Bill Text: IL HB3707 | 2017-2018 | 100th General Assembly | Introduced


Bill Title: Amends the General Assembly Article of the Illinois Pension Code. Requires the General Assembly Retirement System to establish a self-directed retirement plan. Provides that for persons who become a participant on or after the effective date of the amendatory Act, participation in the System shall be limited to participation in the self-directed retirement plan. Allows a Tier 1 or Tier 2 participant to make an irrevocable election to participate in the self-directed retirement plan instead of the defined benefit plan. Makes changes to the pensionable salary for active participants. Provides that upon a participant's first day of participation in the self-directed retirement plan, the participant becomes vested in his or her contributions to the self-directed retirement plan, the employer's contributions to the self-directed retirement plan, and the investment returns attributable to those contributions credited to his or her account.

Spectrum: Strong Partisan Bill (Republican 15-1)

Status: (Introduced) 2017-03-31 - House Committee Amendment No. 1 Rule 19(a) / Re-referred to Rules Committee [HB3707 Detail]

Download: Illinois-2017-HB3707-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB3707

Introduced , by Rep. Sheri Jesiel

SYNOPSIS AS INTRODUCED:
40 ILCS 5/2-105.3 new
40 ILCS 5/2-167 new
40 ILCS 5/2-105.1 rep.

Amends the General Assembly Article of the Illinois Pension Code. Requires the General Assembly Retirement System to establish a self-directed retirement plan. Provides that for persons who become a participant on or after the effective date of the amendatory Act, participation in the System shall be limited to participation in the self-directed retirement plan. Allows a Tier 1 or Tier 2 participant to make an irrevocable election to participate in the self-directed retirement plan instead of the defined benefit plan. Makes changes to the pensionable salary for active participants. Provides that upon a participant's first day of participation in the self-directed retirement plan, the participant becomes vested in his or her contributions to the self-directed retirement plan, the employer's contributions to the self-directed retirement plan, and the investment returns attributable to those contributions credited to his or her account.
LRB100 11379 RPS 21776 b
FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

HB3707LRB100 11379 RPS 21776 b
1 AN ACT concerning public employee benefits.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Illinois Pension Code is amended by adding
5Sections 2-105.3 and 2-167 as follows:
6 (40 ILCS 5/2-105.3 new)
7 Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier
83 participant.
9 "Tier 1 participant": A participant who first became a
10participant before January 1, 2011.
11 In the case of a Tier 1 participant who elects to
12participate in the self-directed retirement plan under Section
132-167, that participant shall be deemed a Tier 1 participant
14only with respect to service performed or established before
15the effective date of that election.
16 "Tier 2 participant": A participant who first became a
17participant on or after January 1, 2011 and before the
18effective date of this amendatory Act of the 100th General
19Assembly.
20 In the case of a Tier 2 participant who elects to
21participate in the self-directed retirement plan under Section
222-167, that participant shall be deemed a Tier 2 participant
23only with respect to service performed or established before

HB3707- 2 -LRB100 11379 RPS 21776 b
1the effective date of that election.
2 "Tier 3 participant": A participant who first becomes a
3participant on or after the effective date of this amendatory
4Act of the 100th General Assembly; or a Tier 1 or Tier 2
5participant who elects to participate in the self-directed
6retirement under Section 2-167 of this Code, but only with
7respect to service performed or established on or after the
8effective date of that election.
9 (40 ILCS 5/2-167 new)
10 Sec. 2-167. Self-directed retirement plan.
11 (a) For the purposes of this Section:
12 "Active participant" means a participant who is in
13 active service in the System.
14 "Consumer price index-u" means the index published by
15 the Bureau of Labor Statistics of the United States
16 Department of Labor that measures the average change in
17 prices of goods and services purchased by all urban
18 consumers, United States city average, all items, 1982-84 =
19 100.
20 "Defined benefit plan" means the retirement plan
21 available under this Article to Tier 1 or Tier 2
22 participants who have not made the election authorized
23 under this Section.
24 "Employer" means the State.
25 "Pensionable salary" means the amount of salary used by

HB3707- 3 -LRB100 11379 RPS 21776 b
1 the System to calculate the amount of an individual's
2 retirement annuity.
3 (b) On and after the effective date of this amendatory Act
4of the 100th General Assembly, a Tier 3 participant's
5participation in the System shall be limited to participation
6in the self-directed retirement plan established under
7subsection (d) of this Section.
8 An active Tier 1 or Tier 2 participant of this System may
9elect to cease accruing benefits in the defined benefit plan
10and begin accruing benefits for future service in the
11self-directed retirement plan established under subsection
12(d). The election to participate in the self-directed
13retirement plan is voluntary and irrevocable.
14 For an active Tier 1 or Tier 2 participant who elects to
15participate in the self-directed retirement plan, all service
16credit under the System (including service under any
17participating system if the participant elects to use the
18reciprocal provisions of Article 20) shall be considered for
19purposes of vesting in the benefits provided prior to the
20effective date of this Section, but only service earned and
21contributions made before that effective date shall be
22considered in determining the amount of those benefits. In lieu
23of receiving any such benefits, an active Tier 1 or Tier 2
24participant who elects to participate in the self-directed
25retirement plan may elect to have an account balance
26established in his or her self-directed retirement plan account

HB3707- 4 -LRB100 11379 RPS 21776 b
1in an amount equal to the amount of the contribution refund
2that the participant would be eligible to receive if he or she
3withdrew from service on the effective date of this Section and
4elected a refund of contributions, except that this
5hypothetical refund shall include interest at the effective
6rate for the respective years. The System shall make these
7transfers of assets to the self-directed plan as tax-free
8transfers in accordance with Internal Revenue Service
9guidelines.
10 (c) The pensionable salary of an active participant shall
11be equal to the average final monthly salary of the
12participant. For a participant who first becomes a participant
13of this System on or after the effective date of this
14amendatory Act of the 100th General Assembly, the average final
15monthly salary determined by dividing the total salary of the
16participant during the 96 consecutive months of service within
17the last 120 months of service in which the total compensation
18was the highest by the number of months of service in that
19period; however, the highest salary for annuity purposes may
20not exceed $106,800, except that that amount shall annually
21thereafter be increased by the lesser of (i) 3% of that amount,
22including all previous adjustments, or (ii) the annual
23unadjusted percentage increase (but not less than zero) in the
24consumer price index-u for the 12 months ending with the
25September preceding each November 1. The new amount resulting
26from each annual adjustment shall be determined by the Public

HB3707- 5 -LRB100 11379 RPS 21776 b
1Pension Division of the Department of Insurance and made
2available to the Board by November 1 of each year.
3 (d) As soon as practicable after the effective date of this
4amendatory Act of the 100th General Assembly, the System shall
5establish a self-directed retirement plan that allows Tier 3
6participants the opportunity to accumulate assets for
7retirement through a combination of employee and employer
8contributions that may be invested in mutual funds, collective
9investment funds, or other investment products and used to
10purchase annuity contracts, either fixed or variable or a
11combination thereof. The plan must be qualified under the
12Internal Revenue Code of 1986.
13 At any time after withdrawal from service, a participant in
14the self-directed plan shall be entitled to a benefit that is
15based on the account values attributable to his or her
16participant contributions and the employer contributions, as
17well as any investment returns attributable to those
18contributions. Upon a participant's first day of participation
19in the self-directed retirement plan, the participant becomes
20vested in his or her contributions to the self-directed
21retirement plan, the employer's contributions to the
22self-directed retirement plan, and the investment returns
23attributable to those contributions credited to his or her
24account.
25 (e) All persons who begin to participate in this System on
26or after the effective date of this amendatory Act of the 100th

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1General Assembly and any active Tier 1 or Tier 2 participant
2who makes the election provided in subsection (b) shall
3participate in the self-directed retirement plan established
4under subsection (d) and, in lieu of the contributions
5otherwise provided for in this Article, shall contribute 8% of
6salary to the plan. The employer of each of those participants
7shall contribute 7% of salary to that plan on behalf of the
8participant.
9 (f) The provisions of this amendatory Act of the 100th
10General Assembly apply notwithstanding any other law,
11including Section 1-160 of this Code. If there is a conflict
12between the provisions of this amendatory Act of the 100th
13General Assembly and any other law, the provisions of this
14Section shall control.
15 (40 ILCS 5/2-105.1 rep.)
16 Section 10. The Illinois Pension Code is amended by
17repealing Section 2-105.1.
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