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
SB2284 LRB100 13770 RPS 28492 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
Section 2-117 and by adding Sections 2-105.3 and 2-167 as
follows:
(40 ILCS 5/2-105.3 new)
Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier
3 participant.
"Tier 1 participant": A participant who first became a
participant before January 1, 2011.
In the case of a Tier 1 participant who elects to
participate in the self-directed retirement plan under Section
2-167, that participant shall be deemed a Tier 1 participant
only with respect to service performed or established before
the effective date of that election.
"Tier 2 participant": A participant who first became a
participant on or after January 1, 2011 and before the
effective date of this amendatory Act of the 100th General
Assembly.
In the case of a Tier 2 participant who elects to
participate in the self-directed retirement plan under Section
2-167, that participant shall be deemed a Tier 2 participant

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

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

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

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

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

SB2284 - 7 - LRB100 13770 RPS 28492 b
Internal Revenue Code of 1986.
At any time after withdrawal from service, a participant in
the self-directed plan shall be entitled to a benefit that is
based on the account values attributable to his or her
participant contributions and the employer contributions, as
well as any investment returns attributable to those
contributions. 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.
(e) All persons who begin to participate in this System on
or after the effective date of this amendatory Act of the 100th
General Assembly and any active Tier 1 or Tier 2 participant
who makes the election provided in subsection (b) shall
participate in the self-directed retirement plan established
under subsection (d) and, in lieu of the contributions
otherwise provided for in this Article, shall contribute 8% of
salary to the plan. The employer of each of those participants
shall contribute 7% of salary to that plan on behalf of the
participant.
(f) The provisions of this amendatory Act of the 100th
General Assembly apply notwithstanding any other law,
including Section 1-160 of this Code. If there is a conflict

SB2284 - 8 - LRB100 13770 RPS 28492 b
between the provisions of this amendatory Act of the 100th
General Assembly and any other law, the provisions of this
Section shall control.
(40 ILCS 5/2-105.1 rep.)
Section 10. The Illinois Pension Code is amended by
repealing Section 2-105.1.
SB2284 - 9 - LRB100 13770 RPS 28492 b
INDEX
Statutes amended in order of appearance