SB1787 EnrolledLRB101 08060 JLS 53122 b

1    AN ACT concerning employment.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Secure Choice Savings Program Act
5is amended by changing Sections 5, 30, 45, 65, and 80 as
6follows:
 
7    (820 ILCS 80/5)
8    Sec. 5. Definitions. Unless the context requires a
9different meaning or as expressly provided in this Section, all
10terms shall have the same meaning as when used in a comparable
11context in the Internal Revenue Code. As used in this Act:
12    "Board" means the Illinois Secure Choice Savings Board
13established under this Act.
14    "Department" means the Department of Revenue.
15    "Director" means the Director of Revenue.
16    "Employee" means any individual who is 18 years of age or
17older, who is employed by an employer, and who has wages that
18are allocable to Illinois during a calendar year under the
19provisions of Section 304(a)(2)(B) of the Illinois Income Tax
20Act.
21    "Employer" means a person or entity engaged in a business,
22industry, profession, trade, or other enterprise in Illinois,
23whether for profit or not for profit, that (i) has at no time

 

 

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1during the previous calendar year employed fewer than 25
2employees in the State, (ii) has been in business at least 2
3years, and (iii) has not offered a qualified retirement plan,
4including, but not limited to, a plan qualified under Section
5401(a), Section 401(k), Section 403(a), Section 403(b),
6Section 408(k), Section 408(p), or Section 457(b) of the
7Internal Revenue Code of 1986 in the preceding 2 years.
8    "Enrollee" means any employee who is enrolled in the
9Program.
10    "Fund" means the Illinois Secure Choice Savings Program
11Fund.
12    "Internal Revenue Code" means Internal Revenue Code of
131986, or any successor law, in effect for the calendar year.
14    "IRA" means a Roth or Traditional IRA (individual
15retirement account) under Section 408 or 408A of the Internal
16Revenue Code.
17    "Participating employer" means an employer or small
18employer that facilitates provides a payroll deposit
19retirement savings arrangement as provided for by this Act for
20its employees who are enrollees in the Program.
21    "Payroll deposit retirement savings arrangement" means an
22arrangement by which a participating employer facilitates
23allows enrollees to remit payroll deduction contributions from
24enrollees to the Program.
25    "Program" means the Illinois Secure Choice Savings
26Program.

 

 

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1    "Small employer" means a person or entity engaged in a
2business, industry, profession, trade, or other enterprise in
3Illinois, whether for profit or not for profit, that (i)
4employed less than 25 employees at any one time in the State
5throughout the previous calendar year, or (ii) has been in
6business less than 2 years, or both items (i) and (ii), but
7that notifies the Board that it is interested in being a
8participating employer.
9    "Wages" means any compensation within the meaning of
10Section 219(f)(1) of the Internal Revenue Code that is received
11by an enrollee from a participating employer during the
12calendar year.
13(Source: P.A. 98-1150, eff. 6-1-15; 99-464, eff. 8-26-15.)
 
14    (820 ILCS 80/30)
15    Sec. 30. Duties of the Board. In addition to the other
16duties and responsibilities stated in this Act, the Board
17shall:
18    (a) Cause the Program to be designed, established and
19operated in a manner that:
20        (1) accords with best practices for retirement savings
21    vehicles;
22        (2) maximizes participation, savings, and sound
23    investment practices;
24        (3) maximizes simplicity, including ease of
25    administration for participating employers and enrollees;

 

 

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1        (4) provides an efficient product to enrollees by
2    pooling investment funds;
3        (5) ensures the portability of benefits; and
4        (6) provides for the deaccumulation of enrollee assets
5    in a manner that maximizes financial security in
6    retirement.
7    (b) Appoint a trustee to the IRA Fund in compliance with
8Section 408 of the Internal Revenue Code.
9    (c) Explore and establish investment options, subject to
10Section 45 of this Act, that offer employees returns on
11contributions and the conversion of individual retirement
12savings account balances to secure retirement income without
13incurring debt or liabilities to the State.
14    (d) Establish the process by which interest, investment
15earnings, and investment losses are allocated to individual
16program accounts on a pro rata basis and are computed at the
17interest rate on the balance of an individual's account.
18    (e) Make and enter into contracts necessary for the
19administration of the Program and Fund, including, but not
20limited to, retaining and contracting with investment
21managers, private financial institutions, other financial and
22service providers, consultants, actuaries, counsel, auditors,
23third-party administrators, and other professionals as
24necessary.
25    (e-5) Conduct a review of the performance of any investment
26vendors every 4 years, including, but not limited to, a review

 

 

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1of returns, fees, and customer service. A copy of reviews
2conducted under this subsection (e-5) shall be posted to the
3Board's Internet website.
4    (f) Determine the number and duties of staff members needed
5to administer the Program and assemble such a staff, including,
6as needed, employing staff, appointing a Program
7administrator, and entering into contracts with the State
8Treasurer to make employees of the State Treasurer's Office
9available to administer the Program.
10    (g) Cause moneys in the Fund to be held and invested as
11pooled investments described in Section 45 of this Act, with a
12view to achieving cost savings through efficiencies and
13economies of scale.
14    (h) Evaluate and establish the process by which an enrollee
15is able to contribute a portion of his or her wages to the
16Program for automatic deposit of those contributions and the
17process by which the participating employer provides a payroll
18deposit retirement savings arrangement to forward those
19contributions and related information to the Program,
20including, but not limited to, contracting with financial
21service companies and third-party administrators with the
22capability to receive and process employee information and
23contributions for payroll deposit retirement savings
24arrangements or similar arrangements.
25    (i) Design and establish the process for enrollment under
26Section 60 of this Act, including the process by which an

 

 

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1employee can opt not to participate in the Program, select a
2contribution level, select an investment option, and terminate
3participation in the Program.
4    (j) Evaluate and establish the process by which an
5individual may voluntarily enroll in and make contributions to
6the Program.
7    (k) Accept any grants, appropriations, or other moneys from
8the State, any unit of federal, State, or local government, or
9any other person, firm, partnership, or corporation solely for
10deposit into the Fund, whether for investment or administrative
11purposes.
12    (l) Evaluate the need for, and procure as needed, insurance
13against any and all loss in connection with the property,
14assets, or activities of the Program, and indemnify as needed
15each member of the Board from personal loss or liability
16resulting from a member's action or inaction as a member of the
17Board.
18    (m) Make provisions for the payment of administrative costs
19and expenses for the creation, management, and operation of the
20Program, including the costs associated with subsection (b) of
21Section 20 of this Act, subsections (e), (f), (h), and (l) of
22this Section, subsection (b) of Section 45 of this Act,
23subsection (a) of Section 80 of this Act, and subsection (n) of
24Section 85 of this Act. Subject to appropriation, the State may
25pay administrative costs associated with the creation and
26management of the Program until sufficient assets are available

 

 

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1in the Fund for that purpose. Thereafter, all administrative
2costs of the Fund, including repayment of any start-up funds
3provided by the State, shall be paid only out of moneys on
4deposit therein. However, private funds or federal funding
5received under subsection (k) of Section 30 of this Act in
6order to implement the Program until the Fund is
7self-sustaining shall not be repaid unless those funds were
8offered contingent upon the promise of such repayment. The
9Board shall keep total annual expenses as low as possible, but
10in no event shall they exceed 0.75% of the total trust balance.
11    (n) Allocate administrative fees to individual retirement
12accounts in the Program on a pro rata basis.
13    (o) Set minimum and maximum contribution levels in
14accordance with limits established for IRAs by the Internal
15Revenue Code.
16    (o-5) Select a default contribution rate for Program
17participants within the range of 3% to 6% of an enrollee's
18wages.
19    (p) Facilitate education and outreach to employers and
20employees.
21    (q) Facilitate compliance by the Program with all
22applicable requirements for the Program under the Internal
23Revenue Code, including tax qualification requirements or any
24other applicable law and accounting requirements.
25    (r) Carry out the duties and obligations of the Program in
26an effective, efficient, and low-cost manner.

 

 

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1    (s) Exercise any and all other powers reasonably necessary
2for the effectuation of the purposes, objectives, and
3provisions of this Act pertaining to the Program.
4    (t) Deposit into the Illinois Secure Choice Administrative
5Fund all grants, gifts, donations, fees, and earnings from
6investments from the Illinois Secure Choice Savings Program
7Fund that are used to recover administrative costs. All
8expenses of the Board shall be paid from the Illinois Secure
9Choice Administrative Fund.
10    The Board may enter into agreements with other governmental
11entities, including other states or their agencies and
12instrumentalities, to enable residents of other states to
13participate in the Program.
14(Source: P.A. 99-571, eff. 7-15-16; 100-6, eff. 6-30-17.)
 
15    (820 ILCS 80/45)
16    Sec. 45. Investment options.
17    (a) The Board shall establish as an investment option a
18life-cycle fund with a target date based upon the age of the
19enrollee. This shall be the default investment option for
20enrollees who fail to elect an investment option unless and
21until the Board designates by rule a new investment option as
22the default as described in subsection (c) of this Section.
23    (b) The Board may also establish any or all of the
24following additional investment options:
25        (1) a conservative principal protection fund;

 

 

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1        (2) a growth fund;
2        (3) a secure return fund whose primary objective is the
3    preservation of the safety of principal and the provision
4    of a stable and low-risk rate of return; if the Board
5    elects to establish a secure return fund, the Board may
6    procure any insurance, annuity, or other product to insure
7    the value of individuals' accounts and guarantee a rate of
8    return; the cost of such funding mechanism shall be paid
9    out of the Fund; under no circumstances shall the Board,
10    Program, Fund, the State, or any participating employer
11    assume any liability for investment or actuarial risk; the
12    Board shall determine whether to establish such investment
13    options based upon an analysis of their cost, risk profile,
14    benefit level, feasibility, and ease of implementation;
15        (4) an annuity fund.
16    The Board shall determine whether to establish any of the
17additional investment options based upon an analysis of its
18cost, risk profile, benefit level, feasibility, and ease of
19implementation.
20    (c) If the Board elects to establish a secure return fund,
21the Board shall then determine whether such option shall
22replace the target date or life-cycle fund as the default
23investment option for enrollees who do not elect an investment
24option. In making such determination, the Board shall consider
25the cost, risk profile, benefit level, and ease of enrollment
26in the secure return fund. The Board may at any time thereafter

 

 

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1revisit this question and, based upon an analysis of these
2criteria, establish either the secure return fund or the
3life-cycle fund as the default for enrollees who do not elect
4an investment option.
5(Source: P.A. 98-1150, eff. 6-1-15.)
 
6    (820 ILCS 80/65)
7    Sec. 65. Payments. Employee contributions deducted by the
8participating employer through payroll deduction shall be paid
9by the participating employer to the Fund using one or more
10payroll deposit retirement savings arrangements established by
11the Board under subsection (h) of Section 30 of this Act,
12either:
13        (1) on or before the last day of the month following
14    the month in which the compensation otherwise would have
15    been payable to the employee in cash; or
16        (2) by a before such later deadline prescribed by the
17    Board for making such payments, but not later than the due
18    date for the deposit of tax required to be deducted and
19    withheld relating to collection of income tax at source on
20    wages or for the deposit of tax required to be paid under
21    the unemployment insurance system for the payroll period to
22    which such payments relate.
23(Source: P.A. 98-1150, eff. 6-1-15.)
 
24    (820 ILCS 80/80)

 

 

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1    Sec. 80. Audit and reports.
2    (a) The Board shall annually submit an audited financial
3report, prepared in accordance with generally accepted
4accounting principles, on the operations of the Program during
5each fiscal calendar year by January July 1 of the following
6year to the Governor, the Comptroller, the State Treasurer, and
7the General Assembly and shall be provided electronically to
8any member of the General Assembly upon request. The annual
9audit shall be made by an independent certified public
10accountant and shall include, but is not limited to, direct and
11indirect costs attributable to the use of outside consultants,
12independent contractors, and any other persons who are not
13State employees for the administration of the Program.
14    (b) In addition to any other statements or reports required
15by law, the Board shall provide periodic reports at least
16annually to participating employers, reporting the names of
17each enrollee employed by the participating employer and the
18amounts of contributions made by the participating employer on
19behalf of each employee during the reporting period, as well as
20to enrollees, reporting contributions and investment income
21allocated to, withdrawals from, and balances in their Program
22accounts for the reporting period. Such reports may include any
23other information regarding the Program as the Board may
24determine.
25    (c) The State Treasurer shall annually prepare a report in
26consultation with the Board that includes a summary of the

 

 

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1benefits provided by the Program each fiscal year, including
2the number of enrollees in the Program, the percentage and
3amounts of investment options and rates of return, and such
4other information that is relevant to make a full, fair, and
5effective disclosure of the operations of the Program and the
6Fund. The report shall be made available on the Program website
7by January of the following year.
8(Source: P.A. 98-1150, eff. 6-1-15; 99-464, eff. 8-26-15.)
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.