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.

House

HB 0299
- Return-to-Work Law for Affected Annuitants – Exemption
Sponsor(s): Representative Carol Ammons

HB 299 amends the State Universities Retirement System Article of the Illinois Pension Code to allow retirees who became affected annuitants between Aug. 1, 2013, and June 30, 2015, and who receive annualized retirement annuities of less than $10,000 to return to work with a SURS-covered employer without the employer having to pay a contribution to SURS.

Public Act 97-968 created the return-to-work law for affected annuitants, effective Aug. 1, 2013. The law requires a SURS-covered employer to pay a contribution to SURS upon hiring a SURS affected annuitant. A SURS retiree becomes an affected annuitant on the first day of an academic year following the academic year in which the retiree receives compensation from a SURS-covered employer exceeding 40 percent of his or her highest annual earnings prior to retirement. The amount of the employer contribution equals the retiree’s annualized retirement annuity.

Public Act 98-1144 created an exemption to this law to allow SURS-covered employers to avoid paying the employer contribution for SURS retirees who receive annualized retirement annuities of less than $10,000. However, this exemption became effective on July 1, 2015; it does not apply to SURS retirees with annualized retirement annuities of less than $10,000 who became affected annuitants between August 1, 2013, and June 30, 2015. HB 299 applies the exemption created by Public Act 98-144 to this group of affected annuitants. It ensures that SURS-covered employers who hire SURS retirees with annualized retirement annuities of less than $10,000 do not have to make the employer contribution to SURS.

HB 299 takes effect immediately upon becoming law.

Status:

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HB 0315
- Accelerated Pension Benefit Payment Option
Sponsor(s): Representative Mark Batinick

HB 315 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.

HB 315 applies to a SURS member who terminates service, meets the service credit requirements for retirement, has not received a retirement annuity from SURS, does not have a QILDRO in effect against him or her under SURS and is not a participant in the Self-Managed Plan. HB 315 does not apply to retirees.

HB 315 requires SURS to calculate the net present value of pension benefits for each eligible person by Jan. 1, 2018. SURS must offer each eligible person the opportunity to irrevocably elect to receive an accelerated pension benefit payment equal to 70 percent of the net present value of his or her pension benefits in lieu of receiving any pension benefit from SURS. The accelerated pension benefit payment must be rolled over into another retirement plan or account qualified under the Internal Revenue Code of 1986, as amended. Eligible members have between Jan. 1, 2018, and July 1, 2018, to irrevocably elect to receive an accelerated pension benefit payment in lieu of receiving any pension benefit from SURS. Eligible members who irrevocably elect to receive an accelerated pension benefit payment in lieu of receiving any pension benefit from SURS will still receive any applicable retiree health insurance benefits.

Once the eligible member receives an accelerated pension benefit payment from SURS, all credits and creditable service under SURS are terminated. If the member subsequently returns to active service under SURS, then any subsequent pension benefits are based on the credits and creditable service accrued after the return to active service. The accelerated pension benefit payment cannot be repaid to SURS and previously terminated credits and creditable service cannot be reinstated under SURS.

HB 315 takes effect immediately upon becoming law.

Status:

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HB 0350
- Survivors Felony Forfeiture
Sponsor(s): Representative David McSweeney

HB 350 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.

HB 350 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. HB 350 applies to the survivors of individuals who first become participants in SURS after the effective date of the legislation.

HB 350 is identical to Senate Bill 896 of the 100th General Assembly, as introduced.

HB 350 takes effect immediately upon becoming law.

Status:

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HB 0368
- SURS Administrative and Technical Changes
Sponsor(s): Representative Elaine Nekritz

House Amendment #1 to HB 368 reinserts the original language of the legislation but changes the wording of item (4) under Section 15-168.1 so that it is identical to the corresponding language in the Teachers Retirement System and Chicago Teachers Pension Fund articles of the Illinois Pension Code.

HB 368 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:

HB 368 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:

HB 368 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.

HB 368 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.

HB 368 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.

HB 368 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.

HB 368 corrects the definition of “service” to reflect the enactment of Public Act 99-0897.

HB 368 takes effect immediately upon becoming law.

Status:

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HB 0436
- Tier III Defined Contribution Plan
Sponsor(s): Representative Jeanne M. Ives

HB 436 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.

HB 436 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. Tier III participants may also 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 3 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.

HB 436 prohibits payments for unused sick or vacation time from counting towards the pensionable earnings of individuals who first become participants of SURS on or after the effective date of the legislation. Additionally, HB 436 prohibits unused, unpaid sick time from counting towards the service credit of individuals who first become participants of SURS on or after the effective date of the legislation.

Finally, HB 436 establishes that a person is not required to participate in SURS. HB 436 allows an employee to terminate his or her participation in SURS by notifying the System in writing. Such person is entitled to a refund of his or her contributions (other than contributions to the Self-Managed Plan or the Tier III defined contribution plan) minus the benefits received prior to the termination of participation in SURS.

HB 436 takes effect immediately upon becoming law.

Status:

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HB 0445
- Tier III Defined Contribution Plan
Sponsor(s): Representative Jeanne M. Ives

HB 445 is identical to House Bill 436 of the 100th General Assembly, as introduced, with the following three differences: HB 445 does not contain language prohibiting payments for unused sick or vacation time from counting towards the pensionable earnings of individuals who first become participants of SURS on or after the effective date of the legislation; HB 445 does not contain language prohibiting unused, unpaid sick time from counting towards the service credit of individuals who first become participants of SURS on or after the effective date of the legislation; and HB 445 establishes the intent of the Tier III defined contribution plan to supersede the defined contribution plan created by Public Act 98-599 (which became inoperative under law when Public Act 98-599 was ruled unconstitutional by the Illinois Supreme Court on May 8, 2015.)

HB 445 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.

HB 445 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2018. Tier I members and Tier II members may make a voluntary, irrevocable election to become Tier III members, stopping participation in the defined benefit plan and starting participation in the defined contribution plan for future service. Tier III members may also 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.

Finally, HB 445 establishes that a person is not required to participate in SURS. HB 445 allows an employee to terminate his or her participation in SURS by notifying the System in writing. Such person is entitled to a refund of his or her contributions (other than contributions to the Self-Managed Plan, the defined contribution plan created by Public Act 98-599 or the Tier III defined contribution plan) minus the benefits received prior to the termination of participation in SURS.

HB 445 takes effect immediately upon becoming law.

Status:

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HB 0671
- Employers Pay Present Value of Salary Increases above CPI-U
Sponsor(s): Representative Thomas Morrison

HB 671 amends the State Universities Retirement System and Teachers Retirement System Articles of the Illinois Pension Code.

HB 671 provides that, for academic years beginning on or after July 1, 2017, if a participant’s earnings exceed the amount of his or her earnings with the same employer for the previous academic year by more than the increase in CPI-U for any year during the final rate of earnings period, then the employer must pay the present value of the resulting increase in benefits to SURS. Earnings increases under contracts or collective bargaining agreements entered into, amended, or renewed before the effective date of the legislation are exempt from this requirement.

Under current law, if a participant’s earnings exceed the amount of his or her earnings with the same employer for the previous academic year by more than 6 percent for any year during the final rate of earnings period, then the participant’s employer must pay the present value of the resulting increase in benefits to SURS.

HB 671 takes effect immediately upon becoming law.

Status:

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HB 0775
- Climate Change Risk Minimization Policy
Sponsor(s): Representative Camille Y. Lilly

HB 775 amends the General Provisions Article of the Illinois Pension Code.

HB 775 requires each pension fund and retirement system (except for downstate policemen’s and firefighters’ pension funds) to develop a climate change risk minimization policy by December 31, 2018. The National Association of Insurance Commissioners’ Insurer Climate Risk Disclosure Survey must be used as a model for the initial development of the policy. The policy must consider the scope of the financial risk and impact of climate related events, including, but not limited to, severe drought, coastal flooding, and intense hurricanes, on the holdings of the retirement system. Data from insurance company projections, the United Nations Framework Convention on Climate Change, and the United States Environmental Protection Agency must be used to make long-term projections on the climate and the potential long-term financial impact to the holdings of the retirement system from increased climate change.

If the retirement system determines that increasing climate change poses a significant financial risk to the long-term value of the retirement system, then the system may develop a policy on voting for shareholder resolutions and directors to advance corporate policies that minimize the long-term risk to the system’s assets from increased climate change.

The policy must be updated annually and published on the retirement system’s website. Previous versions of the policy must remain on the website for a period of 5 years.

HB 775 takes effect immediately upon becoming law.

Status:

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HB 2405
- Tier III Defined Contribution Plan
Sponsor(s): Representative Jeanne M. Ives

HB 2405 is identical to HB 436 of the 100th General Assembly, as introduced, with the following difference: HB 2405 requires all persons who first become participants in SURS on or after July 1, 2018, to participate in the Tier III defined contribution plan.

HB 2405 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.

HB 2405 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.

HB 2405 prohibits payments for unused sick or vacation time from counting towards the pensionable earnings of individuals who first become participants of SURS on or after the effective date of the legislation. Additionally, HB 2405 prohibits unused, unpaid sick time from counting towards the service credit of individuals who first become participants of SURS on or after the effective date of the legislation.

Finally, HB 2405 establishes that a person is not required to participate in SURS. HB 2405 allows an employee to terminate his or her participation in SURS by notifying the System in writing. Such person is entitled to a refund of his or her contributions (other than contributions to the Self-Managed Plan or the Tier III defined contribution plan) minus the benefits received prior to the termination of participation in SURS.

HB 2405 takes effect immediately upon becoming law.

Status:

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HB 2491
- QILDRO Calculations
Sponsor(s): Representative Thomas M. Bennett

HB 2491 amends the Qualified Illinois Domestic Relations Orders (QILDROs) section of the General Provisions article of the Illinois Pension Code.

HB 2491 establishes that, for a QILDRO issued after January 1, 2018, the member’s salary on the date the QILDRO was issued is the salary that must be used to calculate the amount of the benefit under the QILDRO.

HB 2491 takes effect immediately upon becoming law.

Status:

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HB 2707
- Smoothing of Changes in Actuarial Assumptions
Sponsor(s): Representative Grant Wehrli

HB 2707 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.

HB 2707 requires any change in the actuarial assumptions that increases or decreases the required State contribution, including a change in assumed investment returns or mortality rates, that first applies in State Fiscal Year 2016 or thereafter, to be phased-in over a 5-year period beginning in the State Fiscal Year in which the actuarial change first applies or Fiscal Year 2018, whichever is later.

HB 2707 also requires recertification of the State contribution for Fiscal Year 2018.

HB 2707 takes effect immediately upon becoming law.

Status:

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HB 2758
- Overtime Pay Not Included in Pensions
Sponsor(s): Representative Joe Sosnowski

HB 2758 amends the General Provisions article of the Illinois Pension Code.

HB 2758 prohibits pay to a participant in any pension fund or retirement system under the Illinois Pension Code for overtime performed on or after July 1, 2017, from being considered as pensionable salary, earnings or compensation.

HB 2758 takes effect in accordance with the effective date of laws act.

Status:

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HB 2759
- Pension Suspended During Reemployment
Sponsor(s): Representative Joe Sosnowski

HB 2759 amends the General Provisions article of the Illinois Pension Code.

HB 2759 provides that a retirement annuity must be suspended during employment for any person who first becomes a member or participant of a pension fund or retirement system on or after Jan. 1, 2018, is receiving a retirement annuity under that system or fund, and becomes a member or participant under any other system or fund based on full-time employment. Upon termination of employment, such person’s retirement annuity resumes and may be recalculated if applicable.

HB 2759 takes effect immediately upon becoming law.

Status:

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HB 2760
- Self-Managed Plan Transfers to In-Plan Roth Accounts
Sponsor(s): Representative Joe Sosnowski

HB 2760 amends the State Universities Retirement System article of the Illinois Pension Code.

HB 2760 requires all employees under the Self-Managed Plan to be provided options to establish, contribute to, and transfer any guaranteed or vested portion of their accounts, on any day, into qualified in-plan Roth accounts, without distribution.

HB 2760 takes effect immediately upon becoming law.

Status:

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HB 2902
- Pension Buyout Act + SURS Tier III
Sponsor(s): Representative Mike Fortner

HB 2902 creates the Pension Buyout Act and amends the State Universities Retirement System and Teachers Retirement System articles of the Illinois Pension Code.

Pension Buyout Option

HB 2902 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.  A pension buyout option is a plan that authorizes an eligible retiree to relinquish all service credit, rights and benefits under SURS in exchange for a lump-sum payment equal to the present value of his or her retirement annuity.  An eligible retiree may elect to receive a pension buyout payment at any time after he or she has elected to retire and has terminated service.  An eligible retiree who receives a pension buyout payment will still receive any applicable retiree health insurance benefits.

An eligible retiree is a person who has elected to receive a retirement annuity, is eligible to receive a retirement annuity, has terminated service, is not subject to a QILDRO under SURS, is not a participant in the Self-Managed Plan or the Tier III plan, and has received a minimum amount of certified financial planning services, at no cost to the eligible retiree.

Tier III Plan

HB 2902 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2018.  Active Tier I and Tier II members may voluntarily, irrevocably elect to stop accruing benefits in the defined benefit plan and start accruing benefits for future service in the Tier III plan.  A participant in the Tier III plan pays employee contributions 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. An employer is not required to make employer contributions to the Tier III plan, but if the employer elects to contribute, then the rate of the employer contributions must be equal to the rate of the individual employee’s contributions.  The Tier III plan will require five years of participation to vest in the employer contributions.  Failure to vest will result in the forfeiture of the employer contributions and the earnings thereon.  The Tier III plan must provide a variety of options for investments and a variety of options for payouts to participants who are no longer active in SURS and their survivors.  Tier III participants will still receive any applicable retiree health insurance benefits.

HB 2902 allows a Tier I or Tier II member who elects to participate in the Tier III plan to irrevocably elect to terminate all participation in the defined benefit plan.  Upon that election, SURS must transfer an amount equal to the contribution refund, including regular interest for the respective years, into the member’s individual account.  

HB 2902 takes effect immediately upon becoming law.

Status:

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HB 2903
- Pension Buyout Act + SURS Tier III
Sponsor(s): Representative Mike Fortner

HB 2903 creates the Pension Buyout Act and amends the State Universities Retirement System and Teachers Retirement System articles of the Illinois Pension Code.

Pension Buyout Option

HB 2903 authorizes the Illinois Department of Central Management Services to enter into contracts with approved vendors to provide lump-sum payments to eligible persons pursuant to a pension buyout option.  A pension buyout option is a plan that authorizes an eligible person to relinquish all service credit, rights and benefits under SURS in exchange for a lump-sum payment equal to the present value of his or her retirement annuity.  An eligible person may elect to receive a pension buyout payment at any time after he or she has terminated service.  An eligible person who receives a pension buyout payment will still receive any applicable retiree health insurance benefits.

An eligible person is a person who has accrued the service credit necessary to receive a retirement annuity; has not received a retirement annuity; has terminated service; is not subject to a QILDRO under SURS; is not a participant in the Self-Managed Plan or the Tier III Plan; and has received a minimum amount of certified financial planning services provided by the approved vendor, at no cost to the eligible person.

Tier III Plan

HB 2903 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2018.  Active Tier I and Tier II members may voluntarily, irrevocably elect to stop accruing benefits in the defined benefit plan and start accruing benefits for future service in the Tier III plan.  A participant in the Tier III plan pays employee contributions 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.  An employer is not required to make employer contributions to the Tier III plan, but if the employer elects to contribute, then the rate of the employer contributions must be equal to the rate of the individual employee’s contributions.  The Tier III plan will require five years of participation to vest in the employer contributions.  Failure to vest will result in the forfeiture of the employer contributions and the earnings thereon.  The Tier III plan must provide a variety of options for investments and a variety of options for payouts to participants who are no longer active in SURS and their survivors.  Tier III participants will still receive any applicable retiree health insurance benefits.

HB 2903 allows a Tier I or Tier II member who elects to participate in the Tier III plan to irrevocably elect to terminate all participation in the defined benefit plan.  Upon that election, SURS must transfer an amount equal to the contribution refund, including regular interest for the respective years, into the member’s individual account.  

As it relates to SURS, HB 2903 is identical to House Bill 2902 with the following difference: HB 2903 allows eligible persons (instead of eligible retirees) to elect the pension buyout option.

HB 2903 takes effect immediately upon becoming law.

Status:

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HJRCA 18
- Repeal Pension Rights
Sponsor(s): Representative Joe Sosnowski

HJRCA 18 repeals Article 13, Section 5 of the Illinois Constitution (commonly referred to as the Pension Protection Clause). Article 13, Section 5 of the Illinois Constitution states: “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

HJRCA 18 takes effect upon being declared adopted in accordance with Section 7 of the Illinois Constitutional Amendment Act.

Status:

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HR 0027
- Oppose Pension Cost Shift to Local Employers
Sponsor(s): Representative David McSweeney

HR 27 resolves that the Illinois House of Representatives believes that an educational pension cost shift is financially wrong and would only serve to shift pension burdens from the state to the status of an unfunded mandate.

Status:

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HR 0029
- Oppose Tax on Retirement Income
Sponsor(s): Representative David McSweeney

HR 29 resolves that the Illinois House of Representatives believes that the Illinois Income Tax Act should not be amended to permit taxing retirement income.

Status:

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HR 0038
- Oppose Pension Cost Shift to Local Employers
Sponsor(s): Representative Allen Skillicorn

HR 38 resolves that the normal cost of pensions for Illinois educators is the responsibility of the state and the General Assembly should not use the current budget crisis as a reason to shift its financial responsibility for state pension costs to local taxpayers.

Status:

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HR 0076
- Urge Repeal of Federal Government Pension Offset and Windfall Elimination Provision
Sponsor(s): Representative Mary E. Flowers

HR 76 resolves that the Illinois House of Representatives urges the U.S. Congress to introduce and pass legislation that eliminates both the Government Pension Offset and the Windfall Elimination Provision.

HR 76 further resolves that suitable copies of the resolution be delivered to President Donald Trump, U.S. Senate Majority Leader Mitch McConnell, U.S. Senate Minority Leader Chuck Schumer, U.S. Speaker of the House Paul Ryan, U.S. House of Representatives Minority Leader Nancy Pelosi, and all members of the Illinois Congressional Delegation.

Status:

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Senate

SB 0011
- Pension Reform
Sponsor(s): Senator John J. Cullerton

***Senate Bill 11 was called for a vote on Feb. 8, 2017.  It received 18 “yes” votes, 29 “no” votes and 10 “present” votes.  It needed 30 “yes” votes to pass the Senate.***

SB 11 amends the General Assembly Retirement System, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System, Chicago Teachers Retirement System and Judges Retirement System Articles of the Illinois Pension Code.  (The changes to the State Employees Retirement System pertain to state funding and an accelerated pension benefit payment option, and the changes to the Judges Retirement System Article only pertain to state funding.)

Benefit Changes

SB 11 requires each Tier I employee (i.e., each employee who first became a participant of SURS before Jan. 1, 2011, and who is not in the Self-Managed Plan) to elect one of two options:

(1)  To accept a reduced and delayed automatic annual increase in retirement (the lesser of 3 percent or ½ of the increase in CPI-U, non-compounded, beginning the January on or after the earlier of age 67 or five years after retirement); or

(2)  To keep the current Tier I automatic annual increase in retirement (3 percent compounded, beginning the January after retirement).

Each Tier I employee who elects to accept the reduced and delayed automatic annual increase in retirement will: receive a payment of 10 percent of his or her employee contributions made before the effective date of the election (which will not count towards his or her pension); pay reduced employee contributions moving forward (7.2 percent for regular employees and 8.55 percent for public safety employees); and have his or her future earnings increases count towards his or her pension.

Each Tier I employee who elects to keep the current Tier I automatic annual increase in retirement will not have his or her future earnings increases count towards his or her pension.

Generally, the election for Tier I employees will occur between Jan. 1, 2018, and March 31, 2018, and will become effective on July 1, 2018.  A Tier I employee who fails to make an election within the required time period is deemed to have chosen to keep the current Tier I automatic annual increase in retirement.

Retirees, Tier II employees (i.e., employees who first became participants of SURS on or after Jan. 1, 2011), and employees in the Self-Managed Plan are not required to make an election.

SB 11 creates an accelerated pension benefit payment option for the first 10 percent of eligible SURS members each year.  An eligible SURS member is a person who has terminated service; has accrued the necessary service credit for retirement; has not received a retirement annuity from SURS; does not have a QILDRO in effect against him or her under SURS; and is not a participant in the Self-Managed Plan.  By January 1, 2018, and annually thereafter, SURS must calculate the net present value of pension benefits for each eligible person.  SURS must offer each eligible person the opportunity to irrevocably elect to receive an accelerated pension benefit payment equal to 70 percent of the net present value of his or her 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 receipt of an accelerated pension benefit payment, credits and creditable service under SURS are terminated.  If the member subsequently returns to active service under SURS, then any subsequent pension benefits are based on the credits and creditable service accrued after the return to active service.  The accelerated pension benefit payment cannot be repaid to SURS and previously terminated credits and creditable service cannot be reinstated under SURS.  A SURS member who receives an accelerated pension benefit payment will still receive any applicable retiree health insurance benefits.

SB 11 requires SURS to provide a voluntary defined contribution plan for up to 5 percent of Tier I employees by July 1, 2018.  Under the defined contribution plan, a Tier 1 employee could elect to stop accruing benefits in the defined benefit plan and start accruing benefits for future service in the defined contribution plan.  Participants in the defined contribution plan pay employee contributions at the same rate as other participants in SURS.  State contributions to the defined contribution plan are made at a uniform rate, no higher than the employer’s normal cost for Tier 1 employees in the defined benefit plan for that year and no lower than 3 percent of earnings. The rate of state contributions to the defined contribution plan is adjusted annually.  The defined contribution plan requires five years of service in order for the participant to vest in state contributions.  Failure to vest in state contributions results in the forfeiture of state contributions and any earnings on the state contributions. The defined contribution plan must provide a variety of options for investments and a variety of options for payouts to retirees and their survivors.

State Funding Changes

SB 11 makes three changes to the funding formula for SURS:  First, it requires the state contribution for fiscal year 2018 through fiscal year 2045 to be based on total payroll (which includes payroll that is not pensionable), but excluding payroll attributable to participants in the voluntary defined contribution plan.  Second, beginning in fiscal year 2018, it requires any increases or decreases attributable to changes in the System’s actuarial and investment assumptions to be phased-in over a five-year period.  Third, it requires the fiscal year 2018 and fiscal year 2019 state contributions to be recertified based on changes made by the legislation.

Employer Funding Changes
 
SB 11 provides that, for academic years beginning on or after July 1, 2018, if a participant’s earnings exceed the amount of his or her earnings with the same employer for the previous academic year by more than the increase in CPI-U for any year during the final rate of earnings period, then the employer must pay the present value of the resulting increase in benefits to SURS.  Earnings increases under contracts or collective bargaining agreements entered into, amended or renewed before the effective date of the legislation are excluded from this provision.  (Current law provides that if a participant’s earnings exceed the amount of his or her earnings with the same employer for the previous academic year by more than 6 percent during the final rate of earnings period, then the employer must pay the present value of the resulting increase in benefits to SURS.)

Additionally, for academic years beginning on or after July 1, 2018, if a participant’s earnings exceed $140,000, then the employer must pay a contribution to SURS for the portion of earnings in excess of that amount.

SB 11 takes effect immediately upon becoming law, but it does not take effect unless Senate Bills 1-10 and 12-13 of the 100th General Assembly also become law.

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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.

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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.

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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.

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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 claw-back 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 new agreements after January 1, 2018.

SB 779 takes effect immediately upon becoming law.

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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.

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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.

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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.

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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 takes effect immediately upon becoming law.

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SR 0113
- Oppose Tax on Retirement Income
Sponsor(s): Senator Thomas Cullerton

SR 113 resolves that the Illinois Senate believes that the Illinois Income Tax Act should not be amended to permit taxing retirement income.

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