40 ILCS 5/ Illinois Pension Code.

(40 ILCS 5/1-165)

Sec. 1-165. Commission on Government Forecasting and Accountability study. The Commission on Government Forecasting and Accountability shall conduct a study on the feasibility of:

(1) the creation of an investment pool to supplement and enhance the investment opportunities available to boards of trustees of the pension funds organized under Articles 3 and 4 of this Code; the study shall include an analysis on any cost or cost savings associated with establishing the system and transferring assets for management under the investment pool; and

(2) enacting a contribution cost-share component wherein employing municipalities and members of funds established under Articles 3 and 4 of this Code each contribute 50% of the normal cost of the defined-benefit plan.

The Commission shall issue a report on its findings on or before December 31, 2011.

(Source: P.A. 96-1495, eff. 1-1-11.)

(40 ILCS 5/1-166)

Sec. 1-166. Proportional annuity liability.

(a) If a participant's final average salary in a participating system under the Retirement Systems Reciprocal Act, other than the General Assembly Retirement System, is used to calculate a proportional retirement annuity for that participant under the General Assembly Retirement System, if that final average salary is higher than the highest salary for annuity purposes of that person under the General Assembly Retirement System, and if the participant retires after the effective date of this Section with less than 2 years of service that has accrued in that participating system since his or her last day of active participation in the General Assembly Retirement System, then the increased cost of the proportional annuity paid by the General Assembly Retirement System that is attributable to that higher level of compensation shall be paid by the employer of the participant under that other participating system to the General Assembly Retirement System in the form of a lump sum payment determined by the General Assembly Retirement System in accordance with its annuity tables and other actuarial assumptions.

(b) For the purposes of this Section, "final average salary in a participating system under the Retirement Systems Reciprocal Act, other than the General Assembly Retirement System," includes:

(1) In Section 1-160 and Articles 16 and 18, "final average salary".

(2) In Articles 7 and 15, "final rate of earnings".

(3) 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".

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

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

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

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

(c) If an employer fails to pay the amount required under this Section to the General Assembly Retirement System for more than 90 days after the payment is due, the System, after giving notice to the employer, may certify to the State Comptroller the amount of the delinquent payment and the Comptroller shall deduct the amount so certified or any part thereof from any payment of State funds to the employer and shall pay the amount so deducted to the System. If State funds from which such deductions may be made are not available, then the System may proceed against the employer to recover the amount of the delinquent payment in the appropriate circuit court.

(Source: P.A. 97-967, eff. 8-16-12.)

(40 ILCS 5/1-167)

Sec. 1-167. Prohibited disclosures. No pension fund or retirement system subject to this Code shall disclose the following information of any members or participants of any pension fund or retirement system: (1) the individual's home address (including ZIP code and county); (2) the individual's date of birth; (3) the individual's home and personal phone number; (4) the individual's personal email address; (5) personally identifying member or participant deduction information; or (6) any membership status in a labor organization or other voluntary association affiliated with a labor organization or labor federation (including whether participants are members of such organization, the identity of such organization, whether or not participants pay or authorize the payment of any dues or moneys to such organization, and the amounts of such dues or moneys).

This Section does not apply to disclosures (i) required under the Freedom of Information Act, (ii) for purposes of conducting public operations or business, or (iii) to a labor organization or other voluntary association affiliated with a labor organization or labor federation or to the Municipal Employees Society of Chicago.

(Source: P.A. 103-552, eff. 8-11-23.)

(40 ILCS 5/Art. 1A heading) ARTICLE 1A. REGULATION OF PUBLIC PENSION FUNDS

(40 ILCS 5/1A-101)

Sec. 1A-101. Creation of Public Pension Division. There is created in the Department of Insurance a Public Pension Division which, under the supervision and direction of the Director of Insurance, shall exercise the powers and perform the duties and functions prescribed under this Code. The Division shall consist of an administrator, a supervisor, a technical staff trained in the fundamentals of public pension fund planning, operations, administration, and investment of public pension funds, and such other personnel as may be necessary properly and effectively to discharge the functions of the Division.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/1A-102)

Sec. 1A-102. Definitions. As used in this Article, the following terms have the meanings ascribed to them in this Section, unless the context otherwise requires:

"Accrued liability" means the actuarial present value of future benefit payments and appropriate administrative expenses under a plan, reduced by the actuarial present value of all future normal costs (including any participant contributions) with respect to the participants included in the actuarial valuation of the plan.

"Actuarial present value" means the single amount, as of a given valuation date, that results from applying actuarial assumptions to an amount or series of amounts payable or receivable at various times.

"Actuarial value of assets" means the value assigned by the actuary to the assets of a plan for the purposes of an actuarial valuation.

"Basis point" means 1/100th of one percent.

"Beneficiary" means a person eligible for or receiving benefits from a pension fund as provided in the Article of this Code under which the fund is established.

"Consolidated Fund" means: (i) with respect to the pension funds established under Article 3 of this Code, the Police Officers' Pension Investment Fund established under Article 22B of this Code; and (ii) with respect to the pension funds established under Article 4 of this Code, the Firefighters' Pension Investment Fund established under Article 22C of this Code.

"Credited projected benefit" means that portion of a participant's projected benefit based on an allocation taking into account service to date determined in accordance with the terms of the plan based on anticipated future compensation.

"Current value" means the fair market value when available; otherwise, the fair value as determined in good faith by a trustee, assuming an orderly liquidation at the time of the determination.

"Department" means the Department of Insurance of the State of Illinois.

"Director" means the Director of the Department of Insurance.

"Division" means the Public Pension Division of the Department of Insurance.

"Governmental unit" means the State of Illinois, any instrumentality or agency thereof (except transit authorities or agencies operating within or within and without cities with a population over 3,000,000), and any political subdivision or municipal corporation that establishes and maintains a public pension fund.

"Normal cost" means that part of the actuarial present value of all future benefit payments and appropriate administrative expenses assigned to the current year under the actuarial valuation method used by the plan (excluding any amortization of the unfunded accrued liability).

"Participant" means a participating member or deferred pensioner or annuitant of a pension fund as provided in the Article of this Code under which the pension fund is established, or a beneficiary thereof.

"Pension fund" means any public pension fund, annuity and benefit fund, or retirement system established under this Code.

"Plan year" means the calendar or fiscal year on which the records of a given plan are kept.

"Projected benefits" means benefit amounts under a plan which are expected to be paid at various future times under a particular set of actuarial assumptions, taking into account, as applicable, the effect of advancement in age and past and anticipated future compensation and service credits.

"Supplemental annual cost" means that portion of the unfunded accrued liability assigned to the current year under one of the following bases:

(1) interest only on the unfunded accrued liability;

(2) the level annual amount required to amortize the unfunded accrued liability over a period not exceeding 40 years;

(3) the amount required for the current year to amortize the unfunded accrued liability over a period not exceeding 40 years as a level percentage of payroll.

"Total annual cost" means the sum of the normal cost plus the supplemental annual cost.

"Transition period" means the period described in Section 22B-120 with respect to the pension funds established under Article 3 of this Code and the period described in Section 22C-120 with respect to the pension funds established under Article 4 of this Code.

"Unfunded accrued liability" means the excess of the accrued liability over the actuarial value of the assets of a plan.

"Vested pension benefit" means an interest obtained by a participant or beneficiary in that part of an immediate or deferred benefit under a plan which arises from the participant's service and is not conditional upon the participant's continued service for an employer any of whose employees are covered under the plan, and which has not been forfeited under the terms of the plan.

(Source: P.A. 101-610, eff. 1-1-20.)

(40 ILCS 5/1A-103)

Sec. 1A-103. Rules. The Department is authorized to promulgate rules necessary for the administration and enforcement of this Code. Except as otherwise provided under this Code, these rules shall apply only to pension funds established under Article 3 or Article 4 of this Code. Rules adopted pursuant to this Section shall govern where conflict with local rules and regulations exists.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/1A-104)

Sec. 1A-104. Examinations and investigations.

(a) Except as described in the following paragraph with respect to pension funds established under Article 3 or 4 of this Code, the Division shall make periodic examinations and investigations of all pension funds established under this Code and maintained for the benefit of employees and officers of governmental units in the State of Illinois. However, in lieu of making an examination and investigation, the Division may accept and rely upon a report of audit or examination of any pension fund made by an independent certified public accountant pursuant to the provisions of the Article of this Code governing the pension fund. The acceptance of the report of audit or examination does not bar the Division from making a further audit, examination, and investigation if deemed necessary by the Division.

For pension funds established under Article 3 or 4 of this Code: (i) prior to the conclusion of the transition period, the Division shall make the periodic examinations and investigations described in the preceding paragraph; and (ii) after the conclusion of the transition period, the Division may accept and rely upon a report of audit or examination of such pension fund made by an independent certified public accountant retained by the Consolidated Fund. The acceptance of the report of audit or examination does not bar the Division from making a further audit, examination, and investigation if deemed necessary by the Division.

The Department may implement a flexible system of examinations under which it directs resources as it deems necessary or appropriate. In consultation with the pension fund being examined, the Division may retain attorneys, independent actuaries, independent certified public accountants, and other professionals and specialists as examiners, the cost of which (except in the case of pension funds established under Article 3 or 4) shall be borne by the pension fund that is the subject of the examination.

(b) The Division or the Consolidated Fund, as appropriate, shall examine or investigate each pension fund established under Article 3 or Article 4 of this Code. The schedule of each examination shall be such that each fund shall be examined once every 3 years.

Each examination shall include the following:

(1) an audit of financial transactions, investment policies, and procedures;

(2) an examination of books, records, documents, files, and other pertinent memoranda relating to financial, statistical, and administrative operations;

(3) a review of policies and procedures maintained for the administration and operation of the pension fund;

(4) a determination of whether or not full effect is being given to the statutory provisions governing the operation of the pension fund;

(5) a determination of whether or not the administrative policies in force are in accord with the purposes of the statutory provisions and effectively protect and preserve the rights and equities of the participants;

(6) a determination of whether or not proper financial and statistical records have been established and adequate documentary evidence is recorded and maintained in support of the several types of annuity and benefit payments being made; and

(7) a determination of whether or not the calculations made by the fund for the payment of all annuities and benefits are accurate.

In addition, the Division or the Consolidated Fund, as appropriate, may conduct investigations, which shall be identified as such and which may include one or more of the items listed in this subsection.

A copy of the report of examination or investigation as prepared by the Division or the Consolidated Fund, as appropriate, shall be submitted to the secretary of the board of trustees of the pension fund examined or investigated and to the chief executive officer of the municipality. The Director, upon request, shall grant a hearing to the officers or trustees of the pension fund and to the officers or trustees of the Consolidated Fund, as appropriate, or their duly appointed representatives, upon any facts contained in the report of examination. The hearing shall be conducted before filing the report or making public any information contained in the report. The Director may withhold the report from public inspection for up to 60 days following the hearing.

(Source: P.A. 101-610, eff. 1-1-20.)

(40 ILCS 5/1A-105)

Sec. 1A-105. Examination and subpoena of records and witnesses. The Director may administer oaths and affirmations and summon and compel the attendance before him or her and examine under oath any officer, trustee, agent, actuary, attorney, or employee connected either directly or indirectly with any pension fund, or any other person having information regarding the condition, affairs, management, administration, or methods of conducting a pension fund. The Director may require any person having possession of any record, book, paper, contract, or other document pertaining to a pension fund to surrender it or to otherwise afford the Director access to it and for failure so to do the Director may attach the same.

Should any person fail to obey the summons of the Director or refuse to surrender to him or her or afford him or her access to any such record, book, paper, contract, or other document, the Director may apply to the circuit court of the county in which the principal office of the pension fund involved is located, and the court, if it finds that the Director has not exceeded his or her authority in the matter, may, by order duly entered, require the attendance of witnesses and the production of all relevant documents required by the Director in carrying out his or her responsibilities under this Code. Upon refusal or neglect to obey the order of the court, the court may compel obedience by proceedings for contempt of court.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/1A-106)

Sec. 1A-106. Advisory services. The Division shall render advisory services to the pension funds on all matters pertaining to their operations and shall recommend any corrective or clarifying legislation that it may deem necessary. These recommendations shall be made in the report of examination of the particular pension fund and in the biennial report to the General Assembly under Section 1A-108. The recommendations may embrace all substantive legislative and administrative policies, including, but not limited to, matters dealing with the payment of annuities and benefits, the investment of funds, and the condition of the books, records, and accounts of the pension fund.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/1A-107)

Sec. 1A-107. Automation of services. The Division shall automate its operations, services, and communications to the fullest practical extent. This automation shall include, but need not be limited to, the acquisition, use, and maintenance of electronic data processing technology to (i) automate Division operations as necessary to carry out its duties and responsibilities under this Code, (ii) provide by FY 2000 electronic exchange of information between the Division and pension funds subject to this Code, (iii) provide to pension funds and the general public and receive from pension funds and the general public data on computer processible media, and (iv) control access to information when necessary to protect the confidentiality of persons identified in the information.

The Division shall ensure that this automation is designed so as to protect any confidential data it may receive from a pension fund. This Section does not authorize the Division or the Department of Insurance to disclose any information identifying specific pension fund participants or relating to an identifiable pension fund participant.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/1A-108)

Sec. 1A-108. Report to the Governor and General Assembly. On or before October 1 following the convening of a regular session of the General Assembly, the Division shall submit a report to the Governor and General Assembly setting forth the latest financial statements on the pension funds operating in the State of Illinois, a summary of the current provisions underlying these funds, and a report on any changes that have occurred in these provisions since the date of the last such report submitted by the Division.

The report shall also include the results of examinations made by the Division of any pension fund and any specific recommendations for legislative and administrative correction that the Division deems necessary. The report may embody general recommendations concerning desirable changes in any existing pension, annuity, or retirement laws designed to standardize and establish uniformity in their basic provisions and to bring about an improvement in the financial condition of the pension funds. The purposes of these recommendations and the objectives sought shall be clearly expressed in the report.

The requirement for reporting to the General Assembly shall be satisfied by filing copies of the report as required by Section 3.1 of the General Assembly Organization Act, and filing additional copies with the State Government Report Distribution Center for the General Assembly as required under paragraph (t) of Section 7 of the State Library Act.

Upon request, the Division shall distribute additional copies of the report at no charge to the secretary of each pension fund established under Article 3 or 4, the treasurer or fiscal officer of each municipality with an established police or firefighter pension fund, the executive director of every other pension fund established under this Code, and to public libraries, State agencies, and police, firefighter, and municipal organizations active in the public pension area.

(Source: P.A. 100-1148, eff. 12-10-18.)

(40 ILCS 5/1A-108.5)

Sec. 1A-108.5. Economic opportunity investments.

(a) For the purposes of this Section:

"Economic opportunity investment" means a qualified investment, managed passively or actively by the pension fund, that promotes economic development within the State of Illinois by providing financially prudent investment opportunities in or through the use of (a) Illinois businesses or (b) Illinois-based projects that promote the economy of the State or a region of the State, including without limitation promotion of venture capital programs, coal and other natural resource development, tourism development, infrastructure development, real estate development, and job development within the State of Illinois, while producing a competitive rate of return commensurate with the risk of investment.

"Illinois business" means a business, including an investment adviser, that is headquartered in Illinois.

"Illinois-based project" means an individual project of a business, including the provision of products and investment and other services to the pension fund, that will result in the conduct of business within the State, the employment of individuals within the State, or the acquisition of real property located within the State.

(b) It is the public policy of the State of Illinois to encourage the pension funds, and any State entity investing funds on behalf of pension funds, to promote the economy of Illinois through the use of economic opportunity investments to the greatest extent feasible within the bounds of financial and fiduciary prudence.

(c) Each pension fund, except pension funds created under Articles 3 and 4 of this Code, shall submit a report to the Governor and the General Assembly by September 1 of each year, beginning in 2009, that identifies the economic opportunity investments made by the fund, the primary location of the business or project, the percentage of the fund's assets in economic opportunity investments, and the actions that the fund has undertaken to increase the use of economic opportunity investments.

(d) Pension funds created under Articles 2, 14, 15, 16, and 18 of this Act, and any State agency investing funds on behalf of those pension funds, must make reasonable efforts to invest in economic opportunity investments.

(e) In making economic opportunity investments, trustees and fiduciaries must comply with the relevant requirements and restrictions set forth in Sections 1-109, 1-109.1, 1-109.2, 1-110, and 1-111 of this Code. Economic opportunity investments that otherwise comply with this Code shall not be deemed imprudent solely because they are investments in an Illinois business or Illinois-based project.

(Source: P.A. 96-753, eff. 8-25-09.)

(40 ILCS 5/1A-109)

Sec. 1A-109. Annual statements by pension funds. Each pension fund shall furnish to the Division an annual statement in a format prepared by the Division.

The Division shall design the form and prescribe the content of the annual statement and, at least 60 days prior to the filing date, shall furnish the form to each pension fund for completion. The annual statement shall be prepared by each fund, properly certified by its officers, and submitted to the Division within 6 months following the close of the fiscal year of the pension fund.

The annual statement shall include, but need not be limited to, the following:

(1) a financial balance sheet as of the close of the fiscal year;

(2) a statement of income and expenditures;

(3) an actuarial balance sheet;

(4) statistical data reflecting age, service, and salary characteristics concerning all participants;

(5) special facts concerning disability or other claims;

(6) details on investment transactions that occurred during the fiscal year covered by the report;

(7) details on administrative expenses; and

(8) such other supporting data and schedules as in the judgement of the Division may be necessary for a proper appraisal of the financial condition of the pension fund and the results of its operations. The annual statement shall also specify the actuarial and interest tables used in the operation of the pension fund.

For pension funds under Article 3 or 4 of this Code, after the conclusion of the transition period, the Consolidated Fund shall furnish directly to the Division the information described in items (1) and (6) of this Section and shall otherwise cooperate with the pension fund in the preparation of the annual statement.

A pension fund that fails to file its annual statement within the time prescribed under this Section is subject to the penalty provisions of Section 1A-113.

(Source: P.A. 101-610, eff. 1-1-20.)

(40 ILCS 5/1A-110)

Sec. 1A-110. Actuarial statements by pension funds established under Articles other than 3 or 4.

(a) Each pension fund established under an Article of this Code other than Article 3 or 4 shall include as part of its annual statement a complete actuarial statement applicable to the plan year.

The actuarial statement shall be filed with the Division within 9 months after the close of the fiscal year of the pension fund. Any pension fund that fails to file within that time is subject to the penalty provisions of Section 1A-113.

The board of trustees of each pension fund subject to this Section, on behalf of all its participants, shall engage an enrolled actuary who shall be responsible for the preparation of the materials comprising the actuarial statement. The enrolled actuary shall utilize such assumptions and methods as are necessary for the contents of the matters reported in the actuarial statement to be reasonably related to the experience of the plan and to reasonable expectations, and to represent in the aggregate the actuary's best estimate of anticipated experience under the plan.

The actuarial statement shall include a description of the actuarial assumptions and methods used to determine the actuarial values in the statement and shall disclose the impact of significant changes in the actuarial assumptions and methods, plan provisions, and other pertinent factors on the actuarial position of the plan.

The actuarial statement shall include a statement by the enrolled actuary that to the best of his or her knowledge the actuarial statement is complete and accurate and has been prepared in accordance with generally accepted actuarial principles and practice.

For the purposes of this Section, "enrolled actuary" means an actuary who (1) is a member of the Society of Actuaries or the American Academy of Actuaries and (2) either is enrolled under Subtitle C of Title III of the Employee Retirement Income Security Act of 1974 or was engaged in providing actuarial services to a public retirement plan in Illinois on July 1, 1983.

(b) The actuarial statement referred to in subsection (a) shall include all of the following:

(1) The dates of the plan year and the date of the actuarial valuation applicable to the plan year for which the actuarial statement is filed.

(2) The amount of (i) the contributions made by the participants, and (ii) all other contributions, including those made by the employer or employers.

(3) The total estimated amount of the covered compensation with respect to active participants for the plan year for which the statement is filed.

(4) The number of (i) active participants, (ii) terminated participants currently eligible for deferred vested pension benefits or the return of contributions made by those participants, and (iii) all other participants and beneficiaries included in the actuarial valuation.

(5) The following values as of the date of the actuarial valuation applicable to the plan year for which the statement is filed:

(i) The current value of assets accumulated in the plan.

(ii) The unfunded accrued liability. The major factors that have resulted in the change in the unfunded accrued liability from the previous year shall be identified. Effects that are individually significant shall be separately identified. As a minimum, the effect of the following shall be shown: plan amendments; changes in actuarial assumptions; experience less (or more) favorable than that assumed; and contributions less (or more) than the normal cost plus interest on the unfunded accrued liability.

(iii) The amount of accumulated contributions for active participants (including interest, if any).

(iv) The actuarial present value of credited projected benefits for vested participants currently receiving benefits, other vested participants, and non-vested participants.

(6) The actuarial value of assets.

(7) Any other information that is necessary to fully and fairly disclose the actuarial position of the plan and any other information the enrolled actuary may present.

(8) Any other information regarding the plan that the Division may by rule request.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/1A-111)

Sec. 1A-111. Actuarial statements by pension funds established under Article 3 or 4.

(a) For each pension fund established under Article 3 or 4 of this Code, a complete actuarial statement applicable to its plan year shall be included as part of its annual statement in accordance with the following:

(1) Prior to the conclusion of the transition period, if the actuarial statement is prepared by a person other than the Department, it shall be filed with the Division within 9 months after the close of the fiscal year of the pension fund. Any pension fund that fails to file within that time shall be subject to the penalty provisions of Section 1A-113. The statement shall be prepared by or under the supervision of a qualified actuary, signed by the qualified actuary, and contain such information as the Division may by rule require.

(2) After the conclusion of the transition period, each actuarial statement shall be prepared by or under the supervision of a qualified actuary retained by the Consolidated Fund and signed by the qualified actuary and shall contain such information as the Division may by rule require. The actuarial statement shall be filed with the Division within 9 months after the close of the fiscal year of the pension fund.

(a-5) Prior to the conclusion of the transition period, the actuarial statements may be prepared utilizing the method for calculating the actuarially required contribution for the pension fund that was in effect prior to the effective date of this amendatory Act of the 101st General Assembly.

After the conclusion of the transition period, the actuarial statements shall be prepared by or under the supervision of a qualified actuary retained by the Consolidated Fund, and if a change occurs in an actuarial or investment assumption that increases or decreases the actuarially required contribution for the pension fund, that change shall be implemented in equal annual amounts over the 3-year period beginning in the fiscal year of the pension fund in which such change first occurs.

The actuarially required contribution as described in this subsection shall determine the annual required employer contribution.

(b) For the purposes of this Section, "qualified actuary" means (i) a member of the American Academy of Actuaries, or (ii) an individual who has demonstrated to the satisfaction of the Director that he or she has the educational background necessary for the practice of actuarial science and has at least 7 years of actuarial experience.

(Source: P.A. 101-610, eff. 1-1-20.)