Bill Text: IL SB2103 | 2021-2022 | 102nd General Assembly | Engrossed

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Bill Title: Amends the Illinois Pension Code. In the State Universities Article, provides that the System shall offer a deferred compensation plan that is eligible under a specified provision of the Internal Revenue Code of 1986 to participating employees of the System employed by employers that qualify as eligible employers under a specified provision of the Internal Revenue Code of 1986 (instead of offering a defined contribution benefit to active members of the System). Changes references from "defined contribution benefit" to "deferred compensation plan". Provides that the System shall automatically enroll in the eligible deferred compensation plan any employee of an eligible employer who first becomes a participating employee of the System on or after July 1, 2022 under an eligible automatic contribution arrangement. Provides that an employee who is automatically enrolled shall have 3% of his or her compensation for each pay period deferred on a pre-tax basis into his or her account. Provides that an employee may elect not to participate or to increase or reduce the amount of elective deferrals made to the plan. Provides that the System may provide that the default percentage for any employee automatically enrolled in the eligible deferred compensation plan be increased by a specified percentage each plan year after the plan year in which the employee is automatically enrolled in the plan. Provides that the changes are intended to be retroactive to August 10, 2018 (the effective date of Public Act 100-769, which established the defined contribution benefit). In the Downstate Teacher Article, provides that the System may use funds provided under a provision concerning State and employer contributions to defray any and all costs of creating and maintaining the defined contribution benefit and then shall reimburse those costs from funds received from the employee and employer contributions to the defined contribution benefit. Provides that as soon as is practicable on or after January 1, 2022, the System shall automatically enroll any employee in the optional defined contribution benefit who first becomes an active member or participant in the System, and the member shall have 3% of his or her pre-tax gross compensation for each compensation period deferred into his or her deferred compensation account, unless the member otherwise instructs the System. Provides that the System may elect to increase the contribution rate subject to certain restrictions. In the Deferred Compensation Article, provides that pamphlets describing the deferred compensation plan shall not be distributed to employees who are covered under the Illinois Municipal Retirement Fund (IMRF), State Universities, or Downstate Teacher Articles. Makes other changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

Sponsorship: Partisan Bill (Democrat 5)

Status: (Passed) 2021-08-20 - Public Act . . . . . . . . . 102-0540 [SB2103 Detail]

Download: Illinois-2021-SB2103-Engrossed.html

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SB2103 Engrossed LRB102 12567 RPS 17905 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 Sections 15-202, 16-204, and 24-102 as follows:
(40 ILCS 5/15-202)
Sec. 15-202. Optional deferred compensation plan defined
contribution benefit.
(a) As soon as practicable after August 10, 2018 (the
effective date of Public Act 100-769) this amendatory Act of
the 100th General Assembly, the System shall offer a deferred
compensation plan that is eligible under Section 457(b) of the
Internal Revenue Code of 1986, as amended, defined
contribution benefit to participating employees active members
of the System employed by employers described in Section
15-106 of this Code that qualify as eligible employers under
Section 457(e)(1)(A) of the Internal Revenue Code of 1986, as
amended. Such eligible employers shall adopt the plan with an
effective date no later than September 1, 2021. Participating
employees may voluntarily elect to make elective deferrals to
the eligible deferred compensation plan. Eligible employers
may make optional employer contributions to the plan on behalf
of participating employees, which contributions may be

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maintained, increased, reduced, or eliminated at the
discretion of the employer from plan year to plan year. The
defined contribution benefit shall be an optional benefit to
any member who chooses to participate. The plan defined
contribution benefit shall collect voluntary optional employee
and optional employer contributions into an account for each
participant and shall offer investment options to the
participant. The plan benefit under this Section shall be
operated in full compliance with any applicable State and
federal laws, and the System shall utilize generally accepted
practices in creating and maintaining the plan benefit for the
best interest of the participants. The System may use funds
from the employee and employer contributions to defray any and
all costs of creating and maintaining the plan benefit. The
System shall produce an annual report on the participation in
the plan benefit and shall make the report public.
(b) The System shall automatically enroll in the eligible
deferred compensation plan any employee of an eligible
employer who first becomes a participating employee of the
System on or after July 1, 2023 under an eligible automatic
contribution arrangement that is subject to Section 414(w) of
the Internal Revenue Code of 1986, as amended, and the United
States Department of Treasury regulations promulgated
thereunder. An employee who is automatically enrolled under
this subsection (b) shall have 3% of his or her compensation,
as defined by the plan, for each pay period deferred on a

SB2103 Engrossed - 3 - LRB102 12567 RPS 17905 b
pre-tax basis into his or her account, subject to any
contribution limits applicable to the plan. The Board may
increase the default percentage of compensation deferred under
this subsection (b).
An employee shall have 30 days from the date on which the
System provides the notice required under Section 414(w) of
the Internal Revenue Code of 1986, as amended, to elect to not
participate in the eligible deferred compensation plan or to
elect to increase or reduce the initial amount of elective
deferrals made to the plan. In the absence of such affirmative
election, the employee shall be automatically enrolled in the
plan on the first day of the calendar month, or as soon as
administratively practicable thereafter, following the 30th
day from the date on which the System provides the required
notice. An employee who has been automatically enrolled in the
plan under this subsection (b) may elect, within 90 days of
enrollment, to withdraw from the plan and receive a refund of
amounts deferred, adjusted by applicable earnings and fees. An
employee making such an election shall forfeit all employer
matching contributions, if any, made with respect to such
refunded elective deferrals and such forfeited amounts shall
be used to defray plan expenses. Any refunded elective
deferrals shall be included in the employee's gross income for
the taxable year in which the refund is issued.
(c) The System may provide for one or more automatic
contribution arrangements, which shall comply with all

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applicable Internal Revenue Service rules and regulations, in
conjunction with or in lieu of the eligible automatic
contribution arrangement under subsection (b), for
participating employees of eligible employers whose annual
earnings are limited by application of subsection (b) of
Section 15-111 of this Code. The amount of elective deferrals
made for the employee each pay period under an automatic
contribution arrangement shall equal the default percentage
specified by resolution of the Board multiplied by the
employee's compensation as defined by the plan, subject to any
contribution limits applicable to the plan, and shall be made
on a pre-tax basis. An employee subject to this subsection (c)
shall have 30 days from the date on which the System provides
written notice to the employee to elect to not participate in
the eligible deferred compensation plan or to elect to
increase or reduce the amount of initial elective deferrals
made to the plan. In the absence of such affirmative election,
the employee shall be automatically enrolled in the plan
beginning the first day of the calendar month, or as soon as
administratively practicable thereafter, following the 30th
day from the date on which the System provides the required
notice.
(d) The System may provide that the default percentage for
any employee automatically enrolled in the eligible deferred
compensation plan under subsection (b) or (c) be increased by
a specified percentage each plan year after the plan year in

SB2103 Engrossed - 5 - LRB102 12567 RPS 17905 b
which the employee is automatically enrolled in the plan. The
amount of automatic annual increases in any plan year shall
not exceed 1% of compensation as defined by the plan.
(e) The changes made to this Section by this amendatory
Act of the 102nd General Assembly are corrections of existing
law and are intended to be retroactive to the effective date of
Public Act 100-769, notwithstanding Section 1-103.1 of this
Code.
(Source: P.A. 100-769, eff. 8-10-18.)
(40 ILCS 5/16-204)
Sec. 16-204. Optional defined contribution benefit. As
soon as practicable after the effective date of this
amendatory Act of the 100th General Assembly, the System shall
offer a defined contribution benefit to active members of the
System. The defined contribution benefit shall be an optional
benefit to any member who chooses to participate. The defined
contribution benefit shall collect optional employee and
optional employer contributions into an account and shall
offer investment options to the participant. The benefit under
this Section shall be operated in full compliance with any
applicable State and federal laws, and the System shall
utilize generally accepted practices in creating and
maintaining the benefit for the best interest of the
participants. The System may use funds from the employee and
employer contributions to defray any and all costs of creating

SB2103 Engrossed - 6 - LRB102 12567 RPS 17905 b
and maintaining the benefit. In addition, the System may use
funds provided under Section 16-158 of this Code to defray any
and all costs of creating and maintaining the benefit and then
shall reimburse those costs from funds received from the
employee and employer contributions under this Section. All
employers must comply with the reporting and administrative
functions established by the System and are required to
implement the benefits established under this Section. The
System shall produce an annual report on the participation in
the benefit and shall make the report public.
As soon as is practicable on or after January 1, 2022, the
System shall automatically enroll any employee who first
becomes an active member or participant in the System. A
member automatically enrolled under this Section shall have 3%
of his or her pre-tax gross compensation for each compensation
period deferred into his or her deferred compensation account,
unless the member otherwise instructs the System on forms
approved by the System. A member may elect, in a manner
provided for by the System, to not participate in the defined
contribution benefit or to increase or reduce the amount of
pre-tax gross compensation contributed, consistent with State
or federal law. A member shall be automatically enrolled in
the benefit beginning the first day of the pay period
following the member's 30th day of employment. A member who
has been automatically enrolled in the benefit may elect,
within 90 days of enrollment, to withdraw from the benefit and

SB2103 Engrossed - 7 - LRB102 12567 RPS 17905 b
receive a refund of amounts deferred, plus or minus any
applicable earnings, investment fees, and administrative fees.
Any refunded amount shall be included in the member's gross
income for the taxable year in which the refund is issued.
On or after January 1, 2023, the System may elect to
increase the automatic annual contributions under this
Section. The increase in the rate of contribution, however,
shall not exceed 2% of a member's pre-tax gross compensation
per year, and at no time shall any total contribution exceed
any contribution limits established by State or federal law.
(Source: P.A. 100-769, eff. 8-10-18.)
(40 ILCS 5/24-102) (from Ch. 108 1/2, par. 24-102)
Sec. 24-102. As used in this Article, "employee" means any
person, including a person elected, appointed or under
contract, receiving compensation from the State or a unit of
local government or school district for personal services
rendered, including salaried persons. However, "employee", for
the purposes of the State Employees Deferred Compensation Plan
established under Section 24-104, does not include a person
employed by an employer under Section 15-106 who first becomes
a participant of the retirement system under Article 15 on or
after July 1, 2023 unless the person has made an election to
defer compensation into the State Employees Deferred
Compensation Plan under a written agreement and the deferral
election is in effect as of June 30, 2023. A health care

SB2103 Engrossed - 8 - LRB102 12567 RPS 17905 b
provider who elects to participate in the State Employees
Deferred Compensation Plan established under Section 24-104 of
this Code shall, for purposes of that participation, be deemed
an "employee" as defined in this Section.
As used in this Article, "health care provider" means a
dentist, physician, optometrist, pharmacist, or podiatric
physician that participates and receives compensation as a
provider under the Illinois Public Aid Code, the Children's
Health Insurance Act, or the Covering ALL KIDS Health
Insurance Act.
As used in this Article, "compensation" includes
compensation received in a lump sum for accumulated unused
vacation, personal leave or sick leave, with the exception of
health care providers. "Compensation" with respect to health
care providers is defined under the Illinois Public Aid Code,
the Children's Health Insurance Act, or the Covering ALL KIDS
Health Insurance Act.
Where applicable, in no event shall the total of the
amount of deferred compensation of an employee set aside in
relation to a particular year under the Illinois State
Employees Deferred Compensation Plan and the employee's
nondeferred compensation for that year exceed the total annual
salary or compensation under the existing salary schedule or
classification plan applicable to such employee in such year;
except that any compensation received in a lump sum for
accumulated unused vacation, personal leave or sick leave

SB2103 Engrossed - 9 - LRB102 12567 RPS 17905 b
shall not be included in the calculation of such totals.
(Source: P.A. 98-214, eff. 8-9-13.)
Section 90. The State Mandates Act is amended by adding
Section 8.45 as follows:
(30 ILCS 805/8.45 new)
Sec. 8.45. Exempt mandate. Notwithstanding Sections 6 and
8 of this Act, no reimbursement by the State is required for
the implementation of any mandate created by this amendatory
Act of the 102nd General Assembly.
Section 99. Effective date. This Act takes effect upon
becoming law.