Legislation 100th General Assembly (2017-2018)

House

HB 0109
- Fiscal Year 2019 Budget
Sponsor(s): Representative Gregory Harris and Senator John J. Cullerton

HB 109 appropriates $1,585,109,800 for the annual required state contribution to SURS for fiscal year 2019.  Of this amount, $1,370,109,800 is appropriated from the General Revenue Fund, and $215,000,000 is appropriated from the State Pensions Fund.  The certified Fiscal Year 2019 state contribution to SURS is $1,655,154,000.

HB 109 also appropriates $4,390,811 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.

As it relates to SURS, HB 109 is identical to HA #1 to HB 860 of the 100th General Assembly.

HB 109 takes effect on July 1, 2018.

Became Public Act 100-0586 effective June 4, 2018

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HB 0299
- Return-to-Work Law for Affected Annuitants + SURS Technical and Administrative Changes
Sponsor(s): Representative Carol Ammons and Senator Daniel Biss

Return to Work Law for Affected Annuitants:

HB 299 allows SURS retirees who became affected annuitants between August 1, 2013, and May 31, 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 August 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 June 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 May 31, 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.

SURS Technical and Administrative Changes:

HB 299 also enhances the efficient administration of SURS by making one substantive change and five technical changes.

Substantive Change:

HB 299 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 299 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 299 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 299 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 299 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 299 corrects the definition of “service” to reflect the enactment of Public Act 99-0897. 

HB 299 takes effect immediately upon becoming law.

Became Public Act 100-0556 effective December 8, 2017.

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HB 0350
- Survivors Felony Forfeiture
Sponsor(s): Representative David McSweeney and Senator Pamela J. Althoff

HB 350 prohibits any benefits from being paid to a person who is convicted of a felony relating to, arising out of, or in connection with a person’s service as an employee under SURS.  This change applies to individuals who first become participants in SURS on or after the effective date of the legislation.  

HB 350 makes similar changes under the General Assembly Retirement System, Downstate Policemen’s Pension Funds, Downstate Firefighters’ Pension Funds, 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, Teachers Retirement System, Chicago Teachers Pension Fund, and Judges Retirement System.

HB 350 takes effect immediately upon becoming law.

Became Public Act 100-0334 effective August 25, 2017.

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HB 3342
- FY 2019 Budget Implementation
Sponsor(s): Representative Gregory Harris and Senator Heather A. Steans

HB 3342 creates the FY2019 Budget Implementation Act.  It authorizes the use of money in the State Pensions Fund as part of the annual required state contribution to SURS for FY 2019. It also amends the State Employees’ Retirement System, State Universities Retirement System and Teachers’ Retirement System articles of the Illinois Pension Code to provide two types of accelerated pension benefit payment options under each System: (1) an accelerated pension benefit payment in lieu of a pension benefit for vested inactives and (2) an accelerated pension benefit payment for Tier I members who accept a reduced and delayed automatic annual increase in retirement annuities and survivors annuities. The SURS Board of Trustees must establish an implementation date for each accelerated pension benefit payment option by board resolution.  The board must endeavor to make the options available as soon as possible after the effective date of the legislation.  The SURS Board of Trustees must adopt any rules, including emergency rules, necessary to implement the accelerated pension benefit payments.  

Accelerated Pension Benefit Payment In Lieu Of Pension Benefit for Vested Inactives

Beginning on the implementation date established by the SURS Board of Trustees, SURS must offer each eligible person the opportunity to irrevocably elect to receive an amount determined by SURS to be equal to 60 percent of the present value of his or her pension benefits in lieu of receiving any pension benefit from SURS. The term “pension benefit” means the benefits under SURS, or the General Provisions Article of the Illinois Pension Code as it relates to the benefits under SURS, including any anticipated annual increases, that an eligible person is entitled to upon attainment of the applicable retirement age.  It also includes any applicable survivors benefits, disability benefits or disability retirement annuity benefits.

SURS must calculate, using actuarial tables and other assumptions adopted by the SURS Board of Trustees, the present value of pension benefits for each eligible person upon his or her request in writing to the System.  SURS cannot perform more than one calculation per eligible member in a state fiscal year.  The offer must specify the dollar amount that the eligible person will receive if he or she so elects and must expire when a subsequent offer is made to the eligible person.  SURS must make a good faith effort to contact every eligible person to notify him or her of the election and the amount of the accelerated pension benefit payment.

To be eligible for the accelerated pension benefit payment, the person must: (1) have terminated service; (2) have accrued sufficient service credit necessary for retirement (i.e., five years for Tier I members and 10 years for Tier II members); (3) have not received a retirement annuity under SURS; (4) have not made the election as a Tier I member to accept a reduced and delayed automatic annual increase in retirement in exchange for an accelerated pension benefit payment; and (5) not be a participant in the SURS Self-Managed Plan.  The accelerated pension benefit payment must be deposited into a tax qualified retirement plan or account identified by the eligible person at the time of the election. 

An eligible person may irrevocably elect to receive an accelerated pension benefit payment in lieu of any pension benefit from SURS between the implementation date established by the SURS Board of Trustees and June 30, 2021.  A person who elects to receive an accelerated pension benefit payment cannot elect to proceed under the Retirement Systems Reciprocal Act with respect to service under SURS.  Upon payment of an accelerated pension benefit payment from SURS, the person forfeits all accrued rights and credits in SURS and no other benefit can be paid from SURS based on those forfeited rights and credits.  However, an eligible person who receives an accelerated pension benefit payment may still be eligible for any applicable retiree health insurance benefits. 

If a person who has received an accelerated pension benefit payment from SURS returns to participation under SURS, any benefits under SURS earned as a result of that return to participation must be based solely on his or her credits and creditable service arising from the return to participation.  Upon return to participation, the person must be considered a new employee subject to all of the qualifying conditions for participation and eligibility for benefits applicable to new employees.  The accelerated pension benefit payment cannot be repaid to SURS, and the forfeited rights and credits cannot under any circumstances be reinstated.

Accelerated Pension Benefit Payment for Tier I Members Who Accept Reduced and Delayed Automatic Annual Increases in Retirement Annuities and Survivor Annuities

Beginning on the implementation date established by the SURS Board of Trustees and until June 30, 2021, SURS must implement an accelerated pension benefit payment option.  SURS must calculate, using actuarial tables and other assumptions adopted by the board, an accelerated pension benefit payment amount for an eligible person upon his or her request in writing to SURS and must offer that eligible person the opportunity to irrevocably elect to have his or her automatic annual increases in retirement annuity, as well as in any survivor annuity, reduced and delayed in exchange for the accelerated pension benefit payment.  SURS cannot perform more than one calculation per eligible person in a state fiscal year.  The election must be made before any retirement annuity is paid to the eligible person, and the eligible survivor, spouse, or contingent annuitant, as applicable, must consent to the election.

The accelerated pension benefit payment is a lump-sum payment equal to 70 percent of the difference of: (1) the present value of the Tier I automatic annual increases in the retirement annuity and survivor annuity; and (2) the present value of the reduced and delayed automatic annual increases in the retirement annuity and survivor annuity.  

The reduced and delayed automatic annual increase in retirement annuity is calculated at 1.5 percent of the originally granted retirement annuity and begins on the January 1 occurring on or after the later of age 67 or the first anniversary of the annuity start date.  (Currently, a Tier I retiree receives a compounding automatic annual increase in his or her retirement annuity equal to 3 percent of the annuity, beginning on the January 1 occurring after retirement, prorated for the first year.)  

The reduced and delayed automatic annual increase in survivor annuity is calculated at 1.5 percent of the survivor’s original annuity benefit payable and begins on the January 1 occurring on or after the date the annuity begins or the January 1 occurring after the first anniversary of the annuity benefit start date.  (Currently, a survivor of a Tier I retiree receives a compounding automatic annual increase in his or her annuity benefit equal to 3 percent of his or her annuity benefit, beginning on the January 1 occurring on or after the date the annuity benefit begins.)

To be eligible for the accelerated pension benefit, the person must: (1) be a Tier I member; (2) have submitted an application for a retirement annuity from SURS; (3) meet the age and service credit requirements necessary for retirement under SURS (i.e., be any age with 30 years of service credit, age 55 with eight years of service credit, age 62 with five years of service credit, or meet the special vesting for the Police/Fire formula); (4) have not received a retirement  annuity under SURS; (5) have not made the election to receive an accelerated pension benefit payment in lieu of any pension benefit from SURS; and (6) not be a participant in the SURS Self-Managed Plan.  The accelerated pension benefit payment must be deposited into a tax qualified retirement plan or account identified by the eligible person at the time of election. 

An eligible person may make the election to receive an accelerated pension benefit payment in exchange for a reduced and delayed automatic annual increase in retirement annuity and survivor annuity from SURS between the implementation date established by the SURS Board of Trustees and June 30, 2021.  If an annuitant who has received an accelerated pension benefit payment from SURS returns to participation under SURS then the calculation of any future automatic annual increase in retirement annuity must be calculated at the reduced and delayed rate.  The accelerated pension benefit payment cannot be repaid to SURS.

Funding and Payment of Accelerated Pension Benefit Payments

HB 3342 amends the General Obligation Bond Act to authorize the issuance of $1 billion in State Pension Obligation Acceleration Bonds for the purpose of making accelerated pension benefit payments under SERS, SURS and TRS.  The proceeds of the bonds, minus the amounts for bond sale expenses, must be deposited directly into the State Pension Obligation Acceleration Bond Fund, and the comptroller and treasurer must, as soon as practical, make accelerated pension benefit payments under SERS, SURS and TRS.  The State Pension Obligation Acceleration Bond Fund is created as an unappropriated fund outside of the state treasury that can only be used for the purpose of making accelerated pension benefit payments under SERS, SURS and TRS, or for the payment of principal and interest due on State Pension Obligation Acceleration Bonds.  There is a continuing appropriation of all amounts necessary for these purposes.

SURS must submit vouchers to the state comptroller for payment of accelerated pension benefit payments.  The state comptroller shall pay the amounts of the vouchers from the State Pension Obligation Acceleration Bond Fund to SURS, and SURS must deposit the amounts into the applicable tax qualified plans or accounts.

HB 3342 amends the State Pension Funds Continuing Appropriation Act to provide that, if for any reason the aggregate appropriations made available are insufficient to meet the levels required for the payment of principal and interest due on State Pension Obligation Acceleration Bonds, there is a continuing appropriation of all amounts necessary for those purposes.

6% Rule Changed to 3% (Except for Certain Contracts and Collective Bargaining Agreements)

Effective for academic years beginning on or after July 1, 2018, and for earnings paid to a participant under a contract or collective bargaining agreement entered into, amended, or renewed on or after the effective date of the legislation, the legislation reduces the 6% rule to 3%, requiring the employer to pay the present value of the resulting increase in benefits attributable to earnings increases in excess of 3% during the participant’s final rate of earnings period.  

However, for earnings paid to a participant under a contract or collective bargaining agreement entered into, amended, or renewed before the effective date of the legislation, the employer will continue to pay the present value of the resulting increase in benefits attributable to earnings increases in excess of 6% during the participant’s final rate of earnings period. 

Ends the 6% Rule and 3% Rule for Tier II Hybrid Plan Members and Tier II Defined Benefit Members Who First Participate in SURS after Implementation of the Optional Hybrid Plan

HB 3342 provides that the 6% rule and the 3% rule do not apply to Tier II hybrid plan members and Tier II defined benefit members who first participate under SURS on or after the implementation date of the Optional Hybrid Plan.  

FY 2019 Recertification

HB 3342 requires the SURS Board of Trustees, between June 15, 2019, and June 30, 2019, to recalculate and recertify the FY 2019 state contribution, taking into account the changes made by the legislation.  The recertification must be based on the actuarial assumptions used to certify the original FY 2019 state contribution.  The last monthly voucher for FY 2019 must be paid by the comptroller after the recertification is submitted to the governor, comptroller and General Assembly.

Effective Date

HB 3342 takes effect immediately upon becoming law. 

Became Public Act 100-0587 effective June 4, 2018

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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.

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HB 4412
- Retirement System Senior Administrative Staff Composition
Sponsor(s): Representative Carol Ammons and Senator Elgie R. Sims, Jr.

HB 4412 amends the General Provisions article of the Illinois Pension Code.  It requires each retirement system, pension fund and investment board to make its best efforts to ensure that the racial and ethnic makeup of its senior administrative staff represents the racial and ethnic makeup of its membership.

HB 4412 takes effect immediately upon becoming law.

Became Public Act 100-0902 on August 17, 2018.

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HB 4684
- SURS Comptroller Intercept
Sponsor(s): Representative Robert Martwick and Senator Omar Aquino

HB 4684 amends the State Universities Retirement System’s Article of the Illinois Pension Code.  It enhances SURS’ ability to obtain delinquent employer payments that are owed under the law by intercepting them through the state Comptroller and/or the county treasurer for the county in which the employer is located.

Under current law, SURS has the ability to obtain delinquent employer payments through the state Comptroller under the return to work law for affected annuitants (Section 15-139.5) and under legal requirements that employers provide information necessary for the administration of the System and employer audits (Sections  15-168 and 15-168.2).  HB 4684 permits SURS to obtain delinquent employer payments under these laws from the county treasurer for the county in which the employer is located.  HB 4684 also permits SURS to obtain delinquent employer payments through the state Comptroller and/or the county treasurer for amounts owed under other employer contribution laws, such as those pertaining to the 6% Rule (Section 15-155(g)), the Governor’s Salary Rule (Section 15-155(j-5)), employer normal cost contributions from certain employers (Section 15-155(b)), employee contributions that are “picked-up” by the employer  (Sections 15-181 and 15-157.1), and employer contributions under the Self-Managed Plan (Section 15-158.2).  

HB 4684 takes effect immediately upon becoming law.

Became Public Act 100-0769 on August 10, 2018.

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HB 5019
- Withholdings for Tuition Programs and ABLE Programs
Sponsor(s): Representative Natalie A. Manley and Senator Melinda Bush

As it relates to SURS, HB 5019 amends the State Salary and Annuity Withholding Act.  It allows an employee or annuitant to authorize the withholding of a portion of his or her salary, wages or annuity for investment purchases made as a participant or contributor to qualified tuition programs established pursuant to Section 529 of the Internal Revenue Code or qualified ABLE programs established pursuant to Section 529A of the Internal Revenue Code.  (Under current law, an employee or annuitant may authorize the withholding of a portion of his or her salary, wages or annuity for investment purchases made as a participant in College Savings Programs established pursuant to Section 30-15.8a of the School Code.)  HB 5019 also makes other changes.

HB 5019 takes effect immediately upon becoming law.

Became Public Act 100-0763 on August 10, 2018.

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HB 5137
- SURS and TRS Optional Defined Contribution Benefit
Sponsor(s): Representative Robert Martwick and Senator Dan McConchie

HB 5137 amends the State Universities Retirement System and Teachers’ Retirement System articles of the Illinois Pension Code.

HB 5137 requires each system to offer a defined contribution benefit to its active members, as soon as practicable after the effective date of the legislation. The defined contribution benefit must be an optional benefit to any member who chooses to participate. The defined contribution benefit must collect optional employee and optional employer contributions into an account and offer investment options to the participant. The benefit must be operated in full compliance with any applicable state and federal laws, and each system must utilize generally accepted practices in creating and maintaining the benefit for the best interest of the participants. Each system may use funds from the employee and employer contributions to defray any and all costs of creating and maintaining the benefit. Each system must produce an annual report on the participation in the benefit and must make the report public.

HB 5137 takes effect immediately upon becoming law.

Became Public Act 100-0769 on August 10, 2018.

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

HB 5611 creates the Department of Innovation and Technology Act.  As it relates to SURS, HB 5611 establishes that the Department of Central Management Services is an employer with respect to persons 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 Department of Innovation and Technology.  This change reflects the statutory codification of the Department of Innovation and Technology under HB 5611.

HB 5611 takes effect immediately upon becoming law.

Became Public Act 100-0611 on July 30, 2018.

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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.

The resolution was adopted on 6/22/2017.

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Senate

SB 0006
- Fiscal Year 2018 Budget
Sponsor(s): Senator Heather A. Steans and Representative Gregory Harris

SB 6 appropriates $1,587,985,000 for the FY 2018 state contribution to SURS.  Of this amount, $1,372,985,000 comes from the General Revenue Fund and $215,000,000 comes from the State Pensions Fund.  The certified state contribution to SURS for FY 2018 is $1,753,685,000.  (Please note: SB 42 requires recertification of the FY 2018 state contribution by November 1, 2017.)

SB 6 also appropriates $4,133,336 for the FY 2018 state contribution to the College Insurance Program (CIP), which provides health insurance to community college retirees.  This amount is equal to the certified contribution for FY 2018.

SB 6 takes effect immediately upon becoming law.

Became Public Act 100-0021 on July 6, 2017.

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

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

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

Optional Hybrid Plan

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

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

For the defined benefit portion of the optional hybrid plan:

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

For the defined contribution portion of the optional hybrid plan:

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

State Funding Changes

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

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

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

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

Employer Funding Changes

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

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

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

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

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

Effective Date

SB 42 takes effect immediately upon becoming law.

Became Public Act 100-0023 on July 6, 2017.

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SB 1345
- Public Act 100-0023 Trailer Bill – Tier Clarification
Sponsor(s): Senator Donne E. Trotter and Representative Robert Martwick

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

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

SB 1345 takes effect immediately upon becoming law.

Became Public Act 100-0563 effective December 8, 2017.

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

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.

Became Public Act 100-0542 effective November 8, 2017.

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