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 4839
- Pension Reform
Sponsor(s): Representative Jeanne M. Ives

HB 4839 amends the General Provisions, General Assembly Retirement System, Illinois Municipal Retirement Fund, State Employees Retirement System, State Universities Retirement System, Teachers Retirement System, Judges Retirement System, and Reciprocal Retirement System articles of the Illinois Pension Code.  

Restrictions on Pensionable Earnings and Service Credit

HB 4839 prohibits payments for unused sick or vacation time from counting towards the final rate of earnings of individuals who first become participants in SURS on or after the effective date of the legislation.  HB 4839 also prohibits individuals who first become participants in SURS on or after the effective date of the legislation from receiving service credit for unused sick leave.

Employee Non-Participation in SURS

HB 4839 establishes that a person is not required to participate in SURS.  An active employee may terminate his or her participation in SURS (including active participation in the Tier III Plan, if applicable) by notifying SURS in writing.  An active employee terminating participation in SURS is entitled to a refund of his or her contributions (other than contributions to the Self-Managed Plan or the Tier III Plan) minus the benefits received prior to the termination of participation.

Tier III Defined Contribution Plan

HB 4839 requires SURS to prepare and implement a Tier III defined contribution plan by July 1, 2019.  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, 2019, 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.

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 an amount to cover the cost of any defined disability benefits offered under the defined contribution plan).   Tier III participants must have one year 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.

Accelerated Pension Benefit Payment Option

HB 4839 creates an accelerated pension benefit payment option.  Eligible SURS members may elect the accelerated pension benefit payment option between January 1, 2019, and July 1, 2019.  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, 2019, 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. 

Employer Funding Changes

HB 4839 ends the requirement that the employer pay the present value of the increase in benefits resulting from earnings increases above 6% during the final rate of earnings period to SURS.  Instead, HB 4839 provides that, beginning in fiscal year 2020, if a contract or collective bargaining agreement entered into, amended, or renewed on or after the effective date of the legislation provides for earnings to exceed the salaries provided under the preceding contract or collective bargaining agreement, then the employer must pay the current value of the projected amount of the resulting increase in benefits, reflecting whether the participants are Tier I or Tier II members, to SURS.  

Repeal of Public Act 100-0023

HB 4839 repeals many of the provisions of Public Act 100-0023, which created the Optional Hybrid Plan.  It does not repeal the provisions that became effective on July 6, 2017, which were: the Governor’s salary rule, the smoothing of the costs of any changes in actuarial assumptions, and the recertification of the FY 2018 state contribution.

Effective Date

HB 4839 takes effect immediately upon becoming law.

Status:

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HB 5013
- Downstate Police and Firefighters Investment Consolidation
Sponsor(s): Representative Ryan Spain

HB 5013 amends the General Provisions, Regulation of Public Pension Fund, Downstate Policemen’s Pension Fund and Downstate Firefighters’ Pension Fund articles of the Illinois Pension Code. It also adds two new articles to the Illinois Pension Code: the Downstate Police Pension Investment Board article and the Downstate Firefighter Pension Investment Board article.

HB 5013 increases the amount of the annual compliance fee paid by public pension funds and retirement systems (except for Downstate Police and Firefighters Pension Funds) to the Department of Insurance from $8,000 to $16,000. (For Downstate Police and Firefighters Pension Funds, the amount of the annual compliance fee is increased from two basis points to four basis points of the total assets of the pension fund, but not more than $16,000).

HB 5013 also extends laws governing penalties for non-compliance with the Illinois Pension Code to apply to any pension fund (currently, such laws only apply to any governmental unit) that is subject to any law establishing a pension fund or retirement system for the benefit of employees of the governmental unit. Specifically, HB 5013 provides that whenever the Public Pension Division of the Illinois Department of Insurance determines that the governing body or any elected or appointed official or official of a governmental unit has failed to comply with any provision of the Illinois Pension Code, then the director of the Illinois Department of Insurance must notify the governing body, officer, or official of the specific provisions of the law with which the person has failed to comply. Upon receiving such notice, the person must take immediate steps to comply with the provisions of law specified in the notice. If the person fails to comply within a reasonable time after receiving the notice, then the director may hold a hearing at which the person may show cause for noncompliance with the law. If upon hearing the director determines that good and sufficient cause for noncompliance has not been shown, the director may order the person to submit evidence of compliance within a specified period of not less than 30 days. If evidence of compliance has not been submitted to the director within the period of time prescribed in the order and no administrative appeal from the order has been initiated, then the director may assess a civil penalty of up to $2,000 against the governing body, officer, or official for each noncompliance with an order of the director. If a penalty is not paid within 30 days of the date of assessment, then the director must report the act of noncompliance to the Illinois attorney general, who is responsible for ensuring application is made to the circuit court of the county in which the governmental unit is located for enforcement of the penalty or for such additional relief as may be required.

HB 5013 takes effect immediately upon becoming law.

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HB 5028
- 50% of Hydraulic Fracturing Revenues to Fund Pensions
Sponsor(s): Representative Charles Meier

HB 5028 amends the Illinois Hydraulic Fracturing Tax Act.

HB 5028 provides that 50 percent of the moneys received from hydraulic fracturing must be paid into the Pension Relief Fund and must be used to make required employer contributions required to the State Employees Retirement System, State Universities Retirement System and Teachers Retirement System. The remaining 50 percent of moneys received from hydraulic fracturing must be paid into the General Revenue Fund. (Currently, 100 percent of the moneys received from hydraulic fracturing must be paid into the General Revenue Fund.)

HB 5028 takes effect in accordance with the Effective Date of Laws Act.

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HB 5138
- Governor’s Salary Rule Full-Time Equivalent Elimination
Sponsor(s): Representative Robert Martwick

HB 5138 amends the State Universities Retirement System and Teachers Retirement System articles of the Illinois Pension Code.

HB 5138 eliminates the requirement that the governor’s salary rule applies to a participant’s earnings as determined on a full-time equivalent basis. Under current law, if a participant’s earnings, as determined on a full-time equivalent basis, exceed the amount of salary set for the governor, then the participant’s employer must pay the employer normal cost on the portion of the participant’s earnings in excess of the governor’s salary to SURS or TRS (as applicable). HB 5138 provides that only the pensionable earnings received by the participant can be used when determining whether a participant’s earnings exceed the amount of salary set for the governor.

HB 5138 takes effect immediately upon becoming law.

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HB 5404
- Governor's Introduced FY 2019 Budget
Sponsor(s): Representative Jim Durkin

HB 5404 appropriates $1,554,498,000 for the annual required state contribution to SURS for fiscal year 2019. Of this amount, $1,414,498,000 is appropriated from the General Revenue Fund, and $140,000,000 is appropriated from the State Pensions Fund. The certified fiscal year 2019 state contribution to SURS is $1,655,154,000.

HB 5404 also appropriates $0 from the Education Assistance Fund for the state contribution to the College Insurance Program (“CIP”) for fiscal year 2019. The certified fiscal year 2019 state contribution to CIP is $4,390,811.

HB 5404 is identical to Senate Bill 3382 of the 100th General Assembly.

HB 5404 takes effect on July 1, 2018.

Status:

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HB 5472
- Accelerated Pension Benefit Payment Option
Sponsor(s): Representative Robert Martwick

HB 5472 amends the State Employees Retirement System, State Universities Retirement System and Teachers Retirement System articles of the Illinois Pension Code.

HB 5472 creates an accelerated pension benefit payment option for retirement-eligible Tier 1 members. Specifically, an eligible SURS member must: be a Tier 1 member (i.e., a person who first became a participant in SURS or a certain reciprocal retirement system before January 1, 2011); have submitted an application for a retirement annuity under SURS; meet the age and service credit requirements for retirement under SURS; not have received any retirement annuity from SURS; not be a participant in the Self-Managed Plan; and not have a QILDRO in effect against him or her under SURS. As soon as practical on or after the effective date of the legislation, SURS must calculate an accelerated pension benefit payment amount for each eligible person and offer him or her the opportunity to accept the Tier 2 automatic annual increase in retirement (the lesser of 3 percent or ½ of the percentage increase in CPI-U, simple interest, beginning on the January 1 occurring or after the later of age 67 or the first anniversary of retirement) in exchange for an accelerated pension benefit payment. The accelerated pension benefit payment is a lump-sum payment equal to 70 percent of the difference of the present value of the automatic annual increases on the Tier 1 member’s retirement annuity under the Tier 1 formula (i.e., 3 percent compounded annually, applied beginning on the January 1 occurring after retirement) and the present value of the automatic annual increases on the Tier 1 member’s retirement annuity under the Tier 2 formula (i.e., the lesser of 3 percent or ½ of the percentage increase in CPI-U, non-compounded, applied beginning on the January 1 occurring on or after the later of age 67 or the first anniversary of retirement). The accelerated pension benefit payment must be rolled into another retirement plan or account qualified under the Internal Revenue Code of 1986, as amended. If a Tier 1 member who has received an accelerated pension benefit payment subsequently returns to active service under SURS, then the calculation of any future automatic annual increase in retirement annuity must be calculated under the Tier 2 formula (i.e., the lesser of 3 percent or ½ of the percentage increase in CPI-U, non-compounded, applied beginning on the January 1 occurring on or after the later of age 67 or the first anniversary of retirement). The accelerated pension benefit payment cannot be repaid to SURS.

HB 5472 takes effect immediately upon becoming law.

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HB 5611
- Department of Innovation and Technology Act
Sponsor(s): Representative Jaime M. Andrade, Jr.

As they relate to SURS, HA #2 and HA #4 to HB 5611 are identical to the underlying legislation.

HB 5611 creates the Department of Innovation and Technology Act.

As it relates to SURS, HB 5611 provides that persons who were employed by the State Board of Higher Education in positions with the Illinois Century Network as of June 30, 2004 who remain continuously employed after that date by the Department of Central Management Services in positions with the Illinois Century Network, the Bureau of Communication and Computer Services, any successor bureau, or the Department of Innovation and Technology will continue to participate in SURS. This change reflects the statutory codification of the Department of Innovation and Technology under HB 5611.

HB 5611 takes effect immediately upon becoming law.

Status:

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HB 5674
- State-Funded Retirement Systems Annuitant Database
Sponsor(s): Representative Grant Wehrli

HB 5674 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 5674 requires each state-funded retirement system, by July 1, 2019, to establish and post on its website a searchable database of the names of all persons receiving an annuity from the System and the amount of the annuity paid by the System to that person each month. Each System’s database must be updated on a monthly basis. No database can include the name of an annuitant under the age of 18 nor any identifying information other than the annuitant’s name and the amount of the annuity paid to him or her each month.

HB 5674 takes effect immediately upon becoming law.

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HB 5850
- No Investments in Ford Motor Company
Sponsor(s): Representative Mary E. Flowers

HB 5850 amends the General Provisions article of the Illinois Pension Code.

HB 5850 prohibits the state-funded retirement systems from investing in Ford Motor Company and its subsidiaries. By July 1, 2019, the Illinois Investment Policy Board must make its best efforts to identify all subsidiaries of the Ford Motor Company and include those companies in the list of restricted companies distributed to each retirement system for this purpose.

HB 5850 takes effect in accordance with the Effective Date of Laws Act.

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HJR 106
- Oppose Tax on Retirement Income
Sponsor(s): Representative David McSweeney

HR 106 resolves that the House of Representatives and Senate of the state of Illinois believe that the Illinois Income Tax Act should not be amended to permit taxing retirement income.

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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.

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HJRCA 44
- No Tax on Retirement Income
Sponsor(s): Representative Allen Skillicorn

HJRCA 44 amends Article 9, Section 3 of the Illinois Constitution to prohibit the taxation of retirement income by the state of Illinois. It defines “retirement income” as income derived from a pension or any other retirement plan. (Under current law, retirement income is deducted from income that is taxed by the state of Illinois.)

HJRCA 44 takes effect upon being declared adopted in accordance with Section 7 of the Illinois Constitutional Amendment Act.

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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.

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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.

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

House Amendment #1 to HR 38 resolves that the normal cost of pensions for Illinois educators is the responsibility of the State and that the current budget crisis should not be used as a reason to shift the financial responsibility for State pension costs to local taxpayers.

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.

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