[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
| [ Introduced ] | [ Enrolled ] | [ House Amendment 002 ] |
91_SB0851eng SB851 Engrossed LRB9105991EGfg 1 AN ACT to amend the Illinois Pension Code. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Pension Code is amended by 5 changing Section 1-113 as follows: 6 (40 ILCS 5/1-113) (from Ch. 108 1/2, par. 1-113) 7 Sec. 1-113. Investment authority of certain pension funds 8 other than, not includingthose established under Article 3 9 or 4. The investment authority of a board of trustees of a 10 retirement system or pension fund established under this Code 11 shall, if so provided in the Article establishing such 12 retirement system or pension fund, embrace the following 13 investments: 14 (1) Bonds, notes and other direct obligations of the 15 United States Government; bonds, notes and other obligations 16 of any United States Government agency or instrumentality, 17 whether or not guaranteed; and obligations the principal and 18 interest of which are guaranteed unconditionally by the 19 United States Government or by an agency or instrumentality 20 thereof. 21 (2) Obligations of the Inter-American Development Bank, 22 the International Bank for Reconstruction and Development, 23 the African Development Bank, the International Finance 24 Corporation, and the Asian Development Bank. 25 (3) Obligations of any state, or of any political 26 subdivision in Illinois, or of any county or city in any 27 other state having a population as shown by the last federal 28 census of not less than 30,000 inhabitants provided that such 29 political subdivision is not permitted by law to become 30 indebted in excess of 10% of the assessed valuation of 31 property therein and has not defaulted for a period longer SB851 Engrossed -2- LRB9105991EGfg 1 than 30 days in the payment of interest and principal on any 2 of its general obligations or indebtedness during a period of 3 10 calendar years immediately preceding such investment. 4 (4) Nonconvertible bonds, debentures, notes and other 5 corporate obligations of any corporation created or existing 6 under the laws of the United States or any state, district or 7 territory thereof, provided there has been no default on the 8 obligations of the corporation or its predecessor(s) during 9 the 5 calendar years immediately preceding the purchase. Up 10 to 5% of the assets of a pension fund established under 11 Article 9 of this Code may be invested in nonconvertible 12 bonds, debentures, notes, and other corporate obligations of 13 corporations created or existing under the laws of a foreign 14 country, provided there has been no default on the 15 obligations of the corporation or its predecessors during the 16 5 calendar years immediately preceding the date of purchase. 17 (5) Obligations guaranteed by the Government of Canada, 18 or by any Province of Canada, or by any Canadian city with a 19 population of not less than 150,000 inhabitants, provided (a) 20 they are payable in United States currency and are exempt 21 from any Canadian withholding tax; (b) the investment in any 22 one issue of bonds shall not exceed 10% of the amount 23 outstanding; and (c) the total investments at book value in 24 Canadian securities shall be limited to 5% of the total 25 investment account of the board at book value. 26 (5.1) Direct obligations of the State of Israel for the 27 payment of money, or obligations for the payment of money 28 which are guaranteed as to the payment of principal and 29 interest by the State of Israel, or common or preferred stock 30 or notes issued by a bank owned or controlled in whole or in 31 part by the State of Israel, on the following conditions: 32 (a) The total investments in such obligations shall 33 not exceed 5% of the book value of the aggregate 34 investments owned by the board; SB851 Engrossed -3- LRB9105991EGfg 1 (b) The State of Israel shall not be in default in 2 the payment of principal or interest on any of its direct 3 general obligations on the date of such investment; 4 (c) The bonds, stock or notes, and interest thereon 5 shall be payable in currency of the United States; 6 (d) The bonds shall (1) contain an option for the 7 redemption thereof after 90 days from date of purchase or 8 (2) either become due 5 years from the date of their 9 purchase or be subject to redemption 120 days after the 10 date of notice for redemption; 11 (e) The investment in these obligations has been 12 approved in writing by investment counsel employed by the 13 board, which counsel shall be a national or state bank or 14 trust company authorized to do a trust business in the 15 State of Illinois, or an investment advisor qualified 16 under the Federal Investment Advisors Act of 1940 and 17 registered under the Illinois Securities Act of 1953; 18 (f) The fund or system making the investment shall 19 have at least $5,000,000 of net present assets. 20 (6) Notes secured by mortgages under Sections 203, 207, 21 220 and 221 of the National Housing Act which are insured by 22 the Federal Housing Commissioner, or his successor assigns, 23 or debentures issued by such Commissioner, which are 24 guaranteed as to principal and interest by the Federal 25 Housing Administration, or agency of the United States 26 Government, provided the aggregate investment shall not 27 exceed 20% of the total investment account of the board at 28 book value, and provided further that the investment in such 29 notes under Sections 220 and 221 shall in no event exceed 30 one-half of the maximum investment in notes under this 31 paragraph. 32 (7) Loans to veterans guaranteed in whole or part by the 33 United States Government pursuant to Title III of the Act of 34 Congress known as the "Servicemen's Readjustment Act of SB851 Engrossed -4- LRB9105991EGfg 1 1944," 58 Stat. 284, 38 U.S.C. 693, as amended or 2 supplemented from time to time, provided such guaranteed 3 loans are liens upon real estate. 4 (8) Common and preferred stocks and convertible debt 5 securities authorized for investment of trust funds under the 6 laws of the State of Illinois, provided: 7 (a) the common stocks, except as provided in 8 subparagraph (g), are listed on a national securities 9 exchange or board of trade, as defined in the federal 10 Securities Exchange Act of 1934, or quoted in the 11 National Association of Securities Dealers Automated 12 Quotation System (NASDAQ); 13 (b) the securities are of a corporation created or 14 existing under the laws of the United States or any 15 state, district or territory thereof, except that up to 16 5% of the assets of a pension fund established under 17 Article 9 of this Code may be invested in securities 18 issued by corporations created or existing under the laws 19 of a foreign country, if those securities are otherwise 20 in conformance with this paragraph (8); 21 (c) the corporation is not in arrears on payment of 22 dividends on its preferred stock; 23 (d) the total book value of all stocks and 24 convertible debt owned by any pension fund or retirement 25 system shall not exceed 40% of the aggregate book value 26 of all investments of such pension fund or retirement 27 system, except for a pension fund or retirement system 28 governed by Article 9, 13, or 17, where the total of all 29 stocks and convertible debt shall not exceed 50% of the 30 aggregate book value of all fund investments; 31 (e) the book value of stock and convertible debt 32 investments in any one corporation shall not exceed 5% of 33 the total investment account at book value in which such 34 securities are held, determined as of the date of the SB851 Engrossed -5- LRB9105991EGfg 1 investment, and the investments in the stock of any one 2 corporation shall not exceed 5% of the total outstanding 3 stock of such corporation, and the investments in the 4 convertible debt of any one corporation shall not exceed 5 5% of the total amount of such debt that may be 6 outstanding; 7 (f) the straight preferred stocks or convertible 8 preferred stocks and convertible debt securities are 9 issued or guaranteed by a corporation whose common stock 10 qualifies for investment by the board; and 11 (g) that any common stocks not listed or quoted as 12 provided in subdivision 8(a) above be limited to the 13 following types of institutions: (a) any bank which is a 14 member of the Federal Deposit Insurance Corporation 15 having capital funds represented by capital stock, 16 surplus and undivided profits of at least $20,000,000; 17 (b) any life insurance company having capital funds 18 represented by capital stock, special surplus funds and 19 unassigned surplus totalling at least $50,000,000; and 20 (c) any fire or casualty insurance company, or a 21 combination thereof, having capital funds represented by 22 capital stock, net surplus and voluntary reserves of at 23 least $50,000,000. 24 (9) Withdrawable accounts of State chartered and federal 25 chartered savings and loan associations insured by the 26 Federal Savings and Loan Insurance Corporation; deposits or 27 certificates of deposit in State and national banks insured 28 by the Federal Deposit Insurance Corporation; and share 29 accounts or share certificate accounts in a State or federal 30 credit union, the accounts of which are insured as required 31 by The Illinois Credit Union Act or the Federal Credit Union 32 Act, as applicable. 33 No bank or savings and loan association shall receive 34 investment funds as permitted by this subsection (9), unless SB851 Engrossed -6- LRB9105991EGfg 1 it has complied with the requirements established pursuant to 2 Section 6 of the Public Funds Investment Act. 3 (10) Trading, purchase or sale of listed options on 4 underlying securities owned by the board. 5 (11) Contracts and agreements supplemental thereto 6 providing for investments in the general account of a life 7 insurance company authorized to do business in Illinois. 8 (12) Conventional mortgage pass-through securities which 9 are evidenced by interests in Illinois owner-occupied 10 residential mortgages, having not less than an "A" rating 11 from at least one national securities rating service. Such 12 mortgages may have loan-to-value ratios up to 95%, provided 13 that any amount over 80% is insured by private mortgage 14 insurance. The pool of such mortgages shall be insured by 15 mortgage guaranty or equivalent insurance, in accordance with 16 industry standards. 17 (13) Pooled or commingled funds managed by a national or 18 State bank which is authorized to do a trust business in the 19 State of Illinois, shares of registered investment companies 20 as defined in the federal Investment Company Act of 1940 21 which are registered under that Act, and separate accounts of 22 a life insurance company authorized to do business in 23 Illinois, where such pooled or commingled funds, shares, or 24 separate accounts are comprised of common or preferred 25 stocks, bonds, or money market instruments. 26 (14) Pooled or commingled funds managed by a national or 27 state bank which is authorized to do a trust business in the 28 State of Illinois, separate accounts managed by a life 29 insurance company authorized to do business in Illinois, and 30 commingled group trusts managed by an investment adviser 31 registered under the federal Investment Advisors Act of 1940 32 (15 U.S.C. 80b-1 et seq.) and under the Illinois Securities 33 Law of 1953, where such pooled or commingled funds, separate 34 accounts or commingled group trusts are comprised of real SB851 Engrossed -7- LRB9105991EGfg 1 estate or loans upon real estate secured by first or second 2 mortgages. The total investment in such pooled or commingled 3 funds, commingled group trusts and separate accounts shall 4 not exceed 10% of the aggregate book value of all investments 5 owned by the fund. 6 (15) Investment companies which (a) are registered as 7 such under the Investment Company Act of 1940, (b) are 8 diversified, open-end management investment companies and (c) 9 invest only in money market instruments. 10 (16) Up to 10% of the assets of the fund may be invested 11 in investments not included in paragraphs (1) through (15) of 12 this Section, provided that such investments comply with the 13 requirements and restrictions set forth in Sections 1-109, 14 1-109.1, 1-109.2, 1-110 and 1-111 of this Code. 15 The board shall have the authority to enter into such 16 agreements and to execute such documents as it determines to 17 be necessary to complete any investment transaction. 18 Any limitations herein set forth shall be applicable only 19 at the time of purchase and shall not require the liquidation 20 of any investment at any time. 21 All investments shall be clearly held and accounted for 22 to indicate ownership by such board. Such board may direct 23 the registration of securities in its own name or in the name 24 of a nominee created for the express purpose of registration 25 of securities by a national or state bank or trust company 26 authorized to conduct a trust business in the State of 27 Illinois. 28 Investments shall be carried at cost or at a value 29 determined in accordance with generally accepted accounting 30 principles and accounting procedures approved by such board. 31 (Source: P.A. 90-12, eff. 6-13-97; 90-507, eff. 8-22-97; 32 90-511, eff. 8-22-97; 90-655, eff. 7-30-98.)