Bill Text: IL HB1678 | 2013-2014 | 98th General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Illinois Pension Code. Makes a technical change in a Section concerning the short title of the Code.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2014-12-03 - Session Sine Die [HB1678 Detail]

Download: Illinois-2013-HB1678-Amended.html

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Rep. Joe Sosnowski

Filed: 3/22/2013

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AMENDMENT TO HOUSE BILL 1678
AMENDMENT NO. ______. Amend House Bill 1678 by replacing
everything after the enacting clause with the following:
"Section 3. The State Employees Group Insurance Act of 1971
is amended by changing Section 3 as follows:
(5 ILCS 375/3) (from Ch. 127, par. 523)
Sec. 3. Definitions. Unless the context otherwise
requires, the following words and phrases as used in this Act
shall have the following meanings. The Department may define
these and other words and phrases separately for the purpose of
implementing specific programs providing benefits under this
Act.
(a) "Administrative service organization" means any
person, firm or corporation experienced in the handling of
claims which is fully qualified, financially sound and capable
of meeting the service requirements of a contract of

09800HB1678ham001 - 2 - LRB098 09623 EFG 41996 a
administration executed with the Department.
(b) "Annuitant" means (1) an employee who retires, or has
retired, on or after January 1, 1966 on an immediate annuity
under the provisions of Article Articles 2 (including an
employee who has retired under the self-managed plan), 14
(including an employee who has retired under the self-managed
plan and including an employee who has elected to receive an
alternative retirement cancellation payment under Section
14-108.5 of the Illinois Pension Code in lieu of an annuity),
or 15 (including an employee who has retired under the optional
retirement program established under Section 15-158.2), or
under paragraphs (2), (3), or (5) of Section 16-106 of Article
16 (including an employee who has retired under the
self-managed plan), or under Article 18 (including an employee
who has retired under the self-managed plan) of the Illinois
Pension Code; (2) any person who was receiving group insurance
coverage under this Act as of March 31, 1978 by reason of his
status as an annuitant, even though the annuity in relation to
which such coverage was provided is a proportional annuity
based on less than the minimum period of service required for a
retirement annuity in the system involved; (3) any person not
otherwise covered by this Act who has retired as a
participating member under Article 2 of the Illinois Pension
Code but is ineligible for the retirement annuity under Section
2-119 of the Illinois Pension Code; (4) the spouse of any
person who is receiving a retirement annuity under Article 18

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of the Illinois Pension Code and who is covered under a group
health insurance program sponsored by a governmental employer
other than the State of Illinois and who has irrevocably
elected to waive his or her coverage under this Act and to have
his or her spouse considered as the "annuitant" under this Act
and not as a "dependent"; or (5) an employee who retires, or
has retired, from a qualified position, as determined according
to rules promulgated by the Director, under a qualified local
government, a qualified rehabilitation facility, a qualified
domestic violence shelter or service, or a qualified child
advocacy center. (For definition of "retired employee", see (p)
post).
(b-5) (Blank).
(b-6) (Blank).
(b-7) (Blank).
(c) "Carrier" means (1) an insurance company, a corporation
organized under the Limited Health Service Organization Act or
the Voluntary Health Services Plan Act, a partnership, or other
nongovernmental organization, which is authorized to do group
life or group health insurance business in Illinois, or (2) the
State of Illinois as a self-insurer.
(d) "Compensation" means salary or wages payable on a
regular payroll by the State Treasurer on a warrant of the
State Comptroller out of any State, trust or federal fund, or
by the Governor of the State through a disbursing officer of
the State out of a trust or out of federal funds, or by any

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Department out of State, trust, federal or other funds held by
the State Treasurer or the Department, to any person for
personal services currently performed, and ordinary or
accidental disability benefits under Articles 2, 14, 15
(including ordinary or accidental disability benefits under
the optional retirement program established under Section
15-158.2), paragraphs (2), (3), or (5) of Section 16-106 of
Article 16, or Article 18 of the Illinois Pension Code, for
disability incurred after January 1, 1966, or benefits payable
under the Workers' Compensation or Occupational Diseases Act or
benefits payable under a sick pay plan established in
accordance with Section 36 of the State Finance Act.
"Compensation" also means salary or wages paid to an employee
of any qualified local government, qualified rehabilitation
facility, qualified domestic violence shelter or service, or
qualified child advocacy center.
(e) "Commission" means the State Employees Group Insurance
Advisory Commission authorized by this Act. Commencing July 1,
1984, "Commission" as used in this Act means the Commission on
Government Forecasting and Accountability as established by
the Legislative Commission Reorganization Act of 1984.
(f) "Contributory", when referred to as contributory
coverage, shall mean optional coverages or benefits elected by
the member toward the cost of which such member makes
contribution, or which are funded in whole or in part through
the acceptance of a reduction in earnings or the foregoing of

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an increase in earnings by an employee, as distinguished from
noncontributory coverage or benefits which are paid entirely by
the State of Illinois without reduction of the member's salary.
(g) "Department" means any department, institution, board,
commission, officer, court or any agency of the State
government receiving appropriations and having power to
certify payrolls to the Comptroller authorizing payments of
salary and wages against such appropriations as are made by the
General Assembly from any State fund, or against trust funds
held by the State Treasurer and includes boards of trustees of
the retirement systems created by Articles 2, 14, 15, 16 and 18
of the Illinois Pension Code. "Department" also includes the
Illinois Comprehensive Health Insurance Board, the Board of
Examiners established under the Illinois Public Accounting
Act, and the Illinois Finance Authority.
(h) "Dependent", when the term is used in the context of
the health and life plan, means a member's spouse and any child
(1) from birth to age 26 including an adopted child, a child
who lives with the member from the time of the filing of a
petition for adoption until entry of an order of adoption, a
stepchild or adjudicated child, or a child who lives with the
member if such member is a court appointed guardian of the
child or (2) age 19 or over who is mentally or physically
disabled from a cause originating prior to the age of 19 (age
26 if enrolled as an adult child dependent). For the health
plan only, the term "dependent" also includes (1) any person

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enrolled prior to the effective date of this Section who is
dependent upon the member to the extent that the member may
claim such person as a dependent for income tax deduction
purposes and (2) any person who has received after June 30,
2000 an organ transplant and who is financially dependent upon
the member and eligible to be claimed as a dependent for income
tax purposes. A member requesting to cover any dependent must
provide documentation as requested by the Department of Central
Management Services and file with the Department any and all
forms required by the Department.
(i) "Director" means the Director of the Illinois
Department of Central Management Services or of any successor
agency designated to administer this Act.
(j) "Eligibility period" means the period of time a member
has to elect enrollment in programs or to select benefits
without regard to age, sex or health.
(k) "Employee" means and includes each officer or employee
in the service of a department who (1) receives his
compensation for service rendered to the department on a
warrant issued pursuant to a payroll certified by a department
or on a warrant or check issued and drawn by a department upon
a trust, federal or other fund or on a warrant issued pursuant
to a payroll certified by an elected or duly appointed officer
of the State or who receives payment of the performance of
personal services on a warrant issued pursuant to a payroll
certified by a Department and drawn by the Comptroller upon the

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State Treasurer against appropriations made by the General
Assembly from any fund or against trust funds held by the State
Treasurer, and (2) is employed full-time or part-time in a
position normally requiring actual performance of duty during
not less than 1/2 of a normal work period, as established by
the Director in cooperation with each department, except that
persons elected by popular vote will be considered employees
during the entire term for which they are elected regardless of
hours devoted to the service of the State, and (3) except that
"employee" does not include any person who is not eligible by
reason of such person's employment to participate in one of the
State retirement systems under Articles 2, 14, 15 (either the
regular Article 15 system or the optional retirement program
established under Section 15-158.2) or 18, or under paragraph
(2), (3), or (5) of Section 16-106, of the Illinois Pension
Code, but such term does include persons who are employed
during the 6 month qualifying period under Article 14 of the
Illinois Pension Code. Such term also includes any person who
(1) after January 1, 1966, is receiving ordinary or accidental
disability benefits under Articles 2, 14, 15 (including
ordinary or accidental disability benefits under the optional
retirement program established under Section 15-158.2),
paragraphs (2), (3), or (5) of Section 16-106, or Article 18 of
the Illinois Pension Code, for disability incurred after
January 1, 1966, (2) receives total permanent or total
temporary disability under the Workers' Compensation Act or

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Occupational Disease Act as a result of injuries sustained or
illness contracted in the course of employment with the State
of Illinois, or (3) is not otherwise covered under this Act and
has retired as a participating member under Article 2 of the
Illinois Pension Code but is ineligible for the retirement
annuity under Section 2-119 of the Illinois Pension Code.
However, a person who satisfies the criteria of the foregoing
definition of "employee" except that such person is made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code is also an "employee" for the purposes of
this Act. "Employee" also includes any person receiving or
eligible for benefits under a sick pay plan established in
accordance with Section 36 of the State Finance Act. "Employee"
also includes (i) each officer or employee in the service of a
qualified local government, including persons appointed as
trustees of sanitary districts regardless of hours devoted to
the service of the sanitary district, (ii) each employee in the
service of a qualified rehabilitation facility, (iii) each
full-time employee in the service of a qualified domestic
violence shelter or service, and (iv) each full-time employee
in the service of a qualified child advocacy center, as
determined according to rules promulgated by the Director.
(l) "Member" means an employee, annuitant, retired
employee or survivor. In the case of an annuitant or retired
employee who first becomes an annuitant or retired employee on

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or after the effective date of this amendatory Act of the 97th
General Assembly, the individual must meet the minimum vesting
requirements of the applicable retirement system in order to be
eligible for group insurance benefits under that system. In the
case of a survivor who first becomes a survivor on or after the
effective date of this amendatory Act of the 97th General
Assembly, the deceased employee, annuitant, or retired
employee upon whom the annuity is based must have been eligible
to participate in the group insurance system under the
applicable retirement system in order for the survivor to be
eligible for group insurance benefits under that system.
(m) "Optional coverages or benefits" means those coverages
or benefits available to the member on his or her voluntary
election, and at his or her own expense.
(n) "Program" means the group life insurance, health
benefits and other employee benefits designed and contracted
for by the Director under this Act.
(o) "Health plan" means a health benefits program offered
by the State of Illinois for persons eligible for the plan.
(p) "Retired employee" means any person who would be an
annuitant as that term is defined herein but for the fact that
such person retired prior to January 1, 1966. Such term also
includes any person formerly employed by the University of
Illinois in the Cooperative Extension Service who would be an
annuitant but for the fact that such person was made ineligible
to participate in the State Universities Retirement System by

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clause (4) of subsection (a) of Section 15-107 of the Illinois
Pension Code.
(q) "Survivor" means a person receiving an annuity as a
survivor of an employee or of an annuitant. "Survivor" also
includes: (1) the surviving dependent of a person who satisfies
the definition of "employee" except that such person is made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code; (2) the surviving dependent of any
person formerly employed by the University of Illinois in the
Cooperative Extension Service who would be an annuitant except
for the fact that such person was made ineligible to
participate in the State Universities Retirement System by
clause (4) of subsection (a) of Section 15-107 of the Illinois
Pension Code; and (3) the surviving dependent of a person who
was an annuitant under this Act by virtue of receiving an
alternative retirement cancellation payment under Section
14-108.5 of the Illinois Pension Code.
(q-2) "SERS" means the State Employees' Retirement System
of Illinois, created under Article 14 of the Illinois Pension
Code.
(q-3) "SURS" means the State Universities Retirement
System, created under Article 15 of the Illinois Pension Code.
(q-4) "TRS" means the Teachers' Retirement System of the
State of Illinois, created under Article 16 of the Illinois
Pension Code.

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(q-5) (Blank).
(q-6) (Blank).
(q-7) (Blank).
(r) "Medical services" means the services provided within
the scope of their licenses by practitioners in all categories
licensed under the Medical Practice Act of 1987.
(s) "Unit of local government" means any county,
municipality, township, school district (including a
combination of school districts under the Intergovernmental
Cooperation Act), special district or other unit, designated as
a unit of local government by law, which exercises limited
governmental powers or powers in respect to limited
governmental subjects, any not-for-profit association with a
membership that primarily includes townships and township
officials, that has duties that include provision of research
service, dissemination of information, and other acts for the
purpose of improving township government, and that is funded
wholly or partly in accordance with Section 85-15 of the
Township Code; any not-for-profit corporation or association,
with a membership consisting primarily of municipalities, that
operates its own utility system, and provides research,
training, dissemination of information, or other acts to
promote cooperation between and among municipalities that
provide utility services and for the advancement of the goals
and purposes of its membership; the Southern Illinois
Collegiate Common Market, which is a consortium of higher

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education institutions in Southern Illinois; the Illinois
Association of Park Districts; and any hospital provider that
is owned by a county that has 100 or fewer hospital beds and
has not already joined the program. "Qualified local
government" means a unit of local government approved by the
Director and participating in a program created under
subsection (i) of Section 10 of this Act.
(t) "Qualified rehabilitation facility" means any
not-for-profit organization that is accredited by the
Commission on Accreditation of Rehabilitation Facilities or
certified by the Department of Human Services (as successor to
the Department of Mental Health and Developmental
Disabilities) to provide services to persons with disabilities
and which receives funds from the State of Illinois for
providing those services, approved by the Director and
participating in a program created under subsection (j) of
Section 10 of this Act.
(u) "Qualified domestic violence shelter or service" means
any Illinois domestic violence shelter or service and its
administrative offices funded by the Department of Human
Services (as successor to the Illinois Department of Public
Aid), approved by the Director and participating in a program
created under subsection (k) of Section 10.
(v) "TRS benefit recipient" means a person who:
(1) is not a "member" as defined in this Section; and
(2) is receiving a monthly benefit or retirement

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annuity (which may include an annuity or other benefit
under the self-managed plan) under Article 16 of the
Illinois Pension Code; and
(3) either (i) has at least 8 years of creditable
service under Article 16 of the Illinois Pension Code, or
(ii) was enrolled in the health insurance program offered
under that Article on January 1, 1996, or (iii) is the
survivor of a benefit recipient who had at least 8 years of
creditable service under Article 16 of the Illinois Pension
Code or was enrolled in the health insurance program
offered under that Article on the effective date of this
amendatory Act of 1995, or (iv) is a recipient or survivor
of a recipient of a disability benefit under Article 16 of
the Illinois Pension Code.
(w) "TRS dependent beneficiary" means a person who:
(1) is not a "member" or "dependent" as defined in this
Section; and
(2) is a TRS benefit recipient's: (A) spouse, (B)
dependent parent who is receiving at least half of his or
her support from the TRS benefit recipient, or (C) natural,
step, adjudicated, or adopted child who is (i) under age
26, (ii) was, on January 1, 1996, participating as a
dependent beneficiary in the health insurance program
offered under Article 16 of the Illinois Pension Code, or
(iii) age 19 or over who is mentally or physically disabled
from a cause originating prior to the age of 19 (age 26 if

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enrolled as an adult child).
"TRS dependent beneficiary" does not include, as indicated
under paragraph (2) of this subsection (w), a dependent of the
survivor of a TRS benefit recipient who first becomes a
dependent of a survivor of a TRS benefit recipient on or after
the effective date of this amendatory Act of the 97th General
Assembly unless that dependent would have been eligible for
coverage as a dependent of the deceased TRS benefit recipient
upon whom the survivor benefit is based.
(x) "Military leave" refers to individuals in basic
training for reserves, special/advanced training, annual
training, emergency call up, activation by the President of the
United States, or any other training or duty in service to the
United States Armed Forces.
(y) (Blank).
(z) "Community college benefit recipient" means a person
who:
(1) is not a "member" as defined in this Section; and
(2) is receiving a monthly survivor's annuity or
retirement annuity (which may include an annuity or other
benefit under the self-managed plan) under Article 15 of
the Illinois Pension Code; and
(3) either (i) was a full-time employee of a community
college district or an association of community college
boards created under the Public Community College Act
(other than an employee whose last employer under Article

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15 of the Illinois Pension Code was a community college
district subject to Article VII of the Public Community
College Act) and was eligible to participate in a group
health benefit plan as an employee during the time of
employment with a community college district (other than a
community college district subject to Article VII of the
Public Community College Act) or an association of
community college boards, or (ii) is the survivor of a
person described in item (i).
(aa) "Community college dependent beneficiary" means a
person who:
(1) is not a "member" or "dependent" as defined in this
Section; and
(2) is a community college benefit recipient's: (A)
spouse, (B) dependent parent who is receiving at least half
of his or her support from the community college benefit
recipient, or (C) natural, step, adjudicated, or adopted
child who is (i) under age 26, or (ii) age 19 or over and
mentally or physically disabled from a cause originating
prior to the age of 19 (age 26 if enrolled as an adult
child).
"Community college dependent beneficiary" does not
include, as indicated under paragraph (2) of this subsection
(aa), a dependent of the survivor of a community college
benefit recipient who first becomes a dependent of a survivor
of a community college benefit recipient on or after the

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effective date of this amendatory Act of the 97th General
Assembly unless that dependent would have been eligible for
coverage as a dependent of the deceased community college
benefit recipient upon whom the survivor annuity is based.
(bb) "Qualified child advocacy center" means any Illinois
child advocacy center and its administrative offices funded by
the Department of Children and Family Services, as defined by
the Children's Advocacy Center Act (55 ILCS 80/), approved by
the Director and participating in a program created under
subsection (n) of Section 10.
(Source: P.A. 96-756, eff. 1-1-10; 96-1519, eff. 2-4-11;
97-668, eff. 1-13-12; 97-695, eff. 7-1-12.)
Section 5. The Illinois Pension Code is amended by changing
Sections 1-160, 2-126, 2-162, 14-133, 14-152.1, 16-152,
16-203, 18-133, 18-169, 20-121, 20-123, and 20-124 and adding
Sections 2-107.5, 2-107.6, 2-123.5, 2-123.6, 14-103.40,
14-103.41, 14-130.5, 14-130.6, 16-115.1 16-115.2, 16-151.5,
16-151.6, 18-110.1, 18-110.2, 18-130.1, and 18-130.2 as
follows:
(40 ILCS 5/1-160)
Sec. 1-160. Provisions applicable to new hires.
(a) The provisions of this Section apply to a person who,
on or after January 1, 2011, first becomes a member or a
participant under any reciprocal retirement system or pension

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fund established under this Code, other than a retirement
system or pension fund established under Article 2, 3, 4, 5, 6,
or 18 of this Code, notwithstanding any other provision of this
Code to the contrary, but do not apply to any self-managed plan
established under this Code, to any person with respect to
service as a sheriff's law enforcement employee under Article
7, or to any participant of the retirement plan established
under Section 22-101.
(b) "Final average salary" means the average monthly (or
annual) salary obtained by dividing the total salary or
earnings calculated under the Article applicable to the member
or participant during the 96 consecutive months (or 8
consecutive years) of service within the last 120 months (or 10
years) of service in which the total salary or earnings
calculated under the applicable Article was the highest by the
number of months (or years) of service in that period. For the
purposes of a person who first becomes a member or participant
of any retirement system or pension fund to which this Section
applies on or after January 1, 2011, in this Code, "final
average salary" shall be substituted for the following:
(1) In Articles 7 (except for service as sheriff's law
enforcement employees) and 15, "final rate of earnings".
(2) In Articles 8, 9, 10, 11, and 12, "highest average
annual salary for any 4 consecutive years within the last
10 years of service immediately preceding the date of
withdrawal".

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(3) In Article 13, "average final salary".
(4) In Article 14, "final average compensation".
(5) In Article 17, "average salary".
(6) In Section 22-207, "wages or salary received by him
at the date of retirement or discharge".
(b-5) Beginning on January 1, 2011, for all purposes under
this Code (including without limitation the calculation of
benefits and employee contributions), the annual earnings,
salary, or wages (based on the plan year) of a member or
participant to whom this Section applies shall not exceed
$106,800; however, that amount shall annually thereafter be
increased by the lesser of (i) 3% of that amount, including all
previous adjustments, or (ii) one-half the annual unadjusted
percentage increase (but not less than zero) in the consumer
price index-u for the 12 months ending with the September
preceding each November 1, including all previous adjustments.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the boards of the retirement
systems and pension funds by November 1 of each year.
(c) A member or participant is entitled to a retirement

09800HB1678ham001 - 19 - LRB098 09623 EFG 41996 a
annuity upon written application if he or she has attained age
67 and has at least 10 years of service credit and is otherwise
eligible under the requirements of the applicable Article.
A member or participant who has attained age 62 and has at
least 10 years of service credit and is otherwise eligible
under the requirements of the applicable Article may elect to
receive the lower retirement annuity provided in subsection (d)
of this Section.
(d) The retirement annuity of a member or participant who
is retiring after attaining age 62 with at least 10 years of
service credit shall be reduced by one-half of 1% for each full
month that the member's age is under age 67.
(e) Any retirement annuity or supplemental annuity shall be
subject to annual increases on the January 1 occurring either
on or after the attainment of age 67 or the first anniversary
of the annuity start date, whichever is later. Each annual
increase shall be calculated at 3% or one-half the annual
unadjusted percentage increase (but not less than zero) in the
consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less, of the
originally granted retirement annuity. If the annual
unadjusted percentage change in the consumer price index-u for
the 12 months ending with the September preceding each November
1 is zero or there is a decrease, then the annuity shall not be
increased.
(f) The initial survivor's or widow's annuity of an

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otherwise eligible survivor or widow of a retired member or
participant who first became a member or participant on or
after January 1, 2011 shall be in the amount of 66 2/3% of the
retired member's or participant's retirement annuity at the
date of death. In the case of the death of a member or
participant who has not retired and who first became a member
or participant on or after January 1, 2011, eligibility for a
survivor's or widow's annuity shall be determined by the
applicable Article of this Code. The initial benefit shall be
66 2/3% of the earned annuity without a reduction due to age. A
child's annuity of an otherwise eligible child shall be in the
amount prescribed under each Article if applicable. Any
survivor's or widow's annuity shall be increased (1) on each
January 1 occurring on or after the commencement of the annuity
if the deceased member died while receiving a retirement
annuity or (2) in other cases, on each January 1 occurring
after the first anniversary of the commencement of the annuity.
Each annual increase shall be calculated at 3% or one-half the
annual unadjusted percentage increase (but not less than zero)
in the consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less, of the
originally granted survivor's annuity. If the annual
unadjusted percentage change in the consumer price index-u for
the 12 months ending with the September preceding each November
1 is zero or there is a decrease, then the annuity shall not be
increased.

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(g) The benefits in Section 14-110 apply only if the person
is a State policeman, a fire fighter in the fire protection
service of a department, or a security employee of the
Department of Corrections or the Department of Juvenile
Justice, as those terms are defined in subsection (b) of
Section 14-110. A person who meets the requirements of this
Section is entitled to an annuity calculated under the
provisions of Section 14-110, in lieu of the regular or minimum
retirement annuity, only if the person has withdrawn from
service with not less than 20 years of eligible creditable
service and has attained age 60, regardless of whether the
attainment of age 60 occurs while the person is still in
service.
(h) If a person who first becomes a member or a participant
of a retirement system or pension fund subject to this Section
on or after January 1, 2011 is receiving a retirement annuity
or retirement pension under that system or fund and becomes a
member or participant under any other system or fund created by
this Code and is employed on a full-time basis, except for
those members or participants exempted from the provisions of
this Section under subsection (a) of this Section, then the
person's retirement annuity or retirement pension under that
system or fund shall be suspended during that employment. Upon
termination of that employment, the person's retirement
annuity or retirement pension payments shall resume and be
recalculated if recalculation is provided for under the

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applicable Article of this Code.
If a person who first becomes a member of a retirement
system or pension fund subject to this Section on or after
January 1, 2012 and is receiving a retirement annuity or
retirement pension under that system or fund and accepts on a
contractual basis a position to provide services to a
governmental entity from which he or she has retired, then that
person's annuity or retirement pension earned as an active
employee of the employer shall be suspended during that
contractual service. A person receiving an annuity or
retirement pension under this Code shall notify the pension
fund or retirement system from which he or she is receiving an
annuity or retirement pension, as well as his or her
contractual employer, of his or her retirement status before
accepting contractual employment. A person who fails to submit
such notification shall be guilty of a Class A misdemeanor and
required to pay a fine of $1,000. Upon termination of that
contractual employment, the person's retirement annuity or
retirement pension payments shall resume and, if appropriate,
be recalculated under the applicable provisions of this Code.
(i) Notwithstanding any other provision of this Section, a
person who first becomes a participant of the retirement system
established under Article 15 on or after January 1, 2011 shall
have the option to enroll in the self-managed plan created
under Section 15-158.2 of this Code.
Notwithstanding any other provision of this Section, a

09800HB1678ham001 - 23 - LRB098 09623 EFG 41996 a
person who first becomes a participant of a retirement system
established under Article 14 or 16 on or after January 1, 2011
shall have the option to enroll in the self-managed plan
created under the applicable Article.
(j) In the case of a conflict between the provisions of
this Section and any other provision of this Code, the
provisions of this Section shall control.
(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11;
97-609, eff. 1-1-12.)
(40 ILCS 5/2-107.5 new)
Sec. 2-107.5. Defined benefit package.
"Defined benefit package" means either the traditional
benefit package or the reformed benefit package, whichever
would apply to a participant if he or she does not participate
in the self-managed plan.
"Traditional benefit package" means the benefits provided
under this Article, other than the self-managed plan, for
persons who first became participants of the System before
January 1, 2011.
"Reformed benefit package" means the traditional benefit
package as modified for persons who first become participants
of the System on or after January 1, 2011.
(40 ILCS 5/2-107.6 new)
Sec. 2-107.6. Self-managed plan. "Self-managed plan" means

09800HB1678ham001 - 24 - LRB098 09623 EFG 41996 a
the defined contribution retirement program maintained by the
System and established under Section 2-123.5. The self-managed
plan does not include any annuity or refund payable directly by
the System under the defined benefit package.
(40 ILCS 5/2-123.5 new)
Sec. 2-123.5. Self-managed plan.
(a) The General Assembly finds that the System should
provide a defined contribution (self-managed) plan for
eligible participants. Accordingly, the System is hereby
directed to establish and administer a self-managed plan, which
shall offer participants the opportunity to accumulate assets
for retirement through a combination of participant and
employer contributions that may be invested in mutual funds,
collective investment funds, or other investment products and
used to purchase annuity contracts that are fixed, variable, or
a combination of fixed and variable. The plan must be qualified
under the Internal Revenue Code of 1986.
(b) The Board shall make the self-managed plan established
under this Section available to eligible participants under
this Article within 6 months after the effective date of this
amendatory Act of the 98th General Assembly. The adoption of
the self-managed plan makes available to the eligible
participants under this Article the election described in
Section 2-123.6.
The System shall be the plan sponsor for the self-managed

09800HB1678ham001 - 25 - LRB098 09623 EFG 41996 a
plan and shall prepare a plan document and adopt any rules and
procedures that are considered necessary or desirable for the
administration of the self-managed plan. Consistent with its
fiduciary duty to the participants and beneficiaries of the
self-managed plan, the Board of Trustees of the System may
delegate aspects of plan administration as it sees fit to
companies authorized to do business in this State.
(c) The System shall solicit proposals to provide
administrative services and funding vehicles for the
self-managed plan from insurance and annuity companies, mutual
fund companies, banks, trust companies, or other financial
institutions authorized to do business in this State. In
reviewing the proposals received and approving and contracting
with no fewer than 2 and no more than 7 companies, the Board of
Trustees of the System shall consider, among other things, the
following criteria:
(1) the nature and extent of the benefits that would be
provided to the participants;
(2) the reasonableness of the benefits in relation to
the premium charged;
(3) the suitability of the benefits to the needs and
interests of the participants and the employers; and
(4) the ability of the company to provide benefits
under the contract and the financial stability of the
company.
The System shall periodically review each approved

09800HB1678ham001 - 26 - LRB098 09623 EFG 41996 a
company. A company may continue to provide administrative
services and funding vehicles for the self-managed plan only so
long as it continues to be an approved company under contract
with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the Illinois State Board of
Investment.
(d) Participants in the program must be allowed to direct
the transfer of their account balances among the various
investment options offered, subject to applicable contractual
provisions. The participant shall not be deemed a fiduciary by
reason of providing such investment direction. A person who is
a fiduciary shall not be liable for any loss resulting from
that investment direction and shall not be deemed to have
breached any fiduciary duty by acting in accordance with that
direction. Neither the System nor the State shall guarantee any
of the investments in the participant's account balances.
(e) In order to participate in the self-managed plan, an
eligible participant, as defined in Section 2-123.6, must make
a written election in accordance with the provisions of that
Section and the procedures established by the System.
Participation in the self-managed plan shall begin on the first
day of the month immediately following the month in which the
participant's election is filed with the System, but not sooner
than the effective date of the self-managed plan. A person's

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participation in the defined benefit package under this Article
shall terminate on the date that participation in the
self-managed plan begins.
A person who has elected to participate in the self-managed
plan under this Section must continue participation while he or
she remains a participant under this Article, and may not
participate in the defined benefit package.
Participation in the self-managed plan under this Section
shall constitute participation in the System.
Notwithstanding any other provision of this Article, a
participant in the self-managed plan may not purchase or
receive service credit applicable to the defined benefit
package under this Article for any period during which the
participant was a participant in the self-managed plan
established under this Section.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.
(f) If, at the time a participant begins to participate in
the self-managed plan, the participant has rights and credits
in the System due to previous participation in the defined
benefit package, the System shall establish for the participant
an opening account balance in the self-managed plan, equal to
(1) the amount of the refund that the participant would be
eligible to receive if the participant terminated employment on
that date and elected a refund and (2) an amount, representing
employer contributions, equal to the amount of participant

09800HB1678ham001 - 28 - LRB098 09623 EFG 41996 a
contributions, plus interest. The interest used in this
subsection (f) shall be calculated using the actual annual
rates of return that the System has earned during the time
period corresponding to the actual investment of the
contributions being transferred. The System shall transfer
assets to the self-managed plan as a tax-free transfer in
accordance with Internal Revenue Service guidelines, for
purposes of funding the participant's opening account balance.
(g) In lieu of a disability benefit, in the event that a
participant in the self-managed plan has completed 8 years of
service and has become permanently disabled and, as a
consequence, is unable to perform the duties of his or her
office, the participant may elect to receive benefits from the
self-managed plan at any age.
(h) The self-managed plan shall be funded by contributions
from participants in the self-managed plan and employer
contributions as provided in this Section.
The contribution rate for participants in the self-managed
plan under this Section shall be equal to the member
contribution rate for other participants in the System, as
provided in Section 2-126. This required contribution shall be
made as an employer pick-up under Section 414(h) of the
Internal Revenue Code of 1986 or any successor Section thereof.
Any participant in the System's defined benefit package before
his or her election to participate in the self-managed plan
shall continue to have the employer pick up the contributions

09800HB1678ham001 - 29 - LRB098 09623 EFG 41996 a
required under Section 2-126. However, the amounts picked up
after beginning participation in the self-managed plan shall be
remitted to and treated as assets of the self-managed plan. In
no event shall a participant have the option of receiving these
amounts in cash. Participants may make additional
contributions to the self-managed plan in accordance with
procedures prescribed by the System, to the extent permitted
under rules adopted by the System.
The plan shall provide for employer contributions to be
credited to each self-managed plan participant in an amount
equal to the participant contributions. The amounts so credited
shall be paid into the participant's self-managed plan accounts
in a manner to be prescribed by the System.
Employer contributions for participants in the
self-managed plan shall be paid to the System by the State and
shall be included in the calculation of required State
contributions under Section 2-124. The System shall not be
obligated to remit the required employer contributions to any
of the insurance and annuity companies, mutual fund companies,
banks, trust companies, financial institutions, or other
sponsors of any of the funding vehicles offered under the
self-managed plan until it has received the required employer
contributions from the State.
(i) A participant in the self-managed plan becomes vested
in the employer contributions credited to his or her accounts
in the self-managed plan on the earliest to occur of the

09800HB1678ham001 - 30 - LRB098 09623 EFG 41996 a
following: (1) attainment of 4 years of service credit; (2) the
death of the participant while employed under this Article, if
the participant has completed at least 1.5 years of service; or
(3) the participant's election to retire and apply the
reciprocal provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article
(including subsection (g) of this Section and Article 20, if
applicable) shall forfeit all service credit and accrued rights
in the System; if he or she subsequently becomes a participant
under this Article again, he or she shall be considered a new
participant. If a former participant again becomes a
participant (or becomes employed by a participating system
under Article 20 of this Code) and continues as such for at
least 2 years, all rights, service credits, and previous status
as a participant shall be restored upon repayment of the amount
of the distribution, with interest at the actuarially assumed
rate from the date of distribution to the date of payment.
(j) If a participant in the self-managed plan who is vested
in employer contributions terminates employment, the
participant shall be entitled to a benefit that is based on the
account values attributable to both employer and participant
contributions and any investment return thereon.
If a participant in the self-managed plan who is not vested
in employer contributions terminates employment, the

09800HB1678ham001 - 31 - LRB098 09623 EFG 41996 a
participant shall be entitled to a benefit based solely on the
account values attributable to the participant's contributions
and any investment return thereon, and the employer
contributions and any investment return thereon shall be
forfeited. Any employer contributions that are forfeited shall
be held in escrow by the company investing those contributions
and shall be used, as directed by the System, for future
allocations of employer contributions or for the restoration of
amounts previously forfeited.
(40 ILCS 5/2-123.6 new)
Sec. 2-123.6. Election to participate in the self-managed
plan.
(a) For the purposes of this Section and Section 2-123.5:
"Eligible participant" means either a currently eligible
participant or a newly eligible participant of the System.
"Currently eligible participant" means a person who is a
participant under this Article before the day on which the
System first offers the self-managed plan as an alternative to
the defined benefit package.
"Newly eligible participant" means a person who first
becomes a participant under this Article on or after the date
on which the System first offers the self-managed plan as an
alternative to the defined benefit package.
(b) Each eligible participant shall be given an opportunity
to elect to participate in the self-managed plan rather than

09800HB1678ham001 - 32 - LRB098 09623 EFG 41996 a
the defined benefit package. An election to participate in the
self-managed plan applies to all periods of employment under
this System, including employment occurring on, before, and
after the effective date of the participant's election. An
eligible participant who does not make an election under this
Section shall, by default, participate in the defined benefit
package.
An election to participate in the self-managed plan is
irrevocable. If an eligible participant who participates in the
defined benefit package terminates employment under this
Article, then the participant, upon his or her subsequent
re-employment under this Article, may make an election under
this Section.
(c) The election must be made in writing, in the manner
prescribed by the System, and within the required time period.
A currently eligible participant may make the election within
one year after the day on which the System first offers the
self-managed plan. A newly eligible participant may make the
election within 60 days after first becoming a participant
under this Article. An eligible participant who terminates
employment under this Article without having made an election
to participate in the self-managed plan and later returns to
employment under this Article may make the election within 60
days after returning to employment under this Article.
(d) If an eligible participant elects to participate in the
self-managed plan, the System shall fund his or her account as

09800HB1678ham001 - 33 - LRB098 09623 EFG 41996 a
stated in subsection (f) of Section 2-123.5.
(e) An eligible participant shall be provided with written
information prepared or prescribed by the System that describes
the participant's retirement program choices. The eligible
participant shall be offered an opportunity to receive
counseling from the System before making his or her election.
This counseling may consist of videotaped materials, group
presentations, individual consultation with an employee or
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods.
(40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)
Sec. 2-126. Contributions by participants.
(a) Each participant shall contribute toward the cost of
his or her retirement annuity a percentage of each payment of
salary received by him or her for service as a member as
follows: for service between October 31, 1947 and January 1,
1959, 5%; for service between January 1, 1959 and June 30,
1969, 6%; for service between July 1, 1969 and January 10,
1973, 6 1/2%; for service after January 10, 1973, 7%; for
service after December 31, 1981, 8 1/2%.
(b) Beginning August 2, 1949, each male participant, and
from July 1, 1971, each female participant shall contribute
towards the cost of the survivor's annuity 2% of salary.
A participant who has no eligible survivor's annuity

09800HB1678ham001 - 34 - LRB098 09623 EFG 41996 a
beneficiary may elect to cease making contributions for
survivor's annuity under this subsection. A survivor's annuity
shall not be payable upon the death of a person who has made
this election, unless prior to that death the election has been
revoked and the amount of the contributions that would have
been paid under this subsection in the absence of the election
is paid to the System, together with interest at the rate of 4%
per year from the date the contributions would have been made
to the date of payment.
(c) Beginning July 1, 1967, each participant shall
contribute 1% of salary towards the cost of automatic increase
in annuity provided in Section 2-119.1. These contributions
shall be made concurrently with contributions for retirement
annuity purposes.
(d) In addition, each participant serving as an officer of
the General Assembly shall contribute, for the same purposes
and at the same rates as are required of a regular participant,
on each additional payment received as an officer. If the
participant serves as an officer for at least 2 but less than 4
years, he or she shall contribute an amount equal to the amount
that would have been contributed had the participant served as
an officer for 4 years. Persons who serve as officers in the
87th General Assembly but cannot receive the additional payment
to officers because of the ban on increases in salary during
their terms may nonetheless make contributions based on those
additional payments for the purpose of having the additional

09800HB1678ham001 - 35 - LRB098 09623 EFG 41996 a
payments included in their highest salary for annuity purposes;
however, persons electing to make these additional
contributions must also pay an amount representing the
corresponding employer contributions, as calculated by the
System.
(e) Notwithstanding any other provision of this Article,
the required contribution of a participant who first becomes a
participant on or after January 1, 2011 shall not exceed the
contribution that would be due under this Article if that
participant's highest salary for annuity purposes were
$106,800, plus any increases in that amount under Section
2-108.1. This subsection (e) does not apply to participants in
the self-managed plan.
(f) In the case of a participant who participates in the
self-managed plan under Section 2-123.5, the contributions
required under this Section shall instead be used to finance
the benefits available under the self-managed plan.
(Source: P.A. 96-1490, eff. 1-1-11.)
(40 ILCS 5/2-162)
Sec. 2-162. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment

09800HB1678ham001 - 36 - LRB098 09623 EFG 41996 a
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly. "New benefit
increase", however, does not include any benefit increase
resulting from the changes made to this Article by this
amendatory Act of the 98th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Financial and Professional Regulation. A new
benefit increase created by a Public Act that does not include
the additional funding required under this subsection is null
and void. If the Public Pension Division determines that the
additional funding provided for a new benefit increase under
this subsection is or has become inadequate, it may so certify

09800HB1678ham001 - 37 - LRB098 09623 EFG 41996 a
to the Governor and the State Comptroller and, in the absence
of corrective action by the General Assembly, the new benefit
increase shall expire at the end of the fiscal year in which
the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/14-103.40 new)
Sec. 14-103.40. Defined benefit package.
"Defined benefit package" means either the traditional
benefit package or the reformed benefit package, whichever

09800HB1678ham001 - 38 - LRB098 09623 EFG 41996 a
would apply to an employee if he or she does not participate in
the self-managed plan.
"Traditional benefit package" means the benefits provided
under this Article, other than the self-managed plan, without
modification by Section 1-160 of this Code.
"Reformed benefit package" means the traditional benefit
package as modified by Section 1-160 of this Code for certain
persons who first become participants of the System on or after
January 1, 2011.
(40 ILCS 5/14-103.41 new)
Sec. 14-103.41. Self-managed plan. "Self-managed plan"
means the defined contribution retirement program maintained
by the System and established under Section 14-130.5. The
self-managed plan includes disability benefits, but does not
include any other annuity or refund payable directly by the
System under the defined benefit package.
(40 ILCS 5/14-130.5 new)
Sec. 14-130.5. Self-managed plan.
(a) The General Assembly finds that the System should
provide a defined contribution (self-managed) plan for
eligible participants. Accordingly, the System is hereby
directed to establish and administer a self-managed plan, which
shall offer participants the opportunity to accumulate assets
for retirement through a combination of participant and

09800HB1678ham001 - 39 - LRB098 09623 EFG 41996 a
employer contributions that may be invested in mutual funds,
collective investment funds, or other investment products and
used to purchase annuity contracts that are fixed, variable, or
a combination of fixed and variable. The plan must be qualified
under the Internal Revenue Code of 1986.
(b) The Board shall make the self-managed plan established
under this Section available to eligible participants under
this Article within 6 months after the effective date of this
amendatory Act of the 98th General Assembly. The adoption of
the self-managed plan makes available to eligible participants
under this Article the election described in Section 14-130.6.
The System shall be the plan sponsor for the self-managed
plan and shall prepare a plan document and adopt any rules and
procedures that are considered necessary or desirable for the
administration of the self-managed plan. Consistent with its
fiduciary duty to the participants and beneficiaries of the
self-managed plan, the Board of Trustees of the System may
delegate aspects of plan administration as it sees fit to
companies authorized to do business in this State.
(c) The System shall solicit proposals to provide
administrative services and funding vehicles for the
self-managed plan from insurance and annuity companies, mutual
fund companies, banks, trust companies, or other financial
institutions authorized to do business in this State. In
reviewing the proposals received and approving and contracting
with no fewer than 2 and no more than 7 companies, the Board of

09800HB1678ham001 - 40 - LRB098 09623 EFG 41996 a
Trustees of the System shall consider, among other things, the
following criteria:
(1) the nature and extent of the benefits that would be
provided to the participants;
(2) the reasonableness of the benefits in relation to
the premium charged;
(3) the suitability of the benefits to the needs and
interests of the participants and the employers; and
(4) the ability of the company to provide benefits
under the contract and the financial stability of the
company.
The System shall periodically review each approved
company. A company may continue to provide administrative
services and funding vehicles for the self-managed plan only so
long as it continues to be an approved company under contract
with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the Illinois State Board of
Investment.
(d) Participants in the program must be allowed to direct
the transfer of their account balances among the various
investment options offered, subject to applicable contractual
provisions. The participant shall not be deemed a fiduciary by
reason of providing such investment direction. A person who is
a fiduciary shall not be liable for any loss resulting from

09800HB1678ham001 - 41 - LRB098 09623 EFG 41996 a
that investment direction and shall not be deemed to have
breached any fiduciary duty by acting in accordance with that
direction. Neither the System nor the State shall guarantee any
of the investments in the participant's account balances.
(e) In order to participate in the self-managed plan, an
eligible participant, as defined in Section 7-140.5, must make
a written election in accordance with the provisions of that
Section and the procedures established by the System.
Participation in the self-managed plan shall begin on the first
day of the month immediately following the month in which the
participant's election is filed with the System, but not sooner
than the effective date of the self-managed plan. A person's
participation in the defined benefit package under this Article
shall terminate on the date that participation in the
self-managed plan begins.
A person who has elected to participate in the self-managed
plan under this Section must continue participation while he or
she remains a participant under this Article, and may not
participate in the defined benefit package.
Participation in the self-managed plan under this Section
shall constitute participation in the System.
Notwithstanding any other provision of this Article, a
participant in the self-managed plan may not purchase or
receive service credit applicable to the defined benefit
package under this Article for any period during which the
employee was a participant in the self-managed plan established

09800HB1678ham001 - 42 - LRB098 09623 EFG 41996 a
under this Section.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.
(f) If, at the time a participant begins to participate in
the self-managed plan, the participant has rights and credits
in the System due to previous participation in the defined
benefit package, the System shall establish for the participant
an opening account balance in the self-managed plan, equal to
(1) the amount of the refund that the participant would be
eligible to receive if the participant terminated employment on
that date and elected a refund and (2) an amount, representing
employer contributions, equal to the amount of employee
contributions, plus interest. The interest used in this
subsection (f) shall be calculated using the actual annual
rates of return that the System has earned during the time
period corresponding to the actual investment of the
contributions being transferred. The System shall transfer
assets to the self-managed plan as a tax-free transfer in
accordance with Internal Revenue Service guidelines, for
purposes of funding the participant's opening account balance.
(g) A participant in the self-managed plan is covered by
the disability benefits of the System. An amount of employer
contribution, not exceeding 1% of the participating employee's
salary, shall be used for the purpose of providing the
disability benefits of the System to the participant. Prior to
the beginning of each plan year under the self-managed plan,

09800HB1678ham001 - 43 - LRB098 09623 EFG 41996 a
the Board of Trustees shall determine, as a percentage of
salary, the amount of employer contributions to be allocated
during that plan year for providing disability benefits for
employees in the self-managed plan.
(h) The self-managed plan shall be funded by contributions
from participants in the self-managed plan and employer
contributions as provided in this Section.
The contribution rate for participants in the self-managed
plan under this Section shall be equal to the member
contribution rate for other participants in the System, as
provided in Section 14-133. This required contribution shall be
made as an employer pick-up under Section 414(h) of the
Internal Revenue Code of 1986 or any successor Section thereof.
Any participant in the System's defined benefit package before
his or her election to participate in the self-managed plan
shall continue to have the employer pick up the contributions
required under Section 14-133. However, the amounts picked up
after beginning participation in the self-managed plan shall be
remitted to and treated as assets of the self-managed plan. In
no event shall a participant have the option of receiving these
amounts in cash. Participants may make additional
contributions to the self-managed plan in accordance with
procedures prescribed by the System, to the extent permitted
under rules adopted by the System.
The plan shall provide for employer contributions to be
credited to each self-managed plan participant in an amount

09800HB1678ham001 - 44 - LRB098 09623 EFG 41996 a
equal to the employee contributions, less the amount used by
the System to provide disability benefits for the employee. The
amounts so credited shall be paid into the participant's
self-managed plan accounts in a manner to be prescribed by the
System.
Employer contributions for participants in the
self-managed plan shall be paid to the System by the State and
shall be included in the calculation of required State
contributions under Section 14-131. The System shall not be
obligated to remit the required employer contributions to any
of the insurance and annuity companies, mutual fund companies,
banks, trust companies, financial institutions, or other
sponsors of any of the funding vehicles offered under the
self-managed plan until it has received the required employer
contributions from the State.
(i) A participant in the self-managed plan becomes vested
in the employer contributions credited to his or her accounts
in the self-managed plan on the earliest to occur of the
following: (1) attainment of 5 years of service credit; (2) the
death of the participating member while employed under this
Article, if the member has completed at least 1.5 years of
service; or (3) the member's election to retire and apply the
reciprocal provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article

09800HB1678ham001 - 45 - LRB098 09623 EFG 41996 a
(and Article 20, if applicable) shall forfeit all service
credit and accrued rights in the System; if he or she
subsequently becomes a participant under this Article again, he
or she shall be considered a new participant. If a former
participant again becomes a participant (or becomes employed by
a participating system under Article 20 of this Code) and
continues as such for at least 2 years, all rights, service
credits, and previous status as a participant shall be restored
upon repayment of the amount of the distribution, with interest
at the actuarially assumed rate from the date of distribution
to the date of payment.
(j) If a participant in the self-managed plan who is vested
in employer contributions terminates employment, the
participant shall be entitled to a benefit that is based on the
account values attributable to both employer and employee
contributions and any investment return thereon.
If a participant in the self-managed plan who is not vested
in employer contributions terminates employment, the
participant shall be entitled to a benefit based solely on the
account values attributable to the participant's contributions
and any investment return thereon, and the employer
contributions and any investment return thereon shall be
forfeited. Any employer contributions that are forfeited shall
be held in escrow by the company investing those contributions
and shall be used, as directed by the System, for future
allocations of employer contributions or for the restoration of

09800HB1678ham001 - 46 - LRB098 09623 EFG 41996 a
amounts previously forfeited.
(40 ILCS 5/14-130.6 new)
Sec. 14-130.6. Election to participate in the self-managed
plan.
(a) For the purposes of this Section and Section 14-130.5:
"Eligible participant" means either a currently eligible
participant or a newly eligible participant of the System.
"Currently eligible participant" means a person who is a
participant under this Article before the day on which the
System first offers the self-managed plan as an alternative to
the defined benefit package.
"Newly eligible participant" means a person who first
becomes a participant under this Article on or after the date
on which the System first offers the self-managed plan as an
alternative to the defined benefit package.
(b) Each eligible participant shall be given an opportunity
to elect to participate in the self-managed plan rather than
the defined benefit package. An election to participate in the
self-managed plan applies to all periods of employment under
this System, including employment occurring on, before, and
after the effective date of the participant's election. An
eligible participant who does not make an election under this
Section shall, by default, participate in the defined benefit
package.
An election to participate in the self-managed plan is

09800HB1678ham001 - 47 - LRB098 09623 EFG 41996 a
irrevocable. If an eligible participant who participates in the
defined benefit package terminates employment under this
Article, then the participant, upon his or her subsequent
re-employment under this Article, may make an election under
this Section.
(c) The election must be made in writing, in the manner
prescribed by the System, and within the required time period.
A currently eligible participant may make the election within
one year after the day on which the System first offers the
self-managed plan. A newly eligible participant may make the
election within 60 days after first becoming a participant
under this Article. An eligible participant who terminates
employment under this Article without having made an election
to participate in the self-managed plan and later returns to
employment under this Article may make the election within 60
days after returning to employment under this Article.
(d) If an eligible participant elects to participate in the
self-managed plan, the System shall fund his or her account as
stated in subsection (f) of Section 14-130.5.
(e) An eligible participant shall be provided with written
information prepared or prescribed by the System that describes
the participant's retirement program choices. The eligible
participant shall be offered an opportunity to receive
counseling from the System before making his or her election.
This counseling may consist of videotaped materials, group
presentations, individual consultation with an employee or

09800HB1678ham001 - 48 - LRB098 09623 EFG 41996 a
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods.
(40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)
Sec. 14-133. Contributions on behalf of members.
(a) Each participating employee shall make contributions
to the System, based on the employee's compensation, as
follows:
(1) Covered employees, except as indicated below, 3.5%
for retirement annuity, and 0.5% for a widow or survivors
annuity;
(2) Noncovered employees, except as indicated below,
7% for retirement annuity and 1% for a widow or survivors
annuity;
(3) Noncovered employees serving in a position in which
"eligible creditable service" as defined in Section 14-110
may be earned, 1% for a widow or survivors annuity plus the
following amount for retirement annuity: 8.5% through
December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5%
in 2004 and thereafter;
(4) Covered employees serving in a position in which
"eligible creditable service" as defined in Section 14-110
may be earned, 0.5% for a widow or survivors annuity plus
the following amount for retirement annuity: 5% through
December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004

09800HB1678ham001 - 49 - LRB098 09623 EFG 41996 a
and thereafter;
(5) Each security employee of the Department of
Corrections or of the Department of Human Services who is a
covered employee, 0.5% for a widow or survivors annuity
plus the following amount for retirement annuity: 5%
through December 31, 2001; 6% in 2002; 7% in 2003; and 8%
in 2004 and thereafter;
(6) Each security employee of the Department of
Corrections or of the Department of Human Services who is
not a covered employee, 1% for a widow or survivors annuity
plus the following amount for retirement annuity: 8.5%
through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and
11.5% in 2004 and thereafter.
(a-5) In the case of an employee who participates in the
self-managed plan under Section 14-130.5, the contributions
required under this Section shall instead be used to finance
the benefits available under the self-managed plan.
(b) Contributions shall be in the form of a deduction from
compensation and shall be made notwithstanding that the
compensation paid in cash to the employee shall be reduced
thereby below the minimum prescribed by law or regulation. Each
member is deemed to consent and agree to the deductions from
compensation provided for in this Article, and shall receipt in
full for salary or compensation.
(Source: P.A. 92-14, eff. 6-28-01.)

09800HB1678ham001 - 50 - LRB098 09623 EFG 41996 a
(40 ILCS 5/14-152.1)
Sec. 14-152.1. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after June 1, 2005 (the
effective date of Public Act 94-4). "New benefit increase",
however, does not include any benefit increase resulting from
the changes made to this Article by Public Act 96-37 or by this
amendatory Act of the 98th 96th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and

09800HB1678ham001 - 51 - LRB098 09623 EFG 41996 a
shall report its analysis to the Public Pension Division of the
Department of Financial and Professional Regulation. A new
benefit increase created by a Public Act that does not include
the additional funding required under this subsection is null
and void. If the Public Pension Division determines that the
additional funding provided for a new benefit increase under
this subsection is or has become inadequate, it may so certify
to the Governor and the State Comptroller and, in the absence
of corrective action by the General Assembly, the new benefit
increase shall expire at the end of the fiscal year in which
the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new

09800HB1678ham001 - 52 - LRB098 09623 EFG 41996 a
benefit increase was in effect.
(Source: P.A. 96-37, eff. 7-13-09.)
(40 ILCS 5/16-115.1 new)
Sec. 16-115.1. Defined benefit package.
"Defined benefit package" means either the traditional
benefit package or the reformed benefit package, whichever
would apply to an employee if he or she does not participate in
the self-managed plan.
"Traditional benefit package" means the benefits provided
under this Article, other than the self-managed plan, without
modification by Section 1-160 of this Code.
"Reformed benefit package" means the traditional benefit
package as modified by Section 1-160 of this Code for certain
persons who first become participants of the System on or after
January 1, 2011.
(40 ILCS 5/16-115.2 new)
Sec. 16-115.2. Self-managed plan. "Self-managed plan"
means the defined contribution retirement program maintained
by the System and established under Section 16-151.5. The
self-managed plan includes disability benefits, but does not
include any other annuity or refund payable directly by the
System under the defined benefit package.
(40 ILCS 5/16-151.5 new)

09800HB1678ham001 - 53 - LRB098 09623 EFG 41996 a
Sec. 16-151.5. Self-managed plan.
(a) The General Assembly finds that the System should
provide a defined contribution (self-managed) plan for
eligible participants. Accordingly, the System is hereby
directed to establish and administer a self-managed plan, which
shall offer participants the opportunity to accumulate assets
for retirement through a combination of participant and
employer contributions that may be invested in mutual funds,
collective investment funds, or other investment products and
used to purchase annuity contracts that are fixed, variable, or
a combination of fixed and variable. The plan must be qualified
under the Internal Revenue Code of 1986.
(b) The Board shall make the self-managed plan established
under this Section available to eligible participants under
this Article within 6 months after the effective date of this
amendatory Act of the 98th General Assembly. The adoption of
the self-managed plan makes available to eligible participants
under this Article the election described in Section 16-151.6.
The System shall be the plan sponsor for the self-managed
plan and shall prepare a plan document and adopt any rules and
procedures that are considered necessary or desirable for the
administration of the self-managed plan. Consistent with its
fiduciary duty to the participants and beneficiaries of the
self-managed plan, the Board of Trustees of the System may
delegate aspects of plan administration as it sees fit to
companies authorized to do business in this State.

09800HB1678ham001 - 54 - LRB098 09623 EFG 41996 a
(c) The System shall solicit proposals to provide
administrative services and funding vehicles for the
self-managed plan from insurance and annuity companies, mutual
fund companies, banks, trust companies, or other financial
institutions authorized to do business in this State. In
reviewing the proposals received and approving and contracting
with no fewer than 2 and no more than 7 companies, the Board of
Trustees of the System shall consider, among other things, the
following criteria:
(1) the nature and extent of the benefits that would be
provided to the participants;
(2) the reasonableness of the benefits in relation to
the premium charged;
(3) the suitability of the benefits to the needs and
interests of the participants and the employers; and
(4) the ability of the company to provide benefits
under the contract and the financial stability of the
company.
The System shall periodically review each approved
company. A company may continue to provide administrative
services and funding vehicles for the self-managed plan only so
long as it continues to be an approved company under contract
with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the Illinois State Board of

09800HB1678ham001 - 55 - LRB098 09623 EFG 41996 a
Investment.
(d) Participants in the program must be allowed to direct
the transfer of their account balances among the various
investment options offered, subject to applicable contractual
provisions. The participant shall not be deemed a fiduciary by
reason of providing such investment direction. A person who is
a fiduciary shall not be liable for any loss resulting from
that investment direction and shall not be deemed to have
breached any fiduciary duty by acting in accordance with that
direction. Neither the System nor the State shall guarantee any
of the investments in the participant's account balances.
(e) In order to participate in the self-managed plan, an
eligible participant, as defined in Section 7-140.5, must make
a written election in accordance with the provisions of that
Section and the procedures established by the System.
Participation in the self-managed plan shall begin on the first
day of the month immediately following the month in which the
participant's election is filed with the System, but not sooner
than the effective date of the self-managed plan. A person's
participation in the defined benefit package under this Article
shall terminate on the date that participation in the
self-managed plan begins.
A person who has elected to participate in the self-managed
plan under this Section must continue participation while he or
she remains a participant under this Article, and may not
participate in the defined benefit package.

09800HB1678ham001 - 56 - LRB098 09623 EFG 41996 a
Participation in the self-managed plan under this Section
shall constitute participation in the System.
Notwithstanding any other provision of this Article, a
participant in the self-managed plan may not purchase or
receive service credit applicable to the defined benefit
package under this Article for any period during which the
employee was a participant in the self-managed plan established
under this Section.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.
(f) If, at the time a participant begins to participate in
the self-managed plan, the participant has rights and credits
in the System due to previous participation in the defined
benefit package, the System shall establish for the participant
an opening account balance in the self-managed plan, equal to
(1) the amount of the refund that the participant would be
eligible to receive if the participant terminated employment on
that date and elected a refund and (2) an amount, representing
employer contributions, equal to the amount of employee
contributions, plus interest. The interest used in this
subsection (f) shall be calculated using the actual annual
rates of return that the System has earned during the time
period corresponding to the actual investment of the
contributions being transferred. The System shall transfer
assets to the self-managed plan as a tax-free transfer in
accordance with Internal Revenue Service guidelines, for

09800HB1678ham001 - 57 - LRB098 09623 EFG 41996 a
purposes of funding the participant's opening account balance.
(g) A participant in the self-managed plan is covered by
the disability benefits of the System. An amount of employer
contribution, not exceeding 1% of the participating employee's
salary, shall be used for the purpose of providing the
disability benefits of the System to the participant. Prior to
the beginning of each plan year under the self-managed plan,
the Board of Trustees shall determine, as a percentage of
salary, the amount of employer contributions to be allocated
during that plan year for providing disability benefits for
employees in the self-managed plan.
(h) The self-managed plan shall be funded by contributions
from participants in the self-managed plan and employer
contributions as provided in this Section.
The contribution rate for participants in the self-managed
plan under this Section shall be equal to the member
contribution rate for other participants in the System, as
provided in Section 16-152. This required contribution shall be
made as an employer pick-up under Section 414(h) of the
Internal Revenue Code of 1986 or any successor Section thereof.
Any participant in the System's defined benefit package before
his or her election to participate in the self-managed plan
shall continue to have the employer pick up the contributions
required under Section 16-158. However, the amounts picked up
after beginning participation in the self-managed plan shall be
remitted to and treated as assets of the self-managed plan. In

09800HB1678ham001 - 58 - LRB098 09623 EFG 41996 a
no event shall a participant have the option of receiving these
amounts in cash. Participants may make additional
contributions to the self-managed plan in accordance with
procedures prescribed by the System, to the extent permitted
under rules adopted by the System.
The plan shall provide for employer contributions to be
credited to each self-managed plan participant in an amount
equal to the employee contributions, less the amount used by
the System to provide disability benefits for the employee. The
amounts so credited shall be paid into the participant's
self-managed plan accounts in a manner to be prescribed by the
System.
Employer contributions for participants in the
self-managed plan shall be paid to the System by the State and
shall be included in the calculation of required State
contributions under Section 16-158. The System shall not be
obligated to remit the required employer contributions to any
of the insurance and annuity companies, mutual fund companies,
banks, trust companies, financial institutions, or other
sponsors of any of the funding vehicles offered under the
self-managed plan until it has received the required employer
contributions from the State.
(i) A participant in the self-managed plan becomes vested
in the employer contributions credited to his or her accounts
in the self-managed plan on the earliest to occur of the
following: (1) attainment of 5 years of service credit; (2) the

09800HB1678ham001 - 59 - LRB098 09623 EFG 41996 a
death of the participating member while employed under this
Article, if the member has completed at least 1.5 years of
service; or (3) the member's election to retire and apply the
reciprocal provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article
(and Article 20, if applicable) shall forfeit all service
credit and accrued rights in the System; if he or she
subsequently becomes a participant under this Article again, he
or she shall be considered a new participant. If a former
participant again becomes a participant (or becomes employed by
a participating system under Article 20 of this Code) and
continues as such for at least 2 years, all rights, service
credits, and previous status as a participant shall be restored
upon repayment of the amount of the distribution, with interest
at the actuarially assumed rate from the date of distribution
to the date of payment.
(j) If a participant in the self-managed plan who is vested
in employer contributions terminates employment, the
participant shall be entitled to a benefit that is based on the
account values attributable to both employer and employee
contributions and any investment return thereon.
If a participant in the self-managed plan who is not vested
in employer contributions terminates employment, the
participant shall be entitled to a benefit based solely on the

09800HB1678ham001 - 60 - LRB098 09623 EFG 41996 a
account values attributable to the participant's contributions
and any investment return thereon, and the employer
contributions and any investment return thereon shall be
forfeited. Any employer contributions that are forfeited shall
be held in escrow by the company investing those contributions
and shall be used, as directed by the System, for future
allocations of employer contributions or for the restoration of
amounts previously forfeited.
(40 ILCS 5/16-151.6 new)
Sec. 16-151.6. Election to participate in the self-managed
plan.
(a) For the purposes of this Section and Section 16-151.5:
"Eligible participant" means either a currently eligible
participant or a newly eligible participant of the System.
"Currently eligible participant" means a person who is a
participant under this Article before the day on which the
System first offers the self-managed plan as an alternative to
the defined benefit package.
"Newly eligible participant" means a person who first
becomes a participant under this Article on or after the date
on which the System first offers the self-managed plan as an
alternative to the defined benefit package.
(b) Each eligible participant shall be given an opportunity
to elect to participate in the self-managed plan rather than
the defined benefit package. An election to participate in the

09800HB1678ham001 - 61 - LRB098 09623 EFG 41996 a
self-managed plan applies to all periods of employment under
this System, including employment occurring on, before, and
after the effective date of the participant's election. An
eligible participant who does not make an election under this
Section shall, by default, participate in the defined benefit
package.
An election to participate in the self-managed plan is
irrevocable. If an eligible participant who participates in the
defined benefit package terminates employment under this
Article, then the participant, upon his or her subsequent
re-employment under this Article, may make an election under
this Section.
(c) The election must be made in writing, in the manner
prescribed by the System, and within the required time period.
A currently eligible participant may make the election within
one year after the day on which the System first offers the
self-managed plan. A newly eligible participant may make the
election within 60 days after first becoming a participant
under this Article. An eligible participant who terminates
employment under this Article without having made an election
to participate in the self-managed plan and later returns to
employment under this Article may make the election within 60
days after returning to employment under this Article.
(d) If an eligible participant elects to participate in the
self-managed plan, the System shall fund his or her account as
stated in subsection (f) of Section 16-151.5.

09800HB1678ham001 - 62 - LRB098 09623 EFG 41996 a
(e) An eligible participant shall be provided with written
information prepared or prescribed by the System that describes
the participant's retirement program choices. The eligible
participant shall be offered an opportunity to receive
counseling from the System before making his or her election.
This counseling may consist of videotaped materials, group
presentations, individual consultation with an employee or
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods.
(40 ILCS 5/16-152) (from Ch. 108 1/2, par. 16-152)
Sec. 16-152. Contributions by members.
(a) Each member shall make contributions for membership
service to this System as follows:
(1) Effective July 1, 1998, contributions of 7.50% of
salary towards the cost of the retirement annuity. Such
contributions shall be deemed "normal contributions".
(2) Effective July 1, 1969, contributions of 1/2 of 1%
of salary toward the cost of the automatic annual increase
in retirement annuity provided under Section 16-133.1.
(3) Effective July 24, 1959, contributions of 1% of
salary towards the cost of survivor benefits. Such
contributions shall not be credited to the individual
account of the member and shall not be subject to refund
except as provided under Section 16-143.2.

09800HB1678ham001 - 63 - LRB098 09623 EFG 41996 a
(4) Effective July 1, 2005, contributions of 0.40% of
salary toward the cost of the early retirement without
discount option provided under Section 16-133.2. This
contribution shall cease upon termination of the early
retirement without discount option as provided in Section
16-176.
(b) The minimum required contribution for any year of
full-time teaching service shall be $192.
(c) Contributions shall not be required of any annuitant
receiving a retirement annuity who is given employment as
permitted under Section 16-118 or 16-150.1.
(d) A person who (i) was a member before July 1, 1998, (ii)
retires with more than 34 years of creditable service, and
(iii) does not elect to qualify for the augmented rate under
Section 16-129.1 shall be entitled, at the time of retirement,
to receive a partial refund of contributions made under this
Section for service occurring after the later of June 30, 1998
or attainment of 34 years of creditable service, in an amount
equal to 1.00% of the salary upon which those contributions
were based.
(e) A member's contributions toward the cost of early
retirement without discount made under item (a)(4) of this
Section shall not be refunded if the member has elected early
retirement without discount under Section 16-133.2 and has
begun to receive a retirement annuity under this Article
calculated in accordance with that election. Otherwise, a

09800HB1678ham001 - 64 - LRB098 09623 EFG 41996 a
member's contributions toward the cost of early retirement
without discount made under item (a)(4) of this Section shall
be refunded according to whichever one of the following
circumstances occurs first:
(1) The contributions shall be refunded to the member,
without interest, within 120 days after the member's
retirement annuity commences, if the member does not elect
early retirement without discount under Section 16-133.2.
(2) The contributions shall be included, without
interest, in any refund claimed by the member under Section
16-151.
(3) The contributions shall be refunded to the member's
designated beneficiary (or if there is no beneficiary, to
the member's estate), without interest, if the member dies
without having begun to receive a retirement annuity under
this Article.
(4) The contributions shall be refunded to the member,
without interest, within 120 days after the early
retirement without discount option provided under Section
16-133.2 is terminated under Section 16-176.
(f) In the case of a member who participates in the
self-managed plan under Section 16-151.5, the contributions
required under this Section shall instead be used to finance
the benefits available under the self-managed plan.
(Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)

09800HB1678ham001 - 65 - LRB098 09623 EFG 41996 a
(40 ILCS 5/16-203)
Sec. 16-203. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after June 1, 2005 (the
effective date of Public Act 94-4). "New benefit increase",
however, does not include any benefit increase resulting from
the changes made to this Article by public Act 95-910 or by
this amendatory Act of the 98th 95th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and

09800HB1678ham001 - 66 - LRB098 09623 EFG 41996 a
shall report its analysis to the Public Pension Division of the
Department of Financial and Professional Regulation. A new
benefit increase created by a Public Act that does not include
the additional funding required under this subsection is null
and void. If the Public Pension Division determines that the
additional funding provided for a new benefit increase under
this subsection is or has become inadequate, it may so certify
to the Governor and the State Comptroller and, in the absence
of corrective action by the General Assembly, the new benefit
increase shall expire at the end of the fiscal year in which
the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new

09800HB1678ham001 - 67 - LRB098 09623 EFG 41996 a
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05; 95-910, eff. 8-26-08.)
(40 ILCS 5/18-110.1 new)
Sec. 18-110.1. Defined benefit package.
"Defined benefit package" means either the traditional
benefit package or the reformed benefit package, whichever
would apply to a participant if he or she does not participate
in the self-managed plan.
"Traditional benefit package" means the benefits provided
under this Article, other than the self-managed plan, for
persons who first became participants of the System before
January 1, 2011.
"Reformed benefit package" means the traditional benefit
package as modified for persons who first become participants
of the System on or after January 1, 2011.
(40 ILCS 5/18-110.2 new)
Sec. 18-110.2. Self-managed plan. "Self-managed plan"
means the defined contribution retirement program maintained
by the System and established under Section 18-130.1. The
self-managed plan includes disability benefits, but does not
include any other annuity or refund payable directly by the
System under the defined benefit package.
(40 ILCS 5/18-130.1 new)

09800HB1678ham001 - 68 - LRB098 09623 EFG 41996 a
Sec. 18-130.1. Self-managed plan.
(a) The General Assembly finds that the System should
provide a defined contribution (self-managed) plan for
eligible participants. Accordingly, the System is hereby
directed to establish and administer a self-managed plan, which
shall offer participants the opportunity to accumulate assets
for retirement through a combination of participant and
employer contributions that may be invested in mutual funds,
collective investment funds, or other investment products and
used to purchase annuity contracts that are fixed, variable, or
a combination of fixed and variable. The plan must be qualified
under the Internal Revenue Code of 1986.
(b) The Board shall make the self-managed plan established
under this Section available to eligible participants under
this Article within 6 months after the effective date of this
amendatory Act of the 98th General Assembly. The adoption of
the self-managed plan makes available to eligible participants
under this Article the election described in Section 18-130.2.
The System shall be the plan sponsor for the self-managed
plan and shall prepare a plan document and adopt any rules and
procedures that are considered necessary or desirable for the
administration of the self-managed plan. Consistent with its
fiduciary duty to the participants and beneficiaries of the
self-managed plan, the Board of Trustees of the System may
delegate aspects of plan administration as it sees fit to
companies authorized to do business in this State.

09800HB1678ham001 - 69 - LRB098 09623 EFG 41996 a
(c) The System shall solicit proposals to provide
administrative services and funding vehicles for the
self-managed plan from insurance and annuity companies, mutual
fund companies, banks, trust companies, or other financial
institutions authorized to do business in this State. In
reviewing the proposals received and approving and contracting
with no fewer than 2 and no more than 7 companies, the Board of
Trustees of the System shall consider, among other things, the
following criteria:
(1) the nature and extent of the benefits that would be
provided to the participants;
(2) the reasonableness of the benefits in relation to
the premium charged;
(3) the suitability of the benefits to the needs and
interests of the participants and the employers; and
(4) the ability of the company to provide benefits
under the contract and the financial stability of the
company.
The System shall periodically review each approved
company. A company may continue to provide administrative
services and funding vehicles for the self-managed plan only so
long as it continues to be an approved company under contract
with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the Illinois State Board of

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Investment.
(d) Participants in the program must be allowed to direct
the transfer of their account balances among the various
investment options offered, subject to applicable contractual
provisions. The participant shall not be deemed a fiduciary by
reason of providing such investment direction. A person who is
a fiduciary shall not be liable for any loss resulting from
that investment direction and shall not be deemed to have
breached any fiduciary duty by acting in accordance with that
direction. Neither the System nor the State shall guarantee any
of the investments in the participant's account balances.
(e) In order to participate in the self-managed plan, an
eligible participant, as defined in Section 7-140.5, must make
a written election in accordance with the provisions of that
Section and the procedures established by the System.
Participation in the self-managed plan shall begin on the first
day of the month immediately following the month in which the
participant's election is filed with the System, but not sooner
than the effective date of the self-managed plan. A person's
participation in the defined benefit package under this Article
shall terminate on the date that participation in the
self-managed plan begins.
A person who has elected to participate in the self-managed
plan under this Section must continue participation while he or
she remains a participant under this Article, and may not
participate in the defined benefit package.

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Participation in the self-managed plan under this Section
shall constitute participation in the System.
Notwithstanding any other provision of this Article, a
participant in the self-managed plan may not purchase or
receive service credit applicable to the defined benefit
package under this Article for any period during which the
employee was a participant in the self-managed plan established
under this Section.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.
(f) If, at the time a participant begins to participate in
the self-managed plan, the participant has rights and credits
in the System due to previous participation in the defined
benefit package, the System shall establish for the participant
an opening account balance in the self-managed plan, equal to
(1) the amount of the refund that the participant would be
eligible to receive if the participant terminated employment on
that date and elected a refund and (2) an amount, representing
employer contributions, equal to the amount of employee
contributions, plus interest. The interest used in this
subsection (f) shall be calculated using the actual annual
rates of return that the System has earned during the time
period corresponding to the actual investment of the
contributions being transferred. The System shall transfer
assets to the self-managed plan as a tax-free transfer in
accordance with Internal Revenue Service guidelines, for

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purposes of funding the participant's opening account balance.
(g) A participant in the self-managed plan is covered by
the disability benefits of the System. An amount of employer
contribution, not exceeding 1% of the participating employee's
salary, shall be used for the purpose of providing the
disability benefits of the System to the participant. Prior to
the beginning of each plan year under the self-managed plan,
the Board of Trustees shall determine, as a percentage of
salary, the amount of employer contributions to be allocated
during that plan year for providing disability benefits for
employees in the self-managed plan.
(h) The self-managed plan shall be funded by contributions
from participants in the self-managed plan and employer
contributions as provided in this Section.
The contribution rate for participants in the self-managed
plan under this Section shall be equal to the member
contribution rate for other participants in the System, as
provided in Section 18-133. This required contribution shall be
made as an employer pick-up under Section 414(h) of the
Internal Revenue Code of 1986 or any successor Section thereof.
Any participant in the System's defined benefit package before
his or her election to participate in the self-managed plan
shall continue to have the employer pick up the contributions
required under Section 18-133. However, the amounts picked up
after beginning participation in the self-managed plan shall be
remitted to and treated as assets of the self-managed plan. In

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no event shall a participant have the option of receiving these
amounts in cash. Participants may make additional
contributions to the self-managed plan in accordance with
procedures prescribed by the System, to the extent permitted
under rules adopted by the System.
The plan shall provide for employer contributions to be
credited to each self-managed plan participant in an amount
equal to the employee contributions, less the amount used by
the System to provide disability benefits for the employee. The
amounts so credited shall be paid into the participant's
self-managed plan accounts in a manner to be prescribed by the
System.
Employer contributions for participants in the
self-managed plan shall be paid to the System by the State and
shall be included in the calculation of required State
contributions under Section 18-131. The System shall not be
obligated to remit the required employer contributions to any
of the insurance and annuity companies, mutual fund companies,
banks, trust companies, financial institutions, or other
sponsors of any of the funding vehicles offered under the
self-managed plan until it has received the required employer
contributions from the State.
(i) A participant in the self-managed plan becomes vested
in the employer contributions credited to his or her accounts
in the self-managed plan on the earliest to occur of the
following: (1) attainment of 5 years of service credit; (2) the

09800HB1678ham001 - 74 - LRB098 09623 EFG 41996 a
death of the participating member while employed under this
Article, if the member has completed at least 1.5 years of
service; or (3) the member's election to retire and apply the
reciprocal provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article
(and Article 20, if applicable) shall forfeit all service
credit and accrued rights in the System; if he or she
subsequently becomes a participant under this Article again, he
or she shall be considered a new participant. If a former
participant again becomes a participant (or becomes employed by
a participating system under Article 20 of this Code) and
continues as such for at least 2 years, all rights, service
credits, and previous status as a participant shall be restored
upon repayment of the amount of the distribution, with interest
at the actuarially assumed rate from the date of distribution
to the date of payment.
(j) If a participant in the self-managed plan who is vested
in employer contributions terminates employment, the
participant shall be entitled to a benefit that is based on the
account values attributable to both employer and employee
contributions and any investment return thereon.
If a participant in the self-managed plan who is not vested
in employer contributions terminates employment, the
participant shall be entitled to a benefit based solely on the

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account values attributable to the participant's contributions
and any investment return thereon, and the employer
contributions and any investment return thereon shall be
forfeited. Any employer contributions that are forfeited shall
be held in escrow by the company investing those contributions
and shall be used, as directed by the System, for future
allocations of employer contributions or for the restoration of
amounts previously forfeited.
(40 ILCS 5/18-130.2 new)
Sec. 18-130.2. Election to participate in the self-managed
plan.
(a) For the purposes of this Section and Section 18-130.1:
"Eligible participant" means either a currently eligible
participant or a newly eligible participant of the System.
"Currently eligible participant" means a person who is a
participant under this Article before the day on which the
System first offers the self-managed plan as an alternative to
the defined benefit package.
"Newly eligible participant" means a person who first
becomes a participant under this Article on or after the date
on which the System first offers the self-managed plan as an
alternative to the defined benefit package.
(b) Each eligible participant shall be given an opportunity
to elect to participate in the self-managed plan rather than
the defined benefit package. An election to participate in the

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self-managed plan applies to all periods of employment under
this System, including employment occurring on, before, and
after the effective date of the participant's election. An
eligible participant who does not make an election under this
Section shall, by default, participate in the defined benefit
package.
An election to participate in the self-managed plan is
irrevocable. If an eligible participant who participates in the
defined benefit package terminates employment under this
Article, then the participant, upon his or her subsequent
re-employment under this Article, may make an election under
this Section.
(c) The election must be made in writing, in the manner
prescribed by the System, and within the required time period.
A currently eligible participant may make the election within
one year after the day on which the System first offers the
self-managed plan. A newly eligible participant may make the
election within 60 days after first becoming a participant
under this Article. An eligible participant who terminates
employment under this Article without having made an election
to participate in the self-managed plan and later returns to
employment under this Article may make the election within 60
days after returning to employment under this Article.
(d) If an eligible participant elects to participate in the
self-managed plan, the System shall fund his or her account as
stated in subsection (f) of Section 18-130.1.

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(e) An eligible participant shall be provided with written
information prepared or prescribed by the System that describes
the participant's retirement program choices. The eligible
participant shall be offered an opportunity to receive
counseling from the System before making his or her election.
This counseling may consist of videotaped materials, group
presentations, individual consultation with an employee or
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods.
(40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)
Sec. 18-133. Financing; employee contributions.
(a) Effective July 1, 1967, each participant is required to
contribute 7 1/2% of each payment of salary toward the
retirement annuity. Such contributions shall continue during
the entire time the participant is in service, with the
following exceptions:
(1) Contributions for the retirement annuity are not
required on salary received after 18 years of service by
persons who were participants before January 2, 1954.
(2) A participant who continues to serve as a judge
after becoming eligible to receive the maximum rate of
annuity may elect, through a written direction filed with
the Board, to discontinue contributing to the System. Any
such option elected by a judge shall be irrevocable unless

09800HB1678ham001 - 78 - LRB098 09623 EFG 41996 a
prior to January 1, 2000, and while continuing to serve as
judge, the judge (A) files with the Board a letter
cancelling the direction to discontinue contributing to
the System and requesting that such contributing resume,
and (B) pays into the System an amount equal to the total
of the discontinued contributions plus interest thereon at
5% per annum. Service credits earned in any other
"participating system" as defined in Article 20 of this
Code shall be considered for purposes of determining a
judge's eligibility to discontinue contributions under
this subdivision (a)(2).
(3) A participant who (i) has attained age 60, (ii)
continues to serve as a judge after becoming eligible to
receive the maximum rate of annuity, and (iii) has not
elected to discontinue contributing to the System under
subdivision (a)(2) of this Section (or has revoked any such
election) may elect, through a written direction filed with
the Board, to make contributions to the System based only
on the amount of the increases in salary received by the
judge on or after the date of the election, rather than the
total salary received. If a judge who is making
contributions to the System on the effective date of this
amendatory Act of the 91st General Assembly makes an
election to limit contributions under this subdivision
(a)(3) within 90 days after that effective date, the
election shall be deemed to become effective on that

09800HB1678ham001 - 79 - LRB098 09623 EFG 41996 a
effective date and the judge shall be entitled to receive a
refund of any excess contributions paid to the System
during that 90-day period; any other election under this
subdivision (a)(3) becomes effective on the first of the
month following the date of the election. An election to
limit contributions under this subdivision (a)(3) is
irrevocable. Service credits earned in any other
participating system as defined in Article 20 of this Code
shall be considered for purposes of determining a judge's
eligibility to make an election under this subdivision
(a)(3).
(b) Beginning July 1, 1969, each participant is required to
contribute 1% of each payment of salary towards the automatic
increase in annuity provided in Section 18-125.1. However, such
contributions need not be made by any participant who has
elected prior to September 15, 1969, not to be subject to the
automatic increase in annuity provisions.
(c) Effective July 13, 1953, each married participant
subject to the survivor's annuity provisions is required to
contribute 2 1/2% of each payment of salary, whether or not he
or she is required to make any other contributions under this
Section. Such contributions shall be made concurrently with the
contributions made for annuity purposes.
(d) Notwithstanding any other provision of this Article,
the required contributions for a participant who first becomes
a participant on or after January 1, 2011 shall not exceed the

09800HB1678ham001 - 80 - LRB098 09623 EFG 41996 a
contributions that would be due under this Article if that
participant's highest salary for annuity purposes were
$106,800, plus any increase in that amount under Section
18-125. This subsection (d) does not apply to participants in
the self-managed plan.
(e) In the case of a participant who participates in the
self-managed plan under Section 18-130.1, the contributions
required under this Section shall instead be used to finance
the benefits available under the self-managed plan.
(Source: P.A. 96-1490, eff. 1-1-11.)
(40 ILCS 5/18-169)
Sec. 18-169. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly. "New benefit
increase", however, does not include any benefit increase
resulting from the changes made to this Article by this
amendatory Act of the 98th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted

09800HB1678ham001 - 81 - LRB098 09623 EFG 41996 a
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Financial and Professional Regulation. A new
benefit increase created by a Public Act that does not include
the additional funding required under this subsection is null
and void. If the Public Pension Division determines that the
additional funding provided for a new benefit increase under
this subsection is or has become inadequate, it may so certify
to the Governor and the State Comptroller and, in the absence
of corrective action by the General Assembly, the new benefit
increase shall expire at the end of the fiscal year in which
the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General

09800HB1678ham001 - 82 - LRB098 09623 EFG 41996 a
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)
Sec. 20-121. Calculation of proportional retirement
annuities. Upon retirement of the employee, a proportional
retirement annuity shall be computed by each participating
system in which pension credit has been established on the
basis of pension credits under each system. The computation
shall be in accordance with the formula or method prescribed by
each participating system which is in effect at the date of the
employee's latest withdrawal from service covered by any of the
systems in which he has pension credits which he elects to have
considered under this Article. However, the amount of any
retirement annuity payable under the self-managed plan

09800HB1678ham001 - 83 - LRB098 09623 EFG 41996 a
established under Section 2-135.5, 14-130.5, 15-158.2,
16-151.5, or 18-130.1 of this Code depends solely on the value
of the participant's vested account balances and is not subject
to any proportional adjustment under this Section.
Combined pension credit under all retirement systems
subject to this Article shall be considered in determining
whether the minimum qualification has been met and the formula
or method of computation which shall be applied. If a system
has a step-rate formula for calculation of the retirement
annuity, pension credits covering previous service which have
been established under another system shall be considered in
determining which range or ranges of the step-rate formula are
to be applicable to the employee.
Interest on pension credit shall continue to accumulate in
accordance with the provisions of the law governing the
retirement system in which the same has been established during
the time an employee is in the service of another employer, on
the assumption such employee, for interest purposes for pension
credit, is continuing in the service covered by such retirement
system.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)
Sec. 20-123. Survivor's annuity. The provisions governing
a retirement annuity shall be applicable to a survivor's
annuity. Appropriate credits shall be established for

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survivor's annuity purposes in those participating systems
which provide survivor's annuities, according to the same
conditions and subject to the same limitations and restrictions
herein prescribed for a retirement annuity. If a participating
system has no survivor's annuity benefit, or if the survivor's
annuity benefit under that system is waived, pension credit
established in that system shall not be considered in
determining eligibility for or the amount of the survivor's
annuity which may be payable by any other participating system.
For persons who participate in a self-managed plan
established under Section 2-135.5, 14-130.5, 16-151.5, or
18-130.1, pension credit established under the Article
governing that self-managed plan may be considered in
determining eligibility for or the amount of the survivor's
annuity that is payable by any other participating system, but
pension credit established in any other system shall not result
in any right to a survivor's annuity under the Article
governing that self-managed.
For persons who participate in the self-managed plan
established under Section 15-158.2 or the portable benefit
package established under Section 15-136.4, pension credit
established under Article 15 may be considered in determining
eligibility for or the amount of the survivor's annuity that is
payable by any other participating system, but pension credit
established in any other system shall not result in any right
to a survivor's annuity under the Article 15 system.

09800HB1678ham001 - 85 - LRB098 09623 EFG 41996 a
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)
Sec. 20-124. Maximum benefits.
(a) In no event shall the combined retirement or survivors
annuities exceed the highest annuity which would have been
payable by any participating system in which the employee has
pension credits, if all of his pension credits had been
validated in that system.
If the combined annuities should exceed the highest maximum
as determined in accordance with this Section, the respective
annuities shall be reduced proportionately according to the
ratio which the amount of each proportional annuity bears to
the aggregate of all such annuities.
(b) In the case of a participant in the self-managed plan
established under Section 2-135.5, 14-130.5, 16-151.5, or
18-130.1 of this Code to whom the provisions of this Article
apply:
(i) For purposes of calculating the combined
retirement annuity and the proportionate reduction, if
any, in a retirement annuity other than one payable under a
self-managed plan, the amount of the retirement annuity
under the Article governing the self-managed plan shall be
deemed to be the highest annuity to which the annuitant
would have been entitled if he or she had participated in
the defined benefit package instead of in the self-managed

09800HB1678ham001 - 86 - LRB098 09623 EFG 41996 a
plan.
(ii) For purposes of calculating the combined
survivor's annuity and the proportionate reduction, if
any, in a survivor's annuity other than one payable under a
self-managed plan, the amount of the survivor's annuity
under the Article governing the self-managed plan shall be
deemed to be the highest survivor's annuity to which the
survivor would have been entitled if the deceased person
had participated in the defined benefit package instead of
in the self-managed plan.
(iii) Benefits payable under the self-managed plan are
not subject to proportionate reduction under this Section.
(c) In the case of a participant in the self-managed plan
established under Section 15-158.2 of this Code to whom the
provisions of this Article apply:
(i) For purposes of calculating the combined
retirement annuity and the proportionate reduction, if
any, in a retirement annuity other than one payable under
the self-managed plan, the amount of the Article 15
retirement annuity shall be deemed to be the highest
annuity to which the annuitant would have been entitled if
he or she had participated in the traditional benefit
package as defined in Section 15-103.1 rather than the
self-managed plan.
(ii) For purposes of calculating the combined
survivor's annuity and the proportionate reduction, if

09800HB1678ham001 - 87 - LRB098 09623 EFG 41996 a
any, in a survivor's annuity other than one payable under
the self-managed plan, the amount of the Article 15
survivor's annuity shall be deemed to be the highest
survivor's annuity to which the survivor would have been
entitled if the deceased employee had participated in the
traditional benefit package as defined in Section 15-103.1
rather than the self-managed plan.
(iii) Benefits payable under the self-managed plan are
not subject to proportionate reduction under this Section.
(Source: P.A. 91-887, eff. 7-6-00.)
Section 99. Effective date. This Act takes effect upon
becoming law.".