Bill Text: IL SB2284 | 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 participants 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. Provides that a member who has filed notice of an election not to participate may become a Tier 3 participant without making a specified required contribution by filing with the board a written rescission of the election not to participate if he or she elects to participate in the self-directed retirement plan. Provides that a member who files the written rescission without making the required contribution and only participates in the self-directed retirement plan may not receive credit for service as a member prior to the date of the rescission. Repeals a provision added by Public Act 98-599, which has been held unconstitutional, that defines "Tier 1 participant" and "Tier 2 participant".

Spectrum: Partisan Bill (Republican 2-0)

Status: (Failed) 2019-01-09 - Session Sine Die [SB2284 Detail]

Download: Illinois-2017-SB2284-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB2284

Introduced 1/10/2018, by Sen. Chuck Weaver

SYNOPSIS AS INTRODUCED:
See Index

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. Provides that a member who has filed notice of an election not to participate may become a Tier 3 participant without making a specified required contribution by filing with the board a written rescission of the election not to participate if he or she elects to participate in the self-directed retirement plan. Provides that a member who files the written rescission without making the required contribution and only participates in the self-directed retirement plan may not receive credit for service as a member prior to the date of the rescission. Repeals a provision added by Public Act 98-599, which has been held unconstitutional, that defines "Tier 1 participant" and "Tier 2 participant".
LRB100 13770 RPS 28492 b
FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

SB2284LRB100 13770 RPS 28492 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 changing
5Section 2-117 and by adding Sections 2-105.3 and 2-167 as
6follows:
7 (40 ILCS 5/2-105.3 new)
8 Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier
93 participant.
10 "Tier 1 participant": A participant who first became a
11participant before January 1, 2011.
12 In the case of a Tier 1 participant who elects to
13participate in the self-directed retirement plan under Section
142-167, that participant shall be deemed a Tier 1 participant
15only with respect to service performed or established before
16the effective date of that election.
17 "Tier 2 participant": A participant who first became a
18participant on or after January 1, 2011 and before the
19effective date of this amendatory Act of the 100th General
20Assembly.
21 In the case of a Tier 2 participant who elects to
22participate in the self-directed retirement plan under Section
232-167, that participant shall be deemed a Tier 2 participant

SB2284- 2 -LRB100 13770 RPS 28492 b
1only with respect to service performed or established before
2the effective date of that election.
3 "Tier 3 participant": A participant who first becomes a
4participant on or after the effective date of this amendatory
5Act of the 100th General Assembly; or a Tier 1 or Tier 2
6participant who elects to participate in the self-directed
7retirement plan under Section 2-167 of this Code, but only with
8respect to service performed or established on or after the
9effective date of that election.
10 (40 ILCS 5/2-117) (from Ch. 108 1/2, par. 2-117)
11 Sec. 2-117. Participants - Election not to participate.
12 (a) Every person who was a member on November 1, 1947, or
13in military service on such date, is subject to the provisions
14of this system beginning upon such date, unless prior to such
15date he or she filed with the board a written notice of
16election not to participate.
17 Every person who becomes a member after November 1, 1947,
18and who is then not a participant becomes a participant
19beginning upon the date of becoming a member unless, within 24
20months from that date, he or she has filed with the board a
21written notice of election not to participate.
22 (b) A member who has filed notice of an election not to
23participate (and a former member who has not yet begun to
24receive a retirement annuity under this Article) may become a
25participant with respect to the period for which the member

SB2284- 3 -LRB100 13770 RPS 28492 b
1elected not to participate upon filing with the board, before
2April 1, 1993, a written rescission of the election not to
3participate. Upon contributing an amount equal to the
4contributions he or she would have made as a participant from
5November 1, 1947, or the date of becoming a member, whichever
6is later, to the date of becoming a participant, with interest
7at the rate of 4% per annum until the contributions are paid,
8the participant shall receive credit for service as a member
9prior to the date of the rescission, both before and after
10November 1, 1947. The required contributions shall be made
11before commencement of the retirement annuity; otherwise no
12credit for service prior to the date of participation shall be
13granted.
14 (c) A member who has filed notice of an election not to
15participate may become a Tier 3 participant without making a
16contribution under subsection (b) by filing with the board a
17written rescission of the election not to participate if he or
18she elects to participate in the self-directed retirement plan
19under subsection (d) of Section 2-167. A member who files the
20written rescission pursuant to this subsection may not receive
21credit for service as a member prior to the date of the
22rescission.
23(Source: P.A. 86-273; 87-1265.)
24 (40 ILCS 5/2-167 new)
25 Sec. 2-167. Self-directed retirement plan.

SB2284- 4 -LRB100 13770 RPS 28492 b
1 (a) For the purposes of this Section:
2 "Active participant" means a participant who is in
3 active service in the System.
4 "Consumer price index-u" means the index published by
5 the Bureau of Labor Statistics of the United States
6 Department of Labor that measures the average change in
7 prices of goods and services purchased by all urban
8 consumers, United States city average, all items, 1982-84 =
9 100.
10 "Defined benefit plan" means the retirement plan
11 available under this Article to Tier 1 or Tier 2
12 participants who have not made the election authorized
13 under this Section.
14 "Employer" means the State.
15 "Pensionable salary" means the amount of salary used by
16 the System to calculate the amount of an individual's
17 retirement annuity.
18 (b) On and after the effective date of this amendatory Act
19of the 100th General Assembly, a Tier 3 participant's
20participation in the System shall be limited to participation
21in the self-directed retirement plan established under
22subsection (d) of this Section.
23 An active Tier 1 or Tier 2 participant of this System may
24elect to cease accruing benefits in the defined benefit plan
25and begin accruing benefits for future service in the
26self-directed retirement plan established under subsection

SB2284- 5 -LRB100 13770 RPS 28492 b
1(d). The election to participate in the self-directed
2retirement plan is voluntary and irrevocable.
3 For an active Tier 1 or Tier 2 participant who elects to
4participate in the self-directed retirement plan, all service
5credit under the System (including service under any
6participating system if the participant elects to use the
7reciprocal provisions of Article 20) shall be considered for
8purposes of vesting in the benefits provided prior to the
9effective date of this Section, but only service earned and
10contributions made before that effective date shall be
11considered in determining the amount of those benefits. In lieu
12of receiving any such benefits, an active Tier 1 or Tier 2
13participant who elects to participate in the self-directed
14retirement plan may elect to have an account balance
15established in his or her self-directed retirement plan account
16in an amount equal to the amount of the contribution refund
17that the participant would be eligible to receive if he or she
18withdrew from service on the effective date of this Section and
19elected a refund of contributions, except that this
20hypothetical refund shall include interest at the effective
21rate for the respective years. The System shall make these
22transfers of assets to the self-directed plan as tax-free
23transfers in accordance with Internal Revenue Service
24guidelines.
25 (c) The pensionable salary of an active participant shall
26be equal to the average final monthly salary of the

SB2284- 6 -LRB100 13770 RPS 28492 b
1participant. For a participant who first becomes a participant
2of this System on or after the effective date of this
3amendatory Act of the 100th General Assembly, the average final
4monthly salary determined by dividing the total salary of the
5participant during the 96 consecutive months of service within
6the last 120 months of service in which the total compensation
7was the highest by the number of months of service in that
8period; however, the highest salary for annuity purposes may
9not exceed $106,800, except that that amount shall annually
10thereafter be increased by the lesser of (i) 3% of that amount,
11including all previous adjustments, or (ii) the annual
12unadjusted percentage increase (but not less than zero) in the
13consumer price index-u for the 12 months ending with the
14September preceding each November 1. The new amount resulting
15from each annual adjustment shall be determined by the Public
16Pension Division of the Department of Insurance and made
17available to the Board by November 1 of each year.
18 (d) As soon as practicable after the effective date of this
19amendatory Act of the 100th General Assembly, the System shall
20establish a self-directed retirement plan that allows Tier 3
21participants the opportunity to accumulate assets for
22retirement through a combination of employee and employer
23contributions that may be invested in mutual funds, collective
24investment funds, or other investment products and used to
25purchase annuity contracts, either fixed or variable or a
26combination thereof. The plan must be qualified under the

SB2284- 7 -LRB100 13770 RPS 28492 b
1Internal Revenue Code of 1986.
2 At any time after withdrawal from service, a participant in
3the self-directed plan shall be entitled to a benefit that is
4based on the account values attributable to his or her
5participant contributions and the employer contributions, as
6well as any investment returns attributable to those
7contributions. Upon a participant's first day of participation
8in the self-directed retirement plan, the participant becomes
9vested in his or her contributions to the self-directed
10retirement plan, the employer's contributions to the
11self-directed retirement plan, and the investment returns
12attributable to those contributions credited to his or her
13account.
14 (e) All persons who begin to participate in this System on
15or after the effective date of this amendatory Act of the 100th
16General Assembly and any active Tier 1 or Tier 2 participant
17who makes the election provided in subsection (b) shall
18participate in the self-directed retirement plan established
19under subsection (d) and, in lieu of the contributions
20otherwise provided for in this Article, shall contribute 8% of
21salary to the plan. The employer of each of those participants
22shall contribute 7% of salary to that plan on behalf of the
23participant.
24 (f) The provisions of this amendatory Act of the 100th
25General Assembly apply notwithstanding any other law,
26including Section 1-160 of this Code. If there is a conflict

SB2284- 8 -LRB100 13770 RPS 28492 b
1between the provisions of this amendatory Act of the 100th
2General Assembly and any other law, the provisions of this
3Section shall control.
4 (40 ILCS 5/2-105.1 rep.)
5 Section 10. The Illinois Pension Code is amended by
6repealing Section 2-105.1.

SB2284- 9 -LRB100 13770 RPS 28492 b
1 INDEX
2 Statutes amended in order of appearance