State of Illinois
2011 and 2012


Introduced 1/27/2011, by Sen. Chris Lauzen


40 ILCS 5/1-113.1
30 ILCS 805/8.35 new

    Amends the Illinois Pension Code. Provides that no more than 30% of a downstate police or downstate fire pension fund's assets may be invested in debt obligations of corporations subject to specified conditions. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

LRB097 00026 AMC 40027 b






SB0032LRB097 00026 AMC 40027 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 1-113.1 as follows:
6    (40 ILCS 5/1-113.1)
7    Sec. 1-113.1. Investment authority of pension funds
8established under Article 3 or 4. The board of trustees of a
9police pension fund established under Article 3 of this Code or
10firefighter pension fund established under Article 4 of this
11Code shall draw pension funds from the treasurer of the
12municipality and, beginning January 1, 1998, invest any part
13thereof in the name of the board in the items listed in
14Sections 1-113.2 through 1-113.4 according to the limitations
15and requirements of this Article. These investments shall be
16made with the care, skill, prudence, and diligence that a
17prudent person acting in like capacity and familiar with such
18matters would use in the conduct of an enterprise of like
19character with like aims.
20    Interest and any other income from the investments shall be
21credited to the pension fund.
22    For the purposes of Sections 1-113.2 through 1-113.11, the
23"net assets" of a pension fund include both the cash and



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1invested assets of the pension fund.
2    No more than 30% of the pension fund's assets may be
3invested in debt obligations of corporations subject to the
4following conditions: (1) corporate debt maturity is limited to
5a maximum of 30 years from the date of new issuance or
6remaining life of the security, (2) no greater than 3% of the
7pension fund's allowable allocation to corporate debt
8securities can be invested in a single corporate issuer, (3) no
9greater than 15% of the fund's allowable allocation to
10corporate debt securities can be invested into any one of the
1110 Global Industry Classification Standards classified
12sectors, (4) deferable interest debt obligations are
13prohibited, (5) a maximum of 25% in callable corporate debt
14obligations are permitted, (6) no debt leverage is permitted
15within any bond mutual fund, ETF, or individual corporate debt
16portfolio to enhance yield, and (7) if the investment grade
17rating by one or more of 2 standard credit rating services
18falls below investment grade for any issuer, then the debt
19obligation must be sold if it is still rated below investment
20grade by at least 2 credit rating services after a period of 12
21months of the downgrade.
22(Source: P.A. 90-507, eff. 8-22-97.)
23    Section 90. The State Mandates Act is amended by adding
24Section 8.35 as follows:



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1    (30 ILCS 805/8.35 new)
2    Sec. 8.35. Exempt mandate. Notwithstanding Sections 6 and 8
3of this Act, no reimbursement by the State is required for the
4implementation of any mandate created by this amendatory Act of
5the 96th General Assembly.
6    Section 99. Effective date. This Act takes effect upon
7becoming law.