Illinois General Assembly - Full Text of SB1647
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Full Text of SB1647  103rd General Assembly

SB1647 103RD GENERAL ASSEMBLY

  
  

 


 
103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB1647

 

Introduced 2/8/2023, by Sen. Robert F. Martwick

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/16-204
40 ILCS 5/16-207 new

    Amends the Downstate Teacher Article of the Illinois Pension Code. In a provision that requires the System to automatically enroll certain employees in the System's defined contribution benefit, provides an exception for employees whose school district provides an alternative qualifying plan. Provides that the alternative qualifying plan shall abide by the automatic enrollment procedures and automatic increase in contribution provisions applicable to the System's defined contribution benefit. Sets forth additional requirements for alternative qualifying plans. Requires a school district that has an alternative qualifying to file a letter of compliance, passed by resolution of the school board, with the System. Effective immediately.


LRB103 06030 RPS 51060 b

 

 

A BILL FOR

 

SB1647LRB103 06030 RPS 51060 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by
5changing Section 16-204 and by adding Section 16-207 as
6follows:
 
7    (40 ILCS 5/16-204)
8    Sec. 16-204. Optional defined contribution benefit.
9    (a) As soon as practicable after the effective date of
10this amendatory Act of the 100th General Assembly, the System
11shall offer a defined contribution benefit to active members
12of the System. The defined contribution benefit shall be an
13optional benefit to any member who chooses to participate. The
14defined contribution benefit shall collect optional employee
15and optional employer contributions into an account and shall
16offer investment options to the participant. The benefit under
17this Section shall be operated in full compliance with any
18applicable State and federal laws, and the System shall
19utilize generally accepted practices in creating and
20maintaining the benefit for the best interest of the
21participants. The System may use funds from the employee and
22employer contributions to defray any and all costs of creating
23and maintaining the benefit. In addition, the System may use

 

 

SB1647- 2 -LRB103 06030 RPS 51060 b

1funds provided under Section 16-158 of this Code to defray any
2and all costs of creating and maintaining the benefit and then
3shall reimburse those costs from funds received from the
4employee and employer contributions under this Section. All
5employers must comply with the reporting and administrative
6functions established by the System and are required to
7implement the benefits established under this Section. The
8System shall produce an annual report on the participation in
9the benefit and shall make the report public.
10    (b) As soon as is practicable on or after January 1, 2022,
11the System shall automatically enroll any employee who first
12becomes an active member or participant in the System, unless
13the school district that employs the employee provides an
14alternative qualifying plan under subsection (d) and Section
1516-207. School districts electing to use an alternative
16qualifying plan shall abide by the automatic enrollment
17procedures provided in this subsection (b) and the automatic
18increase of contributions provisions under subsection (c). A
19member automatically enrolled under this Section shall have 3%
20of his or her pre-tax gross compensation for each compensation
21period deferred into his or her deferred compensation account,
22unless the member otherwise instructs the System on forms
23approved by the System. A member may elect, in a manner
24provided for by the System, to not participate in the defined
25contribution benefit or to increase or reduce the amount of
26pre-tax gross compensation contributed, consistent with State

 

 

SB1647- 3 -LRB103 06030 RPS 51060 b

1or federal law. A member shall be automatically enrolled in
2the benefit beginning the first day of the pay period
3following the member's 30th day of employment. A member who
4has been automatically enrolled in the benefit may elect,
5within 90 days of enrollment, to withdraw from the benefit and
6receive a refund of amounts deferred, plus or minus any
7applicable earnings, investment fees, and administrative fees.
8Any refunded amount shall be included in the member's gross
9income for the taxable year in which the refund is issued.
10    (c) On or after January 1, 2023, the System may elect to
11increase the automatic annual contributions under this
12Section. The increase in the rate of contribution, however,
13shall not exceed 2% of a member's pre-tax gross compensation
14per year, and at no time shall any total contribution exceed
15any contribution limits established by State or federal law.
16    (d) In this Section, "alternative qualifying plan" means a
17defined contribution benefit plan that is subject to the
18requirements of Article 1 of this Code, meets the qualifying
19criteria specified in this subsection (d), and is sponsored by
20a school district. Any school district may elect to offer an
21alternative qualifying plan, instead of adopting the System's
22defined contribution benefit plan. A school district's
23alternative qualifying plan may automatically enroll employees
24who first become active members or participants in the System
25on or after June 1, 2023 into an alternative qualifying plan
26only if the plan satisfies the following criteria:

 

 

SB1647- 4 -LRB103 06030 RPS 51060 b

1        (1) the alternative qualifying plan only has a single
2    vendor for recordkeeping services;
3        (2) the alternative qualifying plan does not have any
4    annuities or separate accounts;
5        (3) the alternative qualifying plan permits employees
6    to transfer or roll over funds (i) without cost to the
7    employee and (ii) at the time instructed by the employee;
8    and
9        (4) the alternative qualifying plan requires that the
10    plan recordkeeper agree that, in performing services with
11    respect to the plan, the recordkeeper (i) must not use
12    information received as a result of providing services to
13    the plan or the plan's participants to solicit the plan's
14    participants for the purpose of cross-selling non-plan
15    products and services, unless in response to a request by
16    a plan participant; and (ii) shall not promote, recommend,
17    endorse, or solicit plan participants to purchase any
18    financial products or services outside of the plan.
19(Source: P.A. 102-540, eff. 8-20-21.)
 
20    (40 ILCS 5/16-207 new)
21    Sec. 16-207. Alternative qualifying plan application and
22documentation.
23    (a) The optional defined contribution benefit established
24under Section 16-204 constitutes the default defined
25contribution plan for members of the System. A school district

 

 

SB1647- 5 -LRB103 06030 RPS 51060 b

1may only elect to enroll employees into an alternative
2qualifying plan if the school district's desired alternative
3qualifying plan meets the criteria established in Section
416-204 and the school district files a letter of compliance,
5passed by resolution of the school board, with the System.
6    (b) School districts must submit a copy of the passed
7resolution to the System certifying that its alternative
8qualifying plan meets the criteria established in Section
916-204.
10    (c) The school district must submit the resolution to the
11System as soon as practicable after the school board passes
12the resolution.
13    (d) The System shall maintain a record of all alternative
14qualifying plans.
 
15    Section 99. Effective date. This Act takes effect upon
16becoming law.