Bill Text: IL SB3750 | 2019-2020 | 101st General Assembly | Introduced
Bill Title: Amends the General Provisions Article of the Illinois Pension Code. Provides that "emerging investment manager" means a qualified investment adviser that manages an investment portfolio of at least $10,000,000 but less than $20,000,000,000 (rather than at least $10,000,000 but less than $10,000,000,000) at the time of the initial contract with the retirement system, pension fund, or investment board and is a minority-owned business, women-owned business, or business owned by a person with a disability. Effective January 1, 2021.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2021-01-13 - Session Sine Die [SB3750 Detail]
Download: Illinois-2019-SB3750-Introduced.html
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1 | AN ACT concerning public employee benefits.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Pension Code is amended by changing | ||||||||||||||||||||||||
5 | Section 1-109.1 as follows:
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6 | (40 ILCS 5/1-109.1) (from Ch. 108 1/2, par. 1-109.1)
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7 | Sec. 1-109.1. Allocation and delegation of fiduciary | ||||||||||||||||||||||||
8 | duties.
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9 | (1) Subject to the provisions of Section 22A-113 of this | ||||||||||||||||||||||||
10 | Code and
subsections (2) and (3) of this Section, the board of | ||||||||||||||||||||||||
11 | trustees of a
retirement system or pension fund established | ||||||||||||||||||||||||
12 | under this Code may:
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13 | (a) Appoint one or more investment managers as | ||||||||||||||||||||||||
14 | fiduciaries to manage
(including the power to acquire and | ||||||||||||||||||||||||
15 | dispose of) any assets of the
retirement system or pension | ||||||||||||||||||||||||
16 | fund; and
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17 | (b) Allocate duties among themselves and designate | ||||||||||||||||||||||||
18 | others as fiduciaries
to carry out specific fiduciary | ||||||||||||||||||||||||
19 | activities other than the management of the
assets of the | ||||||||||||||||||||||||
20 | retirement system or pension fund.
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21 | (2) The board of trustees of a pension fund established | ||||||||||||||||||||||||
22 | under Article 5, 6,
8, 9, 10, 11, 12 or 17 of this Code may not | ||||||||||||||||||||||||
23 | transfer its investment authority,
nor transfer the assets of |
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1 | the fund to any other person or entity for the
purpose of | ||||||
2 | consolidating or merging its assets and management with any | ||||||
3 | other
pension fund or public investment authority, unless the | ||||||
4 | board resolution
authorizing such transfer is submitted for | ||||||
5 | approval to the contributors and
pensioners of the fund at | ||||||
6 | elections held not less than 30 days after the
adoption of such | ||||||
7 | resolution by the board, and such resolution is approved by a
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8 | majority of the votes cast on the question in both the | ||||||
9 | contributors election
and the pensioners election. The | ||||||
10 | election procedures and qualifications
governing the election | ||||||
11 | of trustees shall govern the submission of resolutions
for | ||||||
12 | approval under this paragraph, insofar as they may be made | ||||||
13 | applicable.
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14 | (3) Pursuant to subsections (h) and (i) of Section 6 of | ||||||
15 | Article VII of
the Illinois Constitution, the investment | ||||||
16 | authority of boards of trustees
of retirement systems and | ||||||
17 | pension funds established under this Code is declared
to be a | ||||||
18 | subject of exclusive State jurisdiction, and the concurrent | ||||||
19 | exercise
by a home rule unit of any power affecting such | ||||||
20 | investment authority is
hereby specifically denied and | ||||||
21 | preempted.
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22 | (4) For the purposes of this Code, "emerging investment | ||||||
23 | manager" means a
qualified investment adviser that manages an | ||||||
24 | investment portfolio of at
least $10,000,000 but less than | ||||||
25 | $20,000,000,000 at the time of the initial contract with the | ||||||
26 | retirement system, pension fund, or investment board |
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1 | $10,000,000,000 and is a
"minority-owned business", | ||||||
2 | "women-owned business" or "business owned by a person with a | ||||||
3 | disability" as those terms are
defined in the Business | ||||||
4 | Enterprise for Minorities, Women, and Persons with | ||||||
5 | Disabilities Act.
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6 | It is hereby declared to be the public policy of the State | ||||||
7 | of Illinois to
encourage the trustees of public employee | ||||||
8 | retirement systems, pension funds, and investment boards
to use | ||||||
9 | emerging investment managers in managing their system's | ||||||
10 | assets, encompassing all asset classes, and increase the | ||||||
11 | racial, ethnic, and gender diversity of its fiduciaries, to the
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12 | greatest extent feasible within the bounds of financial and | ||||||
13 | fiduciary
prudence, and to take affirmative steps to remove any | ||||||
14 | barriers to the full
participation in investment opportunities
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15 | afforded by those retirement systems, pension funds, and | ||||||
16 | investment boards.
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17 | On or before January 1, 2010, a retirement system, pension | ||||||
18 | fund, or investment board subject to this Code, except those | ||||||
19 | whose investments are restricted by Section 1-113.2 of this | ||||||
20 | Code, shall adopt a policy that sets forth goals for | ||||||
21 | utilization of emerging investment managers. This policy shall | ||||||
22 | include quantifiable goals for the management of assets in | ||||||
23 | specific asset classes by emerging investment managers. The | ||||||
24 | retirement system, pension fund, or investment board shall | ||||||
25 | establish 3 separate goals for: (i) emerging investment | ||||||
26 | managers that are minority-owned businesses; (ii) emerging |
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1 | investment managers that are women-owned businesses; and (iii) | ||||||
2 | emerging investment managers that are businesses owned by a | ||||||
3 | person with a disability. The goals established shall be based | ||||||
4 | on the percentage of total dollar amount of investment service | ||||||
5 | contracts let to minority-owned businesses, women-owned | ||||||
6 | businesses, and businesses owned by a person with a disability, | ||||||
7 | as those terms are defined in the Business Enterprise for | ||||||
8 | Minorities, Women, and Persons with Disabilities Act. The | ||||||
9 | retirement system, pension fund, or investment board shall | ||||||
10 | annually review the goals established under this subsection. | ||||||
11 | If in any case an emerging investment manager meets the | ||||||
12 | criteria established by a board for a specific search and meets | ||||||
13 | the criteria established by a consultant for that search, then | ||||||
14 | that emerging investment manager shall receive an invitation by | ||||||
15 | the board of trustees, or an investment committee of the board | ||||||
16 | of trustees, to present his or her firm for final consideration | ||||||
17 | of a contract. In the case where multiple emerging investment | ||||||
18 | managers meet the criteria of this Section, the staff may | ||||||
19 | choose the most qualified firm or firms to present to the | ||||||
20 | board.
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21 | The use of an emerging investment manager does not | ||||||
22 | constitute a transfer
of investment authority for the purposes | ||||||
23 | of subsection (2) of this Section.
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24 | (5) Each retirement system, pension fund, or investment | ||||||
25 | board subject to this Code, except those whose investments are | ||||||
26 | restricted by Section 1-113.2 of this Code, shall establish a |
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1 | policy that sets forth goals for increasing the racial, ethnic, | ||||||
2 | and gender diversity of its fiduciaries, including its | ||||||
3 | consultants and senior staff. Each retirement system, pension | ||||||
4 | fund, or
investment board shall make its best efforts to ensure | ||||||
5 | that
the racial and ethnic makeup of its senior administrative
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6 | staff represents the racial and ethnic makeup of its
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7 | membership. Each system, fund, and investment board shall | ||||||
8 | annually review the goals established under this subsection. | ||||||
9 | (6) On or before January 1, 2010, a retirement system, | ||||||
10 | pension fund, or investment board subject to this Code, except | ||||||
11 | those whose investments are restricted by Section 1-113.2 of | ||||||
12 | this Code, shall adopt a policy that sets forth goals for | ||||||
13 | utilization of businesses owned by minorities, women, and | ||||||
14 | persons with disabilities for all contracts and services. The | ||||||
15 | goals established shall be based on the percentage of total | ||||||
16 | dollar amount of all contracts let to minority-owned | ||||||
17 | businesses, women-owned businesses, and businesses owned by a | ||||||
18 | person with a disability, as those terms are defined in the | ||||||
19 | Business Enterprise for Minorities, Women, and Persons with | ||||||
20 | Disabilities Act. The retirement system, pension fund, or | ||||||
21 | investment board shall annually review the goals established | ||||||
22 | under this subsection. | ||||||
23 | (7) On or before January 1, 2010, a retirement system, | ||||||
24 | pension fund, or investment board subject to this Code, except | ||||||
25 | those whose investments are restricted by Section 1-113.2 of | ||||||
26 | this Code, shall adopt a policy that sets forth goals for |
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1 | increasing the utilization of minority broker-dealers. For the | ||||||
2 | purposes of this Code, "minority broker-dealer" means a | ||||||
3 | qualified broker-dealer who meets the definition of | ||||||
4 | "minority-owned business", "women-owned business", or | ||||||
5 | "business owned by a person with a disability", as those terms | ||||||
6 | are defined in the Business Enterprise for Minorities, Women, | ||||||
7 | and Persons with Disabilities Act. The retirement system, | ||||||
8 | pension fund, or investment board shall annually review the | ||||||
9 | goals established under this Section. | ||||||
10 | (8) Each retirement system, pension fund, and investment | ||||||
11 | board subject to this Code, except those whose investments are | ||||||
12 | restricted by Section 1-113.2 of this Code, shall submit a | ||||||
13 | report to the Governor and the General Assembly by January 1 of | ||||||
14 | each year that includes the following: (i) the policy adopted | ||||||
15 | under subsection (4) of this Section, including the names and | ||||||
16 | addresses of the emerging investment managers used, percentage | ||||||
17 | of the assets under the investment control of emerging | ||||||
18 | investment managers for the 3 separate goals, and the actions | ||||||
19 | it has undertaken to increase the use of emerging investment | ||||||
20 | managers, including encouraging other investment managers to | ||||||
21 | use emerging investment managers as subcontractors when the | ||||||
22 | opportunity arises; (ii) the policy adopted under subsection | ||||||
23 | (5) of this Section; (iii) the policy adopted under subsection | ||||||
24 | (6) of this Section; (iv) the policy adopted under subsection | ||||||
25 | (7) of this Section, including specific actions undertaken to | ||||||
26 | increase the use of minority broker-dealers; and (v) the policy |
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1 | adopted under subsection (9) of this Section. | ||||||
2 | (9) On or before February 1, 2015, a retirement system, | ||||||
3 | pension fund, or investment board subject to this Code, except | ||||||
4 | those whose investments are restricted by Section 1-113.2 of | ||||||
5 | this Code, shall adopt a policy that sets forth goals for | ||||||
6 | increasing the utilization of minority investment managers. | ||||||
7 | For the purposes of this Code, "minority investment manager" | ||||||
8 | means a qualified investment manager that manages an investment | ||||||
9 | portfolio and meets the definition of "minority-owned | ||||||
10 | business", "women-owned business", or "business owned by a | ||||||
11 | person with a disability", as those terms are defined in the | ||||||
12 | Business Enterprise for Minorities, Women, and Persons with | ||||||
13 | Disabilities Act. | ||||||
14 | It is hereby declared to be the public policy of the State | ||||||
15 | of Illinois to
encourage the trustees of public employee | ||||||
16 | retirement systems, pension funds, and investment boards
to use | ||||||
17 | minority investment managers in managing their systems' | ||||||
18 | assets, encompassing all asset classes, and to increase the | ||||||
19 | racial, ethnic, and gender diversity of their fiduciaries, to | ||||||
20 | the
greatest extent feasible within the bounds of financial and | ||||||
21 | fiduciary
prudence, and to take affirmative steps to remove any | ||||||
22 | barriers to the full
participation in investment opportunities
| ||||||
23 | afforded by those retirement systems, pension funds, and | ||||||
24 | investment boards. | ||||||
25 | The retirement system, pension fund, or investment board | ||||||
26 | shall establish 3 separate goals for: (i) minority investment |
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1 | managers that are minority-owned businesses; (ii) minority | ||||||
2 | investment managers that are women-owned businesses; and (iii) | ||||||
3 | minority investment managers that are businesses owned by a | ||||||
4 | person with a disability. The retirement system, pension fund, | ||||||
5 | or investment board shall annually review the goals established | ||||||
6 | under this Section. | ||||||
7 | If in any case a minority investment manager meets the | ||||||
8 | criteria established by a board for a specific search and meets | ||||||
9 | the criteria established by a consultant for that search, then | ||||||
10 | that minority investment manager shall receive an invitation by | ||||||
11 | the board of trustees, or an investment committee of the board | ||||||
12 | of trustees, to present his or her firm for final consideration | ||||||
13 | of a contract. In the case where multiple minority investment | ||||||
14 | managers meet the criteria of this Section, the staff may | ||||||
15 | choose the most qualified firm or firms to present to the | ||||||
16 | board. | ||||||
17 | The use of a minority investment manager does not | ||||||
18 | constitute a transfer
of investment authority for the purposes | ||||||
19 | of subsection (2) of this Section. | ||||||
20 | (10) Beginning January 1, 2016, it shall be the | ||||||
21 | aspirational goal for a retirement system, pension fund, or | ||||||
22 | investment board subject to this Code to use emerging | ||||||
23 | investment managers for not less than 20% of the total funds | ||||||
24 | under management. Furthermore, it shall be the aspirational | ||||||
25 | goal that not less than 20% of investment advisors be | ||||||
26 | minorities, women, and persons with disabilities as those terms |
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1 | are defined in the Business Enterprise for Minorities, Women, | ||||||
2 | and Persons with Disabilities Act. It shall be the aspirational | ||||||
3 | goal to utilize businesses owned by minorities, women, and | ||||||
4 | persons with disabilities for not less than 20% of contracts | ||||||
5 | awarded for "information technology services", "accounting | ||||||
6 | services", "insurance brokers", "architectural and engineering | ||||||
7 | services", and "legal services" as those terms are defined in | ||||||
8 | the Act. | ||||||
9 | (Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17; | ||||||
10 | 100-902, eff. 8-17-18.)
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11 | Section 99. Effective date. This Act takes effect January | ||||||
12 | 1, 2021.
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