Bill Text: IL HB4699 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the General Assembly Article of the Illinois Pension Code. Requires the System to implement a Tier 3 plan by July 1, 2025 that aggregates State and employee contributions in individual participant accounts that are used for payouts after retirement. Provides that a person who becomes a participant of a System on or after July 1, 2025 shall participate in the Tier 3 plan instead of the defined benefit plan. Authorizes a Tier 1 or Tier 2 participant to elect to participate in the Tier 3 plan instead of the defined benefit plan and to also elect to terminate all participation in the defined benefit plan and to have a specified amount credited to his or her account. Makes related changes in the Retirement Systems Reciprocal Act (Article 20 of the Illinois Pension Code) and the State Employees Group Insurance Act of 1971. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2024-04-05 - Rule 19(a) / Re-referred to Rules Committee [HB4699 Detail]

Download: Illinois-2023-HB4699-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB4699 Introduced , by Rep. Tim Ozinga SYNOPSIS AS INTRODUCED:
5 ILCS 375/3 from Ch. 127, par. 523
5 ILCS 375/10 from Ch. 127, par. 530
40 ILCS 5/2-105.3
40 ILCS 5/2-162
40 ILCS 5/2-165.5 new
40 ILCS 5/20-121 from Ch. 108 1/2, par. 20-121
40 ILCS 5/20-123 from Ch. 108 1/2, par. 20-123
40 ILCS 5/20-124 from Ch. 108 1/2, par. 20-124
40 ILCS 5/20-125 from Ch. 108 1/2, par. 20-125
Amends the General Assembly Article of the Illinois Pension Code. Requires the System to implement a Tier 3 plan by July 1, 2025 that aggregates State and employee contributions in individual participant accounts that are used for payouts after retirement. Provides that a person who becomes a participant of a System on or after July 1, 2025 shall participate in the Tier 3 plan instead of the defined benefit plan. Authorizes a Tier 1 or Tier 2 participant to elect to participate in the Tier 3 plan instead of the defined benefit plan and to also elect to terminate all participation in the defined benefit plan and to have a specified amount credited to his or her account. Makes related changes in the Retirement Systems Reciprocal Act (Article 20 of the Illinois Pension Code) and the State Employees Group Insurance Act of 1971. Effective immediately.
LRB103 38255 RPS 68390 b
A BILL FOR
HB4699 LRB103 38255 RPS 68390 b
AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The State Employees Group Insurance Act of 1971
is amended by changing Sections 3 and 10 as follows:
(5 ILCS 375/3) (from Ch. 127, par. 523)
Sec. 3. Definitions. Unless the context otherwise
requires, the following words and phrases as used in this Act
shall have the following meanings. The Department may define
these and other words and phrases separately for the purpose
of implementing specific programs providing benefits under
this Act.
(a) "Administrative service organization" means any
person, firm or corporation experienced in the handling of
claims which is fully qualified, financially sound and capable
of meeting the service requirements of a contract of
administration executed with the Department.
(b) "Annuitant" means (1) an employee who retires, or has
retired, on or after January 1, 1966 on an immediate annuity
under the provisions of Article Articles 2 (including an
employee who, in lieu of receiving an annuity under that
Article, has retired under the Tier 3 plan established under
Section 2-165.5 of that Article), 14 (including an employee

HB4699 - 2 - LRB103 38255 RPS 68390 b
who has elected to receive an alternative retirement
cancellation payment under Section 14-108.5 of the Illinois
Pension Code in lieu of an annuity or who meets the criteria
for retirement, but in lieu of receiving an annuity under that
Article has elected to receive an accelerated pension benefit
payment under Section 14-147.5 of that Article), 15 (including
an employee who has retired under the optional retirement
program established under Section 15-158.2 or who meets the
criteria for retirement but in lieu of receiving an annuity
under that Article has elected to receive an accelerated
pension benefit payment under Section 15-185.5 of the
Article), paragraph (2), (3), or (5) of Section 16-106
(including an employee who meets the criteria for retirement,
but in lieu of receiving an annuity under that Article has
elected to receive an accelerated pension benefit payment
under Section 16-190.5 of the Illinois Pension Code), or
Article 18 of the Illinois Pension Code; (2) any person who was
receiving group insurance coverage under this Act as of March
31, 1978 by reason of his status as an annuitant, even though
the annuity in relation to which such coverage was provided is
a proportional annuity based on less than the minimum period
of service required for a retirement annuity in the system
involved; (3) any person not otherwise covered by this Act who
has retired as a participating member under Article 2 of the
Illinois Pension Code but is ineligible for the retirement
annuity under Section 2-119 of the Illinois Pension Code; (4)

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the spouse of any person who is receiving a retirement annuity
under Article 18 of the Illinois Pension Code and who is
covered under a group health insurance program sponsored by a
governmental employer other than the State of Illinois and who
has irrevocably elected to waive his or her coverage under
this Act and to have his or her spouse considered as the
"annuitant" under this Act and not as a "dependent"; or (5) an
employee who retires, or has retired, from a qualified
position, as determined according to rules promulgated by the
Director, under a qualified local government, a qualified
rehabilitation facility, a qualified domestic violence shelter
or service, or a qualified child advocacy center. (For
definition of "retired employee", see (p) post).
(b-5) (Blank).
(b-6) (Blank).
(b-7) (Blank).
(c) "Carrier" means (1) an insurance company, a
corporation organized under the Limited Health Service
Organization Act or the Voluntary Health Services Plans Act, a
partnership, or other nongovernmental organization, which is
authorized to do group life or group health insurance business
in Illinois, or (2) the State of Illinois as a self-insurer.
(d) "Compensation" means salary or wages payable on a
regular payroll by the State Treasurer on a warrant of the
State Comptroller out of any State, trust or federal fund, or
by the Governor of the State through a disbursing officer of

HB4699 - 4 - LRB103 38255 RPS 68390 b
the State out of a trust or out of federal funds, or by any
Department out of State, trust, federal or other funds held by
the State Treasurer or the Department, to any person for
personal services currently performed, and ordinary or
accidental disability benefits under Articles 2, 14, or 15
(including ordinary or accidental disability benefits under
the optional retirement program established under Section
15-158.2), paragraph (2), (3), or (5) of Section 16-106, or
Article 18 of the Illinois Pension Code, for disability
incurred after January 1, 1966, or benefits payable under the
Workers' Compensation or Occupational Diseases Act or benefits
payable under a sick pay plan established in accordance with
Section 36 of the State Finance Act. "Compensation" also means
salary or wages paid to an employee of any qualified local
government, qualified rehabilitation facility, qualified
domestic violence shelter or service, or qualified child
advocacy center.
(e) "Commission" means the State Employees Group Insurance
Advisory Commission authorized by this Act. Commencing July 1,
1984, "Commission" as used in this Act means the Commission on
Government Forecasting and Accountability as established by
the Legislative Commission Reorganization Act of 1984.
(f) "Contributory", when referred to as contributory
coverage, shall mean optional coverages or benefits elected by
the member toward the cost of which such member makes
contribution, or which are funded in whole or in part through

HB4699 - 5 - LRB103 38255 RPS 68390 b
the acceptance of a reduction in earnings or the foregoing of
an increase in earnings by an employee, as distinguished from
noncontributory coverage or benefits which are paid entirely
by the State of Illinois without reduction of the member's
salary.
(g) "Department" means any department, institution, board,
commission, officer, court or any agency of the State
government receiving appropriations and having power to
certify payrolls to the Comptroller authorizing payments of
salary and wages against such appropriations as are made by
the General Assembly from any State fund, or against trust
funds held by the State Treasurer and includes boards of
trustees of the retirement systems created by Articles 2, 14,
15, 16, and 18 of the Illinois Pension Code. "Department" also
includes the Illinois Comprehensive Health Insurance Board,
the Board of Examiners established under the Illinois Public
Accounting Act, and the Illinois Finance Authority.
(h) "Dependent", when the term is used in the context of
the health and life plan, means a member's spouse and any child
(1) from birth to age 26 including an adopted child, a child
who lives with the member from the time of the placement for
adoption until entry of an order of adoption, a stepchild or
adjudicated child, or a child who lives with the member if such
member is a court appointed guardian of the child or (2) age 19
or over who has a mental or physical disability from a cause
originating prior to the age of 19 (age 26 if enrolled as an

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adult child dependent). For the health plan only, the term
"dependent" also includes (1) any person enrolled prior to the
effective date of this Section who is dependent upon the
member to the extent that the member may claim such person as a
dependent for income tax deduction purposes and (2) any person
who has received after June 30, 2000 an organ transplant and
who is financially dependent upon the member and eligible to
be claimed as a dependent for income tax purposes. A member
requesting to cover any dependent must provide documentation
as requested by the Department of Central Management Services
and file with the Department any and all forms required by the
Department.
(i) "Director" means the Director of the Illinois
Department of Central Management Services.
(j) "Eligibility period" means the period of time a member
has to elect enrollment in programs or to select benefits
without regard to age, sex or health.
(k) "Employee" means and includes each officer or employee
in the service of a department who (1) receives his
compensation for service rendered to the department on a
warrant issued pursuant to a payroll certified by a department
or on a warrant or check issued and drawn by a department upon
a trust, federal or other fund or on a warrant issued pursuant
to a payroll certified by an elected or duly appointed officer
of the State or who receives payment of the performance of
personal services on a warrant issued pursuant to a payroll

HB4699 - 7 - LRB103 38255 RPS 68390 b
certified by a Department and drawn by the Comptroller upon
the State Treasurer against appropriations made by the General
Assembly from any fund or against trust funds held by the State
Treasurer, and (2) is employed full-time or part-time in a
position normally requiring actual performance of duty during
not less than 1/2 of a normal work period, as established by
the Director in cooperation with each department, except that
persons elected by popular vote will be considered employees
during the entire term for which they are elected regardless
of hours devoted to the service of the State, and (3) except
that "employee" does not include any person who is not
eligible by reason of such person's employment to participate
in one of the State retirement systems under Articles 2, 14, 15
(either the regular Article 15 system or the optional
retirement program established under Section 15-158.2), or 18,
or under paragraph (2), (3), or (5) of Section 16-106, of the
Illinois Pension Code, but such term does include persons who
are employed during the 6-month qualifying period under
Article 14 of the Illinois Pension Code. Such term also
includes any person who (1) after January 1, 1966, is
receiving ordinary or accidental disability benefits under
Articles 2, 14, 15 (including ordinary or accidental
disability benefits under the optional retirement program
established under Section 15-158.2), paragraph (2), (3), or
(5) of Section 16-106, or Article 18 of the Illinois Pension
Code, for disability incurred after January 1, 1966, (2)

HB4699 - 8 - LRB103 38255 RPS 68390 b
receives total permanent or total temporary disability under
the Workers' Compensation Act or Occupational Disease Act as a
result of injuries sustained or illness contracted in the
course of employment with the State of Illinois, or (3) is not
otherwise covered under this Act and has retired as a
participating member under Article 2 of the Illinois Pension
Code but is ineligible for the retirement annuity under
Section 2-119 of the Illinois Pension Code. However, a person
who satisfies the criteria of the foregoing definition of
"employee" except that such person is made ineligible to
participate in the State Universities Retirement System by
clause (4) of subsection (a) of Section 15-107 of the Illinois
Pension Code is also an "employee" for the purposes of this
Act. "Employee" also includes any person receiving or eligible
for benefits under a sick pay plan established in accordance
with Section 36 of the State Finance Act. "Employee" also
includes (i) each officer or employee in the service of a
qualified local government, including persons appointed as
trustees of sanitary districts regardless of hours devoted to
the service of the sanitary district, (ii) each employee in
the service of a qualified rehabilitation facility, (iii) each
full-time employee in the service of a qualified domestic
violence shelter or service, and (iv) each full-time employee
in the service of a qualified child advocacy center, as
determined according to rules promulgated by the Director.
(l) "Member" means an employee, annuitant, retired

HB4699 - 9 - LRB103 38255 RPS 68390 b
employee, or survivor. In the case of an annuitant or retired
employee who first becomes an annuitant or retired employee on
or after January 13, 2012 (the effective date of Public Act
97-668), the individual must meet the minimum vesting
requirements of the applicable retirement system in order to
be eligible for group insurance benefits under that system. In
the case of a survivor who is not entitled to occupational
death benefits pursuant to an applicable retirement system or
death benefits pursuant to the Illinois Workers' Compensation
Act, and who first becomes a survivor on or after January 13,
2012 (the effective date of Public Act 97-668), the deceased
employee, annuitant, or retired employee upon whom the annuity
is based must have been eligible to participate in the group
insurance system under the applicable retirement system in
order for the survivor to be eligible for group insurance
benefits under that system.
In the case of a survivor who is entitled to occupational
death benefits pursuant to the deceased employee's applicable
retirement system or death benefits pursuant to the Illinois
Workers' Compensation Act, and first becomes a survivor on or
after January 1, 2022, the survivor is eligible for group
health insurance benefits regardless of the deceased
employee's minimum vesting requirements under the applicable
retirement system, with a State contribution rate of 100%,
until an unmarried child dependent reaches the age of 18, or
the age of 22 if the dependent child is a full-time student, or

HB4699 - 10 - LRB103 38255 RPS 68390 b
until the adult survivor becomes eligible for benefits under
the federal Medicare health insurance program (Title XVIII of
the Social Security Act, as added by Public Law 89-97). In the
case of a survivor currently receiving occupational death
benefits pursuant to the deceased employee's applicable
retirement system or has received death benefits pursuant to
the Illinois Workers' Compensation Act, who first became a
survivor prior to January 1, 2022, the survivor is eligible
for group health insurance benefits regardless of the deceased
employee's minimum vesting requirements under the applicable
retirement system, with a State contribution rate of 100%,
until an unmarried child dependent reaches the age of 18, or
the age of 22 if the dependent child is a full-time student, or
until the adult survivor becomes eligible for benefits under
the federal Medicare health insurance program (Title XVIII of
the Social Security Act, as added by Public Law 89-97). The
changes made by this amendatory Act of the 102nd General
Assembly with respect to survivors who first became survivors
prior to January 1, 2022 shall apply upon request of the
survivor on or after the effective date of this amendatory Act
of the 102nd General Assembly.
(m) "Optional coverages or benefits" means those coverages
or benefits available to the member on his or her voluntary
election, and at his or her own expense.
(n) "Program" means the group life insurance, health
benefits and other employee benefits designed and contracted

HB4699 - 11 - LRB103 38255 RPS 68390 b
for by the Director under this Act.
(o) "Health plan" means a health benefits program offered
by the State of Illinois for persons eligible for the plan.
(p) "Retired employee" means any person who would be an
annuitant as that term is defined herein but for the fact that
such person retired prior to January 1, 1966. Such term also
includes any person formerly employed by the University of
Illinois in the Cooperative Extension Service who would be an
annuitant but for the fact that such person was made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code.
(q) "Survivor" means a person receiving an annuity as a
survivor of an employee or of an annuitant. "Survivor" also
includes: (1) the surviving dependent of a person who
satisfies the definition of "employee" except that such person
is made ineligible to participate in the State Universities
Retirement System by clause (4) of subsection (a) of Section
15-107 of the Illinois Pension Code; (2) the surviving
dependent of any person formerly employed by the University of
Illinois in the Cooperative Extension Service who would be an
annuitant except for the fact that such person was made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code; (3) the surviving dependent of a person
who was an annuitant under this Act by virtue of receiving an

HB4699 - 12 - LRB103 38255 RPS 68390 b
alternative retirement cancellation payment under Section
14-108.5 of the Illinois Pension Code; and (4) a person who
would be receiving an annuity as a survivor of an annuitant
except that the annuitant elected on or after June 4, 2018 to
receive an accelerated pension benefit payment under Section
14-147.5, 15-185.5, or 16-190.5 of the Illinois Pension Code
in lieu of receiving an annuity.
(q-2) "SERS" means the State Employees' Retirement System
of Illinois, created under Article 14 of the Illinois Pension
Code.
(q-3) "SURS" means the State Universities Retirement
System, created under Article 15 of the Illinois Pension Code.
(q-4) "TRS" means the Teachers' Retirement System of the
State of Illinois, created under Article 16 of the Illinois
Pension Code.
(q-5) (Blank).
(q-6) (Blank).
(q-7) (Blank).
(r) "Medical services" means the services provided within
the scope of their licenses by practitioners in all categories
licensed under the Medical Practice Act of 1987.
(s) "Unit of local government" means any county,
municipality, township, school district (including a
combination of school districts under the Intergovernmental
Cooperation Act), special district or other unit, designated
as a unit of local government by law, which exercises limited

HB4699 - 13 - LRB103 38255 RPS 68390 b
governmental powers or powers in respect to limited
governmental subjects, any not-for-profit association with a
membership that primarily includes townships and township
officials, that has duties that include provision of research
service, dissemination of information, and other acts for the
purpose of improving township government, and that is funded
wholly or partly in accordance with Section 85-15 of the
Township Code; any not-for-profit corporation or association,
with a membership consisting primarily of municipalities, that
operates its own utility system, and provides research,
training, dissemination of information, or other acts to
promote cooperation between and among municipalities that
provide utility services and for the advancement of the goals
and purposes of its membership; the Southern Illinois
Collegiate Common Market, which is a consortium of higher
education institutions in Southern Illinois; the Illinois
Association of Park Districts; and any hospital provider that
is owned by a county that has 100 or fewer hospital beds and
has not already joined the program. "Qualified local
government" means a unit of local government approved by the
Director and participating in a program created under
subsection (i) of Section 10 of this Act.
(t) "Qualified rehabilitation facility" means any
not-for-profit organization that is accredited by the
Commission on Accreditation of Rehabilitation Facilities or
certified by the Department of Human Services (as successor to

HB4699 - 14 - LRB103 38255 RPS 68390 b
the Department of Mental Health and Developmental
Disabilities) to provide services to persons with disabilities
and which receives funds from the State of Illinois for
providing those services, approved by the Director and
participating in a program created under subsection (j) of
Section 10 of this Act.
(u) "Qualified domestic violence shelter or service" means
any Illinois domestic violence shelter or service and its
administrative offices funded by the Department of Human
Services (as successor to the Illinois Department of Public
Aid), approved by the Director and participating in a program
created under subsection (k) of Section 10.
(v) "TRS benefit recipient" means a person who:
(1) is not a "member" as defined in this Section; and
(2) is receiving a monthly benefit or retirement
annuity under Article 16 of the Illinois Pension Code or
would be receiving such monthly benefit or retirement
annuity except that the benefit recipient elected on or
after June 4, 2018 to receive an accelerated pension
benefit payment under Section 16-190.5 of the Illinois
Pension Code in lieu of receiving an annuity; and
(3) either (i) has at least 8 years of creditable
service under Article 16 of the Illinois Pension Code, or
(ii) was enrolled in the health insurance program offered
under that Article on January 1, 1996, or (iii) is the
survivor of a benefit recipient who had at least 8 years of

HB4699 - 15 - LRB103 38255 RPS 68390 b
creditable service under Article 16 of the Illinois
Pension Code or was enrolled in the health insurance
program offered under that Article on June 21, 1995 (the
effective date of Public Act 89-25), or (iv) is a
recipient or survivor of a recipient of a disability
benefit under Article 16 of the Illinois Pension Code.
(w) "TRS dependent beneficiary" means a person who:
(1) is not a "member" or "dependent" as defined in
this Section; and
(2) is a TRS benefit recipient's: (A) spouse, (B)
dependent parent who is receiving at least half of his or
her support from the TRS benefit recipient, or (C)
natural, step, adjudicated, or adopted child who is (i)
under age 26, (ii) was, on January 1, 1996, participating
as a dependent beneficiary in the health insurance program
offered under Article 16 of the Illinois Pension Code, or
(iii) age 19 or over who has a mental or physical
disability from a cause originating prior to the age of 19
(age 26 if enrolled as an adult child).
"TRS dependent beneficiary" does not include, as indicated
under paragraph (2) of this subsection (w), a dependent of the
survivor of a TRS benefit recipient who first becomes a
dependent of a survivor of a TRS benefit recipient on or after
January 13, 2012 (the effective date of Public Act 97-668)
unless that dependent would have been eligible for coverage as
a dependent of the deceased TRS benefit recipient upon whom

HB4699 - 16 - LRB103 38255 RPS 68390 b
the survivor benefit is based.
(x) "Military leave" refers to individuals in basic
training for reserves, special/advanced training, annual
training, emergency call up, activation by the President of
the United States, or any other training or duty in service to
the United States Armed Forces.
(y) (Blank).
(z) "Community college benefit recipient" means a person
who:
(1) is not a "member" as defined in this Section; and
(2) is receiving a monthly survivor's annuity or
retirement annuity under Article 15 of the Illinois
Pension Code or would be receiving such monthly survivor's
annuity or retirement annuity except that the benefit
recipient elected on or after June 4, 2018 to receive an
accelerated pension benefit payment under Section 15-185.5
of the Illinois Pension Code in lieu of receiving an
annuity; and
(3) either (i) was a full-time employee of a community
college district or an association of community college
boards created under the Public Community College Act
(other than an employee whose last employer under Article
15 of the Illinois Pension Code was a community college
district subject to Article VII of the Public Community
College Act) and was eligible to participate in a group
health benefit plan as an employee during the time of

HB4699 - 17 - LRB103 38255 RPS 68390 b
employment with a community college district (other than a
community college district subject to Article VII of the
Public Community College Act) or an association of
community college boards, or (ii) is the survivor of a
person described in item (i).
(aa) "Community college dependent beneficiary" means a
person who:
(1) is not a "member" or "dependent" as defined in
this Section; and
(2) is a community college benefit recipient's: (A)
spouse, (B) dependent parent who is receiving at least
half of his or her support from the community college
benefit recipient, or (C) natural, step, adjudicated, or
adopted child who is (i) under age 26, or (ii) age 19 or
over and has a mental or physical disability from a cause
originating prior to the age of 19 (age 26 if enrolled as
an adult child).
"Community college dependent beneficiary" does not
include, as indicated under paragraph (2) of this subsection
(aa), a dependent of the survivor of a community college
benefit recipient who first becomes a dependent of a survivor
of a community college benefit recipient on or after January
13, 2012 (the effective date of Public Act 97-668) unless that
dependent would have been eligible for coverage as a dependent
of the deceased community college benefit recipient upon whom
the survivor annuity is based.

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(bb) "Qualified child advocacy center" means any Illinois
child advocacy center and its administrative offices funded by
the Department of Children and Family Services, as defined by
the Children's Advocacy Center Act (55 ILCS 80/), approved by
the Director and participating in a program created under
subsection (n) of Section 10.
(cc) "Placement for adoption" means the assumption and
retention by a member of a legal obligation for total or
partial support of a child in anticipation of adoption of the
child. The child's placement with the member terminates upon
the termination of such legal obligation.
(Source: P.A. 101-242, eff. 8-9-19; 102-558, eff. 8-20-21;
102-714, eff. 4-29-22; 102-813, eff 5-13-22.)
(5 ILCS 375/10) (from Ch. 127, par. 530)
Sec. 10. Contributions by the State and members.
(a) The State shall pay the cost of basic non-contributory
group life insurance and, subject to member paid contributions
set by the Department or required by this Section and except as
provided in this Section, the basic program of group health
benefits on each eligible member, except a member, not
otherwise covered by this Act, who has retired as a
participating member under Article 2 of the Illinois Pension
Code but is ineligible for the retirement annuity under
Section 2-119 of the Illinois Pension Code, and part of each
eligible member's and retired member's premiums for health

HB4699 - 19 - LRB103 38255 RPS 68390 b
insurance coverage for enrolled dependents as provided by
Section 9. The State shall pay the cost of the basic program of
group health benefits only after benefits are reduced by the
amount of benefits covered by Medicare for all members and
dependents who are eligible for benefits under Social Security
or the Railroad Retirement system or who had sufficient
Medicare-covered government employment, except that such
reduction in benefits shall apply only to those members and
dependents who (1) first become eligible for such Medicare
coverage on or after July 1, 1992; or (2) are
Medicare-eligible members or dependents of a local government
unit which began participation in the program on or after July
1, 1992; or (3) remain eligible for, but no longer receive
Medicare coverage which they had been receiving on or after
July 1, 1992. The Department may determine the aggregate level
of the State's contribution on the basis of actual cost of
medical services adjusted for age, sex or geographic or other
demographic characteristics which affect the costs of such
programs.
The cost of participation in the basic program of group
health benefits for the dependent or survivor of a living or
deceased retired employee who was formerly employed by the
University of Illinois in the Cooperative Extension Service
and would be an annuitant but for the fact that he or she was
made ineligible to participate in the State Universities
Retirement System by clause (4) of subsection (a) of Section

HB4699 - 20 - LRB103 38255 RPS 68390 b
15-107 of the Illinois Pension Code shall not be greater than
the cost of participation that would otherwise apply to that
dependent or survivor if he or she were the dependent or
survivor of an annuitant under the State Universities
Retirement System.
(a-1) (Blank).
(a-2) (Blank).
(a-3) (Blank).
(a-4) (Blank).
(a-5) (Blank).
(a-6) (Blank).
(a-7) (Blank).
(a-8) Any annuitant, survivor, or retired employee may
waive or terminate coverage in the program of group health
benefits. Any such annuitant, survivor, or retired employee
who has waived or terminated coverage may enroll or re-enroll
in the program of group health benefits only during the annual
benefit choice period, as determined by the Director; except
that in the event of termination of coverage due to nonpayment
of premiums, the annuitant, survivor, or retired employee may
not re-enroll in the program.
(a-8.5) Beginning on the effective date of this amendatory
Act of the 97th General Assembly, the Director of Central
Management Services shall, on an annual basis, determine the
amount that the State shall contribute toward the basic
program of group health benefits on behalf of annuitants

HB4699 - 21 - LRB103 38255 RPS 68390 b
(including individuals who (i) participated in the General
Assembly Retirement System, the State Employees' Retirement
System of Illinois, the State Universities Retirement System,
the Teachers' Retirement System of the State of Illinois, or
the Judges Retirement System of Illinois and (ii) qualify as
annuitants under subsection (b) of Section 3 of this Act),
survivors (including individuals who (i) receive an annuity as
a survivor of an individual who participated in the General
Assembly Retirement System, the State Employees' Retirement
System of Illinois, the State Universities Retirement System,
the Teachers' Retirement System of the State of Illinois, or
the Judges Retirement System of Illinois and (ii) qualify as
survivors under subsection (q) of Section 3 of this Act), and
retired employees (as defined in subsection (p) of Section 3
of this Act). The remainder of the cost of coverage for each
annuitant, survivor, or retired employee, as determined by the
Director of Central Management Services, shall be the
responsibility of that annuitant, survivor, or retired
employee.
Contributions required of annuitants, survivors, and
retired employees shall be the same for all retirement systems
and shall also be based on whether an individual has made an
election under Section 15-135.1 of the Illinois Pension Code.
Contributions may be based on annuitants', survivors', or
retired employees' Medicare eligibility, but may not be based
on Social Security eligibility.

HB4699 - 22 - LRB103 38255 RPS 68390 b
(a-9) No later than May 1 of each calendar year, the
Director of Central Management Services shall certify in
writing to the Executive Secretary of the State Employees'
Retirement System of Illinois the amounts of the Medicare
supplement health care premiums and the amounts of the health
care premiums for all other retirees who are not Medicare
eligible.
A separate calculation of the premiums based upon the
actual cost of each health care plan shall be so certified.
The Director of Central Management Services shall provide
to the Executive Secretary of the State Employees' Retirement
System of Illinois such information, statistics, and other
data as he or she may require to review the premium amounts
certified by the Director of Central Management Services.
The Department of Central Management Services, or any
successor agency designated to procure healthcare contracts
pursuant to this Act, is authorized to establish funds,
separate accounts provided by any bank or banks as defined by
the Illinois Banking Act, or separate accounts provided by any
savings and loan association or associations as defined by the
Illinois Savings and Loan Act of 1985 to be held by the
Director, outside the State treasury, for the purpose of
receiving the transfer of moneys from the Local Government
Health Insurance Reserve Fund. The Department may promulgate
rules further defining the methodology for the transfers. Any
interest earned by moneys in the funds or accounts shall inure

HB4699 - 23 - LRB103 38255 RPS 68390 b
to the Local Government Health Insurance Reserve Fund. The
transferred moneys, and interest accrued thereon, shall be
used exclusively for transfers to administrative service
organizations or their financial institutions for payments of
claims to claimants and providers under the self-insurance
health plan. The transferred moneys, and interest accrued
thereon, shall not be used for any other purpose including,
but not limited to, reimbursement of administration fees due
the administrative service organization pursuant to its
contract or contracts with the Department.
(a-10) To the extent that participation, benefits, or
premiums under this Act are based on a person's service credit
under an Article of the Illinois Pension Code, service credit
terminated in exchange for an accelerated pension benefit
payment under Section 14-147.5, 15-185.5, or 16-190.5 of that
Code shall be included in determining a person's service
credit for the purposes of this Act.
(a-15) For purposes of determining State contributions
under this Section, service established under a Tier 3 plan
under Article 2 of the Illinois Pension Code shall be included
in determining an employee's creditable service. Any credit
terminated as part of a transfer of contributions to a Tier 3
plan under Article 2 of the Illinois Pension Code shall also be
included in determining an employee's creditable service.
(b) State employees who become eligible for this program
on or after January 1, 1980 in positions normally requiring

HB4699 - 24 - LRB103 38255 RPS 68390 b
actual performance of duty not less than 1/2 of a normal work
period but not equal to that of a normal work period, shall be
given the option of participating in the available program. If
the employee elects coverage, the State shall contribute on
behalf of such employee to the cost of the employee's benefit
and any applicable dependent supplement, that sum which bears
the same percentage as that percentage of time the employee
regularly works when compared to normal work period.
(c) The basic non-contributory coverage from the basic
program of group health benefits shall be continued for each
employee not in pay status or on active service by reason of
(1) leave of absence due to illness or injury, (2) authorized
educational leave of absence or sabbatical leave, or (3)
military leave. This coverage shall continue until expiration
of authorized leave and return to active service, but not to
exceed 24 months for leaves under item (1) or (2). This
24-month limitation and the requirement of returning to active
service shall not apply to persons receiving ordinary or
accidental disability benefits or retirement benefits through
the appropriate State retirement system or benefits under the
Workers' Compensation or Occupational Disease Act.
(d) The basic group life insurance coverage shall
continue, with full State contribution, where such person is
(1) absent from active service by reason of disability arising
from any cause other than self-inflicted, (2) on authorized
educational leave of absence or sabbatical leave, or (3) on

HB4699 - 25 - LRB103 38255 RPS 68390 b
military leave.
(e) Where the person is in non-pay status for a period in
excess of 30 days or on leave of absence, other than by reason
of disability, educational or sabbatical leave, or military
leave, such person may continue coverage only by making
personal payment equal to the amount normally contributed by
the State on such person's behalf. Such payments and coverage
may be continued: (1) until such time as the person returns to
a status eligible for coverage at State expense, but not to
exceed 24 months or (2) until such person's employment or
annuitant status with the State is terminated (exclusive of
any additional service imposed pursuant to law).
(f) The Department shall establish by rule the extent to
which other employee benefits will continue for persons in
non-pay status or who are not in active service.
(g) The State shall not pay the cost of the basic
non-contributory group life insurance, program of health
benefits and other employee benefits for members who are
survivors as defined by paragraphs (1) and (2) of subsection
(q) of Section 3 of this Act. The costs of benefits for these
survivors shall be paid by the survivors or by the University
of Illinois Cooperative Extension Service, or any combination
thereof. However, the State shall pay the amount of the
reduction in the cost of participation, if any, resulting from
the amendment to subsection (a) made by this amendatory Act of
the 91st General Assembly.

HB4699 - 26 - LRB103 38255 RPS 68390 b
(h) Those persons occupying positions with any department
as a result of emergency appointments pursuant to Section 8b.8
of the Personnel Code who are not considered employees under
this Act shall be given the option of participating in the
programs of group life insurance, health benefits and other
employee benefits. Such persons electing coverage may
participate only by making payment equal to the amount
normally contributed by the State for similarly situated
employees. Such amounts shall be determined by the Director.
Such payments and coverage may be continued until such time as
the person becomes an employee pursuant to this Act or such
person's appointment is terminated.
(i) Any unit of local government within the State of
Illinois may apply to the Director to have its employees,
annuitants, and their dependents provided group health
coverage under this Act on a non-insured basis. To
participate, a unit of local government must agree to enroll
all of its employees, who may select coverage under any group
health benefits plan made available by the Department under
the health benefits program established under this Section or
a health maintenance organization that has contracted with the
State to be available as a health care provider for employees
as defined in this Act. A unit of local government must remit
the entire cost of providing coverage under the health
benefits program established under this Section or, for
coverage under a health maintenance organization, an amount

HB4699 - 27 - LRB103 38255 RPS 68390 b
determined by the Director based on an analysis of the sex,
age, geographic location, or other relevant demographic
variables for its employees, except that the unit of local
government shall not be required to enroll those of its
employees who are covered spouses or dependents under the
State group health benefits plan or another group policy or
plan providing health benefits as long as (1) an appropriate
official from the unit of local government attests that each
employee not enrolled is a covered spouse or dependent under
this plan or another group policy or plan, and (2) at least 50%
of the employees are enrolled and the unit of local government
remits the entire cost of providing coverage to those
employees, except that a participating school district must
have enrolled at least 50% of its full-time employees who have
not waived coverage under the district's group health plan by
participating in a component of the district's cafeteria plan.
A participating school district is not required to enroll a
full-time employee who has waived coverage under the
district's health plan, provided that an appropriate official
from the participating school district attests that the
full-time employee has waived coverage by participating in a
component of the district's cafeteria plan. For the purposes
of this subsection, "participating school district" includes a
unit of local government whose primary purpose is education as
defined by the Department's rules.
Employees of a participating unit of local government who

HB4699 - 28 - LRB103 38255 RPS 68390 b
are not enrolled due to coverage under another group health
policy or plan may enroll in the event of a qualifying change
in status, special enrollment, special circumstance as defined
by the Director, or during the annual Benefit Choice Period. A
participating unit of local government may also elect to cover
its annuitants. Dependent coverage shall be offered on an
optional basis, with the costs paid by the unit of local
government, its employees, or some combination of the two as
determined by the unit of local government. The unit of local
government shall be responsible for timely collection and
transmission of dependent premiums.
The Director shall annually determine monthly rates of
payment, subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees
for elected optional coverages or for enrolled dependents
coverages or other contributory coverages, or contributed
by the State for basic insurance coverages on behalf of
its employees, adjusted for differences between State
employees and employees of the local government in age,
sex, geographic location or other relevant demographic
variables, plus an amount sufficient to pay for the
additional administrative costs of providing coverage to
employees of the unit of local government and their
dependents.
(2) In subsequent years, a further adjustment shall be

HB4699 - 29 - LRB103 38255 RPS 68390 b
made to reflect the actual prior years' claims experience
of the employees of the unit of local government.
In the case of coverage of local government employees
under a health maintenance organization, the Director shall
annually determine for each participating unit of local
government the maximum monthly amount the unit may contribute
toward that coverage, based on an analysis of (i) the age, sex,
geographic location, and other relevant demographic variables
of the unit's employees and (ii) the cost to cover those
employees under the State group health benefits plan. The
Director may similarly determine the maximum monthly amount
each unit of local government may contribute toward coverage
of its employees' dependents under a health maintenance
organization.
Monthly payments by the unit of local government or its
employees for group health benefits plan or health maintenance
organization coverage shall be deposited in the Local
Government Health Insurance Reserve Fund.
The Local Government Health Insurance Reserve Fund is
hereby created as a nonappropriated trust fund to be held
outside the State Treasury, with the State Treasurer as
custodian. The Local Government Health Insurance Reserve Fund
shall be a continuing fund not subject to fiscal year
limitations. The Local Government Health Insurance Reserve
Fund is not subject to administrative charges or charge-backs,
including but not limited to those authorized under Section 8h

HB4699 - 30 - LRB103 38255 RPS 68390 b
of the State Finance Act. All revenues arising from the
administration of the health benefits program established
under this Section shall be deposited into the Local
Government Health Insurance Reserve Fund. Any interest earned
on moneys in the Local Government Health Insurance Reserve
Fund shall be deposited into the Fund. All expenditures from
this Fund shall be used for payments for health care benefits
for local government and rehabilitation facility employees,
annuitants, and dependents, and to reimburse the Department or
its administrative service organization for all expenses
incurred in the administration of benefits. No other State
funds may be used for these purposes.
A local government employer's participation or desire to
participate in a program created under this subsection shall
not limit that employer's duty to bargain with the
representative of any collective bargaining unit of its
employees.
(j) Any rehabilitation facility within the State of
Illinois may apply to the Director to have its employees,
annuitants, and their eligible dependents provided group
health coverage under this Act on a non-insured basis. To
participate, a rehabilitation facility must agree to enroll
all of its employees and remit the entire cost of providing
such coverage for its employees, except that the
rehabilitation facility shall not be required to enroll those
of its employees who are covered spouses or dependents under

HB4699 - 31 - LRB103 38255 RPS 68390 b
this plan or another group policy or plan providing health
benefits as long as (1) an appropriate official from the
rehabilitation facility attests that each employee not
enrolled is a covered spouse or dependent under this plan or
another group policy or plan, and (2) at least 50% of the
employees are enrolled and the rehabilitation facility remits
the entire cost of providing coverage to those employees.
Employees of a participating rehabilitation facility who are
not enrolled due to coverage under another group health policy
or plan may enroll in the event of a qualifying change in
status, special enrollment, special circumstance as defined by
the Director, or during the annual Benefit Choice Period. A
participating rehabilitation facility may also elect to cover
its annuitants. Dependent coverage shall be offered on an
optional basis, with the costs paid by the rehabilitation
facility, its employees, or some combination of the 2 as
determined by the rehabilitation facility. The rehabilitation
facility shall be responsible for timely collection and
transmission of dependent premiums.
The Director shall annually determine quarterly rates of
payment, subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees
for elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its
employees, adjusted for differences between State

HB4699 - 32 - LRB103 38255 RPS 68390 b
employees and employees of the rehabilitation facility in
age, sex, geographic location or other relevant
demographic variables, plus an amount sufficient to pay
for the additional administrative costs of providing
coverage to employees of the rehabilitation facility and
their dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the rehabilitation facility.
Monthly payments by the rehabilitation facility or its
employees for group health benefits shall be deposited in the
Local Government Health Insurance Reserve Fund.
(k) Any domestic violence shelter or service within the
State of Illinois may apply to the Director to have its
employees, annuitants, and their dependents provided group
health coverage under this Act on a non-insured basis. To
participate, a domestic violence shelter or service must agree
to enroll all of its employees and pay the entire cost of
providing such coverage for its employees. The domestic
violence shelter shall not be required to enroll those of its
employees who are covered spouses or dependents under this
plan or another group policy or plan providing health benefits
as long as (1) an appropriate official from the domestic
violence shelter attests that each employee not enrolled is a
covered spouse or dependent under this plan or another group
policy or plan and (2) at least 50% of the employees are

HB4699 - 33 - LRB103 38255 RPS 68390 b
enrolled and the domestic violence shelter remits the entire
cost of providing coverage to those employees. Employees of a
participating domestic violence shelter who are not enrolled
due to coverage under another group health policy or plan may
enroll in the event of a qualifying change in status, special
enrollment, or special circumstance as defined by the Director
or during the annual Benefit Choice Period. A participating
domestic violence shelter may also elect to cover its
annuitants. Dependent coverage shall be offered on an optional
basis, with employees, or some combination of the 2 as
determined by the domestic violence shelter or service. The
domestic violence shelter or service shall be responsible for
timely collection and transmission of dependent premiums.
The Director shall annually determine rates of payment,
subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees
for elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the domestic violence shelter
or service in age, sex, geographic location or other
relevant demographic variables, plus an amount sufficient
to pay for the additional administrative costs of
providing coverage to employees of the domestic violence
shelter or service and their dependents.

HB4699 - 34 - LRB103 38255 RPS 68390 b
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the domestic violence shelter or
service.
Monthly payments by the domestic violence shelter or
service or its employees for group health insurance shall be
deposited in the Local Government Health Insurance Reserve
Fund.
(l) A public community college or entity organized
pursuant to the Public Community College Act may apply to the
Director initially to have only annuitants not covered prior
to July 1, 1992 by the district's health plan provided health
coverage under this Act on a non-insured basis. The community
college must execute a 2-year contract to participate in the
Local Government Health Plan. Any annuitant may enroll in the
event of a qualifying change in status, special enrollment,
special circumstance as defined by the Director, or during the
annual Benefit Choice Period.
The Director shall annually determine monthly rates of
payment subject to the following constraints: for those
community colleges with annuitants only enrolled, first year
rates shall be equal to the average cost to cover claims for a
State member adjusted for demographics, Medicare
participation, and other factors; and in the second year, a
further adjustment of rates shall be made to reflect the
actual first year's claims experience of the covered

HB4699 - 35 - LRB103 38255 RPS 68390 b
annuitants.
(l-5) The provisions of subsection (l) become inoperative
on July 1, 1999.
(m) The Director shall adopt any rules deemed necessary
for implementation of this amendatory Act of 1989 (Public Act
86-978).
(n) Any child advocacy center within the State of Illinois
may apply to the Director to have its employees, annuitants,
and their dependents provided group health coverage under this
Act on a non-insured basis. To participate, a child advocacy
center must agree to enroll all of its employees and pay the
entire cost of providing coverage for its employees. The child
advocacy center shall not be required to enroll those of its
employees who are covered spouses or dependents under this
plan or another group policy or plan providing health benefits
as long as (1) an appropriate official from the child advocacy
center attests that each employee not enrolled is a covered
spouse or dependent under this plan or another group policy or
plan and (2) at least 50% of the employees are enrolled and the
child advocacy center remits the entire cost of providing
coverage to those employees. Employees of a participating
child advocacy center who are not enrolled due to coverage
under another group health policy or plan may enroll in the
event of a qualifying change in status, special enrollment, or
special circumstance as defined by the Director or during the
annual Benefit Choice Period. A participating child advocacy

HB4699 - 36 - LRB103 38255 RPS 68390 b
center may also elect to cover its annuitants. Dependent
coverage shall be offered on an optional basis, with the costs
paid by the child advocacy center, its employees, or some
combination of the 2 as determined by the child advocacy
center. The child advocacy center shall be responsible for
timely collection and transmission of dependent premiums.
The Director shall annually determine rates of payment,
subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees
for elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the child advocacy center in
age, sex, geographic location, or other relevant
demographic variables, plus an amount sufficient to pay
for the additional administrative costs of providing
coverage to employees of the child advocacy center and
their dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the child advocacy center.
Monthly payments by the child advocacy center or its
employees for group health insurance shall be deposited into
the Local Government Health Insurance Reserve Fund.
(Source: P.A. 102-19, eff. 7-1-21.)

HB4699 - 37 - LRB103 38255 RPS 68390 b
Section 10. The Illinois Pension Code is amended by
changing Sections 2-105.3, 2-162, 20-121, 20-123, 20-124, and
20-125 and by adding Section 2-165.5 as follows:
(40 ILCS 5/2-105.3)
Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier
3 participant.
"Tier 1 participant": A participant who first became a
participant before January 1, 2011.
In the case of a Tier 1 participant who elects to
participate in the Tier 3 plan under Section 2-165.5 of this
Code, that participant shall be deemed a Tier 1 participant
only with respect to service performed or established before
the effective date of that election.
"Tier 2 participant": A participant who first became a
participant on or after January 1, 2011.
In the case of a Tier 2 participant who elects to
participate in the Tier 3 plan under Section 2-165.5 of this
Code, that Tier 2 participant shall be deemed a Tier 2
participant only with respect to service performed or
established before the effective date of that election.
"Tier 3 participant": A participant who first becomes a
participant on or after July 1, 2025 or a Tier 1 or Tier 2
participant who elects to participate in the Tier 3 plan under
Section 2-165.5 of this Code, but only with respect to service

HB4699 - 38 - LRB103 38255 RPS 68390 b
performed on or after the effective date of that election.
(Source: P.A. 103-8, eff. 6-7-23.)
(40 ILCS 5/2-162)
Sec. 2-162. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly. "New benefit
increase", however, does not include any benefit increase
resulting from the changes made to this Article by this
amendatory Act of the 103rd General Assembly.
(b) Notwithstanding any other provision of this Code or
any subsequent amendment to this Code, every new benefit
increase is subject to this Section and shall be deemed to be
granted only in conformance with and contingent upon
compliance with the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this

HB4699 - 39 - LRB103 38255 RPS 68390 b
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of
the Department of Insurance. A new benefit increase created by
a Public Act that does not include the additional funding
required under this subsection is null and void. If the Public
Pension Division determines that the additional funding
provided for a new benefit increase under this subsection is
or has become inadequate, it may so certify to the Governor and
the State Comptroller and, in the absence of corrective action
by the General Assembly, the new benefit increase shall expire
at the end of the fiscal year in which the certification is
made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any

HB4699 - 40 - LRB103 38255 RPS 68390 b
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 103-426, eff. 8-4-23.)
(40 ILCS 5/2-165.5 new)
Sec. 2-165.5. Tier 3 plan.
(a) By July 1, 2025, the System shall prepare and
implement a Tier 3 plan. The Tier 3 plan developed under this
Section shall be a plan that aggregates State and employee
contributions in individual participant accounts that, after
meeting any other requirements, are used for payouts after
retirement in accordance with this Section and any other
applicable laws. In developing, preparing, and implementing
the Tier 3 plan and adopting rules concerning the Tier 3 plan,
the System shall utilize the framework of the self-managed
plan offered under Article 15 and shall endeavor to adapt the
benefits and structure of the self-managed plan. The System
shall consult with the State Universities Retirement System in
developing the Tier 3 plan.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1 or Tier
2 participants who have not made the election authorized under
this Section.
(1) All persons who begin to participate in this

HB4699 - 41 - LRB103 38255 RPS 68390 b
System on or after July 1, 2025 shall participate in the
Tier 3 plan rather than the defined benefit plan.
(2) A participant in the Tier 3 plan shall pay
employee contributions at a rate of 8% of salary.
(3) State contributions shall be paid into the
accounts of all participants in the Tier 3 plan at a rate
of 7.6% of salary.
(4) The Tier 3 plan shall require 5 years of
participation in the Tier 3 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 Tier 3 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.
(6) The Tier 3 plan shall provide a variety of options
for payouts to participants in the Tier 3 plan who are no
longer active in the System and their survivors.
(7) 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,
from the Tier 3 plan into other qualified retirement
plans.
(8) The System shall reduce the employee contributions

HB4699 - 42 - LRB103 38255 RPS 68390 b
credited to the participant's Tier 3 plan account by an
amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.
(b) Under the Tier 3 plan, an active Tier 1 or Tier 2
participant of this System may elect, in writing, to cease
accruing benefits in the defined benefit plan and begin
accruing benefits for future service in the Tier 3 plan. The
election to participate in the Tier 3 plan is voluntary and
irrevocable.
(1) Service credit under the Tier 3 plan may be used
for determining retirement eligibility under the defined
benefit plan.
(2) The System shall make a good faith effort to
contact all active Tier 1 and Tier 2 participants who are
eligible to participate in the Tier 3 plan. The System
shall mail information describing the option to join the
Tier 3 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.
(3) 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

HB4699 - 43 - LRB103 38255 RPS 68390 b
their benefits and service. The individual consultation
shall include projections of the participant's defined
benefits at retirement or earlier termination of service
and the value of the participant'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 and Tier 2 participants who are eligible to
participate in the Tier 3 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, private counsel and financial advisors.
(b-5) A Tier 1 or Tier 2 participant who elects to
participate in the Tier 3 plan may irrevocably elect to
terminate all participation in the defined benefit plan. Upon
that election, the System shall transfer to the participant's
individual account an amount equal to the amount of
contribution refund that the participant would be eligible to
receive if the member terminated employment on that date and
elected a refund of contributions, including the prescribed
rate of interest for the respective years. The System shall
make the transfer as a tax-free transfer in accordance with
Internal Revenue Service guidelines, for purposes of funding
the amount credited to the participant's individual account.
(c) In no event shall the System, its staff, its
authorized representatives, or the Board be liable for any

HB4699 - 44 - LRB103 38255 RPS 68390 b
information given to an employee under this Section. The
System may coordinate with the Illinois Department of Central
Management Services to provide information concerning the
impact of the Tier 3 plan set forth in this Section.
(c-5) The System shall solicit proposals to provide
administrative services and funding vehicles for the Tier 3
plan from insurance and annuity companies and mutual fund
companies, banks, trust companies, or other financial
institutions authorized to do business in this State. In
reviewing the proposals received and approving and contracting
with no fewer than 2 and no more than 7 companies, the Board of
Trustees of the System shall consider, among other things, the
following criteria:
(1) the nature and extent of the benefits that would
be provided to the participants;
(2) the reasonableness of the benefits in relation to
the premium charged;
(3) the suitability of the benefits to the needs and
interests of the participating employees and the employer;
(4) the ability of the company to provide benefits
under the contract and the financial stability of the
company; and
(5) the efficacy of the contract in the recruitment
and retention of employees.
The System shall periodically review each approved
company. A company may continue to provide administrative

HB4699 - 45 - LRB103 38255 RPS 68390 b
services and funding vehicles for the Tier 3 plan only so long
as it continues to be an approved company under contract with
the Board.
(d) Notwithstanding any other provision of this Section,
no person shall begin participating in the Tier 3 plan until it
has attained qualified plan status and received all necessary
approvals from the U.S. Internal Revenue Service.
(e) The System shall report on its progress under this
Section, including the available details of the Tier 3 plan
and the System's plans for informing eligible Tier 1 and Tier 2
participants about the plan, to the Governor and the General
Assembly on or before January 15, 2025.
(f) The Illinois State Board of Investment shall be the
plan sponsor for the Tier 3 plan established under this
Section.
(40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-121. Calculation of proportional retirement
annuities.
(a) Upon retirement of the employee, a proportional
retirement annuity shall be computed by each participating
system in which pension credit has been established on the
basis of pension credits under each system. The computation
shall be in accordance with the formula or method prescribed

HB4699 - 46 - LRB103 38255 RPS 68390 b
by each participating system which is in effect at the date of
the employee's latest withdrawal from service covered by any
of the systems in which he has pension credits which he elects
to have considered under this Article. However, the amount of
any retirement annuity payable under the self-managed plan
established under Section 15-158.2 of this Code depends solely
on the value of the participant's vested account balances and
is not subject to any proportional adjustment under this
Section.
(a-5) For persons who participate in a Tier 3 plan
established under Article 2 of this Code to whom the
provisions of this Article apply, the pension credits
established under the Tier 3 plan may be considered in
determining eligibility for or the amount of the defined
benefit retirement annuity that is payable by any other
participating system.
(b) Combined pension credit under all retirement systems
subject to this Article shall be considered in determining
whether the minimum qualification has been met and the formula
or method of computation which shall be applied, except as may
be otherwise provided with respect to vesting in State or
employer contributions in a Tier 3 plan. If a system has a
step-rate formula for calculation of the retirement annuity,
pension credits covering previous service which have been
established under another system shall be considered in
determining which range or ranges of the step-rate formula are

HB4699 - 47 - LRB103 38255 RPS 68390 b
to be applicable to the employee.
(c) Interest on pension credit shall continue to
accumulate in accordance with the provisions of the law
governing the retirement system in which the same has been
established during the time an employee is in the service of
another employer, on the assumption such employee, for
interest purposes for pension credit, is continuing in the
service covered by such retirement system.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-123. Survivor's annuity. The provisions governing
a retirement annuity shall be applicable to a survivor's
annuity. Appropriate credits shall be established for
survivor's annuity purposes in those participating systems
which provide survivor's annuities, according to the same
conditions and subject to the same limitations and
restrictions herein prescribed for a retirement annuity. If a
participating system has no survivor's annuity benefit, or if
the survivor's annuity benefit under that system is waived,
pension credit established in that system shall not be
considered in determining eligibility for or the amount of the
survivor's annuity which may be payable by any other
participating system.

HB4699 - 48 - LRB103 38255 RPS 68390 b
For persons who participate in the self-managed plan
established under Section 15-158.2 or the portable benefit
package established under Section 15-136.4, pension credit
established under Article 15 may be considered in determining
eligibility for or the amount of the survivor's annuity that
is payable by any other participating system, but pension
credit established in any other system shall not result in any
right to a survivor's annuity under the Article 15 system.
For persons who participate in a Tier 3 plan established
under Article 2 of this Code to whom the provisions of this
Article apply, the pension credits established under the Tier
3 plan may be considered in determining eligibility for or the
amount of the defined benefit survivor's annuity that is
payable by any other participating system, but pension credits
established in any other system shall not result in any right
to or increase in the value of a survivor's annuity under the
Tier 3 plan, which depends solely on the options chosen and the
value of the participant's vested account balances and is not
subject to any proportional adjustment under this Section.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-124. Maximum benefits.
(a) In no event shall the combined retirement or survivors

HB4699 - 49 - LRB103 38255 RPS 68390 b
annuities exceed the highest annuity which would have been
payable by any participating system in which the employee has
pension credits, if all of his pension credits had been
validated in that system.
If the combined annuities should exceed the highest
maximum as determined in accordance with this Section, the
respective annuities shall be reduced proportionately
according to the ratio which the amount of each proportional
annuity bears to the aggregate of all such annuities.
(b) In the case of a participant in the self-managed plan
established under Section 15-158.2 of this Code to whom the
provisions of this Article apply:
(i) For purposes of calculating the combined
retirement annuity and the proportionate reduction, if
any, in a retirement annuity other than one payable under
the self-managed plan, the amount of the Article 15
retirement annuity shall be deemed to be the highest
annuity to which the annuitant would have been entitled if
he or she had participated in the traditional benefit
package as defined in Section 15-103.1 rather than the
self-managed plan.
(ii) For purposes of calculating the combined
survivor's annuity and the proportionate reduction, if
any, in a survivor's annuity other than one payable under
the self-managed plan, the amount of the Article 15
survivor's annuity shall be deemed to be the highest

HB4699 - 50 - LRB103 38255 RPS 68390 b
survivor's annuity to which the survivor would have been
entitled if the deceased employee had participated in the
traditional benefit package as defined in Section 15-103.1
rather than the self-managed plan.
(iii) Benefits payable under the self-managed plan are
not subject to proportionate reduction under this Section.
(c) In the case of a participant in a Tier 3 plan
established under Article 2 of this Code to whom the
provisions of this Article apply:
(i) For purposes of calculating the combined
retirement annuity and the proportionate reduction, if
any, in a defined benefit retirement annuity, any benefit
payable under the Tier 3 plan shall not be considered.
(ii) For purposes of calculating the combined
survivor's annuity and the proportionate reduction, if
any, in a defined benefit survivor's annuity, any benefit
payable under the Tier 3 plan shall not be considered.
(iii) Benefits payable under a Tier 3 plan established
under Article 2 of this Code are not subject to
proportionate reduction under this Section.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-125) (from Ch. 108 1/2, par. 20-125)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-125. Return to employment; suspension employment -

HB4699 - 51 - LRB103 38255 RPS 68390 b
suspension of benefits. If a retired employee returns to
employment which is covered by a system from which he is
receiving a proportional annuity under this Article, his
proportional annuity from all participating systems shall be
suspended during the period of re-employment, except that this
suspension does not apply to any distributions payable under
the self-managed plan established under Section 15-158.2 of
this Code or under a Tier 3 plan established under Article 2 of
this Code.
The provisions of the Article under which such employment
would be covered shall govern the determination of whether the
employee has returned to employment, and if applicable the
exemption of temporary employment or employment not exceeding
a specified duration or frequency, for all participating
systems from which the retired employee is receiving a
proportional annuity under this Article, notwithstanding any
contrary provisions in the other Articles governing such
systems.
(Source: P.A. 91-887, eff. 7-6-00.)