102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB3956

 

Introduced 1/21/2022, by Sen. Jason A. Barickman

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/1-161

    Amends the General Provisions Article of the Illinois Pension Code. Provides that the State Employees' Retirement System of Illinois, the State Universities Retirement System, and the Teachers' Retirement System of the State of Illinois shall establish an implementation date of no later than July 1, 2023 for specified benefits for Tier 2 members who elect to receive those benefits and persons who first become members on or after the implementation date and meet other criteria.


LRB102 24250 RPS 33481 b

 

 

A BILL FOR

 

SB3956LRB102 24250 RPS 33481 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by
5changing Section 1-161 as follows:
 
6    (40 ILCS 5/1-161)
7    Sec. 1-161. Optional benefits for certain Tier 2 members
8under Articles 14, 15, and 16.
9    (a) Notwithstanding any other provision of this Code to
10the contrary, the provisions of this Section apply to a person
11who first becomes a member or a participant under Article 14,
1215, or 16 on or after the implementation date under this
13Section for the applicable Article and who does not make the
14election under subsection (b) or (c), whichever applies. The
15provisions of this Section also apply to a person who makes the
16election under subsection (c-5). However, the provisions of
17this Section do not apply to any participant in a self-managed
18plan, nor to a covered employee under Article 14.
19    As used in this Section and Section 1-160, the
20"implementation date" under this Section means the earliest
21date upon which the board of a retirement system authorizes
22members of that system to begin participating in accordance
23with this Section, as determined by the board of that

 

 

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1retirement system. Each of the retirement systems subject to
2this Section shall endeavor to make such participation
3available as soon as possible after the effective date of this
4Section and shall establish an implementation date by board
5resolution, but all retirement systems subject to this Section
6shall establish an implementation date that is no later than
7July 1, 2023.
8    (b) In lieu of the benefits provided under this Section, a
9member or participant, except for a participant under Article
1015, may irrevocably elect the benefits under Section 1-160 and
11the benefits otherwise applicable to that member or
12participant. The election must be made within 30 days after
13becoming a member or participant. Each retirement system shall
14establish procedures for making this election.
15    (c) A participant under Article 15 may irrevocably elect
16the benefits otherwise provided to a Tier 2 member under
17Article 15. The election must be made within 30 days after
18becoming a member. The retirement system under Article 15
19shall establish procedures for making this election.
20    (c-5) A non-covered participant under Article 14 to whom
21Section 1-160 applies, a Tier 2 member under Article 15, or a
22participant under Article 16 to whom Section 1-160 applies may
23irrevocably elect to receive the benefits under this Section
24in lieu of the benefits under Section 1-160 or the benefits
25otherwise available to a Tier 2 member under Article 15,
26whichever is applicable. Each retirement System shall

 

 

SB3956- 3 -LRB102 24250 RPS 33481 b

1establish procedures for making this election.
2    (d) "Final average salary" means the average monthly (or
3annual) salary obtained by dividing the total salary or
4earnings calculated under the Article applicable to the member
5or participant during the last 120 months (or 10 years) of
6service in which the total salary or earnings calculated under
7the applicable Article was the highest by the number of months
8(or years) of service in that period. For the purposes of a
9person to whom this Section applies, in this Code, "final
10average salary" shall be substituted for "final average
11compensation" in Article 14.
12    (e) Beginning on the implementation date, for all purposes
13under this Code (including without limitation the calculation
14of benefits and employee contributions), the annual earnings,
15salary, compensation, or wages (based on the plan year) of a
16member or participant to whom this Section applies shall not
17at any time exceed the federal Social Security Wage Base then
18in effect.
19    (f) A member or participant is entitled to a retirement
20annuity upon written application if he or she has attained the
21normal retirement age determined by the Social Security
22Administration for that member or participant's year of birth,
23but no earlier than 67 years of age, and has at least 10 years
24of service credit and is otherwise eligible under the
25requirements of the applicable Article.
26    (g) The amount of the retirement annuity to which a member

 

 

SB3956- 4 -LRB102 24250 RPS 33481 b

1or participant is entitled shall be computed by multiplying
21.25% for each year of service credit by his or her final
3average salary.
4    (h) Any retirement annuity or supplemental annuity shall
5be subject to annual increases on the first anniversary of the
6annuity start date. Each annual increase shall be one-half the
7annual unadjusted percentage increase (but not less than zero)
8in the consumer price index-w for the 12 months ending with the
9September preceding each November 1 of the originally granted
10retirement annuity. If the annual unadjusted percentage change
11in the consumer price index-w for the 12 months ending with the
12September preceding each November 1 is zero or there is a
13decrease, then the annuity shall not be increased.
14    For the purposes of this Section, "consumer price index-w"
15means the index published by the Bureau of Labor Statistics of
16the United States Department of Labor that measures the
17average change in prices of goods and services purchased by
18Urban Wage Earners and Clerical Workers, United States city
19average, all items, 1982-84 = 100. The new amount resulting
20from each annual adjustment shall be determined by the Public
21Pension Division of the Department of Insurance and made
22available to the boards of the retirement systems and pension
23funds by November 1 of each year.
24    (i) The initial survivor's or widow's annuity of an
25otherwise eligible survivor or widow of a retired member or
26participant to whom this Section applies shall be in the

 

 

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1amount of 66 2/3% of the retired member's or participant's
2retirement annuity at the date of death. In the case of the
3death of a member or participant who has not retired and to
4whom this Section applies, eligibility for a survivor's or
5widow's annuity shall be determined by the applicable Article
6of this Code. The benefit shall be 66 2/3% of the earned
7annuity without a reduction due to age. A child's annuity of an
8otherwise eligible child shall be in the amount prescribed
9under each Article if applicable.
10    (j) In lieu of any other employee contributions, except
11for the contribution to the defined contribution plan under
12subsection (k) of this Section, each employee shall contribute
136.2% of his her or salary to the retirement system. However,
14the employee contribution under this subsection shall not
15exceed the amount of the total normal cost of the benefits for
16all members making contributions under this Section (except
17for the defined contribution plan under subsection (k) of this
18Section), expressed as a percentage of payroll and certified
19on or before January 15 of each year by the board of trustees
20of the retirement system. If the board of trustees of the
21retirement system certifies that the 6.2% employee
22contribution rate exceeds the normal cost of the benefits
23under this Section (except for the defined contribution plan
24under subsection (k) of this Section), then on or before
25December 1 of that year, the board of trustees shall certify
26the amount of the normal cost of the benefits under this

 

 

SB3956- 6 -LRB102 24250 RPS 33481 b

1Section (except for the defined contribution plan under
2subsection (k) of this Section), expressed as a percentage of
3payroll, to the State Actuary and the Commission on Government
4Forecasting and Accountability, and the employee contribution
5under this subsection shall be reduced to that amount
6beginning July 1 of that year. Thereafter, if the normal cost
7of the benefits under this Section (except for the defined
8contribution plan under subsection (k) of this Section),
9expressed as a percentage of payroll and certified on or
10before January 1 of each year by the board of trustees of the
11retirement system, exceeds 6.2% of salary, then on or before
12January 15 of that year, the board of trustees shall certify
13the normal cost to the State Actuary and the Commission on
14Government Forecasting and Accountability, and the employee
15contributions shall revert back to 6.2% of salary beginning
16January 1 of the following year.
17    (k) In accordance with each retirement system's
18implementation date, each retirement system under Article 14,
1915, or 16 shall prepare and implement a defined contribution
20plan for members or participants who are subject to this
21Section. The defined contribution plan developed under this
22subsection shall be a plan that aggregates employer and
23employee contributions in individual participant accounts
24which, after meeting any other requirements, are used for
25payouts after retirement in accordance with this subsection
26and any other applicable laws.

 

 

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1        (1) Each member or participant shall contribute a
2    minimum of 4% of his or her salary to the defined
3    contribution plan.
4        (2) For each participant in the defined contribution
5    plan who has been employed with the same employer for at
6    least one year, employer contributions shall be paid into
7    that participant's accounts at a rate expressed as a
8    percentage of salary. This rate may be set for individual
9    employees, but shall be no higher than 6% of salary and
10    shall be no lower than 2% of salary.
11        (3) Employer contributions shall vest when those
12    contributions are paid into a member's or participant's
13    account.
14        (4) The defined contribution plan shall provide a
15    variety of options for investments. These options shall
16    include investments handled by the Illinois State Board of
17    Investment as well as private sector investment options.
18        (5) The defined contribution plan shall provide a
19    variety of options for payouts to retirees and their
20    survivors.
21        (6) To the extent authorized under federal law and as
22    authorized by the retirement system, the defined
23    contribution plan shall allow former participants in the
24    plan to transfer or roll over employee and employer
25    contributions, and the earnings thereon, into other
26    qualified retirement plans.

 

 

SB3956- 8 -LRB102 24250 RPS 33481 b

1        (7) Each retirement system shall reduce the employee
2    contributions credited to the member's defined
3    contribution plan account by an amount determined by that
4    retirement system to cover the cost of offering the
5    benefits under this subsection and any applicable
6    administrative fees.
7        (8) No person shall begin participating in the defined
8    contribution plan until it has attained qualified plan
9    status and received all necessary approvals from the U.S.
10    Internal Revenue Service.
11    (l) In the case of a conflict between the provisions of
12this Section and any other provision of this Code, the
13provisions of this Section shall control.
14(Source: P.A. 100-23, eff. 7-6-17.)