Bill Text: IL HB3270 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the General Provisions Article of the Illinois Pension Code. Provides that the State Employees' Retirement System of Illinois, the State Universities Retirement System, and the Teachers' Retirement System of the State of Illinois shall establish an implementation date of no later than July 1, 2025 for specified benefits for Tier 2 members who elect to receive those benefits and persons who first become members on or after the implementation date and meet other criteria.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2023-03-10 - Rule 19(a) / Re-referred to Rules Committee [HB3270 Detail]

Download: Illinois-2023-HB3270-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3270 Introduced , by Rep. Travis Weaver SYNOPSIS AS INTRODUCED:
40 ILCS 5/1-161
Amends the General Provisions Article of the Illinois Pension Code. Provides that the State Employees' Retirement System of Illinois, the State Universities Retirement System, and the Teachers' Retirement System of the State of Illinois shall establish an implementation date of no later than July 1, 2025 for specified benefits for Tier 2 members who elect to receive those benefits and persons who first become members on or after the implementation date and meet other criteria.
LRB103 29561 RPS 55956 b
A BILL FOR
HB3270 LRB103 29561 RPS 55956 b
AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Pension Code is amended by
changing Section 1-161 as follows:
(40 ILCS 5/1-161)
Sec. 1-161. Optional benefits for certain Tier 2 members
under Articles 14, 15, and 16.
(a) Notwithstanding any other provision of this Code to
the contrary, the provisions of this Section apply to a person
who first becomes a member or a participant under Article 14,
15, or 16 on or after the implementation date under this
Section for the applicable Article and who does not make the
election under subsection (b) or (c), whichever applies. The
provisions of this Section also apply to a person who makes the
election under subsection (c-5). However, the provisions of
this Section do not apply to any participant in a self-managed
plan, nor to a covered employee under Article 14.
As used in this Section and Section 1-160, the
"implementation date" under this Section means the earliest
date upon which the board of a retirement system authorizes
members of that system to begin participating in accordance
with this Section, as determined by the board of that

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retirement system. Each of the retirement systems subject to
this Section shall endeavor to make such participation
available as soon as possible after the effective date of this
Section and shall establish an implementation date by board
resolution, but all retirement systems subject to this Section
shall establish an implementation date that is no later than
July 1, 2025.
(b) In lieu of the benefits provided under this Section, a
member or participant, except for a participant under Article
15, may irrevocably elect the benefits under Section 1-160 and
the benefits otherwise applicable to that member or
participant. The election must be made within 30 days after
becoming a member or participant. Each retirement system shall
establish procedures for making this election.
(c) A participant under Article 15 may irrevocably elect
the benefits otherwise provided to a Tier 2 member under
Article 15. The election must be made within 30 days after
becoming a member. The retirement system under Article 15
shall establish procedures for making this election.
(c-5) A non-covered participant under Article 14 to whom
Section 1-160 applies, a Tier 2 member under Article 15, or a
participant under Article 16 to whom Section 1-160 applies may
irrevocably elect to receive the benefits under this Section
in lieu of the benefits under Section 1-160 or the benefits
otherwise available to a Tier 2 member under Article 15,
whichever is applicable. Each retirement System shall

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establish procedures for making this election.
(d) "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 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 to whom this Section applies, in this Code, "final
average salary" shall be substituted for "final average
compensation" in Article 14.
(e) Beginning on the implementation date, for all purposes
under this Code (including without limitation the calculation
of benefits and employee contributions), the annual earnings,
salary, compensation, or wages (based on the plan year) of a
member or participant to whom this Section applies shall not
at any time exceed the federal Social Security Wage Base then
in effect.
(f) A member or participant is entitled to a retirement
annuity upon written application if he or she has attained the
normal retirement age determined by the Social Security
Administration for that member or participant's year of birth,
but no earlier than 67 years of age, and has at least 10 years
of service credit and is otherwise eligible under the
requirements of the applicable Article.
(g) The amount of the retirement annuity to which a member

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or participant is entitled shall be computed by multiplying
1.25% for each year of service credit by his or her final
average salary.
(h) Any retirement annuity or supplemental annuity shall
be subject to annual increases on the first anniversary of the
annuity start date. Each annual increase shall be one-half the
annual unadjusted percentage increase (but not less than zero)
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 of the originally granted
retirement annuity. If the annual unadjusted percentage change
in the consumer price index-w 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.
For the purposes of this Section, "consumer price index-w"
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
Urban Wage Earners and Clerical Workers, 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.
(i) The initial survivor's or widow's annuity of an
otherwise eligible survivor or widow of a retired member or
participant to whom this Section applies shall be in the

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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 to
whom this Section applies, eligibility for a survivor's or
widow's annuity shall be determined by the applicable Article
of this Code. The 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.
(j) In lieu of any other employee contributions, except
for the contribution to the defined contribution plan under
subsection (k) of this Section, each employee shall contribute
6.2% of his her or salary to the retirement system. However,
the employee contribution under this subsection shall not
exceed the amount of the total normal cost of the benefits for
all members making contributions under this Section (except
for the defined contribution plan under subsection (k) of this
Section), expressed as a percentage of payroll and certified
on or before January 15 of each year by the board of trustees
of the retirement system. If the board of trustees of the
retirement system certifies that the 6.2% employee
contribution rate exceeds the normal cost of the benefits
under this Section (except for the defined contribution plan
under subsection (k) of this Section), then on or before
December 1 of that year, the board of trustees shall certify
the amount of the normal cost of the benefits under this

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Section (except for the defined contribution plan under
subsection (k) of this Section), expressed as a percentage of
payroll, to the State Actuary and the Commission on Government
Forecasting and Accountability, and the employee contribution
under this subsection shall be reduced to that amount
beginning July 1 of that year. Thereafter, if the normal cost
of the benefits under this Section (except for the defined
contribution plan under subsection (k) of this Section),
expressed as a percentage of payroll and certified on or
before January 1 of each year by the board of trustees of the
retirement system, exceeds 6.2% of salary, then on or before
January 15 of that year, the board of trustees shall certify
the normal cost to the State Actuary and the Commission on
Government Forecasting and Accountability, and the employee
contributions shall revert back to 6.2% of salary beginning
January 1 of the following year.
(k) In accordance with each retirement system's
implementation date, each retirement system under Article 14,
15, or 16 shall prepare and implement a defined contribution
plan for members or participants who are subject to this
Section. The defined contribution plan developed under this
subsection shall be a plan that aggregates employer and
employee contributions in individual participant accounts
which, after meeting any other requirements, are used for
payouts after retirement in accordance with this subsection
and any other applicable laws.

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(1) Each member or participant shall contribute a
minimum of 4% of his or her salary to the defined
contribution plan.
(2) For each participant in the defined contribution
plan who has been employed with the same employer for at
least one year, employer contributions shall be paid into
that participant's accounts at a rate expressed as a
percentage of salary. This rate may be set for individual
employees, but shall be no higher than 6% of salary and
shall be no lower than 2% of salary.
(3) Employer contributions shall vest when those
contributions are paid into a member's or participant's
account.
(4) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(5) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(6) To the extent authorized under federal law and as
authorized by the retirement system, the defined
contribution plan shall allow former participants in the
plan to transfer or roll over employee and employer
contributions, and the earnings thereon, into other
qualified retirement plans.

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(7) Each retirement system shall reduce the employee
contributions credited to the member's defined
contribution plan account by an amount determined by that
retirement system to cover the cost of offering the
benefits under this subsection and any applicable
administrative fees.
(8) No person shall begin participating in the defined
contribution plan until it has attained qualified plan
status and received all necessary approvals from the U.S.
Internal Revenue Service.
(l) 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. 100-23, eff. 7-6-17.)