Full Text of HB3370 97th General Assembly
HB3370ham001 97TH GENERAL ASSEMBLY | Rep. Mike Fortner Filed: 3/4/2011
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| 1 | | AMENDMENT TO HOUSE BILL 3370
| 2 | | AMENDMENT NO. ______. Amend House Bill 3370 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Pension Code is amended by adding | 5 | | Sections 7-130.1, 7-130.2, 7-140.5, and 7-173.3 and changing | 6 | | Section 7-173 as follows: | 7 | | (40 ILCS 5/7-130.1 new)
| 8 | | Sec. 7-130.1. Reformed benefit package. "Reformed benefit
| 9 | | package" means the benefit retirement program maintained by the | 10 | | Fund for persons who first become participants of the Fund on | 11 | | or after January 1, 2011. It
includes the following benefits | 12 | | for those persons: retirement annuities payable directly from | 13 | | the Fund; surviving spouse annuities payable directly from the | 14 | | Fund; child annuities payable directly from the Fund; | 15 | | contribution refunds; and separation benefits. |
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| 1 | | (40 ILCS 5/7-130.2 new)
| 2 | | Sec. 7-130.2. Self-managed plan. "Self-managed plan" means | 3 | | the defined
contribution retirement program maintained by the | 4 | | Fund, as described in
Section 7-173.3. The self-managed plan | 5 | | does not
include retirement, surviving spouse, or child | 6 | | annuities
payable directly from the Fund, contribution | 7 | | refunds, or separation benefits. | 8 | | (40 ILCS 5/7-140.5 new)
| 9 | | Sec. 7-140.5. Retirement program elections. | 10 | | (a) For the purposes of this Article: | 11 | | "Currently eligible participant"
means a person who first | 12 | | became or becomes a participant under this Article on or after | 13 | | January 1, 2011 and is a participant under this Article before | 14 | | the day on which the Fund first offers the
self-managed plan as | 15 | | an alternative to the reformed benefit package. | 16 | | "Eligible participant" means either a currently eligible | 17 | | participant or a newly eligible
participant of the Fund | 18 | | "Newly
eligible participant" means a person who first | 19 | | becomes a participant
under this Article on or after the date | 20 | | on which the Fund first offers the self-managed plan as an | 21 | | alternative to the reformed benefit package.
| 22 | | (b) When the Fund offers to participants under this Article | 23 | | a
self-managed plan as an alternative to the reformed benefit | 24 | | package, each eligible participant shall be
given the choice to | 25 | | elect which retirement program he or she wishes to
participate |
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| 1 | | in with respect to all periods of covered employment occurring | 2 | | on,
before, and after the effective date of the participant's | 3 | | election. The retirement
program election made by an eligible | 4 | | participant must be made in writing, in the
manner prescribed | 5 | | by the Fund, and within the time period described in
this | 6 | | Section. | 7 | | If an eligible participant elects the self-managed plan, | 8 | | then that election is irrevocable. If an eligible participant | 9 | | who elected to participate or participated by default in the | 10 | | reformed benefit plan terminates employment under this | 11 | | Article, then the participant, upon his or her subsequent
| 12 | | re-employment under this Article, may make an election under | 13 | | this Section. | 14 | | An eligible participant who fails to make an election under | 15 | | this Section shall, by default,
participate in the reformed | 16 | | benefit package.
| 17 | | (c) An eligible participant may elect to
participate in the | 18 | | reformed benefit package
or the self-managed plan. An eligible | 19 | | participant must make this election within one year
after the | 20 | | effective date of the adoption of the self-managed plan under | 21 | | Section 7-173.3 or 60 days after first becoming a participant | 22 | | under this Article, whichever is later, or, in the case of a | 23 | | currently eligible participant who terminates employment under | 24 | | this Article, within one year after his or her re-employment | 25 | | under this Article.
| 26 | | (d) If the eligible participant elects to participate in |
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| 1 | | the self-managed plan, the Fund shall fund his or her account | 2 | | as stated in subsection (f) of Section 7-173.3.
| 3 | | (e) An eligible participant shall be provided with written | 4 | | information prepared
or prescribed by the Fund that describes | 5 | | the participant's retirement program
choices. The eligible | 6 | | participant shall be offered an opportunity to
receive | 7 | | counseling from the Fund before making his or her election. | 8 | | This
counseling may consist of videotaped materials, group | 9 | | presentations, individual
consultation with an employee or | 10 | | authorized representative of the Fund in
person or by telephone | 11 | | or other electronic means, or any combination of these
methods.
| 12 | | (40 ILCS 5/7-173) (from Ch. 108 1/2, par. 7-173)
| 13 | | Sec. 7-173. Contributions by employees.
| 14 | | (a) Each participating employee shall make contributions | 15 | | to the fund as
follows:
| 16 | | 1. For retirement annuity purposes, normal | 17 | | contributions of 3 3/4%
of earnings.
| 18 | | 2. Additional contributions of such percentages of | 19 | | each payment of
earnings, as shall be elected by the | 20 | | employee for retirement annuity
purposes, but not in excess | 21 | | of 10%. The selected rate shall be
applicable to all | 22 | | earnings paid following receipt by the Board of written | 23 | | notice of election to
make such contributions. Additional | 24 | | contributions at the selected rate
shall be made | 25 | | concurrently with normal contributions.
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| 1 | | 3. Survivor contributions, by each participating | 2 | | employee, of 3/4%
of each payment of earnings. | 3 | | Notwithstanding this item 3, in the case of an employee who | 4 | | participates in the self-managed plan under Section | 5 | | 7-173.3, contributions for a survivor's annuity shall | 6 | | instead be used to finance the benefits available under | 7 | | Section 1-173.3.
| 8 | | (b) Each employee shall make contributions for Federal
| 9 | | Social Security taxes, for periods during which he is a covered
| 10 | | employee, as required by the Social Security Enabling Act and | 11 | | State and federal law. For
participating employees, such | 12 | | contributions shall be in addition to
those required under | 13 | | paragraph (a) of this Section.
| 14 | | (c) Contributions shall be deducted from each | 15 | | corresponding payment
of earnings paid to each employee and | 16 | | shall be remitted to the board by
the participating | 17 | | municipality or participating instrumentality making
such | 18 | | payment. The remittance, together with a report of the earnings
| 19 | | and contributions shall be made as directed by the board. For | 20 | | township
treasurers and employees of township treasurers | 21 | | qualifying as employees
hereunder, the contributions herein | 22 | | required as deductions from salary
shall be withheld by the | 23 | | school township trustees from funds available
for the payment | 24 | | of the compensation of such treasurers and employees as
| 25 | | provided in the School Code and remitted to the board.
| 26 | | (d) An employee who has made additional contributions under
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| 1 | | paragraph (a)2 of this Section may upon retirement or at any | 2 | | time prior
thereto, elect to withdraw the total of such | 3 | | additional contributions
including interest credited thereon | 4 | | to the end of the preceding calendar
year.
| 5 | | (e) Failure to make the deductions for employee | 6 | | contributions
provided in paragraph (c) of this Section shall | 7 | | not relieve the employee
from liability for such contributions. | 8 | | The amount of such liability may
be deducted, with interest | 9 | | charged under Section 7-209, from any
annuities or benefits | 10 | | payable hereunder to the employee or any other
person receiving | 11 | | an annuity or benefit by reason of such employee's
| 12 | | participation.
| 13 | | (f) A participating employee who has at least 40 years of | 14 | | creditable
service in the Fund may elect to cease making the | 15 | | contributions required
under this Section. The status of the | 16 | | employee under this Article shall be
unaffected by this | 17 | | election, except that the employee shall not receive any
| 18 | | additional creditable service for the periods of employment | 19 | | following the
election. An election under this subsection | 20 | | relieves the employer from
making additional employer | 21 | | contributions in relation to that employee.
| 22 | | (Source: P.A. 96-1084, eff. 7-16-10; 96-1258, eff. 7-23-10; | 23 | | revised 9-2-10.)
| 24 | | (40 ILCS 5/7-173.3 new)
| 25 | | Sec. 7-173.3. Self-managed plan. |
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| 1 | | (a) The General Assembly finds that the Illinois Municipal | 2 | | Retirement Fund should have the flexibility to provide a | 3 | | defined contribution
(self-managed) plan for eligible | 4 | | participants.
Accordingly, the Illinois Municipal Retirement | 5 | | Fund is hereby authorized to
establish and administer a | 6 | | self-managed plan, which shall offer participants the | 7 | | opportunity to accumulate assets for retirement through a
| 8 | | combination of participant and employer contributions that may | 9 | | be invested in
mutual funds, collective investment funds, or | 10 | | other investment products and
used to purchase annuity | 11 | | contracts that are fixed, variable, or a combination of fixed | 12 | | and variable. The plan must be qualified under the Internal | 13 | | Revenue Code of 1986. | 14 | | (b) The Board shall
adopt the self-managed plan established | 15 | | under this Section for eligible participants under this | 16 | | Article. The adoption of the self-managed
plan makes available | 17 | | to the eligible participants under this Article the elections
| 18 | | described in Section 7-140.5.
| 19 | | The Illinois Municipal Retirement Fund shall be the plan | 20 | | sponsor for the
self-managed plan and shall prepare a plan | 21 | | document and adopt any rules
and procedures that are considered | 22 | | necessary or desirable for the administration
of the | 23 | | self-managed plan. Consistent with its fiduciary duty to the
| 24 | | participants and beneficiaries of the self-managed plan, the | 25 | | Board of Trustees
of the Fund may delegate aspects of plan | 26 | | administration as it sees fit to
companies authorized to do |
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| 1 | | business in this State.
| 2 | | (c) The Fund shall solicit proposals to provide
| 3 | | administrative services and funding vehicles for the | 4 | | self-managed plan from
insurance and annuity companies and | 5 | | mutual fund companies, banks, trust
companies, or other | 6 | | financial institutions authorized to do business in this
State. | 7 | | In reviewing the proposals received and approving and | 8 | | contracting with
no fewer than 2 and no more than 7 companies, | 9 | | the Board of Trustees of the Fund shall
consider, among other | 10 | | things, the following criteria:
| 11 | | (1) the nature and extent of the benefits that would be | 12 | | provided
to the participants;
| 13 | | (2) the reasonableness of the benefits in relation to | 14 | | the premium
charged;
| 15 | | (3) the suitability of the benefits to the needs and
| 16 | | interests of the participants and the employers; and | 17 | | (4) the ability of the company to provide benefits | 18 | | under the contract and
the financial stability of the | 19 | | company.
| 20 | | The System shall periodically review
each approved | 21 | | company. A company may continue to provide administrative
| 22 | | services and funding vehicles for the self-managed plan only so | 23 | | long as
it continues to be an approved company under contract | 24 | | with the Board.
| 25 | | In addition to the companies approved by the Fund under | 26 | | this subsection (c), the Fund may offer its participants an |
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| 1 | | investment fund managed by the Illinois State Board of | 2 | | Investment.
| 3 | | (d) Participants in the program
must be allowed to direct | 4 | | the transfer of their account balances among the
various | 5 | | investment options offered, subject to applicable contractual
| 6 | | provisions.
The participant shall not be deemed a fiduciary by | 7 | | reason of providing such
investment direction. A person who is | 8 | | a fiduciary shall not be liable for any
loss resulting from | 9 | | that investment direction and shall not be deemed to have
| 10 | | breached any fiduciary duty by acting in accordance with that | 11 | | direction.
Neither the Fund nor the employer shall guarantee | 12 | | any of the investments in the
participant's account balances.
| 13 | | (e) Eligible participants, as defined in Section 7-140.5, | 14 | | must make a written election to participate in the
self-managed | 15 | | plan in accordance with the
provisions of Section 7-140.5 and | 16 | | the procedures established by the Fund.
Participation in the | 17 | | self-managed plan shall begin
on the first day of the month | 18 | | immediately following the month in which the
participant's | 19 | | election is filed with the Fund, but not sooner than the | 20 | | effective date of
the self-managed
plan. The Fund shall make | 21 | | the self-managed plan available under this Article within 6 | 22 | | months after the effective date of this amendatory Act of the | 23 | | 97th General Assembly. A member's participation in the reformed | 24 | | benefit package under this Article shall terminate on the date | 25 | | that
participation in the self-managed plan begins.
| 26 | | A member who has elected to participate in the self-managed |
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| 1 | | plan under
this Section must continue participation while he or | 2 | | she remains a participant under this Article, and may not | 3 | | participate in the reformed benefit package.
| 4 | | Participation in the self-managed plan under this Section | 5 | | shall constitute
participation in the Illinois Municipal | 6 | | Retirement Fund.
| 7 | | A participant under this Section shall be entitled to the | 8 | | benefits of
Article 20 of this Code.
| 9 | | (f) If, at the time a participant
elects to participate in | 10 | | the self-managed plan, the participant has rights and credits
| 11 | | in the Fund due to previous participation in the reformed | 12 | | benefit package,
the Fund shall establish for the participant | 13 | | an opening account balance in the
self-managed plan, equal to | 14 | | (1) the amount of the separation benefit that the participant
| 15 | | would be eligible to receive if the participant terminated
| 16 | | employment on that date and elected a separation benefit and | 17 | | (2) an amount, representing employer contributions, equal to | 18 | | the amount of employee contributions, plus interest. The | 19 | | interest used in this subsection (f) shall be calculated using | 20 | | the actual annual rates of return that the Fund has earned | 21 | | during the time period corresponding to the actual investment | 22 | | of the contributions being transferred. The Fund shall transfer | 23 | | assets from the reformed benefit
package to the self-managed | 24 | | plan, as a tax-free transfer in
accordance with Internal | 25 | | Revenue Service guidelines, for purposes of funding
the | 26 | | participant's opening account balance.
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| 1 | | (g) Notwithstanding any other provision
of this Article, a | 2 | | participant may not purchase or receive service or service
| 3 | | credit applicable to the reformed benefit package
under this | 4 | | Article for any period during which the employee was a | 5 | | participant
in the self-managed plan established under this | 6 | | Section.
| 7 | | (h) The self-managed plan shall be funded by contributions
| 8 | | from participants in the self-managed plan and employer
| 9 | | contributions as provided in this Section.
| 10 | | The contribution rate for participants in the self-managed | 11 | | plan
under this Section shall be equal to the member | 12 | | contribution rate for other
participants in the Fund, as | 13 | | provided in Section 7-173. This required
contribution shall be | 14 | | made as an employer pick-up under Section 414(h) of the
| 15 | | Internal Revenue Code of 1986 or any successor Section thereof. | 16 | | Any participant in the Fund's reformed benefit package before | 17 | | his or her
election to participate in the self-managed plan | 18 | | shall continue to have the
employer pick up the contributions | 19 | | required under Section 7-173. However, the
amounts picked up | 20 | | after the election of the self-managed plan shall be remitted
| 21 | | to and treated as assets of the self-managed plan. In no event | 22 | | shall a participant have the option of receiving these amounts | 23 | | in cash. Participants may make
additional contributions to the
| 24 | | self-managed plan in accordance with procedures prescribed by | 25 | | the Fund, to
the extent permitted under rules adopted by the | 26 | | Fund.
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| 1 | | The program shall provide for employer contributions to be | 2 | | credited to each self-managed plan participant
in an amount | 3 | | equal to the employee contributions, notwithstanding Section | 4 | | 7-172.
| 5 | | Each employer shall make contributions by appropriations | 6 | | to the
Fund for participants in
the self-managed plan under | 7 | | this Section.
The amount required shall
be certified by the | 8 | | Board of Trustees of the Fund and paid by the employer in
| 9 | | accordance with Section 7-172. The Fund shall not be obligated | 10 | | to remit the
required employer contributions to any of the | 11 | | insurance and annuity
companies, mutual fund
companies, banks, | 12 | | trust companies, financial institutions, or other sponsors
of | 13 | | any of the funding vehicles offered under the self-managed plan
| 14 | | until it has received the required employer contributions from | 15 | | the employer
| 16 | | (i) A participant in the
self-managed plan becomes vested | 17 | | in the employer contributions credited to his
or her accounts | 18 | | in the self-managed plan on the earliest to occur of the
| 19 | | following: (1) attainment of 5 years of service credit; (2) the | 20 | | death of the participating member while employed under this | 21 | | Article, if the member has completed at
least 1.5 years of | 22 | | service; or (3) the member's election to retire and
apply the | 23 | | reciprocal provisions of Article 20 of this Code.
| 24 | | A participant in the self-managed plan who receives a | 25 | | distribution of his or
her vested amounts from the self-managed | 26 | | plan
while not yet eligible for retirement under this Article
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| 1 | | (and Article 20, if applicable) shall forfeit all service | 2 | | credit
and accrued rights in the Fund; if he or she | 3 | | subsequently becomes a participant under this Article again, he | 4 | | or she
shall be considered a new
participant. If a former | 5 | | participant again becomes a participant (or
becomes employed by | 6 | | a participating system under Article 20 of this Code) and
| 7 | | continues as such for at least 2 years, all rights, service | 8 | | credits, and
previous status as a participant shall be restored | 9 | | upon repayment of the amount
of the distribution, with interest | 10 | | at the actuarially assumed rate from the date of distribution | 11 | | until the date of payment.
| 12 | | (j) If a participant in the self-managed plan who is vested | 13 | | in employer
contributions terminates employment, the | 14 | | participant shall be entitled to a
benefit that is based on the
| 15 | | account values attributable to both employer and
employee | 16 | | contributions and any
investment return thereon.
| 17 | | If a participant in the self-managed plan who is not vested | 18 | | in employer contributions terminates
employment, the | 19 | | participant shall be entitled to a benefit based solely on the
| 20 | | account values attributable to the participant's contributions | 21 | | and any investment
return thereon, and the employer | 22 | | contributions and any investment return
thereon shall be | 23 | | forfeited. Any employer contributions that are forfeited
shall | 24 | | be held in escrow by the
company investing those contributions | 25 | | and shall be used, as directed by the
Fund, for future | 26 | | allocations of employer contributions or for the restoration
of |
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| 1 | | amounts previously forfeited by former participants who again | 2 | | become
participating members.
| 3 | | Section 90. The State Mandates Act is amended by adding | 4 | | Section 8.35 as follows: | 5 | | (30 ILCS 805/8.35 new) | 6 | | Sec. 8.35. Exempt mandate. Notwithstanding Sections 6 and 8 | 7 | | of this Act, no reimbursement by the State is required for the | 8 | | implementation of any mandate created by this amendatory Act of | 9 | | the 97th General Assembly.
| 10 | | Section 99. Effective date. This Act takes effect upon | 11 | | becoming law.".
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