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

House Amendment #1 to 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 3-year period beginning in the State Fiscal Year in which the actuarial change first applies or Fiscal Year 2018, whichever is later. The State contribution must be recertified for Fiscal Year 2018.

As introduced, 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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HB 3055
- Tax on Retirement Income
Sponsor(s): Representative David Harris

HB 3055 amends the Illinois Income Tax Act.

HB 3055 taxes retirement income in excess of $75,000 if the taxpayer is younger than 65 years of age during the taxable year and retirement income in excess of $100,000 if the taxpayer is 65 years of age or older during the taxable year (including the taxable year in which the taxpayer turns 65 years of age).

HB 3055 is similar to House Bill 3140 of the 100th General Assembly.

Status:

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HB 3061
- No Investments in Companies that Build a Border Wall
Sponsor(s): Representative Will Guzzardi

HB 3061 amends the General Provisions article of the Illinois Pension Code.

HB 3061 prohibits the state-funded retirement systems from investing in companies that contract to build a border wall. “Contracting to build a border wall” is defined as entering into a contract with the federal government for construction pursuant to Section 4 of Executive Order 13767 of the president of the United States. By July 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.

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

HB 3061 takes effect immediately upon becoming law.

Status:

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HB 3069
- Alternative Retirement Plan - Local Control of Benefits
Sponsor(s): Representative Thomas Morrison

HB 3069 amends the 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 Universities Retirement System, Teachers Retirement System, and Chicago Teachers Retirement System articles of the Illinois Pension Code.

HB 3069 authorizes the board of trustees of a community college district that is an employer covered under SURS to provide an alternative retirement plan, either in addition to or in lieu of the existing retirement plans under SURS, for its eligible new employees. The alternative retirement plan applies only to persons who have not participated in the existing plans under SURS. Participants in an alternative retirement plan are deemed to be participants in SURS.

The alternative retirement plan may include a defined benefit component, defined contribution component, or both, and may include disability or survivor benefits and any other benefits that are permitted under federal law. The alternative retirement plan is not required to provide any minimum level of benefits and does not need to provide any benefits at all, other than mandatory Social Security coverage if applicable. Service credit under the alternative retirement plan cannot be transferred to any other pension fund or retirement system and cannot be used under the Retirement Systems Reciprocal Act. The alternative retirement plan does not need to comply with any mandatory provisions of the existing retirement plans.

Providing an alternative retirement plan does not release the community college district from the obligation of continuing to participate in SURS with regard to participants in the existing retirement plans. The alternative retirement plan provided by the community college district must be funded with contributions from that community college district and its employees who participate in the alternate retirement plan. In no event may the community college district in any way diminish or impair the rights or benefits of participants in the existing retirement plan.

HB 3069 is identical to House Bill 669 of the 100th General Assembly, as introduced.

HB 3069 takes effect in accordance with the Effective Date of Laws Act.

Status:

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HB 3140
- Tax on Retirement Income
Sponsor(s): Representative David Harris

HB 3140 amends the Illinois Income Tax Act.

HB 3140 taxes retirement income in excess of $80,000 if the taxpayer is younger than 65 years of age during the taxable year and retirement income in excess of $100,000 if the taxpayer is 65 years of age or older during the taxable year (including the taxable year in which the taxpayer turns 65 years of age).

HB 3140 is similar to House Bill 3055 of the 100th General Assembly.

HB 3140 takes effect immediately upon becoming law.

Status:

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HB 3175
- Employers Pay Present Value of Salary Increases above CPI-U
Sponsor(s): Representative Nick Sauer

HB 3175 amends the State Universities Retirement System and Teachers Retirement System Articles of the Illinois Pension Code.

HB 3175 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 3175 is identical to House Bill 671 of the 100th General Assembly, as introduced.

HB 3175 takes effect immediately upon becoming law.

Status:

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HB 3258
- Retiree Health Insurance Benefits Without Annuity
Sponsor(s): Representative Sara Wojcicki Jimenez

HB 3258 amends the State Employees Group Insurance Act of 1971 to allow members of the Portable Defined Benefit Plan and the Self-Managed Plan who take lump-sum distributions of their retirement benefits to receive retiree health insurance benefits. Under current law, members of the Portable Defined Benefit Plan and the Self-Managed Plan must annuitize their retirement benefits to receive retiree health insurance benefits.

HB 3258 takes effect immediately upon becoming law.

Status:

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HB 3419
- No Investments in Expatriated Entities
Sponsor(s): Representative Jaime M. Andrade, Jr. and Senator Michael E. Hastings

HB 3419 prohibits the state-funded retirement systems from investing in 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.

HB 3419 takes effect in accordance with the Effective Date of Laws Act.

Became Public Act 100-0551 effective January 1, 2018.

Status:

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HB 3475
- 30-Year Rolling Discount Rate
Sponsor(s): Representative Peter Breen

HB 3475 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 3745 requires the discount rate to be the actual 30-year rolling rate of return experienced by the System, beginning in fiscal year 2019.

HB 3475 takes effect immediately upon becoming law.

Status:

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HB 3867
- Supplemental Defined Contribution Plan
Sponsor(s): Representative Thomas Morrison

HB 3867 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 3867 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.

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

HB 3867 takes effect immediately upon becoming law.

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