(40 ILCS 5/1-113)
(from Ch. 108 1/2, par. 1-113)
Investment authority of certain pension funds, not including
those established under Article 3 or 4.
The investment authority of a board
of trustees of a retirement system or pension fund established under this
Code shall, if so provided in the Article establishing such retirement system
or pension fund, embrace the following investments:
(1) Bonds, notes and other direct obligations of the
United States Government; bonds, notes and other obligations of any United States Government agency or instrumentality, whether or not guaranteed; and obligations the principal and interest of which are guaranteed unconditionally by the United States Government or by an agency or instrumentality thereof.
(2) Obligations of the Inter-American Development
Bank, the International Bank for Reconstruction and Development, the African Development Bank, the International Finance Corporation, and the Asian Development Bank.
(3) Obligations of any state, or of any political
subdivision in Illinois, or of any county or city in any other state having a population as shown by the last federal census of not less than 30,000 inhabitants provided that such political subdivision is not permitted by law to become indebted in excess of 10% of the assessed valuation of property therein and has not defaulted for a period longer than 30 days in the payment of interest and principal on any of its general obligations or indebtedness during a period of 10 calendar years immediately preceding such investment.
(4) Nonconvertible bonds, debentures, notes and other
corporate obligations of any corporation created or existing under the laws of the United States or any state, district or territory thereof, provided there has been no default on the obligations of the corporation or its predecessor(s) during the 5 calendar years immediately preceding the purchase. Up to 5% of the assets of a pension fund established under Article 9 of this Code may be invested in nonconvertible bonds, debentures, notes, and other corporate obligations of corporations created or existing under the laws of a foreign country, provided there has been no default on the obligations of the corporation or its predecessors during the 5 calendar years immediately preceding the date of purchase.
(5) Obligations guaranteed by the Government of
Canada, or by any Province of Canada, or by any Canadian city with a population of not less than 150,000 inhabitants, provided (a) they are payable in United States currency and are exempt from any Canadian withholding tax; (b) the investment in any one issue of bonds shall not exceed 10% of the amount outstanding; and (c) the total investments at book value in Canadian securities shall be limited to 5% of the total investment account of the board at book value.
(5.1) Direct obligations of the State of Israel for
the payment of money, or obligations for the payment of money which are guaranteed as to the payment of principal and interest by the State of Israel, or common or preferred stock or notes issued by a bank owned or controlled in whole or in part by the State of Israel, on the following conditions:
(a) The total investments in such obligations
shall not exceed 5% of the book value of the aggregate investments owned by the board;
(b) The State of Israel shall not be in default
in the payment of principal or interest on any of its direct general obligations on the date of such investment;
(c) The bonds, stock or notes, and interest
thereon shall be payable in currency of the United States;
(d) The bonds shall (1) contain an option for the
redemption thereof after 90 days from date of purchase or (2) either become due 5 years from the date of their purchase or be subject to redemption 120 days after the date of notice for redemption;
(e) The investment in these obligations has been
approved in writing by investment counsel employed by the board, which counsel shall be a national or state bank or trust company authorized to do a trust business in the State of Illinois, or an investment advisor qualified under the federal Investment Advisers Act of 1940 and registered under the Illinois Securities Law of 1953;
(f) The fund or system making the investment
shall have at least $5,000,000 of net present assets.
(6) Notes secured by mortgages under Sections 203,
207, 220 and 221 of the National Housing Act which are insured by the Federal Housing Commissioner, or his successor assigns, or debentures issued by such Commissioner, which are guaranteed as to principal and interest by the Federal Housing Administration, or agency of the United States Government, provided the aggregate investment shall not exceed 20% of the total investment account of the board at book value, and provided further that the investment in such notes under Sections 220 and 221 shall in no event exceed one-half of the maximum investment in notes under this paragraph.
(7) Loans to veterans guaranteed in whole or part by
the United States Government pursuant to Title III of the Act of Congress known as the Servicemen's Readjustment Act of 1944, 58 Stat. 284, 38 U.S.C. 693, as amended or supplemented from time to time, provided such guaranteed loans are liens upon real estate.
(8) Common and preferred stocks and convertible debt
securities authorized for investment of trust funds under the laws of the State of Illinois, provided:
(a) the common stocks, except as provided in
subparagraph (g), are listed on a national securities exchange or board of trade, as defined in the federal Securities Exchange Act of 1934, or quoted in the National Association of Securities Dealers Automated Quotation System (NASDAQ);
(b) the securities are of a corporation created
or existing under the laws of the United States or any state, district or territory thereof, except that up to 5% of the assets of a pension fund established under Article 9 of this Code may be invested in securities issued by corporations created or existing under the laws of a foreign country, if those securities are otherwise in conformance with this paragraph (8);
(c) the corporation is not in arrears on payment
of dividends on its preferred stock;
(d) the total book value of all stocks and
convertible debt owned by any pension fund or retirement system shall not exceed 40% of the aggregate book value of all investments of such pension fund or retirement system, except for a pension fund or retirement system governed by Article 9 or 17, where the total of all stocks and convertible debt shall not exceed 50% of the aggregate book value of all fund investments, and except for a pension fund or retirement system governed by Article 13, where the total market value of all stocks and convertible debt shall not exceed 65% of the aggregate market value of all fund investments;
(e) the book value of stock and convertible debt
investments in any one corporation shall not exceed 5% of the total investment account at book value in which such securities are held, determined as of the date of the investment, and the investments in the stock of any one corporation shall not exceed 5% of the total outstanding stock of such corporation, and the investments in the convertible debt of any one corporation shall not exceed 5% of the total amount of such debt that may be outstanding;
(f) the straight preferred stocks or convertible
preferred stocks and convertible debt securities are issued or guaranteed by a corporation whose common stock qualifies for investment by the board; and
(g) that any common stocks not listed or quoted
as provided in subdivision (8)(a) be limited to the following types of institutions: (a) any bank which is a member of the Federal Deposit Insurance Corporation having capital funds represented by capital stock, surplus and undivided profits of at least $20,000,000; (b) any life insurance company having capital funds represented by capital stock, special surplus funds and unassigned surplus totalling at least $50,000,000; and (c) any fire or casualty insurance company, or a combination thereof, having capital funds represented by capital stock, net surplus and voluntary reserves of at least $50,000,000.
(9) Withdrawable accounts of State chartered and
federal chartered savings and loan associations insured by the Federal Savings and Loan Insurance Corporation; deposits or certificates of deposit in State and national banks insured by the Federal Deposit Insurance Corporation; and share accounts or share certificate accounts in a State or federal credit union, the accounts of which are insured as required by the Illinois Credit Union Act or the Federal Credit Union Act, as applicable.
No bank or savings and loan association shall receive
investment funds as permitted by this subsection (9), unless it has complied with the requirements established pursuant to Section 6 of the Public Funds Investment Act.
(10) Trading, purchase or sale of listed options on
underlying securities owned by the board.
(11) Contracts and agreements supplemental thereto
providing for investments in the general account of a life insurance company authorized to do business in Illinois.
(12) Conventional mortgage pass-through securities
which are evidenced by interests in Illinois owner-occupied residential mortgages, having not less than an "A" rating from at least one national securities rating service. Such mortgages may have loan-to-value ratios up to 95%, provided that any amount over 80% is insured by private mortgage insurance. The pool of such mortgages shall be insured by mortgage guaranty or equivalent insurance, in accordance with industry standards.
(13) Pooled or commingled funds managed by a national
or State bank which is authorized to do a trust business in the State of Illinois, shares of registered investment companies as defined in the federal Investment Company Act of 1940 which are registered under that Act, and separate accounts of a life insurance company authorized to do business in Illinois, where such pooled or commingled funds, shares, or separate accounts are comprised of common or preferred stocks, bonds, or money market instruments.
(14) Pooled or commingled funds managed by a national
or state bank which is authorized to do a trust business in the State of Illinois, separate accounts managed by a life insurance company authorized to do business in Illinois, and commingled group trusts managed by an investment adviser registered under the federal Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) and under the Illinois Securities Law of 1953, where such pooled or commingled funds, separate accounts or commingled group trusts are comprised of real estate or loans upon real estate secured by first or second mortgages. The total investment in such pooled or commingled funds, commingled group trusts and separate accounts shall not exceed 10% of the aggregate book value of all investments owned by the fund.
(15) Investment companies which (a) are registered as
such under the Investment Company Act of 1940, (b) are diversified, open-end management investment companies and (c) invest only in money market instruments.
(16) Up to 10% of the assets of the fund may be
invested in investments not included in paragraphs (1) through (15) of this Section, provided that such investments comply with the requirements and restrictions set forth in Sections 1-109, 1-109.1, 1-109.2, 1-110, and 1-111 of this Code.
The board shall have the authority to enter into such agreements and to
execute such documents as it determines to be necessary to complete any
Any limitations herein set forth shall be applicable only at the time
of purchase and shall not require the liquidation of any investment at
All investments shall be clearly held and accounted for to indicate
ownership by such board. Such board may direct the registration of
securities in its own name or in the name of a nominee created for the
express purpose of registration of securities by a national or state
bank or trust company authorized to conduct a trust business
in the State of Illinois.
Investments shall be carried at cost or at a value determined in accordance
generally accepted accounting principles and accounting procedures
approved by such board.
(Source: P.A. 100-201, eff. 8-18-17.)