) Disclosure of the names and addresses of (i) the
consultant or investment adviser; (ii) any entity that is a
parent of, or owns a controlling interest in, the
consultant or investment adviser; (iii) any entity that is
a subsidiary of, or in which a controlling interest is
owned by, the consultant or investment adviser; (iv) any
persons who have an ownership or distributive income share
in the consultant or investment adviser that is in excess
of 7.5%; or (v) serves as an executive officer of the
consultant or investment adviser.
(6) A disclosure of the names and addresses of all
subcontractors, if applicable, and the expected amount of
money each will receive under the contract, including an

10000SB2767sam001 - 32 - LRB100 17635 RPS 38080 a
acknowledgment that the contractor must promptly make
notification, in writing, if at any time during the term of
the contract a contractor adds or changes any
subcontractors. For purposes of this subparagraph (6),
"subcontractor" does not include non-investment related
professionals or professionals offering services that are
not directly related to the investment of assets, such as
legal counsel, actuary, proxy-voting services, services
used to track compliance with legal standards, and
investment fund of funds where the board has no direct
contractual relationship with the investment advisers or
partnerships.
(7) A description of service to be performed.
(8) A description of the need for the service.
(9) A description of the plan for post-performance
review.
(10) A description of the qualifications necessary.
(11) The duration of the contract.
(12) The method for charging and measuring cost.
(d) Notwithstanding any other provision of law, a
retirement system, pension fund, or investment board subject to
this Code, except those under Article 3 or 4 whose investments
are restricted by Section 1-113.2 of this Code, shall not enter
into a contract with a consultant that exceeds 5 years in
duration. No contract to provide consulting services may be
renewed or extended. At the end of the term of a contract,

10000SB2767sam001 - 33 - LRB100 17635 RPS 38080 a
however, the consultant is eligible to compete for a new
contract as provided in this Section. No retirement system,
pension fund, or investment board shall attempt to avoid or
contravene the restrictions of this subsection (d) by any
means.
(e) Within 60 days after the effective date of this
amendatory Act of the 96th General Assembly, each investment
adviser or consultant currently providing services or subject
to an existing contract for the provision of services must
disclose to the board of trustees all direct and indirect fees,
commissions, penalties, and other compensation paid by or on
behalf of the investment adviser or consultant in connection
with the provision of those services and shall update that
disclosure promptly after a modification of those payments or
an additional payment. The person shall update the disclosure
promptly after a modification of those payments or an
additional payment. The disclosures required by this
subsection (e) shall be in writing and shall include the date
and amount of each payment and the name and address of each
recipient of a payment.
(f) The retirement system, pension fund, or board of
investment shall develop uniform documents that shall be used
for the solicitation, review, and acceptance of all investment
services. The form shall include the terms contained in
subsection (c) of this Section. All such uniform documents
shall be posted on the retirement system's, pension fund's, or

10000SB2767sam001 - 34 - LRB100 17635 RPS 38080 a
investment board's web site.
(g) A description of every contract for investment services
shall be posted in a conspicuous manner on the web site of the
retirement system, pension fund, or investment board. The
description must include the name of the person or entity
awarded a contract, the total amount applicable to the
contract, the total fees paid or to be paid, and a disclosure
approved by the board describing the factors that contributed
to the selection of an investment adviser or consultant.
(Source: P.A. 98-433, eff. 8-16-13.)
(40 ILCS 5/1-113.16)
Sec. 1-113.16. Investment transparency.
(a) The purpose of this Section is to provide for
transparency in the investment of retirement or pension funds
and require the reporting of full and complete information
regarding the investments by pension funds, retirement
systems, and investment boards.
(b) A retirement system, pension fund, or investment board
subject to this Code and any committees established by such
system, fund, or board must comply with the Open Meetings Act.
(c) Any retirement system, pension fund, or investment
board subject to this Code that establishes a committee shall
ensure that the majority of the members on such committee are
board members. If any member of a committee is not a member of
the board for the system, fund, or board, then that committee

10000SB2767sam001 - 35 - LRB100 17635 RPS 38080 a
member shall be a fiduciary.
(d) A retirement system, pension fund, or investment board
subject to this Code, except those under Article 3 or 4 whose
investments are restricted by Section 1-113.2, shall maintain
an official web site and make available in a clear and
conspicuous manner, and update at least quarterly, all of the
following information concerning the investment of funds:
(1) The total amount of funds held by the pension fund,
retirement system, or investment board.
(2) The asset allocation for the investments made by
the pension fund, retirement system, or investment board.
(3) Current and historic return information.
(4) A detailed listing of the investment advisers for
all asset classes.
(5) Performance of investments compared against
established benchmarks.
(6) A detailed list of all consultants doing business
with the retirement system, pension fund, or investment
board.
(7) A detailed list of all contractors, other than
investment advisers and consultants, doing business with
the retirement system, pension fund, or investment board.
(8) Any requests for investment services.
(9) The names and email addresses of all board members,
directors, and senior staff.
(10) The report required under Section 1-109.1 of this

10000SB2767sam001 - 36 - LRB100 17635 RPS 38080 a
Code, if applicable.
(11) The description of each contract required under
subsection (g) of Section 1-113.14 of this Code, if
applicable.
(e) A pension fund under Article 3 or 4 whose investments
are restricted by Section 1-113.2 of this Code shall make the
information required in subsection (d) of this Section
available on its web site or in a location that allows the
information to be available for inspection by the public.
(f) Nothing in this Section requires the pension fund,
retirement system, or investment board to make information
available on the Internet that is exempt from inspection and
copying under the Freedom of Information Act.
(Source: P.A. 96-6, eff. 4-3-09.)
(40 ILCS 5/1-113.20)
Sec. 1-113.20. Investment strategies; explicit and
implicit costs. Every pension fund, retirement system, and
investment board created under this Code, except those under
Article 3 or 4 whose investments are restricted by Section
1-113.2 of this Code, shall instruct the fund's, system's, or
board's investment advisors to utilize investment strategies
designed to ensure that all securities transactions are
executed in such a manner that the total explicit and implicit
costs and total proceeds in every transaction are the most
favorable under the circumstances.

10000SB2767sam001 - 37 - LRB100 17635 RPS 38080 a
(Source: P.A. 96-753, eff. 8-25-09.)
(40 ILCS 5/1-150)
Sec. 1-150. Approval of travel or educational mission. The
expenses for travel or educational missions of a board member
of a retirement system, pension fund, or investment board
created under this Code, except those under Article 3 or 4
whose investments are restricted by Section 1-113.2 of this
Code, must be approved by a majority of the board prior to the
travel or educational mission.
(Source: P.A. 96-6, eff. 4-3-09.)
(40 ILCS 5/1-113.2 rep.)
(40 ILCS 5/1-113.3 rep.)
(40 ILCS 5/1-113.4 rep.)
Section 10. The Illinois Pension Code is amended by
repealing Sections 1-113.2, 1-113.3, and 1-113.4.
Section 99. Effective date. This Act takes effect upon
becoming law.".