Bill Text: IL HB3375 | 2021-2022 | 102nd General Assembly | Introduced

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Bill Title: Amends the General Assembly, State Employee, State Universities, Downstate Teachers, and Judges Articles of the Illinois Pension Code. Requires the Board of each System to establish and maintain a voluntary defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. Provides that the contribution rate shall be established by the Board. Provides that the plan shall exist and serve in addition to other retirement, pension, and benefit plans established under the Code. Provides that any Tier 2 participant who first becomes a participant on or after establishment of the plan shall automatically be enrolled, unless he or she opts out within 60 days after first becoming a participant. Authorizes Tier 1 participants and Tier 2 participants who first became participants before the plan was established to enroll in the plan. Contains provisions concerning investment options, qualified plan status, and distribution requirements. Defines terms and repeals a definition added by Public Act 98-599, which has been held unconstitutional. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2021-03-27 - Rule 19(a) / Re-referred to Rules Committee [HB3375 Detail]

Download: Illinois-2021-HB3375-Introduced.html

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102ND GENERAL ASSEMBLY State of Illinois 2021 and 2022 HB3375 Introduced , by Rep. Joe Sosnowski SYNOPSIS AS INTRODUCED:
See Index
Amends the General Assembly, State Employee, State Universities, Downstate Teachers, and Judges Articles of the Illinois Pension Code. Requires the Board of each System to establish and maintain a voluntary defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. Provides that the contribution rate shall be established by the Board. Provides that the plan shall exist and serve in addition to other retirement, pension, and benefit plans established under the Code. Provides that any Tier 2 participant who first becomes a participant on or after establishment of the plan shall automatically be enrolled, unless he or she opts out within 60 days after first becoming a participant. Authorizes Tier 1 participants and Tier 2 participants who first became participants before the plan was established to enroll in the plan. Contains provisions concerning investment options, qualified plan status, and distribution requirements. Defines terms and repeals a definition added by Public Act 98-599, which has been held unconstitutional. Effective immediately.
LRB102 17001 RPS 22422 b
FISCAL NOTE ACT MAY APPLY PENSION IMPACT NOTE ACT MAY APPLY
A BILL FOR
HB3375 LRB102 17001 RPS 22422 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 adding
Sections 2-105.3, 2-165.5, 14-103.43, 14-155.5, 15-200.5,
16-106.42, 16-205.5, 18-110.1, 18-110.2, and 18-121.5 as
follows:
(40 ILCS 5/2-105.3 new)
Sec. 2-105.3. Tier 1 participant; Tier 2 participant.
"Tier 1 participant": A participant who first became a
participant before January 1, 2011.
"Tier 2 participant": A participant who first became a
participant on or after January 1, 2011.
(40 ILCS 5/2-165.5 new)
Sec. 2-165.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 102nd General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed
as a qualified tax-deferred savings plan under the Internal

HB3375 - 2 - LRB102 17001 RPS 22422 b
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit
plans established under this Code. All assets and income of
the plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 participants and Tier 2
participants who first became participants before the defined
contribution plan was established shall have the opportunity
to voluntarily elect to enroll in the plan. Each Tier 2
participant who becomes a participant on or after the
establishment of the defined contribution plan shall be
automatically enrolled in the plan at a contribution rate that
is established by the Board, unless he or she opts out within
60 days after the date that he or she becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon re-enrollment in the plan and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.

HB3375 - 3 - LRB102 17001 RPS 22422 b
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)
of the Internal Revenue Code of 1986, as amended.
(40 ILCS 5/14-103.43 new)
Sec. 14-103.43. Tier 2 member. "Tier 2 member": A member
of this System who first becomes a member under this Article on
or after January 1, 2011 and who is not a Tier 1 member.
(40 ILCS 5/14-155.5 new)
Sec. 14-155.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 102nd General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed
as a qualified tax-deferred savings plan under the Internal
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit

HB3375 - 4 - LRB102 17001 RPS 22422 b
plans established under this Code. All assets and income of
the plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 members and Tier 2 members who
first became participants before the defined contribution plan
was established shall have the opportunity to voluntarily
elect to enroll in the plan. Each Tier 2 member who becomes a
participant on or after the establishment of the defined
contribution plan shall be automatically enrolled in the plan
at a contribution rate that is established by the Board,
unless he or she opts out within 60 days after the date that he
or she becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon re-enrollment in the plan and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their

HB3375 - 5 - LRB102 17001 RPS 22422 b
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)
of the Internal Revenue Code of 1986, as amended.
(40 ILCS 5/15-200.5 new)
Sec. 15-200.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 102nd General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed
as a qualified tax-deferred savings plan under the Internal
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit
plans established under this Code. All assets and income of
the plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 participants and Tier 2
participants who first became participants before the defined
contribution plan was established shall have the opportunity
to voluntarily elect to enroll in the plan. Each Tier 2

HB3375 - 6 - LRB102 17001 RPS 22422 b
participant who becomes a participant on or after the
establishment of the defined contribution plan shall be
automatically enrolled in the plan at a contribution rate that
is established by the Board, unless he or she opts out within
60 days after the date that he or she becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon re-enrollment in the plan and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)
of the Internal Revenue Code of 1986, as amended.

HB3375 - 7 - LRB102 17001 RPS 22422 b
(40 ILCS 5/16-106.42 new)
Sec. 16-106.42. Tier 2 member. "Tier 2 member": A member
of the System who first becomes a member under this Article on
or after January 1, 2011 and who is not a Tier 1 member.
(40 ILCS 5/16-205.5 new)
Sec. 16-205.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 102nd General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed
as a qualified tax-deferred savings plan under the Internal
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit
plans established under this Code. All assets and income of
the plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 members and Tier 2 members who
first became participants before the defined contribution plan
was established shall have the opportunity to voluntarily
elect to enroll in the plan. Each Tier 2 member who becomes a
participant on or after the establishment of the defined
contribution plan shall be automatically enrolled in the plan

HB3375 - 8 - LRB102 17001 RPS 22422 b
at a contribution rate that is established by the Board,
unless he or she opts out within 60 days after the date that he
or she becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon subsequent re-enrollment and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)
of the Internal Revenue Code of 1986, as amended.
(40 ILCS 5/18-110.1 new)

HB3375 - 9 - LRB102 17001 RPS 22422 b
Sec. 18-110.1. Tier 1 participant. "Tier 1 participant":
A participant who first became a participant of this System
before January 1, 2011.
(40 ILCS 5/18-110.2 new)
Sec. 18-110.2. Tier 2 participant. "Tier 2 participant":
A participant who first becomes a participant of this System
on or after January 1, 2011.
(40 ILCS 5/18-121.5 new)
Sec. 18-121.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 102nd General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed
as a qualified tax-deferred savings plan under the Internal
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit
plans established under this Code. All assets and income of
the plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 participants and Tier 2
participants who first became participants before the defined
contribution plan was established shall have the opportunity

HB3375 - 10 - LRB102 17001 RPS 22422 b
to voluntarily elect to enroll in the plan. Each Tier 2
participant who becomes a participant on or after the
establishment of the defined contribution plan shall be
automatically enrolled in the plan at a contribution rate that
is established by the Board, unless he or she opts out within
60 days after the date that he or she becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon subsequent re-enrollment and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)

HB3375 - 11 - LRB102 17001 RPS 22422 b
of the Internal Revenue Code of 1986, as amended.
(40 ILCS 5/2-105.1 rep.)
Section 10. The Illinois Pension Code is amended by
repealing Section 2-105.1.
Section 99. Effective date. This Act takes effect upon
becoming law.
HB3375 - 12 - LRB102 17001 RPS 22422 b
INDEX
Statutes amended in order of appearance