98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB2591

 

Introduced 5/31/2013, by Sen. Michael E. Hastings

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the State Universities Article of the Illinois Pension Code. Changes the definition of "effective rate of interest" for a fiscal year to the interest rate of 30-year United States Treasury bonds as of the beginning of that fiscal year, plus 75 basis points. Defines "Tier 1" and "Tier 3" participants and creates a new Tier 3 benefit program, applicable to all new participants and to Tier 2 participants who elect to participate, consisting of both a Tier 3 defined contribution component and a Tier 3 defined benefit component. Excludes Tier 3 participants from the portable benefit package and the self-managed plan. Imposes an additional contribution on Tier 1 participants, which increases incrementally until it reaches 2.0% of earnings; excludes these contributions from being considered under the Rule 2 money-purchase formula. Reduces the automatic annual increase in retirement annuity for Tier 1 participants to one-half of the annual unadjusted percentage increase in the consumer price index-u; increases the automatic annual increase in retirement annuity for Tier 3 participants over the Tier 2 level by compounding the increases and removing the 3% annual maximum. Adds 2 additional members to the Board of Trustees, to be appointed by the Governor with the advice and consent of the Senate. Also, beginning in 2015, converts 2 of the elected active participant positions on the Board into active participant positions appointed by the Governor. Includes a new benefit increase exemption. Also makes technical and conforming changes. Amends the State Mandates Act to require implementation without reimbursement. Contains a severability provision. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2591LRB098 12404 EFG 46799 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 changing
5Sections 1-160, 15-111, 15-125, 15-134.5, 15-136, 15-136.4,
615-157, 15-158.2, 15-159, 15-198, 20-121, 20-123, 20-124, and
720-125 and by adding Sections 15-103.4, 15-107.1, 15-107.2,
815-157.2, 15-158.5, and 15-158.6 as follows:
 
9    (40 ILCS 5/1-160)
10    Sec. 1-160. Provisions applicable to new hires.
11    (a) The provisions of this Section apply to a person who,
12on or after January 1, 2011, first becomes a member or a
13participant under any reciprocal retirement system or pension
14fund established under this Code, other than a retirement
15system or pension fund established under Article 2, 3, 4, 5, 6,
16or 18 of this Code, notwithstanding any other provision of this
17Code to the contrary, but do not apply to any self-managed plan
18established under this Code, to any person with respect to
19service as a sheriff's law enforcement employee under Article
207, or to any participant of the retirement plan established
21under Section 22-101. With respect to a participant in the Tier
223 benefit package under Article 15 of this Code, this Section
23applies only to the defined benefit component of that Tier 3

 

 

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1benefit package and is subject to the modifications provided in
2Section 15-158.6.
3    (b) "Final average salary" means the average monthly (or
4annual) salary obtained by dividing the total salary or
5earnings calculated under the Article applicable to the member
6or participant during the 96 consecutive months (or 8
7consecutive years) of service within the last 120 months (or 10
8years) of service in which the total salary or earnings
9calculated under the applicable Article was the highest by the
10number of months (or years) of service in that period. For the
11purposes of a person who first becomes a member or participant
12of any retirement system or pension fund to which this Section
13applies on or after January 1, 2011, in this Code, "final
14average salary" shall be substituted for the following:
15        (1) In Articles 7 (except for service as sheriff's law
16    enforcement employees) and 15, "final rate of earnings".
17        (2) In Articles 8, 9, 10, 11, and 12, "highest average
18    annual salary for any 4 consecutive years within the last
19    10 years of service immediately preceding the date of
20    withdrawal".
21        (3) In Article 13, "average final salary".
22        (4) In Article 14, "final average compensation".
23        (5) In Article 17, "average salary".
24        (6) In Section 22-207, "wages or salary received by him
25    at the date of retirement or discharge".
26    (b-5) Beginning on January 1, 2011, for all purposes under

 

 

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1this Code (including without limitation the calculation of
2benefits and employee contributions), the annual earnings,
3salary, or wages (based on the plan year) of a member or
4participant to whom this Section applies shall not exceed
5$106,800; however, that amount shall annually thereafter be
6increased by the lesser of (i) 3% of that amount, including all
7previous adjustments, or (ii) one-half the annual unadjusted
8percentage increase (but not less than zero) in the consumer
9price index-u for the 12 months ending with the September
10preceding each November 1, including all previous adjustments.
11    For the purposes of this Section, "consumer price index-u"
12means the index published by the Bureau of Labor Statistics of
13the United States Department of Labor that measures the average
14change in prices of goods and services purchased by all urban
15consumers, United States city average, all items, 1982-84 =
16100. The new amount resulting from each annual adjustment shall
17be determined by the Public Pension Division of the Department
18of Insurance and made available to the boards of the retirement
19systems and pension funds by November 1 of each year.
20    (c) A member or participant is entitled to a retirement
21annuity upon written application if he or she has attained age
2267 and has at least 10 years of service credit and is otherwise
23eligible under the requirements of the applicable Article.
24    A member or participant who has attained age 62 and has at
25least 10 years of service credit and is otherwise eligible
26under the requirements of the applicable Article may elect to

 

 

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1receive the lower retirement annuity provided in subsection (d)
2of this Section.
3    (d) The retirement annuity of a member or participant who
4is retiring after attaining age 62 with at least 10 years of
5service credit shall be reduced by one-half of 1% for each full
6month that the member's age is under age 67.
7    (e) Any retirement annuity or supplemental annuity shall be
8subject to annual increases on the January 1 occurring either
9on or after the attainment of age 67 or the first anniversary
10of the annuity start date, whichever is later. Each annual
11increase shall be calculated at 3% or one-half the annual
12unadjusted percentage increase (but not less than zero) in the
13consumer price index-u for the 12 months ending with the
14September preceding each November 1, whichever is less, of the
15originally granted retirement annuity. If the annual
16unadjusted percentage change in the consumer price index-u for
17the 12 months ending with the September preceding each November
181 is zero or there is a decrease, then the annuity shall not be
19increased.
20    (f) The initial survivor's or widow's annuity of an
21otherwise eligible survivor or widow of a retired member or
22participant who first became a member or participant on or
23after January 1, 2011 shall be in the amount of 66 2/3% of the
24retired member's or participant's retirement annuity at the
25date of death. In the case of the death of a member or
26participant who has not retired and who first became a member

 

 

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1or participant on or after January 1, 2011, eligibility for a
2survivor's or widow's annuity shall be determined by the
3applicable Article of this Code. The initial benefit shall be
466 2/3% of the earned annuity without a reduction due to age. A
5child's annuity of an otherwise eligible child shall be in the
6amount prescribed under each Article if applicable. Any
7survivor's or widow's annuity shall be increased (1) on each
8January 1 occurring on or after the commencement of the annuity
9if the deceased member died while receiving a retirement
10annuity or (2) in other cases, on each January 1 occurring
11after the first anniversary of the commencement of the annuity.
12Each annual increase shall be calculated at 3% or one-half the
13annual unadjusted percentage increase (but not less than zero)
14in the consumer price index-u for the 12 months ending with the
15September preceding each November 1, whichever is less, of the
16originally granted survivor's annuity. If the annual
17unadjusted percentage change in the consumer price index-u for
18the 12 months ending with the September preceding each November
191 is zero or there is a decrease, then the annuity shall not be
20increased.
21    (g) The benefits in Section 14-110 apply only if the person
22is a State policeman, a fire fighter in the fire protection
23service of a department, or a security employee of the
24Department of Corrections or the Department of Juvenile
25Justice, as those terms are defined in subsection (b) of
26Section 14-110. A person who meets the requirements of this

 

 

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1Section is entitled to an annuity calculated under the
2provisions of Section 14-110, in lieu of the regular or minimum
3retirement annuity, only if the person has withdrawn from
4service with not less than 20 years of eligible creditable
5service and has attained age 60, regardless of whether the
6attainment of age 60 occurs while the person is still in
7service.
8    (h) If a person who first becomes a member or a participant
9of a retirement system or pension fund subject to this Section
10on or after January 1, 2011 is receiving a retirement annuity
11or retirement pension under that system or fund and becomes a
12member or participant under any other system or fund created by
13this Code and is employed on a full-time basis, except for
14those members or participants exempted from the provisions of
15this Section under subsection (a) of this Section, then the
16person's retirement annuity or retirement pension under that
17system or fund shall be suspended during that employment. Upon
18termination of that employment, the person's retirement
19annuity or retirement pension payments shall resume and be
20recalculated if recalculation is provided for under the
21applicable Article of this Code.
22    If a person who first becomes a member of a retirement
23system or pension fund subject to this Section on or after
24January 1, 2012 and is receiving a retirement annuity or
25retirement pension under that system or fund and accepts on a
26contractual basis a position to provide services to a

 

 

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1governmental entity from which he or she has retired, then that
2person's annuity or retirement pension earned as an active
3employee of the employer shall be suspended during that
4contractual service. A person receiving an annuity or
5retirement pension under this Code shall notify the pension
6fund or retirement system from which he or she is receiving an
7annuity or retirement pension, as well as his or her
8contractual employer, of his or her retirement status before
9accepting contractual employment. A person who fails to submit
10such notification shall be guilty of a Class A misdemeanor and
11required to pay a fine of $1,000. Upon termination of that
12contractual employment, the person's retirement annuity or
13retirement pension payments shall resume and, if appropriate,
14be recalculated under the applicable provisions of this Code.
15    (i) Notwithstanding any other provision of this Section, a
16person who first becomes a participant of the retirement system
17established under Article 15 on or after January 1, 2011 and
18before July 1, 2015 shall have the option to enroll in the
19self-managed plan created under Section 15-158.2 of this Code.
20    A person, other than a Tier 1 participant, who first
21becomes a participant of the retirement system established
22under Article 15 on or after January 1, 2011 and before July 1,
232015 may elect to participate in the Tier 3 benefit plan in
24accordance with Section 15-158.6 of this Code.
25    A person, other than a Tier 1 participant, who first
26becomes a participant of the retirement system established

 

 

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1under Article 15 on or after July 1, 2015 shall participate in
2the Tier 3 benefit plan under that Article.
3    (j) Except as provided in Section 15-158.6 of this Code, in
4In the case of a conflict between the provisions of this
5Section and any other provision of this Code, the provisions of
6this Section shall control.
7(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11;
897-609, eff. 1-1-12.)
 
9    (40 ILCS 5/15-103.4 new)
10    Sec. 15-103.4. Tier 3 benefit package. "Tier 3 benefit
11package": The benefit package made available to persons who are
12not Tier 1 participants and who first become participants under
13this Article on or after July 1, 2015, and to certain other
14persons who elect to participate under subsection (b) of
15Section 15-158.6. The Tier 3 benefit package consists of both a
16defined benefit component and a defined contribution
17component. All Tier 3 participants shall participate in both
18components.
19    The Tier 3 defined benefit component consists of the
20traditional benefit package as modified by Section 1-160, but
21subject to the additional modifications provided in Section
2215-158.6. The Tier 3 defined contribution plan is the plan
23provided in Section 15-158.5.
24    Tier 3 participants are not eligible to participate in the
25portable benefit package or the self-managed plan.

 

 

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1    References in this Article to the "traditional benefit
2package" shall be deemed to include the defined benefit
3component of the Tier 3 benefit package. The Tier 3 defined
4contribution plan is not intended to be included in the terms
5"traditional benefit package" and "self-managed plan" as used
6in this Article or the other Articles of this Code.
 
7    (40 ILCS 5/15-107.1 new)
8    Sec. 15-107.1. Tier 1 participant. "Tier 1 participant": A
9participant under this Article, other than a participant in the
10self-managed plan under Section 15-158.2, who first became a
11member or participant before January 1, 2011 under any
12reciprocal retirement system or pension fund established under
13this Code other than a retirement system or pension fund
14established under Article 2, 3, 4, 5, 6, or 18 of this Code.
 
15    (40 ILCS 5/15-107.2 new)
16    Sec. 15-107.2. Tier 3 participant. "Tier 3 participant": A
17participant under this Article, other than a Tier 1
18participant, who first becomes a participant under this Article
19on or after July 1, 2015. "Tier 3 participant" also includes a
20participant, other than a Tier 1 participant, who makes an
21irrevocable election to become a Tier 3 participant in
22accordance with subsection (b) of Section 15-158.6.
 
23    (40 ILCS 5/15-111)  (from Ch. 108 1/2, par. 15-111)

 

 

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1    Sec. 15-111. Earnings. "Earnings": An amount paid for
2personal services equal to the sum of the basic compensation
3plus extra compensation for summer teaching, overtime or other
4extra service. For periods for which an employee receives
5service credit under subsection (c) of Section 15-113.1 or
6Section 15-113.2, earnings are equal to the basic compensation
7on which contributions are paid by the employee during such
8periods. Compensation for employment which is irregular,
9intermittent and temporary shall not be considered earnings,
10unless the participant is also receiving earnings from the
11employer as an employee under Section 15-107.
12    With respect to transition pay paid by the University of
13Illinois to a person who was a participating employee employed
14in the fire department of the University of Illinois's
15Champaign-Urbana campus immediately prior to the elimination
16of that fire department:
17        (1) "Earnings" includes transition pay paid to the
18    employee on or after the effective date of this amendatory
19    Act of the 91st General Assembly.
20        (2) "Earnings" includes transition pay paid to the
21    employee before the effective date of this amendatory Act
22    of the 91st General Assembly only if (i) employee
23    contributions under Section 15-157 have been withheld from
24    that transition pay or (ii) the employee pays to the System
25    before January 1, 2001 an amount representing employee
26    contributions under Section 15-157 on that transition pay.

 

 

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1    Employee contributions under item (ii) may be paid in a
2    lump sum, by withholding from additional transition pay
3    accruing before January 1, 2001, or in any other manner
4    approved by the System. Upon payment of the employee
5    contributions on transition pay, the corresponding
6    employer contributions become an obligation of the State.
7    With respect to Tier 3 participants, references to
8"earnings" mean "earnings" as defined in this Section but
9subject to the earnings limitation provided in Section 15-158.6
10that is applicable to the defined benefit component of the Tier
113 benefit package, unless the context specifies that the
12different earnings limitation applicable to the Tier 3 defined
13contribution plan is intended.
14(Source: P.A. 91-887, eff. 7-6-00.)
 
15    (40 ILCS 5/15-125)  (from Ch. 108 1/2, par. 15-125)
16    Sec. 15-125. "Prescribed Rate of Interest; Effective Rate
17of Interest".
18    (1) "Prescribed rate of interest": The rate of interest to
19be used in actuarial valuations and in development of actuarial
20tables as determined by the board on the basis of the probable
21average effective rate of interest on a long term basis.
22    (2) "Effective rate of interest": For a fiscal year
23concluding no later than June 30, 2013, the The interest rate
24for all or any part of a fiscal year that is determined by the
25board based on factors including the system's past and expected

 

 

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1investment experience; historical and expected fluctuations in
2the market value of investments; the desirability of minimizing
3volatility in the effective rate of interest from year to year;
4and the provision of reserves for anticipated losses upon
5sales, redemptions, or other disposition of investments and for
6variations in interest experience; except that for the purpose
7of determining the accumulated normal contributions used in
8calculating retirement annuities under Rule 2 of Section
915-136, the effective rate of interest shall be determined by
10the State Comptroller rather than the board. For a fiscal year
11concluding no later than June 30, 2013, the The State
12Comptroller shall determine the effective rate of interest to
13be used for this purpose using the factors listed above, and
14shall certify to the board and the Commission on Government
15Forecasting and Accountability the rate to be used for this
16purpose for fiscal year 2006 as soon as possible after the
17effective date of this amendatory Act of the 94th General
18Assembly, and for each fiscal year thereafter no later than the
19January 31 immediately preceding the start of that fiscal year.
20    For a fiscal year that begins on or after July 1, 2013, the
21effective rate of interest for a given fiscal year shall be
22equal to the interest rate of 30-year United States Treasury
23bonds as of the beginning of that given fiscal year, plus 75
24basis points. This certification shall not be used in
25determining the prescribed rate of interest as defined in
26paragraph (1) of this Section.

 

 

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1    (3) The change made to this Section by Public Acts 90-65
2and 90-511 is a clarification of existing law.
3(Source: P.A. 94-4, eff. 6-1-05; 94-982, eff. 6-30-06.)
 
4    (40 ILCS 5/15-134.5)
5    Sec. 15-134.5. Retirement program elections.
6    (a) All participating employees are participants under the
7traditional benefit package prior to January 1, 1998. This
8Section does not apply to Tier 3 participants.
9    Effective as of the date that an employer elects, as
10described in Section 15-158.2, to offer to its employees the
11portable benefit package and the self-managed plan as
12alternatives to the traditional benefit package, each of that
13employer's eligible employees (as defined in subsection (b))
14shall be given the choice to elect which retirement program he
15or she wishes to participate in with respect to all periods of
16covered employment occurring on and after the effective date of
17the employee's election. The retirement program election made
18by an eligible employee must be made in writing, in the manner
19prescribed by the System, and within the time period described
20in subsection (d) or (d-1).
21    The employee election authorized by this Section is a
22one-time, irrevocable election. If an employee terminates
23employment after making the election provided under this
24subsection (a), then upon his or her subsequent re-employment
25with an employer the original election shall automatically

 

 

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1apply to him or her, provided that the employer is then a
2participating employer as described in Section 15-158.2.
3    An eligible employee who fails to make this election shall,
4by default, participate in the traditional benefit package.
5    (b) "Eligible employee" means an employee (as defined in
6Section 15-107) who is either a currently eligible employee or
7a newly eligible employee, but the term does not include a Tier
83 participant. For purposes of this Section, a "currently
9eligible employee" is an employee who is employed by an
10employer on the effective date on which the employer offers to
11its employees the portable benefit package and the self-managed
12plan as alternatives to the traditional benefit package. A
13"newly eligible employee" is an employee who first becomes
14employed by an employer after the effective date on which the
15employer offers its employees the portable benefit package and
16the self-managed plan as alternatives to the traditional
17benefit package, but the term does not include a Tier 3
18participant. A newly eligible employee participates in the
19traditional benefit package until he or she makes an election
20to participate in the portable benefit package or the
21self-managed plan. If an employee does not elect to participate
22in the portable benefit package or the self-managed plan, he or
23she shall continue to participate in the traditional benefit
24package by default.
25    (c) An eligible employee who at the time he or she is first
26eligible to make the election described in subsection (a) does

 

 

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1not have sufficient age and service to qualify for a retirement
2annuity under Section 15-135 may elect to participate in the
3traditional benefit package, the portable benefit package, or
4the self-managed plan. An eligible employee who has sufficient
5age and service to qualify for a retirement annuity under
6Section 15-135 at the time he or she is first eligible to make
7the election described in subsection (a) may elect to
8participate in the traditional benefit package or the portable
9benefit package, but may not elect to participate in the
10self-managed plan.
11    (d) A currently eligible employee must make this election
12within one year after the effective date of the employer's
13adoption of the self-managed plan.
14    A newly eligible employee must make this election within 6
15months after the date on which the System receives the report
16of status certification from the employer. If an employee
17elects to participate in the self-managed plan, no employer
18contributions shall be remitted to the self-managed plan when
19the employee's account balance transfer is made. Employer
20contributions to the self-managed plan shall commence as of the
21first pay period that begins after the System receives the
22employee's election.
23    (d-1) A newly eligible employee who, prior to the effective
24date of this amendatory Act of the 91st General Assembly, fails
25to make the election within the period provided under
26subsection (d) and participates by default in the traditional

 

 

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1benefit package may make a late election to participate in the
2portable benefit package or the self-managed plan instead of
3the traditional benefit package at any time within 6 months
4after the effective date of this amendatory Act of the 91st
5General Assembly.
6    (e) If a currently eligible employee elects the portable
7benefit package, that election shall not become effective until
8the one-year anniversary of the date on which the election is
9filed with the System, provided the employee remains
10continuously employed by the employer throughout the one-year
11waiting period, and any benefits payable to or on account of
12the employee before such one-year waiting period has ended
13shall not be determined under the provisions applicable to the
14portable benefit package but shall instead be determined in
15accordance with the traditional benefit package. If a currently
16eligible employee who has elected the portable benefit package
17terminates employment covered by the System before the one-year
18waiting period has ended, then no benefits shall be determined
19under the portable benefit package provisions while he or she
20is inactive in the System and upon re-employment with an
21employer covered by the System he or she shall begin a new
22one-year waiting period before the provisions of the portable
23benefit package become effective.
24    (f) An eligible employee shall be provided with written
25information prepared or prescribed by the System which
26describes the employee's retirement program choices. The

 

 

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1eligible employee shall be offered an opportunity to receive
2counseling from the System prior to making his or her election.
3This counseling may consist of videotaped materials, group
4presentations, individual consultation with an employee or
5authorized representative of the System in person or by
6telephone or other electronic means, or any combination of
7these methods.
8(Source: P.A. 90-766, eff. 8-14-98; 91-887, eff. 7-6-00.)
 
9    (40 ILCS 5/15-136)  (from Ch. 108 1/2, par. 15-136)
10    Sec. 15-136. Retirement annuities - Amount. The provisions
11of this Section 15-136 apply only to those participants who are
12participating in the traditional benefit package or the
13portable benefit package and do not apply to participants who
14are participating in the self-managed plan. For Tier 3
15participants, the provisions of this Section are subject to
16Section 15-158.6.
17    (a) The amount of a participant's retirement annuity,
18expressed in the form of a single-life annuity, shall be
19determined by whichever of the following rules is applicable
20and provides the largest annuity:
21    Rule 1: The retirement annuity shall be 1.67% of final rate
22of earnings for each of the first 10 years of service, 1.90%
23for each of the next 10 years of service, 2.10% for each year
24of service in excess of 20 but not exceeding 30, and 2.30% for
25each year in excess of 30; or for persons who retire on or

 

 

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1after January 1, 1998, 2.2% of the final rate of earnings for
2each year of service.
3    Rule 2: The retirement annuity shall be the sum of the
4following, determined from amounts credited to the participant
5in accordance with the actuarial tables and the effective rate
6of interest in effect at the time the retirement annuity
7begins:
8        (i) the normal annuity which can be provided on an
9    actuarially equivalent basis, by the accumulated normal
10    contributions as of the date the annuity begins;
11        (ii) an annuity from employer contributions of an
12    amount equal to that which can be provided on an
13    actuarially equivalent basis from the accumulated normal
14    contributions made by the participant under Section
15    15-113.6 and Section 15-113.7 plus 1.4 times all other
16    accumulated normal contributions made by the participant;
17    and
18        (iii) the annuity that can be provided on an
19    actuarially equivalent basis from the entire contribution
20    made by the participant under Section 15-113.3.
21    For the purpose of calculating an annuity under this Rule
222, the contribution required under Section 15-157.2 shall not
23be considered when determining the participant's accumulated
24normal contributions under clause (i) or the employer
25contribution under clause (ii).
26    With respect to a police officer or firefighter who retires

 

 

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1on or after August 14, 1998, the accumulated normal
2contributions taken into account under clauses (i) and (ii) of
3this Rule 2 shall include the additional normal contributions
4made by the police officer or firefighter under Section
515-157(a).
6    The amount of a retirement annuity calculated under this
7Rule 2 shall be computed solely on the basis of the
8participant's accumulated normal contributions, as specified
9in this Rule and defined in Section 15-116. Neither an employee
10or employer contribution for early retirement under Section
1115-136.2 nor any other employer contribution shall be used in
12the calculation of the amount of a retirement annuity under
13this Rule 2.
14    This amendatory Act of the 91st General Assembly is a
15clarification of existing law and applies to every participant
16and annuitant without regard to whether status as an employee
17terminates before the effective date of this amendatory Act.
18    This Rule 2 does not apply to a person who first becomes an
19employee under this Article on or after July 1, 2005.
20    Rule 3: The retirement annuity of a participant who is
21employed at least one-half time during the period on which his
22or her final rate of earnings is based, shall be equal to the
23participant's years of service not to exceed 30, multiplied by
24(1) $96 if the participant's final rate of earnings is less
25than $3,500, (2) $108 if the final rate of earnings is at least
26$3,500 but less than $4,500, (3) $120 if the final rate of

 

 

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1earnings is at least $4,500 but less than $5,500, (4) $132 if
2the final rate of earnings is at least $5,500 but less than
3$6,500, (5) $144 if the final rate of earnings is at least
4$6,500 but less than $7,500, (6) $156 if the final rate of
5earnings is at least $7,500 but less than $8,500, (7) $168 if
6the final rate of earnings is at least $8,500 but less than
7$9,500, and (8) $180 if the final rate of earnings is $9,500 or
8more, except that the annuity for those persons having made an
9election under Section 15-154(a-1) shall be calculated and
10payable under the portable retirement benefit program pursuant
11to the provisions of Section 15-136.4.
12    Rule 4: A participant who is at least age 50 and has 25 or
13more years of service as a police officer or firefighter, and a
14participant who is age 55 or over and has at least 20 but less
15than 25 years of service as a police officer or firefighter,
16shall be entitled to a retirement annuity of 2 1/4% of the
17final rate of earnings for each of the first 10 years of
18service as a police officer or firefighter, 2 1/2% for each of
19the next 10 years of service as a police officer or
20firefighter, and 2 3/4% for each year of service as a police
21officer or firefighter in excess of 20. The retirement annuity
22for all other service shall be computed under Rule 1.
23    For purposes of this Rule 4, a participant's service as a
24firefighter shall also include the following:
25        (i) service that is performed while the person is an
26    employee under subsection (h) of Section 15-107; and

 

 

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1        (ii) in the case of an individual who was a
2    participating employee employed in the fire department of
3    the University of Illinois's Champaign-Urbana campus
4    immediately prior to the elimination of that fire
5    department and who immediately after the elimination of
6    that fire department transferred to another job with the
7    University of Illinois, service performed as an employee of
8    the University of Illinois in a position other than police
9    officer or firefighter, from the date of that transfer
10    until the employee's next termination of service with the
11    University of Illinois.
12    Rule 5: The retirement annuity of a participant who elected
13early retirement under the provisions of Section 15-136.2 and
14who, on or before February 16, 1995, brought administrative
15proceedings pursuant to the administrative rules adopted by the
16System to challenge the calculation of his or her retirement
17annuity shall be the sum of the following, determined from
18amounts credited to the participant in accordance with the
19actuarial tables and the prescribed rate of interest in effect
20at the time the retirement annuity begins:
21        (i) the normal annuity which can be provided on an
22    actuarially equivalent basis, by the accumulated normal
23    contributions as of the date the annuity begins; and
24        (ii) an annuity from employer contributions of an
25    amount equal to that which can be provided on an
26    actuarially equivalent basis from the accumulated normal

 

 

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1    contributions made by the participant under Section
2    15-113.6 and Section 15-113.7 plus 1.4 times all other
3    accumulated normal contributions made by the participant;
4    and
5        (iii) an annuity which can be provided on an
6    actuarially equivalent basis from the employee
7    contribution for early retirement under Section 15-136.2,
8    and an annuity from employer contributions of an amount
9    equal to that which can be provided on an actuarially
10    equivalent basis from the employee contribution for early
11    retirement under Section 15-136.2.
12    In no event shall a retirement annuity under this Rule 5 be
13lower than the amount obtained by adding (1) the monthly amount
14obtained by dividing the combined employee and employer
15contributions made under Section 15-136.2 by the System's
16annuity factor for the age of the participant at the beginning
17of the annuity payment period and (2) the amount equal to the
18participant's annuity if calculated under Rule 1, reduced under
19Section 15-136(b) as if no contributions had been made under
20Section 15-136.2.
21    With respect to a participant who is qualified for a
22retirement annuity under this Rule 5 whose retirement annuity
23began before the effective date of this amendatory Act of the
2491st General Assembly, and for whom an employee contribution
25was made under Section 15-136.2, the System shall recalculate
26the retirement annuity under this Rule 5 and shall pay any

 

 

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1additional amounts due in the manner provided in Section
215-186.1 for benefits mistakenly set too low.
3    The amount of a retirement annuity calculated under this
4Rule 5 shall be computed solely on the basis of those
5contributions specifically set forth in this Rule 5. Except as
6provided in clause (iii) of this Rule 5, neither an employee
7nor employer contribution for early retirement under Section
815-136.2, nor any other employer contribution, shall be used in
9the calculation of the amount of a retirement annuity under
10this Rule 5.
11    The General Assembly has adopted the changes set forth in
12Section 25 of this amendatory Act of the 91st General Assembly
13in recognition that the decision of the Appellate Court for the
14Fourth District in Mattis v. State Universities Retirement
15System et al. might be deemed to give some right to the
16plaintiff in that case. The changes made by Section 25 of this
17amendatory Act of the 91st General Assembly are a legislative
18implementation of the decision of the Appellate Court for the
19Fourth District in Mattis v. State Universities Retirement
20System et al. with respect to that plaintiff.
21    The changes made by Section 25 of this amendatory Act of
22the 91st General Assembly apply without regard to whether the
23person is in service as an employee on or after its effective
24date.
25    (b) The retirement annuity provided under Rules 1 and 3
26above shall be reduced by 1/2 of 1% for each month the

 

 

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1participant is under age 60 at the time of retirement. However,
2this reduction shall not apply in the following cases:
3        (1) For a disabled participant whose disability
4    benefits have been discontinued because he or she has
5    exhausted eligibility for disability benefits under clause
6    (6) of Section 15-152;
7        (2) For a participant who has at least the number of
8    years of service required to retire at any age under
9    subsection (a) of Section 15-135; or
10        (3) For that portion of a retirement annuity which has
11    been provided on account of service of the participant
12    during periods when he or she performed the duties of a
13    police officer or firefighter, if these duties were
14    performed for at least 5 years immediately preceding the
15    date the retirement annuity is to begin.
16    (c) The maximum retirement annuity provided under Rules 1,
172, 4, and 5 shall be the lesser of (1) the annual limit of
18benefits as specified in Section 415 of the Internal Revenue
19Code of 1986, as such Section may be amended from time to time
20and as such benefit limits shall be adjusted by the
21Commissioner of Internal Revenue, and (2) 80% of final rate of
22earnings.
23    (d) Except as provided in subsection (d-1), an An annuitant
24whose status as an employee terminates after August 14, 1969
25shall receive automatic increases in his or her retirement
26annuity as follows:

 

 

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1    Effective January 1 immediately following the date the
2retirement annuity begins, the annuitant shall receive an
3increase in his or her monthly retirement annuity of 0.125% of
4the monthly retirement annuity provided under Rule 1, Rule 2,
5Rule 3, Rule 4, or Rule 5, contained in this Section,
6multiplied by the number of full months which elapsed from the
7date the retirement annuity payments began to January 1, 1972,
8plus 0.1667% of such annuity, multiplied by the number of full
9months which elapsed from January 1, 1972, or the date the
10retirement annuity payments began, whichever is later, to
11January 1, 1978, plus 0.25% of such annuity multiplied by the
12number of full months which elapsed from January 1, 1978, or
13the date the retirement annuity payments began, whichever is
14later, to the effective date of the increase.
15    The annuitant shall receive an increase in his or her
16monthly retirement annuity on each January 1 thereafter during
17the annuitant's life of 3% of the monthly annuity provided
18under Rule 1, Rule 2, Rule 3, Rule 4, or Rule 5 contained in
19this Section. The change made under this subsection by P.A.
2081-970 is effective January 1, 1980 and applies to each
21annuitant whose status as an employee terminates before or
22after that date.
23    Beginning January 1, 1990, all automatic annual increases
24payable under this Section shall be calculated as a percentage
25of the total annuity payable at the time of the increase,
26including all increases previously granted under this Article.

 

 

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1    The change made in this subsection by P.A. 85-1008 is
2effective January 26, 1988, and is applicable without regard to
3whether status as an employee terminated before that date.
4    (d-1) Beginning January 1, 2014, all automatic increases
5payable under this Section shall be calculated as a percentage
6of the total annuity payable at the time of the increase,
7including all increases previously granted under this Article,
8equal to one-half of the annual unadjusted percentage increase
9(but not less than zero) in the consumer price index-u for the
1012 months ending with the September preceding each November 1;
11except that in the case of an initial increase under this
12Section, the amount of the increase shall be prorated if less
13than one year has elapsed since retirement.
14    For the purposes of this subsection, "consumer price
15index-u" means the index published by the Bureau of Labor
16Statistics of the United States Department of Labor that
17measures the average change in prices of goods and services
18purchased by all urban consumers, United States city average,
19all items, 1982-84 = 100, as determined by the Public Pension
20Division of the Department of Insurance.
21    This subsection (d-1) is applicable without regard to
22whether status as an employee terminated before the effective
23date of this amendatory Act of the 98th General Assembly.
24    (e) If, on January 1, 1987, or the date the retirement
25annuity payment period begins, whichever is later, the sum of
26the retirement annuity provided under Rule 1 or Rule 2 of this

 

 

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1Section and the automatic annual increases provided under the
2preceding subsection or Section 15-136.1, amounts to less than
3the retirement annuity which would be provided by Rule 3, the
4retirement annuity shall be increased as of January 1, 1987, or
5the date the retirement annuity payment period begins,
6whichever is later, to the amount which would be provided by
7Rule 3 of this Section. Such increased amount shall be
8considered as the retirement annuity in determining benefits
9provided under other Sections of this Article. This paragraph
10applies without regard to whether status as an employee
11terminated before the effective date of this amendatory Act of
121987, provided that the annuitant was employed at least
13one-half time during the period on which the final rate of
14earnings was based.
15    (f) A participant is entitled to such additional annuity as
16may be provided on an actuarially equivalent basis, by any
17accumulated additional contributions to his or her credit.
18However, the additional contributions made by the participant
19toward the automatic increases in annuity provided under this
20Section shall not be taken into account in determining the
21amount of such additional annuity.
22    (g) If, (1) by law, a function of a governmental unit, as
23defined by Section 20-107 of this Code, is transferred in whole
24or in part to an employer, and (2) a participant transfers
25employment from such governmental unit to such employer within
266 months after the transfer of the function, and (3) the sum of

 

 

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1(A) the annuity payable to the participant under Rule 1, 2, or
23 of this Section (B) all proportional annuities payable to the
3participant by all other retirement systems covered by Article
420, and (C) the initial primary insurance amount to which the
5participant is entitled under the Social Security Act, is less
6than the retirement annuity which would have been payable if
7all of the participant's pension credits validated under
8Section 20-109 had been validated under this system, a
9supplemental annuity equal to the difference in such amounts
10shall be payable to the participant.
11    (h) On January 1, 1981, an annuitant who was receiving a
12retirement annuity on or before January 1, 1971 shall have his
13or her retirement annuity then being paid increased $1 per
14month for each year of creditable service. On January 1, 1982,
15an annuitant whose retirement annuity began on or before
16January 1, 1977, shall have his or her retirement annuity then
17being paid increased $1 per month for each year of creditable
18service.
19    (i) On January 1, 1987, any annuitant whose retirement
20annuity began on or before January 1, 1977, shall have the
21monthly retirement annuity increased by an amount equal to 8¢
22per year of creditable service times the number of years that
23have elapsed since the annuity began.
24(Source: P.A. 97-933, eff. 8-10-12; 97-968, eff. 8-16-12.)
 
25    (40 ILCS 5/15-136.4)

 

 

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1    Sec. 15-136.4. Retirement and Survivor Benefits Under
2Portable Benefit Package.
3    (a) This Section 15-136.4 describes the form of annuity and
4survivor benefits available to a participant who has elected
5the portable benefit package and has completed the one-year
6waiting period required under subsection (e) of Section
715-134.5. For purposes of this Section, the term "eligible
8spouse" means the husband or wife of a participant to whom the
9participant is married on the date the participant's annuity
10payment period begins, provided however, that if the
11participant should die prior to the commencement of retirement
12annuity benefits, then "eligible spouse" means the husband or
13wife, if any, to whom the participant was married throughout
14the one-year period preceding the date of his or her death.
15Tier 3 participants are not eligible to participate in the
16portable benefit package prescribed under this Section.
17    (b) This subsection (b) describes the normal form of
18annuity payable to a participant subject to this Section
1915-136.4. If the participant is unmarried on the date his or
20her annuity payment period begins, then the annuity payments
21shall be made in the form of a single-life annuity as described
22in Section 15-118. If the participant is married on the date
23his or her annuity payments commence, then the annuity payments
24shall be paid in the form of a qualified joint and survivor
25annuity that is the actuarial equivalent of the single-life
26annuity. Under the "qualified joint and survivor annuity", a

 

 

SB2591- 30 -LRB098 12404 EFG 46799 b

1reduced amount shall be paid to the participant for his or her
2lifetime and his or her eligible spouse, if surviving at the
3participant's death, shall be entitled to receive thereafter a
4lifetime survivorship annuity in a monthly amount equal to 50%
5of the reduced monthly amount that was payable to the
6participant. The last payment of a qualified joint and survivor
7annuity shall be made as of the first day of the month in which
8the death of the survivor occurs.
9    (c) Instead of the normal form of annuity that would be
10paid under subsection (b), a participant may elect in writing
11within the 180-day period prior to the date his or her annuity
12payments commence to waive the normal form of annuity payment
13and receive an optional form of payment as described in
14subsection (h). If the participant is married and elects an
15optional form of payment under subsection (h) other than a
16joint and survivor annuity with the eligible spouse designated
17as the contingent annuitant, then such election shall require
18the consent of his or her eligible spouse in the manner
19described in subsection (d). At any time during the 180-day
20period preceding the date the participant's payment period
21begins, the participant may revoke the optional form of payment
22elected under this subsection (c) and reinstate coverage under
23the qualified joint and survivor annuity without the spouse's
24consent, but an election to revoke the optional form elected
25and elect a new optional form of payment or designate a
26different contingent annuitant shall not be effective without

 

 

SB2591- 31 -LRB098 12404 EFG 46799 b

1the eligible spouse's consent.
2    (d) The eligible spouse's consent to any election made
3pursuant to this Section that requires the eligible spouse's
4consent shall be in writing and shall acknowledge the effect of
5the consent. In addition, the eligible spouse's signature on
6the written consent must be witnessed by a notary public. The
7eligible spouse's consent need not be obtained if the system is
8satisfied that there is no eligible spouse, that the eligible
9spouse cannot be located, or because of any other relevant
10circumstances. An eligible spouse's consent under this Section
11is valid only with respect to the specified optional form of
12payment and, if applicable, contingent annuitant designated by
13the participant. If the optional form of payment or the
14contingent annuitant is subsequently changed (other than by a
15revocation of the optional form of payment and reinstatement of
16the qualified joint and survivor annuity), a new consent by the
17eligible spouse is required. The eligible spouse's consent to
18an election made by a participant pursuant to this Section,
19once made, may not be revoked by the eligible spouse.
20    (e) Within a reasonable period of time preceding the date a
21participant's annuity commences, a participant shall be
22supplied with a written explanation of (1) the terms and
23conditions of the normal form single-life annuity and qualified
24joint and survivor annuity, (2) the participant's right to
25elect a single-life annuity or an optional form of payment
26under subsection (h) subject to his or her eligible spouse's

 

 

SB2591- 32 -LRB098 12404 EFG 46799 b

1consent, if applicable, and (3) the participant's right to
2reinstate coverage under the qualified joint and survivor
3annuity prior to his or her annuity commencement date by
4revoking an election of an optional form of payment under
5subsection (h).
6    (f) If a married participant with at least 1.5 years of
7service dies prior to commencing retirement annuity payments
8and prior to taking a refund under Section 15-154, his or her
9eligible spouse is entitled to receive a pre-retirement
10survivor annuity, if there is not then in effect a waiver of
11the pre-retirement survivor annuity. The pre-retirement
12survivor annuity payable under this subsection shall be a
13monthly annuity payable for the eligible spouse's life,
14commencing as of the beginning of the month next following the
15later of the date of the participant's death or the date the
16participant would have first met the eligibility requirements
17for retirement, and continuing through the beginning of the
18month in which the death of the eligible spouse occurs. The
19monthly amount payable to the spouse under the pre-retirement
20survivor annuity shall be equal to the monthly amount that
21would be payable as a survivor annuity under the qualified
22joint and survivor annuity described in subsection (b) if: (1)
23in the case of a participant who dies on or after the date on
24which the participant has met the eligibility requirements for
25retirement, the participant had retired with an immediate
26qualified joint and survivor annuity on the day before the

 

 

SB2591- 33 -LRB098 12404 EFG 46799 b

1participant's date of death; or (2) in the case of a
2participant who dies before the earliest date on which the
3participant would have met the eligibility requirements for
4retirement age, the participant had separated from service on
5the date of death, survived to the earliest retirement age
6based on service prior to his or her death, retired with an
7immediate qualified joint and survivor annuity at the earliest
8retirement age, and died on the day after the day on which the
9participant would have attained the earliest retirement age.
10    (g) A married participant who has not retired may elect at
11any time to waive the pre-retirement survivor annuity described
12in subsection (f). Any such election shall require the consent
13of the participant's eligible spouse in the manner described in
14subsection (d). A waiver of the pre-retirement survivor annuity
15shall increase the lump sum death benefit payable under
16subsection (b) of Section 15-141. Prior to electing any waiver
17of the pre-retirement survivor annuity, the participant shall
18be provided with a written explanation of (1) the terms and
19conditions of the pre-retirement survivor annuity and the death
20benefits payable from the system both with and without the
21pre-retirement survivor annuity, (2) the participant's right
22to elect a waiver of the pre-retirement survivor annuity
23coverage subject to his or her spouse's consent, and (3) the
24participant's right to reinstate pre-retirement survivor
25annuity coverage at any time by revoking a prior waiver of such
26coverage.

 

 

SB2591- 34 -LRB098 12404 EFG 46799 b

1    (h) By filing a timely election with the system, a
2participant who will be eligible to receive a retirement
3annuity under this Section may waive the normal form of annuity
4payment described in subsection (b), subject to obtaining the
5consent of his or her eligible spouse, if applicable, and elect
6to receive any one of the following optional forms of payment:
7        (1) Joint and Survivor Annuity Options: The
8    participant may elect to receive a reduced annuity payable
9    for his or her life and to have a lifetime survivorship
10    annuity in a monthly amount equal to 50%, 75%, or 100% (as
11    elected by the participant) of that reduced monthly amount,
12    to be paid after the participant's death to his or her
13    contingent annuitant, if the contingent annuitant is alive
14    at the time of the participant's death.
15        (2) Single-Life Annuity Option (optional for married
16    participants). The participant may elect to receive a
17    single-life annuity payable for his or her life only.
18        (3) Lump sum retirement benefit. The participant may
19    elect to receive a lump sum retirement benefit that is
20    equal to the amount of a refund payable under Section
21    15-154(a-2).
22All joint and survivor annuity forms shall be in an amount that
23is the actuarial equivalent of the single-life annuity.
24    For the purposes of this Section, the term "contingent
25annuitant" means the beneficiary who is designated by a
26participant at the time the participant elects a joint and

 

 

SB2591- 35 -LRB098 12404 EFG 46799 b

1survivor annuity to receive the lifetime survivorship annuity
2in the event the beneficiary survives the participant at the
3participant's death.
4    (i) Under no circumstances may an option be elected,
5changed, or revoked after the date the participant's retirement
6annuity commences.
7    (j) An election made pursuant to subsection (h) shall
8become inoperative if the participant or the contingent
9annuitant dies before the date the participant's annuity
10payments commence, or if the eligible spouse's consent is
11required and not given.
12    (k) (Blank).
13    (l) The automatic annual increases described in subsection
14(d) of Section 15-136 shall apply to retirement benefits under
15the portable benefit package and the automatic annual increases
16described in subsection (j) of Section 15-145 shall apply to
17survivor benefits under the portable benefit package.
18(Source: P.A. 96-586, eff. 8-18-09; 97-933, eff. 8-10-12;
1997-968, eff. 8-16-12.)
 
20    (40 ILCS 5/15-157)  (from Ch. 108 1/2, par. 15-157)
21    Sec. 15-157. Employee Contributions.
22    (a) Each participating employee shall make contributions
23towards the retirement benefits payable under the retirement
24program applicable to the employee from each payment of
25earnings applicable to employment under this system on and

 

 

SB2591- 36 -LRB098 12404 EFG 46799 b

1after the date of becoming a participant as follows: Prior to
2September 1, 1949, 3 1/2% of earnings; from September 1, 1949
3to August 31, 1955, 5%; from September 1, 1955 to August 31,
41969, 6%; from September 1, 1969, 6 1/2%. These contributions
5are to be considered as normal contributions for purposes of
6this Article.
7    Each participant who is a police officer or firefighter
8shall make normal contributions of 8% of each payment of
9earnings applicable to employment as a police officer or
10firefighter under this system on or after September 1, 1981,
11unless he or she files with the board within 60 days after the
12effective date of this amendatory Act of 1991 or 60 days after
13the board receives notice that he or she is employed as a
14police officer or firefighter, whichever is later, a written
15notice waiving the retirement formula provided by Rule 4 of
16Section 15-136. This waiver shall be irrevocable. If a
17participant had met the conditions set forth in Section
1815-132.1 prior to the effective date of this amendatory Act of
191991 but failed to make the additional normal contributions
20required by this paragraph, he or she may elect to pay the
21additional contributions plus compound interest at the
22effective rate. If such payment is received by the board, the
23service shall be considered as police officer service in
24calculating the retirement annuity under Rule 4 of Section
2515-136. While performing service described in clause (i) or
26(ii) of Rule 4 of Section 15-136, a participating employee

 

 

SB2591- 37 -LRB098 12404 EFG 46799 b

1shall be deemed to be employed as a firefighter for the purpose
2of determining the rate of employee contributions under this
3Section.
4    (b) Starting September 1, 1969, each participating
5employee shall make additional contributions of 1/2 of 1% of
6earnings to finance a portion of the cost of the annual
7increases in retirement annuity provided under Section 15-136,
8except that with respect to participants in the self-managed
9plan this additional contribution shall be used to finance the
10benefits obtained under that retirement program.
11    (c) In addition to the amounts described in subsections (a)
12and (b) of this Section, each participating employee shall make
13contributions of 1% of earnings applicable under this system on
14and after August 1, 1959. The contributions made under this
15subsection (c) shall be considered as survivor's insurance
16contributions for purposes of this Article if the employee is
17covered under the traditional benefit package, and such
18contributions shall be considered as additional contributions
19for purposes of this Article if the employee is participating
20in the self-managed plan or has elected to participate in the
21portable benefit package and has completed the applicable
22one-year waiting period. Contributions in excess of $80 during
23any fiscal year beginning before August 31, 1969 and in excess
24of $120 during any fiscal year thereafter until September 1,
251971 shall be considered as additional contributions for
26purposes of this Article.

 

 

SB2591- 38 -LRB098 12404 EFG 46799 b

1    (d) If the board by board rule so permits and subject to
2such conditions and limitations as may be specified in its
3rules, a participant may make other additional contributions of
4such percentage of earnings or amounts as the participant shall
5elect in a written notice thereof received by the board.
6    (e) That fraction of a participant's total accumulated
7normal contributions, the numerator of which is equal to the
8number of years of service in excess of that which is required
9to qualify for the maximum retirement annuity, and the
10denominator of which is equal to the total service of the
11participant, shall be considered as accumulated additional
12contributions. The determination of the applicable maximum
13annuity and the adjustment in contributions required by this
14provision shall be made as of the date of the participant's
15retirement.
16    (f) Notwithstanding the foregoing, a participating
17employee shall not be required to make contributions under this
18Section after the date upon which continuance of such
19contributions would otherwise cause his or her retirement
20annuity to exceed the maximum retirement annuity as specified
21in clause (1) of subsection (c) of Section 15-136.
22    (g) A participating employee may make contributions for the
23purchase of service credit under this Article.
24    (h) A Tier 3 participant shall not make contributions as
25prescribed under subsections (a), (b), and (c) of this
26subsection.

 

 

SB2591- 39 -LRB098 12404 EFG 46799 b

1    For purposes of the Tier 3 defined benefit plan, Tier 3
2participants shall contribute at a rate equal to 5.35% of
3earnings, but shall not make contributions on compensation that
4exceeds the federal social security wage base in effect from
5time to time. These contributions are to be considered as
6normal contributions for purposes of this Article.
7    For purposes of the Tier 3 defined contribution plan, Tier
83 participants are also required to contribute as provided in
9Section 15-158.5.
10(Source: P.A. 90-32, eff. 6-27-97; 90-65, eff. 7-7-97; 90-448,
11eff. 8-16-97; 90-511, eff. 8-22-97; 90-576, eff. 3-31-98;
1290-655, eff. 7-30-98; 90-766, eff. 8-14-98.)
 
13    (40 ILCS 5/15-157.2 new)
14    Sec. 15-157.2. Additional Tier 1 participant
15contributions. In addition to the contributions otherwise
16required under this Section, each Tier 1 participant shall also
17make the following contributions toward the retirement
18benefits payable under the retirement program applicable to the
19employee from each payment of earnings applicable to employment
20under this system. Beginning on July 1, 2013, this contribution
21shall be equal to 0.5% of earnings, and it shall be increased
22by 0.5% of earnings on each July 1 thereafter until such
23contribution equals 2.0% earnings. Once this contribution is
24equal to 2.0% of earnings, the contribution under this Section
25shall not be increased. Except as otherwise specified, these

 

 

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1contributions shall be considered as normal contributions for
2the purposes of this Article. The contributions required by
3this Section shall not be considered when determining the
4participant's accumulated normal contributions under clause
5(i) or the employer contribution under clause (ii) of Rule 2 of
6Section 15-136.
 
7    (40 ILCS 5/15-158.2)
8    Sec. 15-158.2. Self-managed plan.
9    (a) Purpose. The General Assembly finds that it is
10important for colleges and universities to be able to attract
11and retain the most qualified employees and that in order to
12attract and retain these employees, colleges and universities
13should have the flexibility to provide a defined contribution
14plan as an alternative for eligible employees who elect not to
15participate in a defined benefit retirement program provided
16under this Article. Accordingly, the State Universities
17Retirement System is hereby authorized to establish and
18administer a self-managed plan, which shall offer
19participating employees the opportunity to accumulate assets
20for retirement through a combination of employee and employer
21contributions that may be invested in mutual funds, collective
22investment funds, or other investment products and used to
23purchase annuity contracts, either fixed or variable or a
24combination thereof. The plan must be qualified under the
25Internal Revenue Code of 1986.

 

 

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1    (b) Adoption by employers. Each employer subject to this
2Article may elect to adopt the self-managed plan established
3under this Section; this election is irrevocable. An employer's
4election to adopt the self-managed plan makes available to the
5eligible employees of that employer the elections described in
6Section 15-134.5.
7    The State Universities Retirement System shall be the plan
8sponsor for the self-managed plan and shall prepare a plan
9document and prescribe such rules and procedures as are
10considered necessary or desirable for the administration of the
11self-managed plan. Consistent with its fiduciary duty to the
12participants and beneficiaries of the self-managed plan, the
13Board of Trustees of the System may delegate aspects of plan
14administration as it sees fit to companies authorized to do
15business in this State, to the employers, or to a combination
16of both.
17    (c) Selection of service providers and funding vehicles.
18The System, in consultation with the employers, shall solicit
19proposals to provide administrative services and funding
20vehicles for the self-managed plan from insurance and annuity
21companies and mutual fund companies, banks, trust companies, or
22other financial institutions authorized to do business in this
23State. In reviewing the proposals received and approving and
24contracting with no fewer than 2 and no more than 7 companies,
25the Board of Trustees of the System shall consider, among other
26things, the following criteria:

 

 

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1        (1) the nature and extent of the benefits that would be
2    provided to the participants;
3        (2) the reasonableness of the benefits in relation to
4    the premium charged;
5        (3) the suitability of the benefits to the needs and
6    interests of the participating employees and the employer;
7        (4) the ability of the company to provide benefits
8    under the contract and the financial stability of the
9    company; and
10        (5) the efficacy of the contract in the recruitment and
11    retention of employees.
12    The System, in consultation with the employers, shall
13periodically review each approved company. A company may
14continue to provide administrative services and funding
15vehicles for the self-managed plan only so long as it continues
16to be an approved company under contract with the Board.
17    (d) Employee Direction. Employees who are participating in
18the program must be allowed to direct the transfer of their
19account balances among the various investment options offered,
20subject to applicable contractual provisions. The participant
21shall not be deemed a fiduciary by reason of providing such
22investment direction. A person who is a fiduciary shall not be
23liable for any loss resulting from such investment direction
24and shall not be deemed to have breached any fiduciary duty by
25acting in accordance with that direction. Neither the System
26nor the employer guarantees any of the investments in the

 

 

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1employee's account balances.
2    (e) Participation. An employee eligible to participate in
3the self-managed plan must make a written election in
4accordance with the provisions of Section 15-134.5 and the
5procedures established by the System. Participation in the
6self-managed plan by an electing employee shall begin on the
7first day of the first pay period following the later of the
8date the employee's election is filed with the System or the
9effective date as of which the employee's employer begins to
10offer participation in the self-managed plan. Employers may not
11make the self-managed plan available earlier than January 1,
121998. An employee's participation in any other retirement
13program administered by the System under this Article shall
14terminate on the date that participation in the self-managed
15plan begins.
16    An employee who has elected to participate in the
17self-managed plan under this Section must continue
18participation while employed in an eligible position, and may
19not participate in any other retirement program administered by
20the System under this Article while employed by that employer
21or any other employer that has adopted the self-managed plan,
22unless the self-managed plan is terminated in accordance with
23subsection (i).
24    Participation in the self-managed plan under this Section
25shall constitute membership in the State Universities
26Retirement System.

 

 

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1    A participant under this Section shall be entitled to the
2benefits of Article 20 of this Code.
3    Tier 3 participants are not eligible to participate in the
4self-managed plan under this Section.
5    (f) Establishment of Initial Account Balance. If at the
6time an employee elects to participate in the self-managed plan
7he or she has rights and credits in the System due to previous
8participation in the traditional benefit package, the System
9shall establish for the employee an opening account balance in
10the self-managed plan, equal to the amount of contribution
11refund that the employee would be eligible to receive under
12Section 15-154 if the employee terminated employment on that
13date and elected a refund of contributions, except that this
14hypothetical refund shall include interest at the effective
15rate for the respective years. The System shall transfer assets
16from the defined benefit retirement program to the self-managed
17plan, as a tax free transfer in accordance with Internal
18Revenue Service guidelines, for purposes of funding the
19employee's opening account balance.
20    (g) No Duplication of Service Credit. Notwithstanding any
21other provision of this Article, an employee may not purchase
22or receive service or service credit applicable to any other
23retirement program administered by the System under this
24Article for any period during which the employee was a
25participant in the self-managed plan established under this
26Section.

 

 

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1    (h) Contributions. The self-managed plan shall be funded by
2contributions from employees participating in the self-managed
3plan and employer contributions as provided in this Section.
4    The contribution rate for employees participating in the
5self-managed plan under this Section shall be equal to the
6employee contribution rate for other participants in the
7System, as provided in Section 15-157. This required
8contribution shall be made as an "employer pick-up" under
9Section 414(h) of the Internal Revenue Code of 1986 or any
10successor Section thereof. Any employee participating in the
11System's traditional benefit package prior to his or her
12election to participate in the self-managed plan shall continue
13to have the employer pick up the contributions required under
14Section 15-157. However, the amounts picked up after the
15election of the self-managed plan shall be remitted to and
16treated as assets of the self-managed plan. In no event shall
17an employee have an option of receiving these amounts in cash.
18Employees may make additional contributions to the
19self-managed plan in accordance with procedures prescribed by
20the System, to the extent permitted under rules prescribed by
21the System.
22    The program shall provide for employer contributions to be
23credited to each self-managed plan participant at a rate of
247.6% of the participating employee's salary, less the amount
25used by the System to provide disability benefits for the
26employee. The amounts so credited shall be paid into the

 

 

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1participant's self-managed plan accounts in a manner to be
2prescribed by the System.
3    An amount of employer contribution, not exceeding 1% of the
4participating employee's salary, shall be used for the purpose
5of providing the disability benefits of the System to the
6employee. Prior to the beginning of each plan year under the
7self-managed plan, the Board of Trustees shall determine, as a
8percentage of salary, the amount of employer contributions to
9be allocated during that plan year for providing disability
10benefits for employees in the self-managed plan.
11    The State of Illinois shall make contributions by
12appropriations to the System of the employer contributions
13required for employees who participate in the self-managed plan
14under this Section. The amount required shall be certified by
15the Board of Trustees of the System and paid by the State in
16accordance with Section 15-165. The System shall not be
17obligated to remit the required employer contributions to any
18of the insurance and annuity companies, mutual fund companies,
19banks, trust companies, financial institutions, or other
20sponsors of any of the funding vehicles offered under the
21self-managed plan until it has received the required employer
22contributions from the State. In the event of a deficiency in
23the amount of State contributions, the System shall implement
24those procedures described in subsection (c) of Section 15-165
25to obtain the required funding from the General Revenue Fund.
26    (i) Termination. The self-managed plan authorized under

 

 

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1this Section may be terminated by the System, subject to the
2terms of any relevant contracts, and the System shall have no
3obligation to reestablish the self-managed plan under this
4Section. This Section does not create a right to continued
5participation in any self-managed plan set up by the System
6under this Section. If the self-managed plan is terminated, the
7participants shall have the right to participate in one of the
8other retirement programs offered by the System and receive
9service credit in such other retirement program for any years
10of employment following the termination.
11    (j) Vesting; Withdrawal; Return to Service. A participant
12in the self-managed plan becomes vested in the employer
13contributions credited to his or her accounts in the
14self-managed plan on the earliest to occur of the following:
15(1) completion of 5 years of service with an employer described
16in Section 15-106; (2) the death of the participating employee
17while employed by an employer described in Section 15-106, if
18the participant has completed at least 1 1/2 years of service;
19or (3) the participant's election to retire and apply the
20reciprocal provisions of Article 20 of this Code.
21    A participant in the self-managed plan who receives a
22distribution of his or her vested amounts from the self-managed
23plan while not yet eligible for retirement under this Article
24(and Article 20, if applicable) shall forfeit all service
25credit and accrued rights in the System; if subsequently
26re-employed, the participant shall be considered a new

 

 

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1employee. If a former participant again becomes a participating
2employee (or becomes employed by a participating system under
3Article 20 of this Code) and continues as such for at least 2
4years, all such rights, service credits, and previous status as
5a participant shall be restored upon repayment of the amount of
6the distribution, without interest.
7    (k) Benefit amounts. If an employee who is vested in
8employer contributions terminates employment, the employee
9shall be entitled to a benefit which is based on the account
10values attributable to both employer and employee
11contributions and any investment return thereon.
12    If an employee who is not vested in employer contributions
13terminates employment, the employee shall be entitled to a
14benefit based solely on the account values attributable to the
15employee's contributions and any investment return thereon,
16and the employer contributions and any investment return
17thereon shall be forfeited. Any employer contributions which
18are forfeited shall be held in escrow by the company investing
19those contributions and shall be used as directed by the System
20for future allocations of employer contributions or for the
21restoration of amounts previously forfeited by former
22participants who again become participating employees.
23(Source: P.A. 93-347, eff. 7-24-03.)
 
24    (40 ILCS 5/15-158.5 new)
25    Sec. 15-158.5. Tier 3 defined contribution plan.

 

 

SB2591- 49 -LRB098 12404 EFG 46799 b

1    (a) Creation. The State Universities Retirement System
2shall establish and administer a Tier 3 defined contribution
3plan, which shall offer Tier 3 participants the opportunity to
4accumulate assets for retirement through a combination of
5employee and employer contributions that may be invested in
6mutual funds, collective investment funds, investment funds
7administered by the State Universities Retirement System, or
8other investment products and used to purchase annuity
9contracts, either fixed or variable or a combination thereof.
10The plan must be qualified under the Internal Revenue Code of
111986.
12    (b) Administration. The State Universities Retirement
13System shall be the plan sponsor for the defined contribution
14plan and shall prepare a plan document and prescribe such rules
15and procedures as are considered necessary or desirable for the
16administration of the defined contribution plan. Consistent
17with its fiduciary duty to the participants and beneficiaries
18of the defined contribution plan, the Board of Trustees of the
19System may delegate aspects of plan administration as it sees
20fit to companies authorized to do business in this State, to
21the employers, or to a combination of both.
22    (c) Participation. All Tier 3 participants shall
23participate in the Tier 3 defined contribution plan. A Tier 3
24participant who first becomes a participant under this Article
25on or after July 1, 2015 shall begin participation in the Tier
263 defined contribution plan on the first day of employment.

 

 

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1    (d) Contributions. The Tier 3 defined contribution plan
2shall be funded by contributions from Tier 3 participants and
3employer contributions as provided in this Section. For the
4purposes of calculating these contributions, the earnings of a
5Tier 3 participant that exceed the federal social security wage
6base in effect from time to time but do not exceed the limit
7imposed under Section 1-117 of this Code shall be included.
8    Each Tier 3 participant shall contribute to the System for
9the purposes of the defined contribution plan under this
10Section an amount equal to 2.65% of each payment of earnings.
11This required contribution shall be made as an employer pick-up
12under Section 414(h) of the Internal Revenue Code of 1986 or
13any successor Section thereof. These amounts shall be remitted
14to and treated as assets of the Tier 3 defined contribution
15plan. In no event shall a Tier 3 participant have an option of
16receiving these amounts in cash. Tier 3 participants may make
17additional contributions to the defined contribution plan in
18accordance with procedures prescribed by the System, to the
19extent permitted under federal law and the rules prescribed by
20the System.
21    Each employer of Tier 3 participants shall make monthly
22contributions to the System for the purposes of the Tier 3
23defined contribution plan equal to the rate of earnings that
24the employer has chosen to contribute on behalf of its
25employees who are Tier 3 participants, which shall be no less
26than 1% of earnings as that term is used in this subsection. An

 

 

SB2591- 51 -LRB098 12404 EFG 46799 b

1employer may agree to contribute more than the required 1%, but
2must provide the same employer contribution rate for every Tier
33 participant in its employ that participates in this defined
4contribution plan. Any increase in the amount agreed to by the
5employer shall be certified to the System each year in a manner
6prescribed by the System.
7    These employer contributions shall be credited to the
8accounts of the employer's Tier 3 participants. The amounts so
9credited shall be paid into the participant's defined
10contribution plan accounts by the administrator of the plan in
11a manner prescribed by the System.
12    The System shall not be obligated to remit the required
13employer contributions to the plan administrator or to any of
14the insurance and annuity companies, mutual fund companies,
15banks, trust companies, financial institutions, or other
16sponsors of any of the funding vehicles offered under the
17defined contribution plan until it has received the required
18employer contributions from the employer. In the event of a
19deficiency in the amount of employer contributions required
20under this Section, the System shall proceed with the
21collection process prescribed under subsection (h).
22    (e) Vesting. A participant in the Tier 3 defined
23contribution plan becomes vested in the employee contributions
24credited to his or her accounts in the defined contribution
25plan and associated investment earnings on becoming a
26participant in the plan.

 

 

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1    A participant in the Tier 3 defined contribution plan
2becomes vested in the employer contributions and associated
3investment earnings credited to his or her accounts in the
4defined contribution plan as follows: upon attaining 2 years of
5service credit, 20%; upon attaining 3 years of service credit,
640%; upon attaining 4 years of service credit, 60%; upon
7attaining 5 years of service credit, 80%; and upon attaining 6
8years of service credit, 100%.
9    (f) Benefit amounts. In designing the Tier 3 defined
10contribution plan, the System shall determine and specify the
11conditions under which a participant or other entity becomes
12eligible to receive a benefit or other distribution from the
13defined contribution plan.
14    Upon meeting the conditions for eligibility, a Tier 3
15participant shall be entitled to a benefit that is based on the
16account values attributable to (1) participant contributions
17and any investment return thereon and (2) the vested portion of
18employer contributions and any investment return thereon.
19    (g) Forfeiture. If a Tier 3 participant who is not fully
20vested in employer contributions terminates employment under
21this Article, the account values attributable to the unvested
22employer contributions and any investment return thereon shall
23be forfeited and held in escrow by the company investing those
24contributions, to be used as directed by the System for future
25allocations of employer contributions or for the restoration of
26amounts previously forfeited by former Tier 3 participants who

 

 

SB2591- 53 -LRB098 12404 EFG 46799 b

1again become participating employees. If a former Tier 3
2participant again becomes a participating employee (or becomes
3employed by a participating system under Article 20 of this
4Code) and continues as such for at least 2 years, all forfeited
5employer contributions and investment earnings theron shall be
6restored to his or her accounts, without interest.
7    (h) Enforcement. Any employer, other than the State, that
8fails to transmit to the System contributions required of it
9under this Section for more than 14 days after those
10contributions are due is subject to the following enforcement
11process:
12    After giving notice to the employer, the System shall
13certify to the State Comptroller or the Illinois Community
14College Board, whichever is applicable, the amounts of such
15delinquent payments, and the State Comptroller or the Illinois
16Community College Board, whichever is applicable, shall deduct
17the amounts so certified or any part thereof from any State
18funds to be remitted to the employer and shall pay the amount
19so deducted to the System. If State funds from which such
20deductions may be made are not available, the System may
21proceed against the employer to recover the amounts of such
22delinquent payments in the appropriate circuit court.
23    The System may provide for an audit of the records of an
24employer, other than the State, as may be required to establish
25the amounts of required contributions. The employer shall make
26its records available to the System for the purpose of

 

 

SB2591- 54 -LRB098 12404 EFG 46799 b

1conducting an audit. The cost of the audit shall be added to
2the amount of the delinquent payments and may be recovered by
3the System from the employer at the same time and in the same
4manner as the delinquent payments are recovered.
5    (i) Termination. The defined contribution plan authorized
6under this Section may be terminated by the System, subject to
7the terms of any relevant contracts, and the System shall have
8no obligation to reestablish the defined contribution plan
9under this Section. This Section does not create a right to
10continued participation in any Tier 3 defined contribution plan
11established by the System under this Section.
12    If the Tier 3 defined contribution plan is terminated, the
13participants shall have the right to transfer their account
14balances into another qualified and appropriate retirement
15plan, including a plan not established by the System, subject
16to applicable laws. Termination of the Tier 3 defined
17contribution plan does not affect a Tier 3 participant's
18participation in the Tier 3 defined benefit plan.
 
19    (40 ILCS 5/15-158.6 new)
20    Sec. 15-158.6. Tier 3 service; election; defined benefit
21plan.
22    (a) Service credit earned or purchased by a Tier 3
23participant applies to the Tier 3 defined benefit plan and, for
24vesting purposes only, to the Tier 3 defined contribution plan.
25A Tier 3 participant may not purchase or receive service or

 

 

SB2591- 55 -LRB098 12404 EFG 46799 b

1service credit applicable to any other retirement package
2administered by the System under this Article for any period
3during which the employee is a participant in the Tier 3
4benefit package.
5    (b) An active participant, other than a Tier 1 participant
6or a participant in the self-managed plan, who first becomes a
7participant under this Article on or after January 1, 2011 but
8before July 1, 2015 may irrevocably elect to participate in the
9System as a Tier 3 participant. The deadline for making this
10election shall be the later of January 1, 2015 or 60 days after
11commencing or returning to service under this Article. The
12election shall be effective on and after July 1, 2015.
13    In calculating the defined benefits for a Tier 3
14participant who has made this election, benefits payable after
15July 1, 2015 shall be determined under the Tier 3 benefit
16package, notwithstanding that they may be based in part on
17service credit accrued before that date. Making this election
18does not entitle the participant to a refund of any portion of
19employee contributions paid at the rates applicable to service
20before July 1, 2015.
21    (c) The Tier 3 defined benefit plan consists of the
22traditional benefit package as modified by Section 1-160, but
23subject to the following additional modifications:
24        (1) Notwithstanding Section 1-160 of this Code, all
25    automatic annual increases in retirement annuity payable
26    under the Tier 3 benefit package shall be calculated at

 

 

SB2591- 56 -LRB098 12404 EFG 46799 b

1    one-half the annual unadjusted percentage increase (but
2    not less than zero) in the consumer price index-u for the
3    12 months ending with the September preceding each November
4    1, and shall be calculated as a percentage of the total
5    annuity payable at the time of the increase, including all
6    increases previously granted under this Article. A
7    retirement annuity payable under the Tier 3 retirement
8    package shall first be subject to annual increases on the
9    January 1 occurring on or next after attainment of age 67
10    or the January 1 occurring on or next after the fifth
11    anniversary of the annuity start date, whichever occurs
12    earlier.
13        For the purposes of this Section, "consumer price
14    index-u" means the index published by the Bureau of Labor
15    Statistics of the United States Department of Labor that
16    measures the average change in prices of goods and services
17    purchased by all urban consumers, United States city
18    average, all items, 1982-84 = 100, as determined by the
19    Public Pension Division of the Department of Insurance.
20        (2) Notwithstanding Section 1-160 of this Code, for the
21    purposes of determining contributions and benefits under
22    the defined benefit component of the Tier 3 retirement
23    package, the earnings of a Tier 3 participant shall not
24    exceed the federal social security wage base in effect from
25    time to time. However, the earnings of a Tier 3 participant
26    that exceed that wage base but do not exceed the limit

 

 

SB2591- 57 -LRB098 12404 EFG 46799 b

1    imposed under Section 1-117 of this Code shall be included
2    in calculating the contributions of the Tier 3 participant
3    and the employer to the Tier 3 defined contribution plan
4    under Section 15-158.5.
5        (3) Notwithstanding subsection (a) of Section 15-136
6    of this Article, the retirement annuity shall be 1.5% of
7    final rate of earnings for each year of service.
8    (d) A Tier 3 participant shall be entitled to the benefits
9of Article 20 of this Code, but only with respect to the
10defined benefit component of the Tier 3 retirement package. The
11Tier 3 defined contribution plan, and the additional earnings
12considered under that plan, shall not be taken into
13consideration when calculating salary, proportional annuities,
14or other benefits under Article 20 of this Code.
 
15    (40 ILCS 5/15-159)  (from Ch. 108 1/2, par. 15-159)
16    Sec. 15-159. Board created.
17    (a) A board of trustees constituted as provided in this
18Section shall administer this System. The board shall be known
19as the Board of Trustees of the State Universities Retirement
20System.
21    (b) (Blank). Until July 1, 1995, the Board of Trustees
22shall be constituted as follows:
23    Two trustees shall be members of the Board of Trustees of
24the University of Illinois, one shall be a member of the Board
25of Trustees of Southern Illinois University, one shall be a

 

 

SB2591- 58 -LRB098 12404 EFG 46799 b

1member of the Board of Trustees of Chicago State University,
2one shall be a member of the Board of Trustees of Eastern
3Illinois University, one shall be a member of the Board of
4Trustees of Governors State University, one shall be a member
5of the Board of Trustees of Illinois State University, one
6shall be a member of the Board of Trustees of Northeastern
7Illinois University, one shall be a member of the Board of
8Trustees of Northern Illinois University, one shall be a member
9of the Board of Trustees of Western Illinois University, and
10one shall be a member of the Illinois Community College Board,
11selected in each case by their respective boards, and 2 shall
12be participants of the system appointed by the Governor for a 6
13year term with the first appointment made pursuant to this
14amendatory Act of 1984 to be effective September 1, 1985, and
15one shall be a participant appointed by the Illinois Community
16College Board for a 6 year term, and one shall be a participant
17appointed by the Board of Trustees of the University of
18Illinois for a 6 year term, and one shall be a participant or
19annuitant of the system who is a senior citizen age 60 or older
20appointed by the Governor for a 6 year term with the first
21appointment to be effective September 1, 1985.
22    The terms of all trustees holding office under this
23subsection (b) on June 30, 1995 shall terminate at the end of
24that day and the Board shall thereafter be constituted as
25provided in subsection (c).
26    (c) (Blank). Beginning July 1, 1995, the Board of Trustees

 

 

SB2591- 59 -LRB098 12404 EFG 46799 b

1shall be constituted as follows:
2    The Board shall consist of 9 trustees appointed by the
3Governor. Two of the trustees, designated at the time of
4appointment, shall be participants of the System. Two of the
5trustees, designated at the time of appointment, shall be
6annuitants of the System who are receiving retirement annuities
7under this Article. The 5 remaining trustees may, but need not,
8be participants or annuitants of the System.
9    The term of office of trustees appointed under this
10subsection (c) shall be 6 years, beginning on July 1. However,
11of the initial trustees appointed under this subsection (c), 3
12shall be appointed for terms of 2 years, 3 shall be appointed
13for terms of 4 years, and 3 shall be appointed for terms of 6
14years, to be designated by the Governor at the time of
15appointment.
16    The terms of all trustees holding office under this
17subsection (c) on the effective date of this amendatory Act of
18the 96th General Assembly shall terminate on that effective
19date. The Governor shall make nominations for appointment under
20this Section within 60 days after the effective date of this
21amendatory Act of the 96th General Assembly. A trustee sitting
22on the board on the effective date of this amendatory Act of
23the 96th General Assembly may not hold over in office for more
24than 90 days after the effective date of this amendatory Act of
25the 96th General Assembly. Nothing in this Section shall
26prevent the Governor from making a temporary appointment or

 

 

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1nominating a trustee holding office on the day before the
2effective date of this amendatory Act of the 96th General
3Assembly.
4    (d) Beginning on the 90th day after April 3, 2009 (the
5effective date of Public Act 96-6) this amendatory Act of the
696th General Assembly, the Board of Trustees shall be
7constituted as follows:
8        (1) The Chairperson of the Board of Higher Education,
9    who shall act as chairperson of this Board.
10        (2) Four trustees appointed by the Governor with the
11    advice and consent of the Senate who may not be members of
12    the system or hold an elective State office and who shall
13    serve for a term of 6 years, except that the terms of the
14    initial appointees under this subsection (d) shall be as
15    follows: 2 for a term of 3 years and 2 for a term of 6
16    years.
17        (3) Four active participants of the system to be
18    elected from the contributing membership of the system by
19    the contributing members, no more than 2 of which may be
20    from any of the University of Illinois campuses, who shall
21    serve for a term of 6 years, except that the terms of the
22    initial electees shall be as follows: 2 for a term of 3
23    years and 2 for a term of 6 years. Beginning with the
24    election of active participants next occurring after the
25    reduction in the number of elected active participant
26    positions on the Board under subsection (d-10), no more

 

 

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1    than one elected active participant may be from any of the
2    University of Illinois campuses.
3        (4) Two annuitants of the system who have been
4    annuitants for at least one full year, to be elected from
5    and by the annuitants of the system, no more than one of
6    which may be from any of the University of Illinois
7    campuses, who shall serve for a term of 6 years, except
8    that the terms of the initial electees shall be as follows:
9    one for a term of 3 years and one for a term of 6 years.
10    For the purposes of this Section, the Governor may make a
11nomination and the Senate may confirm the nominee in advance of
12the commencement of the nominee's term of office.
13    (d-5) Beginning July 1, 2013, there shall be 2 additional
14members of the Board of Trustees appointed by the Governor with
15the advice and consent of the Senate, each of whom shall serve
16for a term of 6 years, except that one of the initial
17appointees under this subsection (d-5) shall be designated by
18the Governor to serve for a term of 3 years. One of the
19additional members shall have knowledge and experience
20relating to community colleges in Illinois, and the other shall
21have knowledge and experience relating to public universities
22in Illinois.
23    (d-10) Upon the expiration of the terms of the 2 elected
24active participant members of the Board whose terms expire in
252015, those seats shall no longer be filled by election, but
26shall instead be filled by appointment by the Governor with the

 

 

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1advice and consent of the Senate. A person so appointed must be
2an active participant from the contributing membership of the
3System, and shall serve for a term of 6 years, but only so long
4as he or she remains an active participant of the System. One
5of these members shall be an active employee of a community
6college employer, and the other shall be an active employee of
7a public university employer.
8    (e) The 6 elected trustees shall be elected within 90 days
9after April 3, 2009 (the effective date of Public Act 96-6)
10this amendatory Act of the 96th General Assembly for a term
11beginning on the 90th day after that the effective date of this
12amendatory Act. Trustees shall be elected thereafter as terms
13expire for a 6-year term beginning July 15 next following their
14election, and such election shall be held on May 1, or on May 2
15when May 1 falls on a Sunday. The board may establish rules for
16the election of trustees to implement the provisions of Public
17Act 96-6 this amendatory Act of the 96th General Assembly and
18for future elections. Candidates for the participating trustee
19shall be nominated by petitions in writing, signed by not less
20than 400 participants with their addresses shown opposite their
21names. Candidates for the annuitant trustee shall be nominated
22by petitions in writing, signed by not less than 100 annuitants
23with their addresses shown opposite their names. If there is
24more than one qualified nominee for each elected trustee, then
25the board shall conduct a secret ballot election by mail for
26that trustee, in accordance with rules as established by the

 

 

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1board. If there is only one qualified person nominated by
2petition for each elected trustee, then the election as
3required by this Section shall not be conducted for that
4trustee and the board shall declare such nominee duly elected.
5A vacancy occurring in the elective membership of the board
6shall be filled for the unexpired term by the elected trustees
7serving on the board for the remainder of the term.
8    (f) A vacancy on the board of trustees caused by
9resignation, death, expiration of term of office, or other
10reason shall be filled by a qualified person appointed by the
11Governor for the remainder of the unexpired term.
12    (g) Trustees (other than the trustees incumbent on June 30,
131995 or as provided in subsection (c) of this Section) shall
14continue in office until their respective successors are
15appointed and have qualified, except that a trustee appointed
16to one of the participant positions shall be disqualified
17immediately upon the termination of his or her status as a
18participant and a trustee appointed to one of the annuitant
19positions shall be disqualified immediately upon the
20termination of his or her status as an annuitant receiving a
21retirement annuity.
22    (h) Each trustee must take an oath of office before a
23notary public of this State and shall qualify as a trustee upon
24the presentation to the board of a certified copy of the oath.
25The oath must state that the person will diligently and
26honestly administer the affairs of the retirement system, and

 

 

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1will not knowingly violate or wilfully permit to be violated
2any provisions of this Article.
3    Each trustee shall serve without compensation but shall be
4reimbursed for expenses necessarily incurred in attending
5board meetings and carrying out his or her duties as a trustee
6or officer of the system.
7    (i) This amendatory Act of 1995 is intended to supersede
8the changes made to this Section by Public Act 89-4.
9(Source: P.A. 96-6, eff. 4-3-09; 96-1000, eff. 7-2-10.)
 
10    (40 ILCS 5/15-198)
11    Sec. 15-198. Application and expiration of new benefit
12increases.
13    (a) As used in this Section, "new benefit increase" means
14an increase in the amount of any benefit provided under this
15Article, or an expansion of the conditions of eligibility for
16any benefit under this Article, that results from an amendment
17to this Code that takes effect after the effective date of this
18amendatory Act of the 94th General Assembly. "New benefit
19increase", however does not include any changes to this Article
20or to Article 1 or Article 20 of this Code made by this
21amendatory Act of the 98th General Assembly.
22    (b) Notwithstanding any other provision of this Code or any
23subsequent amendment to this Code, every new benefit increase
24is subject to this Section and shall be deemed to be granted
25only in conformance with and contingent upon compliance with

 

 

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1the provisions of this Section.
2    (c) The Public Act enacting a new benefit increase must
3identify and provide for payment to the System of additional
4funding at least sufficient to fund the resulting annual
5increase in cost to the System as it accrues.
6    Every new benefit increase is contingent upon the General
7Assembly providing the additional funding required under this
8subsection. The Commission on Government Forecasting and
9Accountability shall analyze whether adequate additional
10funding has been provided for the new benefit increase and
11shall report its analysis to the Public Pension Division of the
12Department of Financial and Professional Regulation. A new
13benefit increase created by a Public Act that does not include
14the additional funding required under this subsection is null
15and void. If the Public Pension Division determines that the
16additional funding provided for a new benefit increase under
17this subsection is or has become inadequate, it may so certify
18to the Governor and the State Comptroller and, in the absence
19of corrective action by the General Assembly, the new benefit
20increase shall expire at the end of the fiscal year in which
21the certification is made.
22    (d) Every new benefit increase shall expire 5 years after
23its effective date or on such earlier date as may be specified
24in the language enacting the new benefit increase or provided
25under subsection (c). This does not prevent the General
26Assembly from extending or re-creating a new benefit increase

 

 

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1by law.
2    (e) Except as otherwise provided in the language creating
3the new benefit increase, a new benefit increase that expires
4under this Section continues to apply to persons who applied
5and qualified for the affected benefit while the new benefit
6increase was in effect and to the affected beneficiaries and
7alternate payees of such persons, but does not apply to any
8other person, including without limitation a person who
9continues in service after the expiration date and did not
10apply and qualify for the affected benefit while the new
11benefit increase was in effect.
12(Source: P.A. 94-4, eff. 6-1-05.)
 
13    (40 ILCS 5/20-121)  (from Ch. 108 1/2, par. 20-121)
14    Sec. 20-121. Calculation of proportional retirement
15annuities. Upon retirement of the employee, a proportional
16retirement annuity shall be computed by each participating
17system in which pension credit has been established on the
18basis of pension credits under each system. The computation
19shall be in accordance with the formula or method prescribed by
20each participating system which is in effect at the date of the
21employee's latest withdrawal from service covered by any of the
22systems in which he has pension credits which he elects to have
23considered under this Article. However, the amount of any
24retirement annuity payable under the self-managed plan
25established under Section 15-158.2 of this Code depends solely

 

 

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1on the value of the participant's vested account balances and
2is not subject to any proportional adjustment under this
3Section. In the case of a participant in the Tier 3 benefit
4package under Article 15 of this Code, only the benefits
5provided under the Tier 3 defined benefit component shall be
6considered for the purposes of this Article; the benefits
7provided and the additional earnings considered under the Tier
83 defined contribution plan established under Section 15-158.5
9shall be disregarded.
10    Combined pension credit under all retirement systems
11subject to this Article shall be considered in determining
12whether the minimum qualification has been met and the formula
13or method of computation which shall be applied. If a system
14has a step-rate formula for calculation of the retirement
15annuity, pension credits covering previous service which have
16been established under another system shall be considered in
17determining which range or ranges of the step-rate formula are
18to be applicable to the employee.
19    Interest on pension credit shall continue to accumulate in
20accordance with the provisions of the law governing the
21retirement system in which the same has been established during
22the time an employee is in the service of another employer, on
23the assumption such employee, for interest purposes for pension
24credit, is continuing in the service covered by such retirement
25system.
26(Source: P.A. 91-887, eff. 7-6-00.)
 

 

 

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1    (40 ILCS 5/20-123)  (from Ch. 108 1/2, par. 20-123)
2    Sec. 20-123. Survivor's annuity. The provisions governing
3a retirement annuity shall be applicable to a survivor's
4annuity. Appropriate credits shall be established for
5survivor's annuity purposes in those participating systems
6which provide survivor's annuities, according to the same
7conditions and subject to the same limitations and restrictions
8herein prescribed for a retirement annuity. If a participating
9system has no survivor's annuity benefit, or if the survivor's
10annuity benefit under that system is waived, pension credit
11established in that system shall not be considered in
12determining eligibility for or the amount of the survivor's
13annuity which may be payable by any other participating system.
14    For persons who participate in the self-managed plan
15established under Section 15-158.2 or the portable benefit
16package established under Section 15-136.4, pension credit
17established under Article 15 may be considered in determining
18eligibility for or the amount of the survivor's annuity that is
19payable by any other participating system, but pension credit
20established in any other system shall not result in any right
21to a survivor's annuity under the Article 15 system.
22    In the case of a participant in the Tier 3 benefit package
23under Article 15 of this Code, only the benefits provided under
24the Tier 3 defined benefit component shall be considered for
25the purposes of this Article; the benefits provided and the

 

 

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1additional earnings considered under the Tier 3 defined
2contribution plan established under Section 15-158.5 shall be
3disregarded.
4(Source: P.A. 91-887, eff. 7-6-00.)
 
5    (40 ILCS 5/20-124)  (from Ch. 108 1/2, par. 20-124)
6    Sec. 20-124. Maximum benefits.
7    (a) In no event shall the combined retirement or survivors
8annuities exceed the highest annuity which would have been
9payable by any participating system in which the employee has
10pension credits, if all of his pension credits had been
11validated in that system.
12    If the combined annuities should exceed the highest maximum
13as determined in accordance with this Section, the respective
14annuities shall be reduced proportionately according to the
15ratio which the amount of each proportional annuity bears to
16the aggregate of all such annuities.
17    (b) In the case of a participant in the self-managed plan
18established under Section 15-158.2 of this Code to whom the
19provisions of this Article apply:
20        (i) For purposes of calculating the combined
21    retirement annuity and the proportionate reduction, if
22    any, in a retirement annuity other than one payable under
23    the self-managed plan, the amount of the Article 15
24    retirement annuity shall be deemed to be the highest
25    annuity to which the annuitant would have been entitled if

 

 

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1    he or she had participated in the traditional benefit
2    package as defined in Section 15-103.1 rather than the
3    self-managed plan.
4        (ii) For purposes of calculating the combined
5    survivor's annuity and the proportionate reduction, if
6    any, in a survivor's annuity other than one payable under
7    the self-managed plan, the amount of the Article 15
8    survivor's annuity shall be deemed to be the highest
9    survivor's annuity to which the survivor would have been
10    entitled if the deceased employee had participated in the
11    traditional benefit package as defined in Section 15-103.1
12    rather than the self-managed plan.
13        (iii) Benefits payable under the self-managed plan are
14    not subject to proportionate reduction under this Section.
15    (c) In the case of a participant in the Tier 3 benefit
16package under Article 15 of this Code, only the benefits
17provided under the Tier 3 defined benefit component shall be
18considered for the purposes of this Article; the benefits
19provided and the additional earnings considered under the Tier
203 defined contribution plan established under Section 15-158.5
21shall be disregarded.
22(Source: P.A. 91-887, eff. 7-6-00.)
 
23    (40 ILCS 5/20-125)  (from Ch. 108 1/2, par. 20-125)
24    Sec. 20-125. Return to employment - suspension of benefits.
25If a retired employee returns to employment which is covered by

 

 

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1a system from which he is receiving a proportional annuity
2under this Article, his proportional annuity from all
3participating systems shall be suspended during the period of
4re-employment, except that this suspension does not apply to
5any distributions payable under the self-managed plan
6established under Section 15-158.2 or under the Tier 3 defined
7contribution plan established under Section 15-158.5 of this
8Code.
9    The provisions of the Article under which such employment
10would be covered shall govern the determination of whether the
11employee has returned to employment, and if applicable the
12exemption of temporary employment or employment not exceeding a
13specified duration or frequency, for all participating systems
14from which the retired employee is receiving a proportional
15annuity under this Article, notwithstanding any contrary
16provisions in the other Articles governing such systems.
17(Source: P.A. 91-887, eff. 7-6-00.)
 
18    Section 90. The State Mandates Act is amended by adding
19Section 8.37 as follows:
 
20    (30 ILCS 805/8.37 new)
21    Sec. 8.37. Exempt mandate. Notwithstanding Sections 6 and 8
22of this Act, no reimbursement by the State is required for the
23implementation of any mandate created by this amendatory Act of
24the 98th General Assembly.
 

 

 

SB2591- 72 -LRB098 12404 EFG 46799 b

1    Section 97. Severability. The provisions of this Act are
2severable under Section 1.31 of the Statute on Statutes.
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    40 ILCS 5/1-160
4    40 ILCS 5/15-103.4 new
5    40 ILCS 5/15-107.1 new
6    40 ILCS 5/15-107.2 new
7    40 ILCS 5/15-111from Ch. 108 1/2, par. 15-111
8    40 ILCS 5/15-125from Ch. 108 1/2, par. 15-125
9    40 ILCS 5/15-134.5
10    40 ILCS 5/15-136from Ch. 108 1/2, par. 15-136
11    40 ILCS 5/15-136.4
12    40 ILCS 5/15-157from Ch. 108 1/2, par. 15-157
13    40 ILCS 5/15-157.2 new
14    40 ILCS 5/15-158.2
15    40 ILCS 5/15-158.5 new
16    40 ILCS 5/15-158.6 new
17    40 ILCS 5/15-159from Ch. 108 1/2, par. 15-159
18    40 ILCS 5/15-198
19    40 ILCS 5/20-121from Ch. 108 1/2, par. 20-121
20    40 ILCS 5/20-123from Ch. 108 1/2, par. 20-123
21    40 ILCS 5/20-124from Ch. 108 1/2, par. 20-124
22    40 ILCS 5/20-125from Ch. 108 1/2, par. 20-125
23    30 ILCS 805/8.37 new