HB1259 98TH GENERAL ASSEMBLY

LRB098 07417 EFG 37484 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB1259

Introduced , by Rep. Mike Fortner

SYNOPSIS AS INTRODUCED:

40 ILCS 5/1-160
40 ILCS 5/7-130.1 new
40 ILCS 5/7-130.2 new
40 ILCS 5/7-140.5 new
40 ILCS 5/7-173	from Ch. 108 1/2, par. 7-173
40 ILCS 5/7-173.3 new
40 ILCS 5/20-121	from Ch. 108 1/2, par. 20-121
40 ILCS 5/20-123	from Ch. 108 1/2, par. 20-123
40 ILCS 5/20-124	from Ch. 108 1/2, par. 20-124
30 ILCS 805/8.37 new

Amends the Illinois Pension Code. Allows participants in the Illinois Municipal Retirement Fund (IMRF) to elect to participate in a self-managed program of retirement benefits instead of the program of traditional or reformed retirement benefits currently offered. Provides that the self-managed plan shall authorize a participant to accumulate assets for retirement through a combination of employer and employee contributions that may be invested at the participant's direction in mutual funds, collective investment funds, or other investment products and used to purchase annuity contracts. Requires the Fund to make the self-managed plan available within 6 months after the effective date of the amendatory Act. Makes conforming changes in the Retirement Systems Reciprocal Act. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

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 Sections 1-160, 7-173, 20-121, 20-123, and 20-124 and adding Sections 7-130.1, 7-130.2, 7-140.5, and 7-173.3 as follows:

(40 ILCS 5/1-160)

Sec. 1-160. Provisions applicable to new hires.

(a) The provisions of this Section apply to a person who, on or after January 1, 2011, first becomes a member or a participant under any reciprocal retirement system or pension fund established under this Code, other than a retirement system or pension fund established under Article 2, 3, 4, 5, 6, or 18 of this Code, notwithstanding any other provision of this Code to the contrary, but do not apply to any self-managed plan established under this Code, to any person with respect to service as a sheriff's law enforcement employee under Article 7, or to any participant of the retirement plan established under Section 22-101.

(b) "Final average salary" means the average monthly (or annual) salary obtained by dividing the total salary or earnings calculated under the Article applicable to the member or participant during the 96 consecutive months (or 8 consecutive years) of service within the last 120 months (or 10 years) of service in which the total salary or earnings calculated under the applicable Article was the highest by the number of months (or years) of service in that period. For the purposes of a person who first becomes a member or participant of any retirement system or pension fund to which this Section applies on or after January 1, 2011, in this Code, "final average salary" shall be substituted for the following:

(1) In Articles 7 (except for service as sheriff's law enforcement employees) and 15, "final rate of earnings".

(2) In Articles 8, 9, 10, 11, and 12, "highest average annual salary for any 4 consecutive years within the last 10 years of service immediately preceding the date of withdrawal".

(3) In Article 13, "average final salary".

(4) In Article 14, "final average compensation".

(5) In Article 17, "average salary".

(6) In Section 22-207, "wages or salary received by him at the date of retirement or discharge".

(b-5) Beginning on January 1, 2011, for all purposes under this Code (including without limitation the calculation of benefits and employee contributions), the annual earnings, salary, or wages (based on the plan year) of a member or participant to whom this Section applies shall not exceed $106,800; however, that amount shall annually thereafter be increased by the lesser of (i) 3% of that amount, including all previous adjustments, or (ii) one-half 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, including all previous adjustments.

For the purposes of this Section, "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. 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 boards of the retirement systems and pension funds by November 1 of each year.

(c) A member or participant is entitled to a retirement annuity upon written application if he or she has attained age 67 and has at least 10 years of service credit and is otherwise eligible under the requirements of the applicable Article.

A member or participant who has attained age 62 and has at least 10 years of service credit and is otherwise eligible under the requirements of the applicable Article may elect to receive the lower retirement annuity provided in subsection (d) of this Section.

(d) The retirement annuity of a member or participant who is retiring after attaining age 62 with at least 10 years of service credit shall be reduced by one-half of 1% for each full month that the member's age is under age 67.

(e) Any retirement annuity or supplemental annuity shall be subject to annual increases on the January 1 occurring either on or after the attainment of age 67 or the first anniversary of the annuity start date, whichever is later. Each annual increase shall be calculated at 3% or one-half 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, whichever is less, of the originally granted retirement annuity. If the annual unadjusted percentage change in the consumer price index-u for the 12 months ending with the September preceding each November 1 is zero or there is a decrease, then the annuity shall not be increased.

(f) The initial survivor's or widow's annuity of an otherwise eligible survivor or widow of a retired member or participant who first became a member or participant on or after January 1, 2011 shall be in the amount of 66 2/3% of the retired member's or participant's retirement annuity at the date of death. In the case of the death of a member or participant who has not retired and who first became a member or participant on or after January 1, 2011, eligibility for a survivor's or widow's annuity shall be determined by the applicable Article of this Code. The initial benefit shall be 66 2/3% of the earned annuity without a reduction due to age. A child's annuity of an otherwise eligible child shall be in the amount prescribed under each Article if applicable. Any survivor's or widow's annuity shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at 3% or one-half 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, whichever is less, of the originally granted survivor's annuity. If the annual unadjusted percentage change in the consumer price index-u for the 12 months ending with the September preceding each November 1 is zero or there is a decrease, then the annuity shall not be increased.

(g) The benefits in Section 14-110 apply only if the person is a State policeman, a fire fighter in the fire protection service of a department, or a security employee of the Department of Corrections or the Department of Juvenile Justice, as those terms are defined in subsection (b) of Section 14-110. A person who meets the requirements of this Section is entitled to an annuity calculated under the provisions of Section 14-110, in lieu of the regular or minimum retirement annuity, only if the person has withdrawn from service with not less than 20 years of eligible creditable service and has attained age 60, regardless of whether the attainment of age 60 occurs while the person is still in service.

(h) If a person who first becomes a member or a participant of a retirement system or pension fund subject to this Section on or after January 1, 2011 is receiving a retirement annuity or retirement pension under that system or fund and becomes a member or participant under any other system or fund created by this Code and is employed on a full-time basis, except for those members or participants exempted from the provisions of this Section under subsection (a) of this Section, then the person's retirement annuity or retirement pension under that system or fund shall be suspended during that employment. Upon termination of that employment, the person's retirement annuity or retirement pension payments shall resume and be recalculated if recalculation is provided for under the applicable Article of this Code.

If a person who first becomes a member of a retirement system or pension fund subject to this Section on or after January 1, 2012 and is receiving a retirement annuity or retirement pension under that system or fund and accepts on a contractual basis a position to provide services to a governmental entity from which he or she has retired, then that person's annuity or retirement pension earned as an active employee of the employer shall be suspended during that contractual service. A person receiving an annuity or retirement pension under this Code shall notify the pension fund or retirement system from which he or she is receiving an annuity or retirement pension, as well as his or her contractual employer, of his or her retirement status before accepting contractual employment. A person who fails to submit such notification shall be guilty of a Class A misdemeanor and required to pay a fine of $1,000. Upon termination of that contractual employment, the person's retirement annuity or retirement pension payments shall resume and, if appropriate, be recalculated under the applicable provisions of this Code.

(i) Notwithstanding any other provision of this Section, a person who first becomes a participant of the retirement system established under Article 15 on or after January 1, 2011 shall have the option to enroll in the self-managed plan created under Section 15-158.2 of this Code.

Notwithstanding any other provision of this Section, a person who first becomes a participant of the retirement fund established under Article 7 on or after January 1, 2011 shall have the option to enroll in the self-managed plan created under Section 7-173.3 of this Code.

(j) In the case of a conflict between the provisions of this Section and any other provision of this Code, the provisions of this Section shall control.

(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11; 97-609, eff. 1-1-12.)

(40 ILCS 5/7-130.1 new)

Sec. 7-130.1. Regular benefit package.

"Regular benefit package" means either the traditional benefit package or the reformed benefit package, whichever would apply to an employee if he or she does not participate in the self-managed plan.

"Traditional benefit package" means the benefits provided under this Article, other than the self-managed plan, without modification by Section 1-160 of this Code. It includes, but is not limited to: retirement annuities payable directly from the Fund; surviving spouse annuities payable directly from the Fund; child annuities payable directly from the Fund; contribution refunds; and separation benefits.

"Reformed benefit package" means the traditional benefit package as modified by Section 1-160 of this Code for certain persons who first become participants of the Fund on or after January 1, 2011.

(40 ILCS 5/7-130.2 new)

Sec. 7-130.2. Self-managed plan. "Self-managed plan" means the defined contribution retirement program maintained by the Fund, created under Section 7-173.3. The self-managed plan does not include retirement, surviving spouse, or child annuities payable directly from the Fund, contribution refunds, or separation benefits.

(40 ILCS 5/7-140.5 new)

Sec. 7-140.5. Retirement program elections.

(a) For the purposes of this Article:

"Currently eligible participant" means a person who is a participant under this Article before the day on which the Fund first offers the self-managed plan as an alternative to the regular benefit package.

"Eligible participant" means either a currently eligible participant or a newly eligible participant of the Fund

"Newly eligible participant" means a person who first becomes a participant under this Article on or after the date on which the Fund first offers the self-managed plan as an alternative to the regular benefit package.

(b) When the Fund offers to participants under this Article a self-managed plan as an alternative to the regular benefit package, each eligible participant shall be given the choice to elect which retirement program he or she wishes to participate in with respect to all periods of covered employment occurring on, before, and after the effective date of the participant's election. The retirement program election made by an eligible participant must be made in writing, in the manner prescribed by the Fund, and within the time period described in this Section.

If an eligible participant elects the self-managed plan, then that election is irrevocable. If an eligible participant who elected to participate or participated by default in the regular benefit package terminates employment under this Article, then the participant, upon his or her subsequent re-employment under this Article, may make an election under this Section.

An eligible participant who fails to make an election under this Section shall, by default, participate in the regular benefit package.

(c) An eligible participant may elect to participate in the regular benefit package or the self-managed plan. An eligible participant must make this election within one year after the effective date of the adoption of the self-managed plan under Section 7-173.3 or 60 days after first becoming a participant under this Article, whichever is later, or, in the case of a currently eligible participant who terminates employment under this Article, within one year after his or her re-employment under this Article.

(d) If the eligible participant elects to participate in the self-managed plan, the Fund shall fund his or her account as stated in subsection (f) of Section 7-173.3.

(e) An eligible participant shall be provided with written information prepared or prescribed by the Fund that describes the participant's retirement program choices. The eligible participant shall be offered an opportunity to receive counseling from the Fund before making his or her election. This counseling may consist of videotaped materials, group presentations, individual consultation with an employee or authorized representative of the Fund in person or by telephone or other electronic means, or any combination of these methods.

(40 ILCS 5/7-173) (from Ch. 108 1/2, par. 7-173)

Sec. 7-173. Contributions by employees.

(a) Each participating employee shall make contributions to the fund as follows:

1. For retirement annuity purposes, normal contributions of 3 3/4% of earnings.

2. Additional contributions of such percentages of each payment of earnings, as shall be elected by the employee for retirement annuity purposes, but not in excess of 10%. The selected rate shall be applicable to all earnings paid following receipt by the Board of written notice of election to make such contributions. Additional contributions at the selected rate shall be made concurrently with normal contributions.

3. Survivor contributions, by each participating employee, of 3/4% of each payment of earnings; except that in the case of an employee who participates in the self-managed plan under Section 7-173.3, these survivor contributions shall instead be used to finance the benefits available under Section 7-173.3.

(b) Each employee shall make contributions for Federal Social Security taxes, for periods during which he is a covered employee, as required by the Social Security Enabling Act and State and federal law. For participating employees, such contributions shall be in addition to those required under paragraph (a) of this Section.

(c) Contributions shall be deducted from each corresponding payment of earnings paid to each employee and shall be remitted to the board by the participating municipality or participating instrumentality making such payment. The remittance, together with a report of the earnings and contributions shall be made as directed by the board. For township treasurers and employees of township treasurers qualifying as employees hereunder, the contributions herein required as deductions from salary shall be withheld by the school township trustees from funds available for the payment of the compensation of such treasurers and employees as provided in the School Code and remitted to the board.

(d) An employee who has made additional contributions under paragraph (a)2 of this Section may upon retirement or at any time prior thereto, elect to withdraw the total of such additional contributions including interest credited thereon to the end of the preceding calendar year.

(e) Failure to make the deductions for employee contributions provided in paragraph (c) of this Section shall not relieve the employee from liability for such contributions. The amount of such liability may be deducted, with interest charged under Section 7-209, from any annuities or benefits payable hereunder to the employee or any other person receiving an annuity or benefit by reason of such employee's participation.

(f) A participating employee who has at least 40 years of creditable service in the Fund may elect to cease making the contributions required under this Section. The status of the employee under this Article shall be unaffected by this election, except that the employee shall not receive any additional creditable service for the periods of employment following the election. An election under this subsection relieves the employer from making additional employer contributions in relation to that employee.

(Source: P.A. 96-1084, eff. 7-16-10; 96-1258, eff. 7-23-10; 97-333, eff. 8-12-11.)

(40 ILCS 5/7-173.3 new)

Sec. 7-173.3. Self-managed plan.

(a) The General Assembly finds that the Illinois Municipal Retirement Fund should provide a defined contribution (self-managed) plan for eligible participants. Accordingly, the Illinois Municipal Retirement Fund is hereby directed to establish and administer a self-managed plan, which shall offer participants the opportunity to accumulate assets for retirement through a combination of participant and employer contributions that may be invested in mutual funds, collective investment funds, or other investment products and used to purchase annuity contracts that are fixed, variable, or a combination of fixed and variable. The plan must be qualified under the Internal Revenue Code of 1986.

(b) The Board shall make the self-managed plan established under this Section available to eligible participants under this Article within 6 months after the effective date of this amendatory Act of the 98th General Assembly. The adoption of the self-managed plan makes available to the eligible participants under this Article the elections described in Section 7-140.5.

The Illinois Municipal Retirement Fund shall be the plan sponsor for the self-managed plan and shall prepare a plan document and adopt any rules and procedures that are considered necessary or desirable for the administration of the self-managed plan. Consistent with its fiduciary duty to the participants and beneficiaries of the self-managed plan, the Board of Trustees of the Fund may delegate aspects of plan administration as it sees fit to companies authorized to do business in this State.

(c) The Fund shall solicit proposals to provide administrative services and funding vehicles for the self-managed plan from insurance and annuity companies and mutual fund companies, banks, trust companies, or other financial institutions authorized to do business in this State. In reviewing the proposals received and approving and contracting with no fewer than 2 and no more than 7 companies, the Board of Trustees of the Fund shall consider, among other things, the following criteria:

(1) the nature and extent of the benefits that would be provided to the participants;

(2) the reasonableness of the benefits in relation to the premium charged;

(3) the suitability of the benefits to the needs and interests of the participants and the employers; and

(4) the ability of the company to provide benefits under the contract and the financial stability of the company.

The Fund shall periodically review each approved company. A company may continue to provide administrative services and funding vehicles for the self-managed plan only so long as it continues to be an approved company under contract with the Board.

In addition to the companies approved by the Fund under this subsection (c), the Fund may offer its participants an investment fund managed by the Illinois State Board of Investment.

(d) Participants in the program must be allowed to direct the transfer of their account balances among the various investment options offered, subject to applicable contractual provisions. The participant shall not be deemed a fiduciary by reason of providing such investment direction. A person who is a fiduciary shall not be liable for any loss resulting from that investment direction and shall not be deemed to have breached any fiduciary duty by acting in accordance with that direction. Neither the Fund nor the employer shall guarantee any of the investments in the participant's account balances.

(e) In order to participate in the self-managed plan, an eligible participant, as defined in Section 7-140.5, must make a written election in accordance with the provisions of that Section and the procedures established by the Fund. Participation in the self-managed plan shall begin on the first day of the month immediately following the month in which the participant's election is filed with the Fund, but not sooner than the effective date of the self-managed plan. A person's participation in the regular benefit package under this Article shall terminate on the date that participation in the self-managed plan begins.

A person who has elected to participate in the self-managed plan under this Section must continue participation while he or she remains a participant under this Article, and may not participate in the regular benefit package.

Participation in the self-managed plan under this Section shall constitute participation in the Illinois Municipal Retirement Fund.

A participant under this Section shall be entitled to the benefits of Article 20 of this Code.

(f) If, at the time a participant elects to participate in the self-managed plan, the participant has rights and credits in the Fund due to previous participation in the regular benefit package, the Fund shall establish for the participant an opening account balance in the self-managed plan, equal to (1) the amount of the separation benefit that the participant would be eligible to receive if the participant terminated employment on that date and elected a separation benefit and (2) an amount, representing employer contributions, equal to the amount of employee contributions, plus interest. The interest used in this subsection (f) shall be calculated using the actual annual rates of return that the Fund has earned during the time period corresponding to the actual investment of the contributions being transferred. The Fund shall transfer assets from the regular benefit package to the self-managed plan as a tax-free transfer in accordance with Internal Revenue Service guidelines, for purposes of funding the participant's opening account balance.

(g) Notwithstanding any other provision of this Article, a participant may not purchase or receive service credit applicable to the regular benefit package under this Article for any period during which the employee was a participant in the self-managed plan established under this Section.

(h) The self-managed plan shall be funded by contributions from participants in the self-managed plan and employer contributions as provided in this Section.

The contribution rate for participants in the self-managed plan under this Section shall be equal to the member contribution rate for other participants in the Fund, as provided in Section 7-173. This required contribution shall be made as an employer pick-up under Section 414(h) of the Internal Revenue Code of 1986 or any successor Section thereof. Any participant in the Fund's regular benefit package before his or her election to participate in the self-managed plan shall continue to have the employer pick up the contributions required under Section 7-173. However, the amounts picked up after the election of the self-managed plan shall be remitted to and treated as assets of the self-managed plan. In no event shall a participant have the option of receiving these amounts in cash. Participants may make additional contributions to the self-managed plan in accordance with procedures prescribed by the Fund, to the extent permitted under rules adopted by the Fund.

The program shall provide for employer contributions to be credited to each self-managed plan participant in an amount equal to the employee contributions, notwithstanding Section 7-172.

Each employer shall make contributions by appropriations to the Fund for participants in the self-managed plan under this Section. The amount required shall be certified by the Board of Trustees of the Fund and paid by the employer in accordance with Section 7-172. The Fund shall not be obligated to remit the required employer contributions to any of the insurance and annuity companies, mutual fund companies, banks, trust companies, financial institutions, or other sponsors of any of the funding vehicles offered under the self-managed plan until it has received the required employer contributions from the employer.

(i) A participant in the self-managed plan becomes vested in the employer contributions credited to his or her accounts in the self-managed plan on the earliest to occur of the following: (1) attainment of 5 years of service credit; (2) the death of the participating member while employed under this Article, if the member has completed at least 1.5 years of service; or (3) the member's election to retire and apply the reciprocal provisions of Article 20 of this Code.

A participant in the self-managed plan who receives a distribution of his or her vested amounts from the self-managed plan while not yet eligible for retirement under this Article (and Article 20, if applicable) shall forfeit all service credit and accrued rights in the Fund; if he or she subsequently becomes a participant under this Article again, he or she shall be considered a new participant. If a former participant again becomes a participant (or becomes employed by a participating system under Article 20 of this Code) and continues as such for at least 2 years, all rights, service credits, and previous status as a participant shall be restored upon repayment of the amount of the distribution, with interest at the actuarially assumed rate from the date of distribution to the date of payment.

(j) If a participant in the self-managed plan who is vested in employer contributions terminates employment, the participant shall be entitled to a benefit that is based on the account values attributable to both employer and employee contributions and any investment return thereon.

If a participant in the self-managed plan who is not vested in employer contributions terminates employment, the participant shall be entitled to a benefit based solely on the account values attributable to the participant's contributions and any investment return thereon, and the employer contributions and any investment return thereon shall be forfeited. Any employer contributions that are forfeited shall be held in escrow by the company investing those contributions and shall be used, as directed by the Fund, for future allocations of employer contributions or for the restoration of amounts previously forfeited by former participants who again become participating members.

(40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)

Sec. 20-121. Calculation of proportional retirement annuities. Upon retirement of the employee, a proportional retirement annuity shall be computed by each participating system in which pension credit has been established on the basis of pension credits under each system. The computation shall be in accordance with the formula or method prescribed by each participating system which is in effect at the date of the employee's latest withdrawal from service covered by any of the systems in which he has pension credits which he elects to have considered under this Article. However, the amount of any retirement annuity payable under the self-managed plan established under Section 7-173.3 or 15-158.2 of this Code depends solely on the value of the participant's vested account balances and is not subject to any proportional adjustment under this Section.

Combined pension credit under all retirement systems subject to this Article shall be considered in determining whether the minimum qualification has been met and the formula or method of computation which shall be applied. If a system has a step-rate formula for calculation of the retirement annuity, pension credits covering previous service which have been established under another system shall be considered in determining which range or ranges of the step-rate formula are to be applicable to the employee.

Interest on pension credit shall continue to accumulate in accordance with the provisions of the law governing the retirement system in which the same has been established during the time an employee is in the service of another employer, on the assumption such employee, for interest purposes for pension credit, is continuing in the service covered by such retirement system.

(Source: P.A. 91-887, eff. 7-6-00.)

(40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)

Sec. 20-123. Survivor's annuity. The provisions governing a retirement annuity shall be applicable to a survivor's annuity. Appropriate credits shall be established for survivor's annuity purposes in those participating systems which provide survivor's annuities, according to the same conditions and subject to the same limitations and restrictions herein prescribed for a retirement annuity. If a participating system has no survivor's annuity benefit, or if the survivor's annuity benefit under that system is waived, pension credit established in that system shall not be considered in determining eligibility for or the amount of the survivor's annuity which may be payable by any other participating system.

For persons who participate in the self-managed plan established under Section 7-173.3, pension credit established under Article 7 may be considered in determining eligibility for or the amount of the survivor's annuity that is payable by any other participating system, but pension credit established in any other system shall not result in any right to a survivor's annuity under the Article 7 system.

For persons who participate in the self-managed plan established under Section 15-158.2 or the portable benefit package established under Section 15-136.4, pension credit established under Article 15 may be considered in determining eligibility for or the amount of the survivor's annuity that is payable by any other participating system, but pension credit established in any other system shall not result in any right to a survivor's annuity under the Article 15 system.

(Source: P.A. 91-887, eff. 7-6-00.)

(40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)

Sec. 20-124. Maximum benefits.

(a) In no event shall the combined retirement or survivors annuities exceed the highest annuity which would have been payable by any participating system in which the employee has pension credits, if all of his pension credits had been validated in that system.

If the combined annuities should exceed the highest maximum as determined in accordance with this Section, the respective annuities shall be reduced proportionately according to the ratio which the amount of each proportional annuity bears to the aggregate of all such annuities.

(b) In the case of a participant in the self-managed plan established under Section 7-173.3 of this Code to whom the provisions of this Article apply:

(i) For purposes of calculating the combined retirement annuity and the proportionate reduction, if any, in a retirement annuity other than one payable under a self-managed plan, the amount of the Article 7 retirement annuity shall be deemed to be the highest annuity to which the annuitant would have been entitled if he or she had participated in the regular benefit package as defined in Article 7 instead of in the self-managed plan.

(ii) For purposes of calculating the combined survivor's annuity and the proportionate reduction, if any, in a survivor's annuity other than one payable under a self-managed plan, the amount of the Article 7 survivor's annuity shall be deemed to be the highest survivor's annuity to which the survivor would have been entitled if the deceased person had participated in the regular benefit package as defined in Article 7 instead of in the self-managed plan.

(iii) Benefits payable under the self-managed plan are not subject to proportionate reduction under this Section.

(c) In the case of a participant in the self-managed plan established under Section 15-158.2 of this Code to whom the provisions of this Article apply:

(i) For purposes of calculating the combined retirement annuity and the proportionate reduction, if any, in a retirement annuity other than one payable under the self-managed plan, the amount of the Article 15 retirement annuity shall be deemed to be the highest annuity to which the annuitant would have been entitled if he or she had participated in the traditional benefit package as defined in Section 15-103.1 rather than the self-managed plan.

(ii) For purposes of calculating the combined survivor's annuity and the proportionate reduction, if any, in a survivor's annuity other than one payable under the self-managed plan, the amount of the Article 15 survivor's annuity shall be deemed to be the highest survivor's annuity to which the survivor would have been entitled if the deceased employee had participated in the traditional benefit package as defined in Section 15-103.1 rather than the self-managed plan.

(iii) Benefits payable under the self-managed plan are not subject to proportionate reduction under this Section.

(Source: P.A. 91-887, eff. 7-6-00.)

Section 90. The State Mandates Act is amended by adding Section 8.37 as follows:

(30 ILCS 805/8.37 new)

Sec. 8.37. Exempt mandate. Notwithstanding Sections 6 and 8 of this Act, no reimbursement by the State is required for the implementation of any mandate created by this amendatory Act of the 98th General Assembly.

Section 99. Effective date. This Act takes effect upon becoming law.