Legislation

Legislation

Please note: SURS does not endorse specific pension reform legislation. Our goal is to update and educate SURS members concerning legislation that may affect their retirement benefits.

Appropriations

SB 0042
- Fiscal Year 2018 Budget Implementation Act
Sponsor(s): Senator Donne E. Trotter and Representative Gregory Harris

SB 42 creates the FY 2018 Budget Implementation Act for the purpose of making changes in state programs that are necessary to implement the state budget.

SB 42 authorizes the use of money in the State Pensions Fund as part of the FY 2018 state contribution to SURS.  It also makes the following changes to SURS:

Optional Hybrid Plan

SB 42 creates an optional hybrid plan for new participants of SURS on or after the implementation date of the optional hybrid plan and current Tier II participants who irrevocably elect to participate in the optional hybrid plan.  The optional hybrid plan does not apply to participants in the Self-Managed Plan.  Individuals who first become participants of SURS on or after the implementation date of the optional hybrid plan (and who are not participants in the Self-Managed Plan) can irrevocably elect to participate in Tier II within 30 days after becoming a participant.  The implementation date of the optional hybrid plan means the earliest date upon which the SURS Board of Trustees authorizes members of SURS to begin participating in the optional hybrid plan.  SURS must endeavor to make such participation available as soon as possible after the effective date of the legislation and must establish an implementation date by board resolution.

Stated differently, individuals who first become participants of SURS on or after the implementation date of the optional hybrid plan will have the option to participate in: the optional hybrid plan, the Tier II plan or the Self-Managed Plan.  Current Tier II participants will have the option to elect to participate in the optional hybrid plan.

For the defined benefit portion of the optional hybrid plan:

  • Final average salary (“FAS”) equals the average monthly (or annual) salary during the period of service in which earnings were the highest during the last 120 months (or 10 years) of service.
  • Pensionable earnings are capped at the federal Social Security Wage Base.
  • Age and service credits for retirement are the normal Social Security retirement age applicable to that member, but no earlier than age 67, with 10 years of service credit.
  • Retirement annuities are calculated using the following formula: 1.25 percent x each year of service credit x FAS.
  • Automatic annual increases are applied beginning one year after retirement, calculated at ½ of the percentage increase in the CPI-W.
  • Survivor benefits are equal to 66 2/3 percent of the member’s retirement annuity on the date of death, or 66 2/3 percent of the member’s earned annuity without an age reduction if the member was not retired on the date of death.
  • Employee contributions are equal to the lower of 6.2 percent of salary or the normal cost of benefits under the defined benefit portion of the plan.

For the defined contribution portion of the optional hybrid plan:

  • Employee contributions are equal to a minimum of 4 percent of salary.
  • Employer contributions for employees with at least one year of service with the same employer are equal to a rate that may be set for individual employees, but no higher than 6 percent of salary and no lower than 2 percent of salary.
  • The participant vests in employer contributions when they are paid into his or her account.
  • The plan must provide a variety of investment options (including investments handled by the Illinois State Board of Investment) and a variety of options for payouts to retirees and their survivors.

State Funding Changes

SB 42 requires the state to make additional contributions to SURS in FY 2018, FY 2019 and FY 2020 equal to 2 percent of the total payroll of each employee who participates in the optional hybrid plan or who participates in the Tier II plan in lieu of the optional hybrid plan.

SB 42 requires any change in an actuarial assumption that increases or decreases the required state contribution and first applies in FY 2018 or thereafter to be implemented in equal annual amounts over a five-year period beginning in the state fiscal year in which the change first applies to the required state contribution.

SB 42 requires any change in an actuarial assumption that increases or decreases the required state contribution and first applied to the state contribution in FY 2014, FY 2015, FY 2016 or FY 2017 to be implemented as already applies in state fiscal years before 2018 and, in the portion of the five-year period beginning in the state fiscal year in which the actuarial change first applied that occurs in state fiscal year 2018 or thereafter, by calculating the change in equal annual amounts over that five-year period and then implementing it at the resulting annual rate in each of the remaining fiscal years in that five-year period.

SB 42 requires recertification of the amount of the required state contribution for FY 2018, based on the changes made by the legislation.

Employer Funding Changes

SB 42 requires each employer under SURS to contribute the following amounts:

  • In FY 2018, FY 2019 and FY 2020, the normal cost of the defined benefit plan, minus the employee contribution, for each employee of the employer who participates in the optional hybrid plan or participates in the Tier II plan in lieu of the optional hybrid plan; or
  • Beginning in FY 2021, the normal cost of the defined benefit plan, minus the employee contribution, plus 2 percent, for each employee of the employer who participates in the optional hybrid plan or participates in the Tier II plan in lieu of the optional hybrid plan; plus;
  • Beginning in FY 2018, the amount for that fiscal year to amortize any unfunded actuarial accrued liability attributable to the defined benefits of the employer’s employees who first became participants on or after the implementation date of the optional hybrid plan and the employer’s employees who were previously Tier II participants but elected to participate in the optional hybrid plan, determined as a level percentage of payroll over a 30-year rolling amortization period.

Stated differently, beginning in FY 2018, the employer will be responsible for: (1) the employer normal cost of the defined benefits of optional hybrid plan participants and the employer normal cost of the defined benefits of participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan; and (2) the unfunded liability of the defined benefits of optional hybrid plan participants, participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan, and participants who currently participate in the Tier II plan but elect to participate in the optional hybrid plan.  Additionally, beginning in FY 2021, the employer will pay a 2 percent surcharge for optional hybrid plan participants and participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan.  

SB 42 requires SURS to create and maintain individual employer accounts for this purpose.

SB 42 also requires the employer to pay the employer normal cost of the portion of an employee’s earnings that exceeds the amount of salary set for the governor, for academic years beginning on or after July 1, 2017.

Effective Date

SB 42 takes effect immediately upon becoming law.

Status:

Public Act 100-0023 (Effective July 6, 2017)

SB 2063
- Unbalanced Budget Response Act
Sponsor(s): Senator Christine Radogno

SB 2063 creates the Unbalanced Budget Response Act.

SB 2063 authorizes the governor to designate a contingency reserve to balance the budget. The contingency reserve may be comprised of amounts appropriated from funds held by the state treasurer to any agency for fiscal year 2017 and fiscal year 2018, including amounts appropriated under a statutory continuing appropriation. However, the governor cannot designate amounts to be set aside as a contingency reserve from amounts appropriated for: (1) payment of debt service; (2) general state aid for schools; or (3) grants for early childhood education.

Additionally, SB 2063 authorizes the governor to delay payments under any statutory continuing appropriation, except for payments of debt service, for fiscal year 2017 and fiscal year 2018. Any payment so delayed may be paid out of the next fiscal year’s appropriation.

SB 2063 is identical to House Bill 3868 of the 100th General Assembly.

SB 2063 takes effect immediately upon becoming law.

Status:

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Senate

SB 0363
- No Pensions for Private Employment
Sponsor(s): Senator Julie Morrison

Senate Amendment #1 to SB 363 amends the General Provisions Article of the Illinois Pension Code. It establishes that, beginning on and after the effective date of the legislation, a person is not eligible to become a member or participant in any pension fund or retirement system with respect to private employment. A person who first becomes a participant or member of any of the following pension funds or retirement systems on or after the effective date of the legislation cannot establish service credit under that fund or system with respect to private employment: the General Assembly Retirement System; Downstate Policemen’s Pension Funds; Downstate Firefighters’ Pension Funds; the Chicago Policemen’s Pension Fund; the Chicago Firefighters’ Pension Fund; the Illinois Municipal Retirement Fund; the Chicago Municipal Pension Fund; the Cook County Pension Fund; the Cook County Forest Preserve District Pension Fund; the Chicago Laborers’ Pension Fund; the Chicago Park District Pension Fund; the Metropolitan Water Reclamation District Pension Fund; the State Employees Retirement System; the State Universities Retirement System; the Teachers Retirement System; the Chicago Teachers Pension Fund and the Judges Retirement System.

SA #1 to SB 363 defines “private employment” as including any employment that is not compensated with funds under the control of a state agency, school district, public institution of higher education, unit of local government, municipal government, or county government or a body politic established under such government and also includes employment by a labor union or an organization representing governments, regardless of whether the organization receives dues from units of government.

SA #1 to SB 363 takes effect in accordance with the Effective Date of Laws Act.

Status:

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SB 0654
- SURS Administrative and Technical Changes
Sponsor(s): Senator Daniel Biss

SB 654 amends the State Universities Retirement System Article of the Illinois Pension Code to enhance the efficient administration of SURS.  It has no impact to member benefits.  It makes one substantive change and five technical changes.

Substantive Change:

SB 654 authorizes the System to issue subpoenas in connection with an attempt to obtain information to assist in the collection of sums due to the System, all personal identifying information necessary for the administration of benefits and the determination of the death of a benefit recipient or a potential benefit recipient.  

Technical Changes:

SB 654 codifies the long-standing practice of SURS in which a disability retirement annuity recipient is prevented from backdating his or her retirement annuity prior to the termination of the disability retirement annuity.  

SB 654 codifies the long-standing practice of SURS in which a participant’s disability benefits are discontinued upon failure to provide an earnings verification necessary to determine continued eligibility for disability benefits.

SB 654 codifies the long-standing practice of SURS in which a disability retirement annuity is discontinued upon a recipient’s refusal to submit to a reasonable physical examination or failure to provide an earnings verification necessary to determine continued eligibility for the disability retirement annuity.

SB 654 codifies the long-standing practice of SURS in which the costs incurred in a claim for a disability retirement annuity are allocated in a similar way as the costs incurred in a claim for disability benefits.

SB 654 corrects the definition of “service” to reflect the enactment of Public Act 99-0897.  

SB 654 takes effect immediately upon becoming law.

Status:

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SB 0662
- Pension Buyout Act
Sponsor(s): Senator Michael E. Hastings

SB 662 creates the Pension Buyout Act. It applies to eligible retirees of the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System.

SB 662 authorizes the Illinois Department of Central Management Services to enter into contracts with approved vendors to provide lump-sum payments to eligible retirees pursuant to a pension buyout option. Approved vendors must provide, at no cost to the eligible retiree, a minimum amount of certified financial planning services before the eligible retiree makes an election pursuant to a pension buyout option.

To be eligible to elect a pension buyout option, a SURS retiree must (1) have elected to receive a retirement annuity; (2) be eligible to receive a retirement annuity; (3) have terminated service; (4) not be subject to a QILDRO under SURS; (4) not be a participant in the Self-Managed Plan; (5) have received at least the minimum amount of financial planning services provided by the approved vendor; and (6) not retire reciprocally with another retirement system or pension fund under the Illinois Pension Code.

An eligible SURS retiree who elects a pension buyout option relinquishes all rights and benefits under the Illinois Pension Code in exchange for a lump-sum payment equal to the present value of his or her retirement annuity under SURS. An eligible SURS retiree may elect a pension buyout option at any time after he or she has elected to retire and has terminated service. SURS retirees who elect to participate in a pension buyout option will still receive any applicable retiree health insurance benefits.

SB 662 takes effect on July 1, 2018.

Status:

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SB 0778
- FOIA - No Exemption for Alternative Investment Contracts
Sponsor(s): Senator Daniel Biss

SB 778 amends the Freedom of Information Act (the Act) to establish that the texts of new agreements entered into by a public pension fund or retirement system after January 1, 2018, to invest in a private equity fund, hedge fund, or absolute return fund are not exempt from disclosure under the Act. However, trade secrets contained in the text of such new agreements remain exempt under the Act.

SB 778 takes effect immediately upon becoming law.

Status:

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SB 0779
- Alternative Investment Contract and Fee Transparency
Sponsor(s): Senator Daniel Biss

SB 779 amends the General Provisions article of the Illinois Pension Code to require the disclosure of certain information related to the investments of public pension funds, retirement systems, and investment boards in alternative investment funds.

SB 779 defines an “alternative investment fund” as a private equity fund, hedge fund, or absolute return fund.

SB 779 requires all pension funds, retirement systems, and investment boards under the Illinois Pension Code to disclose the following information within 90 days after entering into an agreement to invest in an alternative investment fund: (1) all management fee waiver provisions; (2) all indemnification provisions; (3) all clawback provisions; and (4) the cover page and signature block of the agreement. These disclosures must be filed with the Public Pension Division of the Illinois Department of Insurance and the Illinois Secretary of State. They must also be posted and maintained on the website of the pension fund, retirement system, or investment board.

SB 779 further requires all pension funds, retirement systems, and investment boards under the Illinois Pension Code to require their alternative investment fund external managers and general partners to disclose the following information annually for each alternative investment fund: (1) direct fees and expenses; (2) all other fees and expenses, including carried interest; (3) the amount of all management fee waivers; and (4) the total amount of portfolio holding fees. The disclosure of this information may be satisfied by the completion of the Institutional Limited Partners Association (“ILPA”) template for the relevant category of investment for the applicable year. These disclosures must be filed with the Public Pension Division of the Illinois Department of Insurance and posted and maintained on the website of the public pension fund, retirement system, or investment board.

SB 779 applies to agreements after January 1, 2018.

SB 779 takes effect immediately upon becoming law.

SB 779 is similar to House Amendment #1 to House Bill 163 of the 100th General Assembly.

Status:

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SB 0896
- Survivors Felony Forfeiture
Sponsor(s): Senator Pamela J. Althoff

SB 896 amends the General Assembly Retirement System, Downstate Policemen’s Pension Fund, Downstate Firefighters’ Pension Fund, Chicago Policemen’s Pension Fund, Chicago Firefighters’ Pension Fund, Illinois Municipal Retirement Fund, Chicago Municipal Pension Fund, Cook County Pension Fund, Cook County Forest Preserve District Pension Fund, Chicago Laborers’ Pension Fund, Chicago Park District Pension Fund, Metropolitan Water Reclamation District Pension Fund, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System, Chicago Teachers Pension Fund and Judges Retirement System articles of the Illinois Pension Code.

SB 896 prohibits any benefits from being paid to a person who otherwise would receive a survivor benefit but is convicted of a felony relating to, arising out of, or in connection with the service of the employee from whom the benefit results. SB 896 applies to the survivors of individuals who first become participants in SURS after the effective date of the legislation.

SB 896 is identical to House Bill 250 of the 100th General Assembly, as introduced.

SB 896 takes effect immediately upon becoming law.

Status:

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SB 1012
- Tier III Defined Contribution Plan
Sponsor(s): Senator Dale A. Righter

Senate Amendment #2 to SB 1012 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System articles of the Illinois Pension Code.

SA #2 to SB 1012 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2018. SURS must utilize the framework of the Self-Managed Plan and must endeavor to adapt the benefits and structure of the Self-Managed Plan to the Tier III plan. Tier I participants and Tier II participants may make a voluntary, irrevocable election to stop accruing benefits in the defined benefit plan and start accruing benefits for future service in the Tier III defined contribution plan. Additionally, all persons who first become participants in SURS on or after July 1, 2018, must participate in the Tier III defined contribution plan. Participants in the Tier III defined contribution plan will receive any applicable retiree health insurance benefits upon retirement.

A Tier I or Tier II member who elects to participate in the Tier III defined contribution plan may irrevocably elect to terminate all participation in the defined benefit plan. Upon such election, SURS must transfer an amount equal to the amount of the contribution refund that the member would be eligible to receive, including interest at the effective rate for the respective years, to the member’s individual account in the defined contribution plan.

Participant contributions to the Tier III defined contribution plan are at the rate of 8 percent of earnings. State contributions to the Tier III defined contribution plan are at the rate of 7.6 percent of earnings (minus up to 1 percent of earnings to cover the cost of any defined disability benefits offered under the defined contribution plan). Tier III participants must have five years of service credit in the defined contribution plan to vest in state contributions. Failure to vest results in the forfeiture of state contributions and any earnings thereon.

The Tier III defined contribution plan must offer a variety of options for investments, including investments handled by SURS as well as private sector investment options; provide a variety of options for payouts to inactive participants and their survivors; and, to the extent authorized under federal law and as authorized by SURS, allow former participants to transfer or roll over employee and vested state contributions, and the earnings thereon, from the Tier III defined contribution plan into other qualified retirement plans.

SURS, in consultation with employers, must solicit proposals to provide administrative services and funding vehicles for the Tier III defined contribution plan from insurance and annuity companies and mutual fund companies, banks, trust companies or other financial institutions authorized to do business in Illinois. SURS must contract with no fewer than two and no more than seven companies to provide administrative services and funding vehicles for the Tier III defined contribution plan. Each approved company must be periodically reviewed by SURS in consultation with the employers.

SA #2 takes effect immediately upon becoming law.

Senate Amendment #1 to SB 1012 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System articles of the Illinois Pension Code.

SA #1 to SB 1012 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2018. Tier I participants and Tier II participants may make a voluntary, irrevocable election to become Tier III participants, stopping participation in the defined benefit plan and starting participation in the defined contribution plan for future service. Additionally, all persons who first become participants in SURS on or after July 1, 2018, must participate in the Tier III defined contribution plan.

Tier III participants may irrevocably elect to terminate all participation in the defined benefit plan. Upon such election, SURS must transfer an amount equal to the amount of the contribution refund that the member would be eligible to receive, including interest at the effective rate, to the member’s individual account in the defined contribution plan. Participants in the Tier III defined contribution plan will receive any applicable retiree health insurance benefits upon retirement.

Tier III employee contributions to the defined contribution plan are set at a rate determined by the participant, but not less than 3 percent of earnings and not more than a percentage of earnings determined by the board in accordance with the requirements of state and federal law. State contributions to the defined contribution plan are set at a uniform rate, but not higher than 7.6 percent of earnings and not lower than 3 percent of earnings. The state must adjust this rate annually. Tier III participants must have five years of service in the defined contribution plan to vest in state contributions. Failure to vest results in the forfeiture of state contributions and any earnings thereon. Disability benefits may be provided under the Tier III defined contribution plan, and Tier III employee contributions to the defined contribution plan may be reduced by an amount to cover the cost of offering such disability benefits.

The Tier III defined contribution plan must offer a variety of options for investments, including investments handled by SURS as well as private sector investment options; provide a variety of options for payouts to inactive members and their survivors; and, to the extent permitted under federal law and as authorized by SURS, allow former participants to transfer or roll over employee and vested state contributions, and the earnings thereon, from the Tier III defined contribution plan into other qualified retirement plans.

The Tier III defined contribution plan contained in SA #1 to SB 1012 is identical to the Tier III defined contribution plan contained in House Bill 2405 of the 100th General Assembly.

SA #1 SB 1012 takes effect immediately upon becoming law.

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SB 1345
- Public Act 100-0023 Trailer Bill – Tier Clarification
Sponsor(s): Senator John G. Mulroe and Representative Robert Markwick

House Amendment #2 to SB 1345 amends the General Provisions and SURS articles of the Illinois Pension Code.

HA #2 to SB 1345 clarifies that individuals who first become members of SURS on or after January 1, 2011 and prior to the implementation date of the Optional Hybrid Plan will participate in SURS as Tier 2 members.

Public Act 100-0023 (effective July 6, 2017) closed Tier 2 for individuals who first become members of SURS on or after January 6, 2018. As a result, under Public Act 100-0023, individuals who first become members of SURS on or after January 6, 2018 would not have a benefit “Tier” assigned to them, meaning that the retirement benefits for those members would not be clearly defined in statute. HA #2 to SB 1345 provides that individuals who first become members of SURS on or after January 6, 2018 and until the implementation date of the Optional Hybrid Plan will participate in SURS as Tier 2 members.

HA #2 to SB 1345 takes effect immediately upon becoming law.

Status:

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SB 1714
- Investment Consultant Disclosures
Sponsor(s): Senator James F. Clayborne, Jr.

SB 1714 amends the General Provisions article of the Illinois Pension Code.

SB 1714 requires each consultant retained by the board of a retirement system, pension fund or investment board to disclose the following information by Jan. 1, 2018, and each Jan. 1 thereafter:

  • The total number of searches for investment services made by the consultant in the prior calendar year;

  • The total number of searches for investment services made by the consultant in the prior calendar year that included: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability;

  • The total number of searches for investment services made by the consultant in the prior calendar year in which the consultant recommended for selection: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability;

  • The total number of searches for investment services made by the consultant in the prior calendar year that resulted in the selection of: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability; and

  • The total dollar amount of investment made in the previous calendar year with: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability that was selected after a search for investment services performed by the consultant.

Beginning Jan. 1, 2018, the board of a retirement system, pension fund or investment board is prohibited from awarding a contract, oral or written, for consulting services without first requiring the consultant to make these disclosures.  These disclosures must be considered, within the bounds of financial and fiduciary prudence, prior to the awarding of a contract, oral or written, for consulting services.

SB 1714 also requires each consultant retained by the board of a retirement system, pension fund or investment board to disclose the following information by Jan. 1, 2018, and each Jan. 1 thereafter: all compensation and economic opportunity received in the last 24 months from investment advisors retained by the board of a retirement system, pension fund or investment board.  

Finally, SB 1714 requires each consultant to disclose the following information to the board of a retirement system, pension fund or investment board beginning Jan. 1, 2018: any compensation or economic opportunity received in the last 24 months from an investment advisor that is recommended for selection by the consultant.  The consultant must make this disclosure prior to the board selecting an investment advisor for appointment.  Beginning Jan. 1, 2018, the board of a retirement system, pension fund or investment board is prohibited from awarding a contract, oral or written, for consulting services without first requiring the consultant to make these disclosures.

SB 1714 takes effect immediately upon becoming law.

Status:

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SB 1798
- No Investments in Expatriate Corporations
Sponsor(s): Senator Michael E. Hastings

Senate Amendment #1 to SB 1798 amends the General Provisions article of the Illinois Pension Code to authorize the state-funded retirement systems to use shareholder activism prior to divestment to impact the behavior of expatriated entities.  

An expatriated entity is defined as “a foreign incorporated entity which is treated as an inverted domestic corporation under subsection (b) of Section 835 of the Homeland Security Act of 2002, 6 U.S.C. 395(b), or any subsidiary of such an entity.”

By April 1, 2018, the Illinois Investment Policy Board must make its best efforts to identify all expatriated entities and include those companies in the list of restricted companies distributed to each retirement system and the state treasurer.

To the extent the retirement system believes that shareholder activism would be more impactful than divestment, the retirement system has the authority to engage with an expatriated entity prior to divesting from it.  Methods of shareholder activism utilized by the retirement system may include, but are not limited to, bringing shareholder resolutions and proxy voting on shareholder resolutions. The retirement system must report on its shareholder activism and the outcome of such efforts to the Illinois Investment Policy Board by April 1 of each year.  However, if the engagement efforts of the retirement system are unsuccessful, then it must adhere to the normal procedures for divestment.

If a company ceases activity that designates it as an expatriated entity, then it is removed from the list of restricted companies (and is not subject to shareholder activism or divestment), unless it resumes such activities.

Senate Amendment #2 to SB 1798 clarifies that if the retirement system determines that its engagement efforts with an expatriated entity are unsuccessful, then it must adhere to the normal procedures for divestment.

As introduced, SB 1798 amends the General Provisions article of the Illinois Pension Code to prohibit the state-funded retirement systems from investing in expatriate corporations.  

An expatriate corporation is defined as a foreign incorporated entity to which all of the following apply: (1) it is publicly traded in the United States; (2) it is incorporated in a foreign tax haven; (3) less than 10 percent of the gross income of the foreign entity is derived from activities in the tax haven; (4) less than 10 percent of the employees of the foreign entity are permanently located in the tax haven; and (5) either of the following applies:

  • The foreign entity was established in connection with a transaction or series of related transactions pursuant to which: (i) the foreign entity directly or indirectly acquired substantially all of the properties held by a domestic corporation or all of the properties constituting a trade or business of a domestic partnership or related foreign partnership; and (ii) immediately after the acquisition, more than 50 percent of the publicly traded stock, by vote or value, of the foreign entity is held by former shareholders of the domestic corporation or by former partners of the domestic partnership or related foreign partnership.  For purposes of item (ii), any stock sold in a public offering related to the transaction or a series of transactions is disregarded.
  • The foreign entity was established in connection with a transaction or series of related transactions pursuant to which (i) the foreign entity directly or indirectly acquired substantially all of the properties held by a domestic corporation or all of the properties constituting a trade or business of a domestic partnership or related foreign partnership and (ii) the acquiring foreign entity is more than 50 percent owned, by vote or value, by domestic shareholders or partners.

By April 1, 2018, the Illinois Investment Policy Board must make its best efforts to identify all expatriate corporations and include those companies in the list of restricted companies distributed to each retirement system for this purpose.  If a company ceases activity that designates it as an expatriate corporation, then it must be removed from the list of restricted companies, and is subject to investment by the state-funded retirement systems, unless it resumes such activities.

As introduced, SB 1798 is identical to House Bill 3419 of the 100th General Assembly.

SB 1798 takes effect in accordance with the Effective Date of Laws Act.

Status:

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SB 1801
- Supplemental Defined Contribution Plan
Sponsor(s): Senator William E. Brady

SB 1801 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System articles of the Illinois Pension Code.

SB 1801 requires the SURS Board of Trustees to establish and maintain a defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. The plan must be established within one year of the effective date of the legislation and must exist and serve in addition to other retirement, pension and benefit plans established under the Illinois Pension Code. All assets and income of the plan must be held in trust for the exclusive benefit of participants and their beneficiaries.

Each person who first became a participant of SURS before Jan. 1, 2011 (Tier I participants) and each person who first became a participant of SURS on or after Jan. 1, 2011 (Tier II participants) but prior to the creation of the supplemental defined contribution plan may voluntarily elect to enroll in the plan. Each person who becomes a Tier II participant after the creation of the supplemental defined contribution plan will be automatically enrolled in the plan at a contribution rate established by the Board, unless he or she opts out within 60 days after becoming a participant.

The supplemental defined contribution plan must be designed to enable participants to generate a stream of income to replace their pre-retirement income in retirement and must provide a variety of options for distributions to participants and their beneficiaries.

SB 1801 is identical to House Bill 3867 of the 100th General Assembly, as introduced.

SB 1801 takes effect immediately upon becoming law.

Status:

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SB 1820
- Partial and Full Accelerated Pension Benefit Payment Options
Sponsor(s): Senator Dan McConchie

SB 1820 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System and Judges Retirement System Articles of the Illinois Pension Code.

Accelerated Pension Benefit Payment

SB 1820 authorizes an eligible person to irrevocably elect to receive an accelerated pension benefit payment, beginning Jan. 1, 2018.  The accelerated pension benefit payment consists of a one-time lump-sum payment equal to 70 percent of the net present value of the eligible person’s pension benefits in lieu of receiving any pension benefit from SURS.  The accelerated pension benefit payment must be rolled into another retirement plan or account qualified under the Internal Revenue Code of 1986, as amended.  Upon receiving an accelerated pension benefit payment, a person’s credits and creditable service under SURS are terminated.  If the person subsequently returns to active service under SURS, then any benefits earned are based solely on the person’s credits and creditable service arising from the return to active service.  The accelerated pension benefit payment cannot be repaid to SURS, and the terminated credits and creditable service cannot be reinstated.  A person who accepts an accelerated pension benefit payment will still receive any applicable retiree health insurance benefits.

To be eligible for an accelerated pension benefit payment, a SURS member must have terminated service; met the age and service credit requirements for retirement; not have received a retirement annuity; not have a QILDRO in effect against him or her under SURS; not be a participant in the Self-Managed Plan; not have elected to receive a partial accelerated pension benefit payment; and have received counseling on asset management and the costs, benefits and risks of electing to receive the accelerated pension benefit payment in lieu of pension benefits.  

Partial Accelerated Pension Benefit Payment

SB 1820 authorizes an eligible person to make a written election to receive a partial accelerated pension benefit payment in exchange for a reduction in pension benefits, beginning Jan. 1, 2018.  In the written election, the eligible person must specify the percentage by which pension benefits are reduced.  However, an eligible person may not elect a percentage reduction of his or her pension benefits that would result in a partial accelerated pension benefit payment of less than $50,000. The partial accelerated pension benefit payment consists of a one-time lump-sum payment equal to 70 percent of the elected percentage of the net present value of the eligible person’s pension benefits.  A person who receives a partial accelerated pension benefit payment will have his or her pension benefits reduced by the percentage specified in the written election.  The percentage reduction in pension benefits cannot be modified after the partial accelerated pension benefit payment is received.  If a person who has received a partial accelerated pension benefit payment returns to active service, then any benefits earned must be reduced by the amount specified in the written election; the partial accelerated pension benefit payment may not be repaid to SURS; and the person is not eligible to elect or receive any additional partial accelerated pension benefit payment.

To be eligible for a partial accelerated pension benefit payment, a SURS member must have terminated service; met the age and service credit requirements for retirement; not have received a retirement annuity; not have a QILDRO in effect against him or her under SURS; not be a participant in the Self-Managed Plan; not have elected to receive an accelerated pension benefit payment; and have received counseling on asset management and the costs, benefits and risks of electing to receive a partial accelerated pension benefit payment in exchange for a reduction of pension benefits.

SB 1820 takes effect immediately upon becoming law.

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SB 2091
- No Investments in Businesses that Build a Border Wall
Sponsor(s): Senator Martin A. Sandoval

SB 2091 amends the General Provisions article of the Illinois Pension Code.

SB 2091 prohibits the state-funded retirement systems from investing in businesses that enter into a contract with the federal government for the purpose of building a wall along the border of Mexico and the United States of America. By May 1, 2017, the Illinois Investment Policy Board must make its best efforts to identify all companies that contract to build a border wall and include those companies in the list of restricted companies distributed to each retirement system for this purpose.

SB 2091 also makes similar changes under the Illinois Procurement Code.

SB 2091 is similar to House Bill 3061 of the 100th General Assembly, as introduced.

SB 2091 takes effect immediately upon becoming law.

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