Bill Text: IL SB3789 | 2023-2024 | 103rd General Assembly | Introduced


Bill Title: Amends the State Universities Article of the Illinois Pension Code. Provides that the System shall require that the deferred compensation recordkeeper agree that, in performing services with respect to the deferred compensation plan, the recordkeeper: (i) will not use information received as a result of providing services with respect to the deferred compensation plan or the participants in the deferred compensation plan to solicit the participants in the deferred compensation plan for the purpose of cross-selling nonplan products and services, unless in response to a request by a participant in the deferred compensation plan or a request by the System (currently, a request by a participant in the deferred compensation plan); and (ii) will not promote, recommend, endorse, or solicit participants in the deferred compensation plan to purchase any financial products or services outside of the deferred compensation plan, except that links to parts of the recordkeeper's or the recordkeeper's affiliate's (currently, recordkeeper's) website that are generally available to the public, are about commercial products, and may be encountered by a participant in the regular course of navigating the recordkeeper's or the recordkeeper's affiliate's website (currently, recordkeeper's) does not constitute a violation of the prohibition. Amends the University Employees Custodial Accounts Act. Makes similar changes. In a provision prohibiting a defined contribution plan recordkeeper from promoting credit cards, life insurance, or banking products, provides an exception if a request to provide those products is made by the governing board of the public institution of higher education or its authorized delegate. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-02-09 - Referred to Assignments [SB3789 Detail]

Download: Illinois-2023-SB3789-Introduced.html

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3789

Introduced 2/9/2024, by Sen. Robert F. Martwick

SYNOPSIS AS INTRODUCED:
40 ILCS 5/15-202
110 ILCS 95/2 from Ch. 144, par. 1702

Amends the State Universities Article of the Illinois Pension Code. Provides that the System shall require that the deferred compensation recordkeeper agree that, in performing services with respect to the deferred compensation plan, the recordkeeper: (i) will not use information received as a result of providing services with respect to the deferred compensation plan or the participants in the deferred compensation plan to solicit the participants in the deferred compensation plan for the purpose of cross-selling nonplan products and services, unless in response to a request by a participant in the deferred compensation plan or a request by the System (currently, a request by a participant in the deferred compensation plan); and (ii) will not promote, recommend, endorse, or solicit participants in the deferred compensation plan to purchase any financial products or services outside of the deferred compensation plan, except that links to parts of the recordkeeper's or the recordkeeper's affiliate's (currently, recordkeeper's) website that are generally available to the public, are about commercial products, and may be encountered by a participant in the regular course of navigating the recordkeeper's or the recordkeeper's affiliate's website (currently, recordkeeper's) does not constitute a violation of the prohibition. Amends the University Employees Custodial Accounts Act. Makes similar changes. In a provision prohibiting a defined contribution plan recordkeeper from promoting credit cards, life insurance, or banking products, provides an exception if a request to provide those products is made by the governing board of the public institution of higher education or its authorized delegate. Effective immediately.
LRB103 37547 RPS 67671 b

A BILL FOR

SB3789LRB103 37547 RPS 67671 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
5changing Section 15-202 as follows:
6 (40 ILCS 5/15-202)
7 Sec. 15-202. Optional deferred compensation plan.
8 (a) As soon as practicable after August 10, 2018 (the
9effective date of Public Act 100-769), the System shall offer
10a deferred compensation plan that is eligible under Section
11457(b) of the Internal Revenue Code of 1986, as amended, to
12participating employees of the System employed by employers
13described in Section 15-106 of this Code that qualify as
14eligible employers under Section 457(e)(1)(A) of the Internal
15Revenue Code of 1986, as amended. Such eligible employers
16shall adopt the plan with an effective date no later than
17September 1, 2021. Participating employees may voluntarily
18elect to make elective deferrals to the eligible deferred
19compensation plan. Eligible employers may make optional
20employer contributions to the plan on behalf of participating
21employees, which contributions may be maintained, increased,
22reduced, or eliminated at the discretion of the employer from
23plan year to plan year. The plan shall collect voluntary

SB3789- 2 -LRB103 37547 RPS 67671 b
1employee and optional employer contributions into an account
2for each participant and shall offer investment options to the
3participant. The plan under this Section shall be operated in
4full compliance with any applicable State and federal laws,
5and the System shall utilize generally accepted practices in
6creating and maintaining the plan for the best interest of the
7participants. In administering the deferred compensation plan,
8the System shall require that the deferred compensation plan
9recordkeeper agree that, in performing services with respect
10to the deferred compensation plan, the recordkeeper: (i) will
11not use information received as a result of providing services
12with respect to the deferred compensation plan or the
13participants in the deferred compensation plan to solicit the
14participants in the deferred compensation plan for the purpose
15of cross-selling nonplan products and services, unless in
16response to a request by a participant in the deferred
17compensation plan or a request by the System; and (ii) will not
18promote, recommend, endorse, or solicit participants in the
19deferred compensation plan to purchase any financial products
20or services outside of the deferred compensation plan, except
21that links to parts of the recordkeeper's or the
22recordkeeper's affiliate's website that are generally
23available to the public, are about commercial products, and
24may be encountered by a participant in the regular course of
25navigating the recordkeeper's or the recordkeeper's
26affiliate's website will not constitute a violation of this

SB3789- 3 -LRB103 37547 RPS 67671 b
1item (ii). The System may use funds from the employee and
2employer contributions to defray any and all costs of creating
3and maintaining the plan. The System shall produce an annual
4report on the participation in the plan and shall make the
5report public.
6 (b) The System shall automatically enroll in the eligible
7deferred compensation plan any employee of an eligible
8employer who first becomes a participating employee of the
9System on or after July 1, 2023 under an eligible automatic
10contribution arrangement that is subject to Section 414(w) of
11the Internal Revenue Code of 1986, as amended, and the United
12States Department of Treasury regulations promulgated
13thereunder. An employee who is automatically enrolled under
14this subsection (b) shall have 3% of his or her compensation,
15as defined by the plan, for each pay period deferred on a
16pre-tax basis into his or her account, subject to any
17contribution limits applicable to the plan. The Board may
18increase the default percentage of compensation deferred under
19this subsection (b).
20 An employee shall have 30 days from the date on which the
21System provides the notice required under Section 414(w) of
22the Internal Revenue Code of 1986, as amended, to elect to not
23participate in the eligible deferred compensation plan or to
24elect to increase or reduce the initial amount of elective
25deferrals made to the plan. In the absence of such affirmative
26election, the employee shall be automatically enrolled in the

SB3789- 4 -LRB103 37547 RPS 67671 b
1plan on the first day of the calendar month, or as soon as
2administratively practicable thereafter, following the 30th
3day from the date on which the System provides the required
4notice. An employee who has been automatically enrolled in the
5plan under this subsection (b) may elect, within 90 days of
6enrollment, to withdraw from the plan and receive a refund of
7amounts deferred, adjusted by applicable earnings and fees. An
8employee making such an election shall forfeit all employer
9matching contributions, if any, made with respect to such
10refunded elective deferrals and such forfeited amounts shall
11be used to defray plan expenses. Any refunded elective
12deferrals shall be included in the employee's gross income for
13the taxable year in which the refund is issued.
14 (c) The System may provide for one or more automatic
15contribution arrangements, which shall comply with all
16applicable Internal Revenue Service rules and regulations, in
17conjunction with or in lieu of the eligible automatic
18contribution arrangement under subsection (b), for
19participating employees of eligible employers whose annual
20earnings are limited by application of subsection (b) of
21Section 15-111 of this Code. The amount of elective deferrals
22made for the employee each pay period under an automatic
23contribution arrangement shall equal the default percentage
24specified by resolution of the Board multiplied by the
25employee's compensation as defined by the plan, subject to any
26contribution limits applicable to the plan, and shall be made

SB3789- 5 -LRB103 37547 RPS 67671 b
1on a pre-tax basis. An employee subject to this subsection (c)
2shall have 30 days from the date on which the System provides
3written notice to the employee to elect to not participate in
4the eligible deferred compensation plan or to elect to
5increase or reduce the amount of initial elective deferrals
6made to the plan. In the absence of such affirmative election,
7the employee shall be automatically enrolled in the plan
8beginning the first day of the calendar month, or as soon as
9administratively practicable thereafter, following the 30th
10day from the date on which the System provides the required
11notice.
12 (d) The System may provide that the default percentage for
13any employee automatically enrolled in the eligible deferred
14compensation plan under subsection (b) or (c) be increased by
15a specified percentage each plan year after the plan year in
16which the employee is automatically enrolled in the plan. The
17amount of automatic annual increases in any plan year shall
18not exceed 1% of compensation as defined by the plan.
19 (e) The changes made to this Section by this amendatory
20Act of the 102nd General Assembly are corrections of existing
21law and are intended to be retroactive to the effective date of
22Public Act 100-769, notwithstanding Section 1-103.1 of this
23Code.
24(Source: P.A. 102-540, eff. 8-20-21; 103-552, eff. 8-11-23.)
25 Section 10. The University Employees Custodial Accounts

SB3789- 6 -LRB103 37547 RPS 67671 b
1Act is amended by changing Section 2 as follows:
2 (110 ILCS 95/2) (from Ch. 144, par. 1702)
3 Sec. 2. The governing board of any public institution of
4higher education has the power to establish a defined
5contribution plan to make payments to custodial accounts for
6investment in regulated investment company stock to provide
7retirement benefits as described in Section 403(b)(7) of the
8Internal Revenue Code for eligible employees of such
9institutions. Such payments shall be made with funds made
10available by deductions from or reductions in salary or wages
11of eligible employees who authorize in writing deductions or
12reductions for such purpose. Such stock shall be purchased
13only from persons authorized to sell such stock in this State.
14 In administering the defined contribution plan, the
15governing board of any public institution of higher education
16shall require that the defined contribution plan recordkeeper
17agree that, in performing services with respect to the defined
18contribution plan, the recordkeeper: (i) will not use
19information received as a result of providing services with
20respect to the defined contribution plan or the participants
21in the defined contribution plan to solicit the participants
22in the defined contribution plan for the purpose of
23cross-selling nonplan products and services, unless in
24response to a request by a participant in the defined
25contribution plan or a request by the governing board of the

SB3789- 7 -LRB103 37547 RPS 67671 b
1public institution of higher education or its authorized
2delegate; and (ii) will not promote, recommend, endorse, or
3solicit participants in the defined contribution plan to
4purchase any financial products or services outside of the
5defined contribution plan, except that links to parts of the
6recordkeeper's or the recordkeeper's affiliate's website that
7are generally available to the public, are about commercial
8products, and may be encountered by a participant in the
9regular course of navigating the recordkeeper's or the
10recordkeeper's affiliate's website will not constitute a
11violation of this item (ii). However, a public institution of
12higher education may allow promotion of limited services if
13the public institution of higher education receives no
14compensation from the recordkeeper for promoting or providing
15such services. Such limited services may include educational,
16counseling, debt reduction, student loan repayment or
17forgiveness, or other services intended to enhance retirement
18savings opportunities. Such limited services may not include
19credit cards, life insurance, or banking products, unless a
20request to provide those products is made by the governing
21board of the public institution of higher education or its
22authorized delegate.
23(Source: P.A. 103-552, eff. 8-11-23.)
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