Illinois-2021-HB3375-Introduced

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

1 AN ACT concerning public employee benefits.

2 Be it enacted by the People of the State of Illinois,

3 represented in the General Assembly:

4 Section 5. The Illinois Pension Code is amended by adding

5 Sections 2-105.3, 2-165.5, 14-103.43, 14-155.5, 15-200.5,

6 16-106.42, 16-205.5, 18-110.1, 18-110.2, and 18-121.5 as

7 follows:

8 (40 ILCS 5/2-105.3 new)

9 Sec. 2-105.3. Tier 1 participant; Tier 2 participant.

10 "Tier 1 participant": A participant who first became a

11 participant before January 1, 2011.

12 "Tier 2 participant": A participant who first became a

13 participant on or after January 1, 2011.

14 (40 ILCS 5/2-165.5 new)

15 Sec. 2-165.5. Defined contribution plan.

16 (a) Authority. No later than one year after the effective

17 date of this amendatory Act of the 102nd General Assembly, the

18 Board shall establish and maintain a defined contribution plan

19 to address the retirement preparedness gap for participants in

20 a defined benefit plan who are not on track to maintain their

21 standard of living in retirement. The plan shall be designed

22 as a qualified tax-deferred savings plan under the Internal

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LRB102 17001 RPS 22422 b

1 Revenue Code of 1986, as amended. The plan shall exist and

2 serve in addition to other retirement, pension, and benefit

3 plans established under this Code. All assets and income of

4 the plan shall be held in trust for the exclusive benefit of

5 participants and their beneficiaries.

6 (b) Enrollment. Tier 1 participants and Tier 2

7 participants who first became participants before the defined

8 contribution plan was established shall have the opportunity

9 to voluntarily elect to enroll in the plan. Each Tier 2

10 participant who becomes a participant on or after the

11 establishment of the defined contribution plan shall be

12 automatically enrolled in the plan at a contribution rate that

13 is established by the Board, unless he or she opts out within

14 60 days after the date that he or she becomes a participant.

15 (c) Investments. The plan shall be designed to enable

16 participants to generate a stream of income to replace their

17 pre-retirement income in retirement. The Board shall establish

18 a default investment option in which employees are

19 automatically invested upon initial enrollment in the plan or

20 upon re-enrollment in the plan and absent direction by the

21 participant to the contrary. Such investment in a default

22 investment option shall be deemed to have been made by

23 participant direction so long as the Board has provided

24 reasonable notice and description of the default investment

25 option and the participant's right to select other investment

26 options.

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LRB102 17001 RPS 22422 b

1 (d) Distributions. The plan shall provide a variety of

2 options for distributions to participants and their

3 beneficiaries and shall meet the relevant requirements of the

4 Internal Revenue Code of 1986, as amended. The manner and

5 timing of benefit distributions shall meet the distribution

6 requirements of Section 401(a)(9) of the Internal Revenue Code

7 of 1986, as amended. Distributions upon the death of the

8 participant shall meet the requirements of Section 401(a)(37)

9 of the Internal Revenue Code of 1986, as amended.

10 (40 ILCS 5/14-103.43 new)

11 Sec. 14-103.43. Tier 2 member. "Tier 2 member": A member

12 of this System who first becomes a member under this Article on

13 or after January 1, 2011 and who is not a Tier 1 member.

14 (40 ILCS 5/14-155.5 new)

15 Sec. 14-155.5. Defined contribution plan.

16 (a) Authority. No later than one year after the effective

17 date of this amendatory Act of the 102nd General Assembly, the

18 Board shall establish and maintain a defined contribution plan

19 to address the retirement preparedness gap for participants in

20 a defined benefit plan who are not on track to maintain their

21 standard of living in retirement. The plan shall be designed

22 as a qualified tax-deferred savings plan under the Internal

23 Revenue Code of 1986, as amended. The plan shall exist and

24 serve in addition to other retirement, pension, and benefit

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LRB102 17001 RPS 22422 b

1 plans established under this Code. All assets and income of

2 the plan shall be held in trust for the exclusive benefit of

3 participants and their beneficiaries.

4 (b) Enrollment. Tier 1 members and Tier 2 members who

5 first became participants before the defined contribution plan

6 was established shall have the opportunity to voluntarily

7 elect to enroll in the plan. Each Tier 2 member who becomes a

8 participant on or after the establishment of the defined

9 contribution plan shall be automatically enrolled in the plan

10 at a contribution rate that is established by the Board,

11 unless he or she opts out within 60 days after the date that he

12 or she becomes a participant.

13 (c) Investments. The plan shall be designed to enable

14 participants to generate a stream of income to replace their

15 pre-retirement income in retirement. The Board shall establish

16 a default investment option in which employees are

17 automatically invested upon initial enrollment in the plan or

18 upon re-enrollment in the plan and absent direction by the

19 participant to the contrary. Such investment in a default

20 investment option shall be deemed to have been made by

21 participant direction so long as the Board has provided

22 reasonable notice and description of the default investment

23 option and the participant's right to select other investment

24 options.

25 (d) Distributions. The plan shall provide a variety of

26 options for distributions to participants and their

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LRB102 17001 RPS 22422 b

1 beneficiaries and shall meet the relevant requirements of the

2 Internal Revenue Code of 1986, as amended. The manner and

3 timing of benefit distributions shall meet the distribution

4 requirements of Section 401(a)(9) of the Internal Revenue Code

5 of 1986, as amended. Distributions upon the death of the

6 participant shall meet the requirements of Section 401(a)(37)

7 of the Internal Revenue Code of 1986, as amended.

8 (40 ILCS 5/15-200.5 new)

9 Sec. 15-200.5. Defined contribution plan.

10 (a) Authority. No later than one year after the effective

11 date of this amendatory Act of the 102nd General Assembly, the

12 Board shall establish and maintain a defined contribution plan

13 to address the retirement preparedness gap for participants in

14 a defined benefit plan who are not on track to maintain their

15 standard of living in retirement. The plan shall be designed

16 as a qualified tax-deferred savings plan under the Internal

17 Revenue Code of 1986, as amended. The plan shall exist and

18 serve in addition to other retirement, pension, and benefit

19 plans established under this Code. All assets and income of

20 the plan shall be held in trust for the exclusive benefit of

21 participants and their beneficiaries.

22 (b) Enrollment. Tier 1 participants and Tier 2

23 participants who first became participants before the defined

24 contribution plan was established shall have the opportunity

25 to voluntarily elect to enroll in the plan. Each Tier 2

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LRB102 17001 RPS 22422 b

1 participant who becomes a participant on or after the

2 establishment of the defined contribution plan shall be

3 automatically enrolled in the plan at a contribution rate that

4 is established by the Board, unless he or she opts out within

5 60 days after the date that he or she becomes a participant.

6 (c) Investments. The plan shall be designed to enable

7 participants to generate a stream of income to replace their

8 pre-retirement income in retirement. The Board shall establish

9 a default investment option in which employees are

10 automatically invested upon initial enrollment in the plan or

11 upon re-enrollment in the plan and absent direction by the

12 participant to the contrary. Such investment in a default

13 investment option shall be deemed to have been made by

14 participant direction so long as the Board has provided

15 reasonable notice and description of the default investment

16 option and the participant's right to select other investment

17 options.

18 (d) Distributions. The plan shall provide a variety of

19 options for distributions to participants and their

20 beneficiaries and shall meet the relevant requirements of the

21 Internal Revenue Code of 1986, as amended. The manner and

22 timing of benefit distributions shall meet the distribution

23 requirements of Section 401(a)(9) of the Internal Revenue Code

24 of 1986, as amended. Distributions upon the death of the

25 participant shall meet the requirements of Section 401(a)(37)

26 of the Internal Revenue Code of 1986, as amended.

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LRB102 17001 RPS 22422 b

1 (40 ILCS 5/16-106.42 new)

2 Sec. 16-106.42. Tier 2 member. "Tier 2 member": A member

3 of the System who first becomes a member under this Article on

4 or after January 1, 2011 and who is not a Tier 1 member.

5 (40 ILCS 5/16-205.5 new)

6 Sec. 16-205.5. Defined contribution plan.

7 (a) Authority. No later than one year after the effective

8 date of this amendatory Act of the 102nd General Assembly, the

9 Board shall establish and maintain a defined contribution plan

10 to address the retirement preparedness gap for participants in

11 a defined benefit plan who are not on track to maintain their

12 standard of living in retirement. The plan shall be designed

13 as a qualified tax-deferred savings plan under the Internal

14 Revenue Code of 1986, as amended. The plan shall exist and

15 serve in addition to other retirement, pension, and benefit

16 plans established under this Code. All assets and income of

17 the plan shall be held in trust for the exclusive benefit of

18 participants and their beneficiaries.

19 (b) Enrollment. Tier 1 members and Tier 2 members who

20 first became participants before the defined contribution plan

21 was established shall have the opportunity to voluntarily

22 elect to enroll in the plan. Each Tier 2 member who becomes a

23 participant on or after the establishment of the defined

24 contribution plan shall be automatically enrolled in the plan

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LRB102 17001 RPS 22422 b

1 at a contribution rate that is established by the Board,

2 unless he or she opts out within 60 days after the date that he

3 or she becomes a participant.

4 (c) Investments. The plan shall be designed to enable

5 participants to generate a stream of income to replace their

6 pre-retirement income in retirement. The Board shall establish

7 a default investment option in which employees are

8 automatically invested upon initial enrollment in the plan or

9 upon subsequent re-enrollment and absent direction by the

10 participant to the contrary. Such investment in a default

11 investment option shall be deemed to have been made by

12 participant direction so long as the Board has provided

13 reasonable notice and description of the default investment

14 option and the participant's right to select other investment

15 options.

16 (d) Distributions. The plan shall provide a variety of

17 options for distributions to participants and their

18 beneficiaries and shall meet the relevant requirements of the

19 Internal Revenue Code of 1986, as amended. The manner and

20 timing of benefit distributions shall meet the distribution

21 requirements of Section 401(a)(9) of the Internal Revenue Code

22 of 1986, as amended. Distributions upon the death of the

23 participant shall meet the requirements of Section 401(a)(37)

24 of the Internal Revenue Code of 1986, as amended.

25 (40 ILCS 5/18-110.1 new)

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LRB102 17001 RPS 22422 b

1 Sec. 18-110.1. Tier 1 participant. "Tier 1 participant":

2 A participant who first became a participant of this System

3 before January 1, 2011.

4 (40 ILCS 5/18-110.2 new)

5 Sec. 18-110.2. Tier 2 participant. "Tier 2 participant":

6 A participant who first becomes a participant of this System

7 on or after January 1, 2011.

8 (40 ILCS 5/18-121.5 new)

9 Sec. 18-121.5. Defined contribution plan.