(40 ILCS 5/14-155)
Sec. 14-155. Defined contribution plan.
(a) By July 1, 2015, the System shall prepare and implement a voluntary defined contribution plan for up to 5% of eligible active Tier 1 members. The System shall determine the 5% cap by the number of active Tier 1 members on the effective date of this Section. The defined contribution plan developed under this Section shall be a plan that aggregates employer and employee contributions in individual participant accounts which, after meeting any other requirements, are used for payouts after retirement in accordance with this Section and any other applicable laws.
As used in this Section, "defined benefit plan" means the retirement plan available under this Article to Tier 1 members who have not made the election authorized under this Section.
(1) Under the defined contribution plan, an active
Tier 1 member of this System could elect to cease accruing benefits in the defined benefit plan under this Article and begin accruing benefits for future service in the defined contribution plan. Service credit under the defined contribution plan may be used for determining retirement eligibility under the defined benefit plan.
(2) Participants in the defined contribution plan
shall pay employee contributions at the same rate as Tier 1 members in this System who do not participate in the defined contribution plan.
(3) State contributions shall be paid into the
accounts of all participants in the defined contribution plan at a uniform rate, expressed as a percentage of compensation and determined for each year. This rate shall be no higher than the employer's normal cost for Tier 1 members in the defined benefit plan for that year, as determined by the System and expressed as a percentage of compensation, and shall be no lower than 3% of compensation. The State shall adjust this rate annually.
(4) The defined contribution plan shall require 5
years of participation in the defined contribution plan before vesting in State contributions. If the participant fails to vest in them, the State contributions, and the earnings thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for the defined disability benefits available to other participants under this Article. If it does, the System shall reduce the employee contributions credited to the member's defined contribution plan account by an amount determined by the System to cover the cost of offering such benefits.
(6) The defined contribution plan shall provide a
variety of options for investments. These options shall include investments handled by the Illinois State Board of Investment as well as private sector investment options.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their survivors.
(8) To the extent authorized under federal law and
as authorized by the System, the plan shall allow former participants in the plan to transfer or roll over employee and vested State contributions, and the earnings thereon, into other qualified retirement plans.
(9) The System shall reduce the employee
contributions credited to the member's defined contribution plan account by an amount determined by the System to cover the cost of offering these benefits and any applicable administrative fees.
(b) Only persons who are active Tier 1 members of the System on the effective date of this Section are eligible to participate in the defined contribution plan. Participation in the defined contribution plan shall be limited to the first 5% of eligible persons who elect to participate. The election to participate in the defined contribution plan is voluntary and irrevocable.
(c) An eligible Tier 1 employee may irrevocably elect to participate in the defined contribution plan by filing with the System a written application to participate that is received by the System prior to its determination that 5% of eligible persons have elected to participate in the defined contribution plan.
When the System first determines that 5% of eligible persons have elected to participate in the defined contribution plan, the System shall provide notice to previously eligible employees that the plan is no longer available and shall cease accepting applications to participate.
(d) The System shall make a good faith effort to contact each active Tier 1 member who is eligible to participate in the defined contribution plan. The System shall mail information describing the option to join the defined contribution plan to each of these employees to his or her last known address on file with the System. If the employee is not responsive to other means of contact, it is sufficient for the System to publish the details of the option on its website.
Upon request for further information describing the option, the System shall provide employees with information from the System before exercising the option to join the plan, including information on the impact to their vested benefits or non-vested service. The individual consultation shall include projections of the member's defined benefits at retirement or earlier termination of service and the value of the member's account at retirement or earlier termination of service. The System shall not provide advice or counseling with respect to whether the employee should exercise the option. The System shall inform Tier 1 employees who are eligible to participate in the defined contribution plan that they may also wish to obtain information and counsel relating to their option from any other available source, including but not limited to labor organizations, private counsel, and financial advisors.
(e) In no event shall the System, its staff, its authorized representatives, or the Board be liable for any information given to an employee under this Section. The System may coordinate with the Illinois Department of Central Management Services and other retirement systems administering a defined contribution plan in accordance with this amendatory Act of the 98th General Assembly to provide information concerning the impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no person shall begin participating in the defined contribution plan until it has attained qualified plan status and received all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this Section, including the available details of the defined contribution plan and the System's plans for informing eligible Tier 1 members about the plan, to the Governor and the General Assembly on or before January 15, 2015.
(h) The Illinois State Board of Investments shall be the plan sponsor for the defined contribution plan established under this Section.
(i) The intent of this amendatory Act of the 98th General Assembly is to ensure that the State's normal cost of participation in the defined contribution plan is similar, and if possible equal, to the State's normal cost of participation in the defined benefit plan, unless a lower State's normal cost is necessary to ensure cost neutrality.
(Source: P.A. 98-599, eff. 6-1-14.)
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Last modified: February 18, 2015