(40 ILCS 5/15-158.2)
(a) Purpose. The General Assembly finds that it is important for colleges
and universities to be able to attract and retain the most qualified employees
and that in order to attract and retain these employees, colleges and
universities should have the flexibility to provide a defined contribution
plan as an alternative for eligible employees who elect not to participate
in a defined benefit retirement program provided under this Article.
Accordingly, the State Universities Retirement System is hereby authorized to
establish and administer a self-managed plan, which shall offer participating
employees the opportunity to accumulate assets for retirement through a
combination of employee and employer contributions that may be invested in
mutual funds, collective investment funds, or other investment products and
used to purchase annuity contracts, either fixed or variable or a combination
thereof. The plan must be qualified under the Internal Revenue Code of 1986.
(b) Adoption by employers. Each employer subject to this Article may
elect to adopt the self-managed plan established under this Section; this
election is irrevocable. An employer's election to adopt the self-managed
plan makes available to the eligible employees of that employer the elections
described in Section 15-134.5.
The State Universities Retirement System shall be the plan sponsor for the
self-managed plan and shall prepare a plan document and prescribe such rules
and procedures as are considered necessary or desirable for the administration
of the self-managed plan. Consistent with its fiduciary duty to the
participants and beneficiaries of the self-managed plan, the Board of Trustees
of the System may delegate aspects of plan administration as it sees fit to
companies authorized to do business in this State, to the employers, or to a
combination of both.
(c) Selection of service providers and funding vehicles. The System, in
consultation with the employers, shall solicit proposals to provide
administrative services and funding vehicles for the self-managed plan from
insurance and annuity companies and mutual fund companies, banks, trust
companies, or other financial institutions authorized to do business in this
State. In reviewing the proposals received and approving and contracting with
no fewer than 2 and no more than 7 companies, the Board of Trustees of the System shall
consider, among other things, the following criteria:
(1) the nature and extent of the benefits that would
The System, in consultation with the employers, shall periodically review
each approved company. A company may continue to provide administrative
services and funding vehicles for the self-managed plan only so long as
it continues to be an approved company under contract with the Board.
(d) Employee Direction. Employees who are participating in the program
must be allowed to direct the transfer of their account balances among the
various investment options offered, subject to applicable contractual
The participant shall not be deemed a fiduciary by reason of providing such
investment direction. A person who is a fiduciary shall not be liable for any
loss resulting from such investment direction and shall not be deemed to have
breached any fiduciary duty by acting in accordance with that direction. The System shall provide advance notice to the participant of the participant's obligation to direct the investment of employee and employer contributions into one or more investment funds selected by the System at the time he or she makes his or her initial retirement plan selection. If a participant fails to direct the investment of employee and employer contributions into the various investment options offered to the participant when making his or her initial retirement election choice, that failure shall require the System to invest the employee and employer contributions in a default investment fund on behalf of the participant, and the investment shall be deemed to have been made at the participant's investment direction. The participant has the right to transfer account balances out of the default investment fund during time periods designated by the System.
Neither the System nor the employer guarantees any of the investments in the
employee's account balances.
(e) Participation. An employee eligible to participate in the
self-managed plan must make a written election in accordance with the
provisions of Section 15-134.5 and the procedures established by the System.
Participation in the self-managed plan by an electing employee shall begin
on the first day of the first pay period following the later of the date the
employee's election is filed with the System or the effective date as of
which the employee's employer begins to offer participation in the self-managed
plan. Employers may not make the self-managed plan available earlier than
January 1, 1998. An employee's participation in any other retirement program
administered by the System under this Article shall terminate on the date that
participation in the self-managed plan begins.
An employee who has elected to participate in the self-managed plan under
this Section must continue participation while employed in an eligible
position, and may not participate in any other retirement program administered
by the System under this Article while employed by that employer or any other
employer that has adopted the self-managed plan, unless the self-managed plan
is terminated in accordance with subsection (i).
Notwithstanding any other provision of this Article, a Tier 2 member shall have the option to enroll in the self-managed plan.
Participation in the self-managed plan under this Section shall constitute
membership in the State Universities Retirement System.
A participant under this Section shall be entitled to the benefits of
Article 20 of this Code.
(f) Establishment of Initial Account Balance. If at the time an employee
elects to participate in the self-managed plan he or she has rights and credits
in the System due to previous participation in the traditional benefit package,
the System shall establish for the employee an opening account balance in the
self-managed plan, equal to the amount of contribution refund that the employee
would be eligible to receive under Section 15-154 if the employee terminated
employment on that date and elected a refund of contributions, except that this
hypothetical refund shall include interest at the effective rate for the
respective years. The System shall transfer assets from the defined benefit
retirement program to the self-managed plan, as a tax free transfer in
accordance with Internal Revenue Service guidelines, for purposes of funding
the employee's opening account balance.
(g) No Duplication of Service Credit. Notwithstanding any other provision
of this Article, an employee may not purchase or receive service or service
credit applicable to any other retirement program administered by the System
under this Article for any period during which the employee was a participant
in the self-managed plan established under this Section.
(h) Contributions. The self-managed plan shall be funded by contributions
from employees participating in the self-managed plan and employer
contributions as provided in this Section.
The contribution rate for employees participating in the self-managed plan
under this Section shall be equal to the employee contribution rate for other
participants in the System, as provided in Section 15-157. This required
contribution shall be made as an "employer pick-up" under Section 414(h) of the
Internal Revenue Code of 1986 or any successor Section thereof. Any employee
participating in the System's traditional benefit package prior to his or her
election to participate in the self-managed plan shall continue to have the
employer pick up the contributions required under Section 15-157. However, the
amounts picked up after the election of the self-managed plan shall be remitted
to and treated as assets of the self-managed plan. In no event shall an
employee have an option of receiving these amounts in cash. Employees may make
additional contributions to the
self-managed plan in accordance with procedures prescribed by the System, to
the extent permitted under rules prescribed by the System.
The program shall provide for employer contributions to be credited to each
self-managed plan participant at a rate of 7.6%
of the participating employee's salary, less the amount used by
the System to provide disability benefits for the employee.
The amounts so credited
shall be paid into the participant's self-managed plan accounts in a manner
to be prescribed by the System.
An amount of employer contribution, not exceeding 1% of the participating
employee's salary, shall be used for the purpose of providing the disability
benefits of the System to the employee. Prior to the beginning of each plan
year under the self-managed plan, the Board of Trustees shall determine, as a
percentage of salary, the amount of employer contributions to be allocated
during that plan year for providing disability benefits for employees in the
The State of Illinois shall make contributions by appropriations to the
System of the employer contributions required for employees who participate in
the self-managed plan under this Section.
The amount required shall
be certified by the Board of Trustees of the System and paid by the State in
accordance with Section 15-165. The System shall not be obligated to remit the
required employer contributions to any of the insurance and annuity
companies, mutual fund
companies, banks, trust companies, financial institutions, or other sponsors
of any of the funding vehicles offered under the self-managed plan
until it has received the required employer contributions from the State. In
the event of a deficiency in the amount of State contributions, the System
shall implement those procedures described in subsection (c) of Section 15-165
to obtain the required funding from the General Revenue
(i) Termination. The self-managed plan authorized under this
Section may be terminated by the System, subject to the terms
of any relevant
contracts, and the System shall have no obligation to
reestablish the self-managed plan under this Section. This Section does not
create a right
to continued participation in any self-managed plan set up by the System under
this Section. If the self-managed plan is terminated,
the participants shall have the right to participate in one of the other
retirement programs offered by the System and receive service credit in such
other retirement program for any years of employment following the termination.
(j) Vesting; Withdrawal; Return to Service. A participant in the
self-managed plan becomes vested in the employer contributions credited to his
or her accounts in the self-managed plan on the earliest to occur of the
following: (1) completion of 5 years of service with an employer described in
Section 15-106; (2) the death of the participating employee while employed by
an employer described in Section 15-106, if the participant has completed at
least 1 1/2 years of service; or (3) the participant's election to retire and
apply the reciprocal provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a distribution of his or
her vested amounts from the self-managed plan
while not yet eligible for retirement under this Article
(and Article 20, if applicable) shall forfeit all service credit
and accrued rights in the System; if subsequently re-employed, the participant
shall be considered a new
employee. If a former participant again becomes a participating employee (or
becomes employed by a participating system under Article 20 of this Code) and
continues as such for at least 2 years, all such rights, service credits, and
previous status as a participant shall be restored upon repayment of the amount
of the distribution, without interest.
(k) Benefit amounts. If an employee who is vested in employer
contributions terminates employment, the employee shall be entitled to a
benefit which is based on the
account values attributable to both employer and
employee contributions and any
investment return thereon.
If an employee who is not vested in employer contributions terminates
employment, the employee shall be entitled to a benefit based solely on the
account values attributable to the employee's contributions and any investment
return thereon, and the employer contributions and any investment return
thereon shall be forfeited. Any employer contributions which are forfeited
shall be held in escrow by the
company investing those contributions and shall be used as directed by the
System for future allocations of employer contributions or for the restoration
of amounts previously forfeited by former participants who again become
(Source: P.A. 98-92, eff. 7-16-13; 99-897, eff. 1-1-17