Bill Text: IL SB0303 | 2009-2010 | 96th General Assembly | Introduced

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Bill Title: Amends the Illinois Pension Code. Requires 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, and the Judges Retirement System of Illinois to allow employees to elect to participate in a self-managed program of retirement benefits instead of the program of retirement benefits currently offered. Provides that a self-managed plan shall authorize a participating employee to accumulate assets for retirement through a combination of employer and employee contributions that may be invested at the employee's direction in mutual funds, collective investment funds, or other investment products and used to purchase annuity contracts. Provides that, to the extent that the changes made by the amendatory Act are determined to be a new benefit increase, the changes are exempt from the 5-year expiration provision. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2009-03-13 - Rule 3-9(a) / Re-referred to Assignments [SB0303 Detail]

Download: Illinois-2009-SB0303-Introduced.html

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96TH GENERAL ASSEMBLY State of Illinois 2009 and 2010 SB0303 Introduced 2/6/2009, by Sen. Bill Brady SYNOPSIS AS INTRODUCED:
See Index
Amends the Illinois Pension Code. Requires 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, and the Judges Retirement System of Illinois to allow employees to elect to participate in a self-managed program of retirement benefits instead of the program of retirement benefits currently offered. Provides that a self-managed plan shall authorize a participating employee to accumulate assets for retirement through a combination of employer and employee contributions that may be invested at the employee's direction in mutual funds, collective investment funds, or other investment products and used to purchase annuity contracts. Provides that, to the extent that the changes made by the amendatory Act are determined to be a new benefit increase, the changes are exempt from the 5-year expiration provision. Effective immediately.
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FISCAL NOTE ACT MAY APPLY PENSION IMPACT NOTE ACT MAY APPLY
A BILL FOR
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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 Illinois Pension Code is amended by adding
Sections 2-103.1, 2-103.2, 2-117.4, 2-126.2, 2-162.1,
14-103.40, 14-103.41, 14-105.8, 14-133.2, 15-198.1, 16-104.1,
16-104.2, 16-131.7, 16-158.2, 16-203.1, 18-105.1, 18-105.2,
18-123.3, 18-133.2, and 18-169.1 and changing Sections 2-126,
14-133, 14-152.2, 15-103.3, 15-134.5, 15-158.2, 16-152, and
18-133 as follows:
(40 ILCS 5/2-103.1 new)
Sec. 2-103.1. Traditional benefit package. "Traditional
benefit package" means the defined benefit retirement program
maintained by the System, which includes retirement annuities
payable directly from the System, as provided in Sections
2-119, 2-119.01, 2-119.1, and 2-120; survivor's annuities
payable directly from the System, as provided in Sections
2-121, 2-121.1, 2-121.2, and 2-121.3; and contribution
refunds, as provided in Section 2-123.
(40 ILCS 5/2-103.2 new)
Sec. 2-103.2. Self-managed plan. "Self-managed plan" means
the defined contribution retirement program maintained by the

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System, as described in Section 2-126.2. The self-managed plan
does not include retirement annuities or survivor's benefits
payable directly from the System, as provided in Sections
2-119, 2-119.01, 2-119.1, 2-120, 2-121, 2-121.1, 2-121.2, and
2-121.3 or refunds determined under Section 2-123.
(40 ILCS 5/2-117.4 new)
Sec. 2-117.4. Retirement program elections.
(a) For the purposes of this Section:
"Eligible participant" means either a currently eligible
participant or a newly eligible participant of the System.
"Currently eligible participant" means a person who is a
participant under this Article on the date on which the System
first offers the self-managed plan as an alternative to the
traditional benefit package.
"Newly eligible participant" means a person who first
becomes a participant after the date on which the System first
offers the self-managed plan as an alternative to the
traditional benefit package.
(b) When the System offers to participants under this
Article a self-managed plan as an alternative to the
traditional benefit package, each currently eligible
participant shall be given the choice to elect which retirement
program he or she wishes to participate in with respect to all
periods of covered employment occurring on, before, and after
the effective date of the participant's election.

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The retirement program election made by an eligible
participant must be made in writing, in the manner prescribed
by the System, and within the time period described in this
Section.
If an eligible participant elects the self-managed plan,
then that election is irrevocable. If an eligible participant
who elected to participate or participated by default in the
traditional benefit plan terminates employment under this
Article, then the participant, upon his or her subsequent
re-employment under this Article, may make an election under
this Section.
An eligible participant who fails to make an election under
this Section shall, by default, participate in the traditional
benefit package.
(c) An eligible participant may elect to participate in the
traditional benefit package or the self-managed plan.
A currently eligible participant must make this election
within 5 years after the effective date of the adoption of the
self-managed plan under Section 2-126.2 or, in the case of a
currently eligible participant who terminates employment under
this Article, within 6 months after his or her re-employment
under this Article.
A newly eligible participant must make this election within
6 months after he or she begins employment under this Article.
(d) If the eligible participant elects to participate in
the self-managed plan, the system shall fund their account as

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stated in subsection (f) of Section 2-126.2.
(e) An eligible participant shall be provided with written
information prepared or prescribed by the System that describes
the participant's retirement program choices. The eligible
participant shall be offered an opportunity to receive
counseling from the System prior to making his or her election.
This counseling may consist of videotaped materials, group
presentations, individual consultation with an employee or
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods.
(40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)
Sec. 2-126. Contributions by participants.
(a) Each participant shall contribute toward the cost of
his or her retirement annuity a percentage of each payment of
salary received by him or her for service as a member as
follows: for service between October 31, 1947 and January 1,
1959, 5%; for service between January 1, 1959 and June 30,
1969, 6%; for service between July 1, 1969 and January 10,
1973, 6 1/2%; for service after January 10, 1973, 7%; for
service after December 31, 1981, 8 1/2%.
(b) Beginning August 2, 1949, each male participant, and
from July 1, 1971, each female participant shall contribute
towards the cost of the survivor's annuity 2% of salary.
A participant who has no eligible survivor's annuity

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beneficiary may elect to cease making contributions for
survivor's annuity under this subsection. A survivor's annuity
shall not be payable upon the death of a person who has made
this election, unless prior to that death the election has been
revoked and the amount of the contributions that would have
been paid under this subsection in the absence of the election
is paid to the System, together with interest at the rate of 4%
per year from the date the contributions would have been made
to the date of payment.
Notwithstanding any provision in this subsection (b) to the
contrary, in the case of an employee who participates in the
self-managed plan under Section 2-126.2, contributions for a
survivor's annuity shall instead be used to finance the
benefits available under Section 2-126.2.
(c) Beginning July 1, 1967, each participant shall
contribute 1% of salary towards the cost of automatic increase
in annuity provided in Section 2-119.1. These contributions
shall be made concurrently with contributions for retirement
annuity purposes.
(d) In addition, each participant serving as an officer of
the General Assembly shall contribute, for the same purposes
and at the same rates as are required of a regular participant,
on each additional payment received as an officer. If the
participant serves as an officer for at least 2 but less than 4
years, he or she shall contribute an amount equal to the amount
that would have been contributed had the participant served as

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an officer for 4 years. Persons who serve as officers in the
87th General Assembly but cannot receive the additional payment
to officers because of the ban on increases in salary during
their terms may nonetheless make contributions based on those
additional payments for the purpose of having the additional
payments included in their highest salary for annuity purposes;
however, persons electing to make these additional
contributions must also pay an amount representing the
corresponding employer contributions, as calculated by the
System.
(Source: P.A. 90-766, eff. 8-14-98.)
(40 ILCS 5/2-126.2 new)
Sec. 2-126.2. Self-managed plan.
(a) The General Assembly finds that the State should have
the flexibility to provide a defined contribution
(self-managed) plan for eligible participants. Accordingly,
the General Assembly Retirement System is hereby authorized to
establish and administer a self-managed plan, which shall offer
participants the opportunity to accumulate assets for
retirement through a combination of participant and State
contributions that may be invested in mutual funds, collective
investment funds, or other investment products and used to
purchase annuity contracts, either fixed or variable or a
combination of fixed and variable. The plan must be qualified
under the Internal Revenue Code of 1986.

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(b) The Board shall adopt the self-managed plan established
under this Section for participants under this Article. The
adoption of the self-managed plan makes available to the
eligible participants under this Article the elections
described in Section 2-117.4.
The General Assembly Retirement System shall be the plan
sponsor for the self-managed plan and shall prepare a plan
document and adopt any rules and procedures as are considered
necessary or desirable for the administration of the
self-managed plan. Consistent with its fiduciary duty to the
participants and beneficiaries of the self-managed plan, the
Board of Trustees of the System may delegate aspects of plan
administration as it sees fit to companies authorized to do
business in this State.
(c) The System shall solicit proposals to provide
administrative services and funding vehicles for the
self-managed 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

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the premium charged;
(3) the suitability of the benefits to the needs and
interests of the participants and the State; and
(4) the ability of the company to provide benefits
under the contract and the financial stability of the
company.
The System shall periodically review each approved
company. A company may continue to provide administrative
services and funding vehicles for the self-managed plan only so
long as it continues to be an approved company under contract
with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the System.
(d) Participants in the program must be allowed to direct
the transfer of their account balances among the various
investment options offered, subject to applicable contractual
provisions. The participant shall not be deemed a fiduciary by
reason of providing such investment direction. A person who is
a fiduciary shall not be liable for any loss resulting from
that investment direction and shall not be deemed to have
breached any fiduciary duty by acting in accordance with that
direction. Neither the System nor the State shall guarantee any
of the investments in the participant's account balances.
(e) An eligible participant, as defined in Section 2-117.4,
must make a written election to participate in the self-managed

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plan in accordance with the provisions of Section 2-117.4 and
the procedures established by the System. Participation in the
self-managed plan shall begin on the first day of the month
immediately following the month in which the eligible
participant's election is filed with the System, but not sooner
than the effective date of the self-managed plan. The System
shall make the self-managed plan available under this Article
by January 1, 2010. A member's participation in the traditional
retirement package under this Article shall terminate on the
date that participation in the self-managed plan begins.
A member who has elected to participate in the self-managed
plan under this Section must continue participation while he or
she remains a participant under this Article, and may not
participate in the traditional benefit package.
Participation in the self-managed plan under this Section
shall constitute participation in the General Assembly
Retirement System.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.
(f) If, at the time a participant elects to participate in
the self-managed plan, the participant has rights and credits
in the System due to previous participation in the traditional
benefit package, the System shall establish for the participant
an opening account balance in the self-managed plan, equal to
(1) the amount of the contribution refund that the participant
would be eligible to receive under Section 2-123 if the

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participant terminated employment on that date and elected a
refund of contributions and (2) an amount equal to the regular
employer contribution that would be required to fund the actual
regular cost incurred for each year of service credit earned,
provided that the total opening account balance does not exceed
7.6% of the participant's salary for that year, plus interest.
The interest used in this subsection (f) is calculated as the
average annual rate of return that the System has earned over
the past 20 fiscal years and is compounded. The System shall
transfer assets from the defined benefit retirement program to
the self-managed plan, as a tax-free transfer in accordance
with Internal Revenue Service guidelines, for purposes of
funding the participant's opening account balance.
(g) Notwithstanding any other provision of this Article, a
participant may not purchase or receive service or service
credit applicable to the traditional benefit package under this
Article for any period during which the employee was a
participant in the self-managed plan established under this
Section.
(h) The self-managed plan shall be funded by contributions
from participants in the self-managed plan and State
contributions as provided in this Section.
The contribution rate for participants in the self-managed
plan under this Section shall be equal to the member
contribution rate for other participants in the System, as
provided in Section 2-126. This required contribution shall be

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made as an employer pick-up under Section 414(h) of the
Internal Revenue Code of 1986 or any successor Section thereof.
Any participant in the System's traditional benefit package
prior to his or her election to participate in the self-managed
plan shall continue to have the employer pick up the
contributions required under Section 2-126. However, the
amounts picked up after the election of the self-managed plan
shall be remitted to and treated as assets of the self-managed
plan. In no event shall a participant have the option of
receiving these amounts in cash. Participants may make
additional contributions to the self-managed plan in
accordance with procedures prescribed by the System, to the
extent permitted under rules adopted by the System.
The program shall provide for State contributions to be
credited to each self-managed plan participant in an amount
equal to the regular employer contribution that would be
required to fund the actual regular cost incurred for each year
of service credit earned had the participant chosen to enroll
in the traditional benefit plan. The amounts so credited shall
be paid into the participant's self-managed plan accounts in a
manner to be prescribed by the System.
The State of Illinois shall make contributions by
appropriations to the System for participants in the
self-managed plan under this Section. The amount required shall
be certified by the Board of Trustees of the System and paid by
the State in accordance with Section 2-134. The System shall

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not be obligated to remit the required State contributions to
any of the insurance and annuity companies, mutual fund
companies, banks, trust companies, financial institutions, or
other sponsors of any of the funding vehicles offered under the
self-managed plan until it has received the required State
contributions from the State.
(i) A participant in the self-managed plan becomes vested
in the State contributions credited to his or her accounts in
the self-managed plan on the earliest to occur of the
following: (1) attainment of 5 years of service credit; (2) the
death of the participating member while employed under this
Article, if the member has completed at least 1.5 years of
service; or (3) the member's election to retire and apply the
reciprocal provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article
(and Article 20, if applicable) shall forfeit all service
credit and accrued rights in the System; if he or she
subsequently becomes a participant under this Article again, he
or she shall be considered a new participant. If a former
participant again becomes a participating member (or becomes
employed by a participating system under Article 20 of this
Code) and continues as such for at least 2 years, all rights,
service credits, and previous status as a participant shall be
restored upon repayment of the amount of the distribution,

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without interest.
(j) If a participant in the self-managed plan who is vested
in State contributions terminates employment, the participant
shall be entitled to a benefit that is based on the account
values attributable to both State and member contributions and
any investment return thereon.
If a participant in the self-managed plan who is not vested
in State contributions terminates employment, the participant
shall be entitled to a benefit based solely on the account
values attributable to the participant's contributions and any
investment return thereon, and the State contributions and any
investment return thereon shall be forfeited. Any State
contributions that are forfeited shall be held in escrow by the
company investing those contributions and shall be used, as
directed by the System, for future allocations of State
contributions or for the restoration of amounts previously
forfeited by former participants who again become
participating members.
(40 ILCS 5/2-162.1 new)
Sec. 2-162.1. New benefit increases. To the extent that the
changes made to this Article by this amendatory Act of the 96th
General Assembly authorizing the System to offer a self-managed
plan are determined to be a new benefit increase within the
meaning of Section 2-162, the changes made by this amendatory
Act are exempt from the provisions of subsection (d) of Section

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2-162.
(40 ILCS 5/14-103.40 new)
Sec. 14-103.40. Traditional benefit package. "Traditional
benefit package" means the defined benefit retirement program
maintained by the System, which includes retirement annuities
payable directly from the System, as provided in Sections
14-107, 14-108, 14-108.3, 14-108.4, 14-109, 14-110, 14-112,
14-113, 14-114, and 14-115; disability benefits payable under
Sections 14-123, 14-123.1, 14-124, 14-125, 14-125.1, and
14-126; death benefits payable directly from the System, as
provided in Sections 14-116, 14-117, and 14-128; widow or
survivors annuities payable directly from the System, as
provided in Sections 14-118, 14-119, 14-120, 14-121, 14-121.1,
and 14-122; and contribution refunds, as provided in Section
14-130.
(40 ILCS 5/14-103.41 new)
Sec. 14-103.41. Self-managed plan. "Self-managed plan"
means the defined contribution retirement program maintained
under the System, as described in Section 14-133.2. The
self-managed plan also includes disability benefits, as
provided in Sections 14-123, 14-123.1, 14-124, 14-125,
14-125.1, and 14-126. The self-managed plan does not include
retirement annuities, death benefits, widow or survivors
annuities payable directly from the System, as provided in

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Sections 14-107, 14-108, 14-108.3, 14-108.4, 14-109, 14-110,
14-112, 14-113, 14-114, 14-115, 14-116, 14-117, 14-118,
14-119, 14-120, 14-121, 14-121.1, 14-122, and 14-128 or refunds
determined under Section 14-130.
(40 ILCS 5/14-105.8 new)
Sec. 14-105.8. Retirement program elections.
(a) For the purposes of this Section:
"Eligible employee" means either a currently eligible
employee or a newly eligible employee.
"Currently eligible employee" means an employee who is
employed by the State on the date on which the System first
offers the self-managed plan as an alternative to the
traditional benefit package.
"Newly eligible employee" means an employee who first
becomes employed under this Article after the date on which the
System first offers the self-managed plan as an alternative to
the traditional benefit package.
(b) When the System offers to employees under this Article
the self-managed plan as an alternative to the traditional
benefit package, each currently eligible employee shall be
given the choice to elect which retirement program he or she
wishes to participate in with respect to all periods of covered
employment occurring on, before, and after the effective date
of the employee's election.
The retirement program election made by an eligible

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employee must be made in writing, in the manner prescribed by
the System, and within the time period described in this
Section.
If an eligible employee elects the self-managed plan, then
that election is irrevocable. If an eligible employee who
elected to participate or participated by default in the
traditional benefit plan terminates employment under this
Article, then the employee, upon his or her subsequent
re-employment under this Article, may make an election under
this Section.
An eligible employee who fails to make an election under
this Section shall, by default, participate in the traditional
benefit package.
(c) An eligible employee may elect to participate in the
traditional benefit package or the self-managed plan.
A currently eligible employee must make this election
within 5 years after the effective date of the adoption of the
self-managed plan under Section 14-133.2 or, in the case of a
currently eligible employee who terminates employment under
this Article, within 6 months after his or her re-employment
under this Article.
A newly eligible employee must make this election within 6
months after he or she begins employment under this Article.
(d) If the eligible participant elects to participate in
the self-managed plan, the System shall fund their account as
stated in subsection (f) of Section 14-133.2.

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(e) An eligible employee shall be provided with written
information prepared or prescribed by the System that describes
the employee's retirement program choices. Each eligible
employee shall be offered an opportunity to receive counseling
from the System prior to making his or her election. This
counseling may consist of videotaped materials, group
presentations, individual consultation with an employee or
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods.
(40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)
Sec. 14-133. Contributions on behalf of members.
(a) Each participating employee shall make contributions
to the System, based on the employee's compensation, as
follows:
(1) Covered employees, except as indicated below, 3.5%
for retirement annuity, and 0.5% for a widow or survivors
annuity;
(2) Noncovered employees, except as indicated below,
7% for retirement annuity and 1% for a widow or survivors
annuity;
(3) Noncovered employees serving in a position in which
"eligible creditable service" as defined in Section 14-110
may be earned, 1% for a widow or survivors annuity plus the
following amount for retirement annuity: 8.5% through

SB0303 - 18 - LRB096 02849 AMC 12862 b
December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5%
in 2004 and thereafter;
(4) Covered employees serving in a position in which
"eligible creditable service" as defined in Section 14-110
may be earned, 0.5% for a widow or survivors annuity plus
the following amount for retirement annuity: 5% through
December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004
and thereafter;
(5) Each security employee of the Department of
Corrections or of the Department of Human Services who is a
covered employee, 0.5% for a widow or survivors annuity
plus the following amount for retirement annuity: 5%
through December 31, 2001; 6% in 2002; 7% in 2003; and 8%
in 2004 and thereafter;
(6) Each security employee of the Department of
Corrections or of the Department of Human Services who is
not a covered employee, 1% for a widow or survivors annuity
plus the following amount for retirement annuity: 8.5%
through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and
11.5% in 2004 and thereafter.
Notwithstanding any provision in this subsection (a) to the
contrary, in the case of an employee who participates in the
self-managed plan under Section 14-133.2, contributions for
widow or survivors annuities shall instead be used by the
System to fund the benefits in Sections 14-123, 14-123.1,
14-124, 14-125, 14-125.1, and 14-126.

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(b) Contributions shall be in the form of a deduction from
compensation and shall be made notwithstanding that the
compensation paid in cash to the employee shall be reduced
thereby below the minimum prescribed by law or regulation. Each
member is deemed to consent and agree to the deductions from
compensation provided for in this Article, and shall receipt in
full for salary or compensation.
(Source: P.A. 92-14, eff. 6-28-01.)
(40 ILCS 5/14-133.2 new)
Sec. 14-133.2. Self-managed plan.
(a) The General Assembly finds that it is important for
Illinois to be able to attract and retain the most qualified
employees and that in order to attract and retain these
employees, the State of Illinois should have the flexibility to
provide the defined contribution (self-managed) plan for
eligible employees. Accordingly, the State Employees
Retirement System of Illinois is hereby authorized to establish
and administer a self-managed plan, which shall offer
participating employees the opportunity to accumulate assets
for retirement through a combination of employee and employer
contributions that may be invested in mutual funds, collective
investment funds, or other investment products and used to
purchase annuity contracts, either fixed or variable or a
combination of fixed and variable. The plan must be qualified
under the Internal Revenue Code of 1986.

SB0303 - 20 - LRB096 02849 AMC 12862 b
(b) The Board shall adopt the self-managed plan established
under this Section for members under this Article. The State's
election to adopt the self-managed plan makes available to the
eligible employees of the State of Illinois the elections
described in Section 14-105.8.
The State Employees Retirement System of Illinois shall be
the plan sponsor for the self-managed plan and shall prepare a
plan document and adopt such rules and procedures as are
considered necessary or desirable for the administration of the
self-managed plan. Consistent with its fiduciary duty to the
participants and beneficiaries of the self-managed plan, the
Board of Trustees of the System may delegate aspects of plan
administration as it sees fit to companies authorized to do
business in this State.
(c) The System shall solicit proposals to provide
administrative services and funding vehicles for the
self-managed 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

SB0303 - 21 - LRB096 02849 AMC 12862 b
the premium charged;
(3) the suitability of the benefits to the needs and
interests of the participating employees and the State;
(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
services and funding vehicles for the self-managed plan only so
long as it continues to be an approved company under contract
with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the System.
(d) Employees who are participating in the program must be
allowed to direct the transfer of their account balances among
the various investment options offered, subject to applicable
contractual provisions. The participant shall not be deemed a
fiduciary by reason of providing such investment direction. A
person who is a fiduciary shall not be liable for any loss
resulting from such investment direction and shall not be
deemed to have breached any fiduciary duty by acting in
accordance with that direction. Neither the System nor the
employer shall guarantee any of the investments in the

SB0303 - 22 - LRB096 02849 AMC 12862 b
employee's account balances.
(e) An eligible employee, as defined in Section 14-105.8,
must make a written election to participate in the self-managed
plan in accordance with the provisions of Section 14-105.8 and
the procedures established by the System. Participation in the
self-managed plan shall begin on the first day of the month
immediately following the month in which the eligible
employee's election is filed with the System, but not sooner
than the effective date of the self-managed plan. The System
shall make the self-managed plan available under this Article
by January 1, 2010. An employee's participation in the
traditional retirement package under this Article shall
terminate on the date that participation in the self-managed
plan begins.
An employee who has elected to participate in the
self-managed plan under this Section must continue
participation while employed in an eligible position, and may
not participate in the traditional benefit package
administered by the System under this Article while employed by
the State under this Article.
Participation in the self-managed plan under this Section
shall constitute membership in the State Employees' Retirement
System of Illinois.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.
(f) If, at the time an employee elects to participate in

SB0303 - 23 - LRB096 02849 AMC 12862 b
the self-managed plan, the employee has rights and credits in
the System due to previous participation in the traditional
benefit package, the System shall establish for the employee an
opening account balance in the self-managed plan, equal to (i)
the amount of the contribution refund that the employee would
be eligible to receive under Section 14-130 if the employee
terminated employment on that date and elected a refund of
contributions, plus (ii) an amount equal to the regular
employer contribution that would be required to fund the actual
regular cost incurred for each year of service credit earned,
provided that the total opening account balance does not exceed
7.6% of that participant's salary for that year, plus interest.
The interest used in this subsection (f) is calculated as the
average annual rate of return that the System has earned over
the past 20 fiscal years and is compounded. The System shall
transfer assets from the defined benefit retirement program to
the self-managed plan, as a tax-free transfer in accordance
with Internal Revenue Service guidelines, for purposes of
funding the employee's opening account balance.
(g) Notwithstanding any other provision of this Article, an
employee may not purchase or receive service or service credit
applicable to the traditional benefit package under this
Article for any period during which the employee was a
participant in the self-managed plan established under this
Section.
(h) The self-managed plan shall be funded by contributions

SB0303 - 24 - LRB096 02849 AMC 12862 b
from employees participating in the self-managed plan and State
contributions as provided in this Section.
The contribution rate for employees participating in the
self-managed plan under this Section shall be equal to the
employee contribution rate applicable to participants of the
same class under Section 14-133. This required contribution
shall be made as an employer pick-up under Section 414(h) of
the Internal Revenue Code of 1986 or any successor Section
thereof. Any employee participating in the System's
traditional benefit package prior to his or her election to
participate in the self-managed plan shall continue to have the
employer pick up the contributions required under Section
14-133. However, the amounts picked up after the election of
the self-managed plan shall be remitted to and treated as
assets of the self-managed plan. In no event shall the employee
have an option of receiving these amounts in cash. Employees
may make additional contributions to the self-managed plan in
accordance with procedures prescribed by the System, to the
extent permitted under rules adopted by the System.
The program shall provide for State contributions to be
credited to each self-managed plan participant in an amount
equal to the regular employer contribution that would be
required to fund the actual regular cost incurred for each year
of service credit earned had the participant chosen to enroll
in the traditional benefit plan.
The System shall not be obligated to remit the required

SB0303 - 25 - LRB096 02849 AMC 12862 b
employer contributions to any of the insurance and annuity
companies, mutual fund companies, banks, trust companies,
financial institutions, or other sponsors of any of the funding
vehicles offered under the self-managed plan until it has
received the required employer contributions from the State. In
the event of a deficiency in the amount of State contributions,
the System shall implement any procedures to obtain the
required funding from the General Revenue Fund.
An amount of employer contribution, not exceeding 1% of the
participating employee's salary, shall be used for the purpose
of providing the disability benefits of the System to the
employee. Prior to the beginning of each plan year under the
self-managed plan, the Board of Trustees shall determine, as a
percentage of salary, the amount of employer contributions to
be allocated during that plan year for providing disability
benefits for employees in the self-managed plan. The provisions
of this paragraph shall work in conjunction with the provisions
of subsection (a-1) of Section 14-133.
(i) A participant in the self-managed plan becomes vested
in the employer contributions credited to his or her accounts
in the self-managed plan on the earliest to occur of the
following: (1) completion of 5 years of service credit under
this Article; (2) the death of the participating employee while
employed by an employer under this Article, if the participant
has completed at least 1.5 years of service; or (3) the
participant's election to retire and apply the reciprocal

SB0303 - 26 - LRB096 02849 AMC 12862 b
provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article
(and Article 20, if applicable) shall forfeit all service
credit and accrued rights in the System; if subsequently
re-employed, the participant shall be considered a new
employee. If a former participant again becomes a participating
employee (or becomes employed by a participating system under
Article 20 of this Code) and continues as such for at least 2
years, all rights, service credits, and previous status as a
participant shall be restored upon repayment of the amount of
the distribution, without interest.
(j) If an employee participating in the self-managed plan
who is vested in employer contributions terminates employment,
the employee shall be entitled to a benefit which is based on
the account values attributable to both employer and employee
contributions and any investment return thereon.
If an employee participating in the self-managed plan who
is not vested in employer contributions terminates employment,
the employee shall be entitled to a benefit based solely on the
account values attributable to the employee's contributions
and any investment return thereon, and the employer
contributions and any investment return thereon shall be
forfeited. Any employer contributions which are forfeited
shall be held in escrow by the company investing those

SB0303 - 27 - LRB096 02849 AMC 12862 b
contributions and shall be used, as directed by the System, for
future allocations of employer contributions or for the
restoration of amounts previously forfeited by former
participants who again become participating employees.
(40 ILCS 5/14-152.2)
Sec. 14-152.2. New benefit increases.
(a) The General Assembly finds and declares that the
amendment to Section 14-104 made by Public Act 95-652 this
amendatory Act of the 95th General Assembly that allows members
to establish creditable service for certain participation in
the University of Illinois Government Public Service
Internship Program (GPSI) constitutes a new benefit increase
within the meaning of Section 14-152.1. Funding for this new
benefit increase will be provided by additional employee
contributions under subsection (r) of Section 14-104.
(b) To the extent that the changes made to this Article by
this amendatory Act of the 96th General Assembly authorizing
the System to offer a self-managed plan are determined to be a
new benefit increase within the meaning of Section 14-152.1,
the changes made by this amendatory Act are exempt from the
provisions of subsection (d) of Section 14-152.1.
(Source: P.A. 95-652, eff. 10-11-07.)
(40 ILCS 5/15-103.3)
Sec. 15-103.3. Self-Managed Plan. "Self-managed plan": The

SB0303 - 28 - LRB096 02849 AMC 12862 b
defined contribution retirement program maintained under the
System as described in Section 15-158.2. The self-managed plan
also includes disability benefits as provided in Sections
15-150 through 15-153.3 (but disregarding disability
retirement annuities under Section 15-153.2). The self-managed
plan does not include retirement annuities, death benefits, or
survivors insurance benefits payable directly from the System
as provided in Sections 15-135 through 15-149 and Section
15-153.2, or refunds determined under Section 15-154.
(Source: P.A. 90-766, eff. 8-14-98.)
(40 ILCS 5/15-134.5)
Sec. 15-134.5. Retirement program elections.
(a) All participating employees are participants under the
traditional benefit package prior to January 1, 1998.
Effective as of the date that the System offers an employer
elects, as described in Section 15-158.2, to offer to its
employees the portable benefit package and the self-managed
plan as alternatives to the traditional benefit package, each
of that employer's eligible employee employees (as defined in
subsection (b)) shall be given the choice to elect which
retirement program he or she wishes to participate in with
respect to all periods of covered employment occurring on and
after the effective date of the employee's election. The
retirement program election made by an eligible employee must
be made in writing, in the manner prescribed by the System, and

SB0303 - 29 - LRB096 02849 AMC 12862 b
within the time period described in subsection (d) or (d-1).
If an eligible employee elects the self-managed plan, then
that election is irrevocable. The employee election authorized
by this Section is a one-time, irrevocable election. If an
employee who elected to participate or participated by default
in the traditional benefit plan terminates employment after
making the election provided under this subsection (a), then
upon his or her subsequent re-employment under this Article the
employee may make an election under this Section with an
employer the original election shall automatically apply to him
or her, provided that the employer is then a participating
employer as described in Section 15-158.2.
An eligible employee who fails to make this election shall,
by default, participate in the traditional benefit package.
(b) "Eligible employee" means an employee (as defined in
Section 15-107) who is either a currently eligible employee or
a newly eligible employee. For purposes of this Section, a
"currently eligible employee" is an employee who is employed
under this Article on the date on which the System first offers
the self-managed plan as an alternative to the traditional
benefit package an employee who is employed by an employer on
the effective date on which the employer offers to its
employees the portable benefit package and the self-managed
plan as alternatives to the traditional benefit package. A
"newly eligible employee" is an employee who first becomes an
employee after the date on which the System first offers the

SB0303 - 30 - LRB096 02849 AMC 12862 b
self-managed plan as an alternative to the traditional benefit
package. an employee who first becomes employed by an employer
after the effective date on which the employer offers its
employees the portable benefit package and the self-managed
plan as alternatives to the traditional benefit package. A
newly eligible employee participates in the traditional
benefit package until he or she makes an election to
participate in the portable benefit package or the self-managed
plan. If an employee does not elect to participate in the
portable benefit package or the self-managed plan, he or she
shall continue to participate in the traditional benefit
package by default.
(c) A currently An eligible employee who at the time he or
she is first eligible to make the election described in
subsection (a) does not have sufficient age and service to
qualify for a retirement annuity under Section 15-135 may elect
to participate in the traditional benefit package, the portable
benefit package, or the self-managed plan. An eligible employee
who has sufficient age and service to qualify for a retirement
annuity under Section 15-135 at the time he or she is first
eligible to make the election described in subsection (a) may
elect to participate in the traditional benefit package or the
portable benefit package, but may not elect to participate in
the self-managed plan.
(d) A currently eligible employee must make this election
within 5 years one year after the effective date of the

SB0303 - 31 - LRB096 02849 AMC 12862 b
employer's adoption of the self-managed plan.
A currently newly eligible employee who terminates
employment under this Article must make this election within 6
months after his or her re-employment under this Article. the
date on which the System receives the report of status
certification from the employer. If an employee elects to
participate in the self-managed plan, no employer
contributions shall be remitted to the self-managed plan when
the employee's account balance transfer is made. Employer
contributions to the self-managed plan shall commence as of the
first pay period that begins after the System receives the
employee's election.
(d-1) A newly eligible employee must make this election
within 6 months after he or she begins employment under this
Article. who, prior to the effective date of this amendatory
Act of the 91st General Assembly, fails to make the election
within the period provided under subsection (d) and
participates by default in the traditional benefit package may
make a late election to participate in the portable benefit
package or the self-managed plan instead of the traditional
benefit package at any time within 6 months after the effective
date of this amendatory Act of the 91st General Assembly.
(e) (Blank) If a currently eligible employee elects the
portable benefit package, that election shall not become
effective until the one-year anniversary of the date on which
the election is filed with the System, provided the employee

SB0303 - 32 - LRB096 02849 AMC 12862 b
remains continuously employed by the employer throughout the
one-year waiting period, and any benefits payable to or on
account of the employee before such one-year waiting period has
ended shall not be determined under the provisions applicable
to the portable benefit package but shall instead be determined
in accordance with the traditional benefit package. If a
currently eligible employee who has elected the portable
benefit package terminates employment covered by the System
before the one-year waiting period has ended, then no benefits
shall be determined under the portable benefit package
provisions while he or she is inactive in the System and upon
re-employment with an employer covered by the System he or she
shall begin a new one-year waiting period before the provisions
of the portable benefit package become effective.
(f) An eligible employee shall be provided with written
information prepared or prescribed by the System which
describes the employee's retirement program choices. The
eligible employee shall be offered an opportunity to receive
counseling from the System prior to making his or her election.
This counseling may consist of videotaped materials, group
presentations, individual consultation with an employee or
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods.
(Source: P.A. 90-766, eff. 8-14-98; 91-887, eff. 7-6-00.)

SB0303 - 33 - LRB096 02849 AMC 12862 b
(40 ILCS 5/15-158.2)
Sec. 15-158.2. Self-managed plan.
(a) Purpose. The General Assembly finds that it is
important for colleges and universities to be able to attract
and retain the most qualified employees and that in order to
attract and retain these employees, colleges and universities
should have the flexibility to provide a defined contribution
(self-managed) plan as an alternative for eligible employees
who elect not to participate in a defined benefit retirement
program provided under this Article. Accordingly, the State
Universities Retirement System is hereby authorized to
establish and administer a self-managed plan, which shall offer
participating employees the opportunity to accumulate assets
for retirement through a combination of employee and employer
contributions that may be invested in mutual funds, collective
investment funds, or other investment products and used to
purchase annuity contracts, either fixed or variable or a
combination thereof. The plan must be qualified under the
Internal Revenue Code of 1986.
(b) The Board shall adopt the self-managed plan established
under this Section for participants under this Article. The
adoption of Adoption by employers. Each employer subject to
this Article may elect to adopt the self-managed plan
established under this Section; this election is irrevocable.
An employer's election to adopt the self-managed plan makes
available to the eligible employees of that employer the

SB0303 - 34 - LRB096 02849 AMC 12862 b
elections described in Section 15-134.5.
The State Universities Retirement System shall be the plan
sponsor for the self-managed plan and shall prepare a plan
document and prescribe such rules and procedures as are
considered necessary or desirable for the administration of the
self-managed plan. Consistent with its fiduciary duty to the
participants and beneficiaries of the self-managed plan, the
Board of Trustees of the System may delegate aspects of plan
administration as it sees fit to companies authorized to do
business in this State, to the employers, or to a combination
of both.
(c) Selection of service providers and funding vehicles.
The System, in consultation with the employers, shall solicit
proposals to provide administrative services and funding
vehicles for the self-managed 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

SB0303 - 35 - LRB096 02849 AMC 12862 b
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, in consultation with the employers, shall
periodically review each approved company. A company may
continue to provide administrative services and funding
vehicles for the self-managed plan only so long as it continues
to be an approved company under contract with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the System.
(d) Employee Direction. Employees who are participating in
the program must be allowed to direct the transfer of their
account balances among the various investment options offered,
subject to applicable contractual provisions. The participant
shall not be deemed a fiduciary by reason of providing such
investment direction. A person who is a fiduciary shall not be
liable for any loss resulting from such investment direction
and shall not be deemed to have breached any fiduciary duty by
acting in accordance with that direction. Neither the System
nor the employer guarantees any of the investments in the
employee's account balances.
(e) Participation. An employee eligible to participate in

SB0303 - 36 - LRB096 02849 AMC 12862 b
the self-managed plan must make a written election in
accordance with the provisions of Section 15-134.5 and the
procedures established by the System. Participation in the
self-managed plan by an electing employee shall begin on the
first day of the first pay period following the later of the
date the employee's election is filed with the System or the
effective date as of which the employee's employer begins to
offer participation in the self-managed plan. Employers may not
make the self-managed plan available earlier than January 1,
1998. An employee's participation in any other retirement
program administered by the System under this Article shall
terminate on the date that participation in the self-managed
plan begins.
An employee who has elected to participate in the
self-managed plan under this Section must continue
participation while employed in an eligible position, and may
not participate in any other retirement program administered by
the System under this Article while employed by that employer
or any other employer that has adopted the self-managed plan,
unless the self-managed plan is terminated in accordance with
subsection (i).
Participation in the self-managed plan under this Section
shall constitute membership in the State Universities
Retirement System.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.

SB0303 - 37 - LRB096 02849 AMC 12862 b
(f) Establishment of Initial Account Balance. If at the
time an employee elects to participate in the self-managed plan
he or she has rights and credits in the System due to previous
participation in the traditional benefit package, the System
shall establish for the employee an opening account balance in
the self-managed plan, equal to the amount of contribution
refund that the employee would be eligible to receive under
Section 15-154 if the employee terminated employment on that
date and elected a refund of contributions, except that this
hypothetical refund shall include interest at the effective
rate for the respective years. The System shall transfer assets
from the defined benefit retirement program to the self-managed
plan, as a tax free transfer in accordance with Internal
Revenue Service guidelines, for purposes of funding the
employee's opening account balance.
(g) No Duplication of Service Credit. Notwithstanding any
other provision of this Article, an employee may not purchase
or receive service or service credit applicable to any other
retirement program administered by the System under this
Article for any period during which the employee was a
participant in the self-managed plan established under this
Section.
(h) Contributions. The self-managed plan shall be funded by
contributions from employees participating in the self-managed
plan and employer contributions as provided in this Section.
The contribution rate for employees participating in the

SB0303 - 38 - LRB096 02849 AMC 12862 b
self-managed plan under this Section shall be equal to the
employee contribution rate for other participants in the
System, as provided in Section 15-157. This required
contribution shall be made as an "employer pick-up" under
Section 414(h) of the Internal Revenue Code of 1986 or any
successor Section thereof. Any employee participating in the
System's traditional benefit package prior to his or her
election to participate in the self-managed plan shall continue
to have the employer pick up the contributions required under
Section 15-157. However, the amounts picked up after the
election of the self-managed plan shall be remitted to and
treated as assets of the self-managed plan. In no event shall
an employee have an option of receiving these amounts in cash.
Employees may make additional contributions to the
self-managed plan in accordance with procedures prescribed by
the System, to the extent permitted under rules prescribed by
the System.
The program shall provide for employer contributions to be
credited to each self-managed plan participant in an amount
equal to the regular employer contribution that would be
required to fund the actual regular cost incurred for each year
of service credit earned had the participant chosen to enroll
in the traditional benefit plan. at a rate of 7.6% of the
participating employee's salary, less the amount used by the
System to provide disability benefits for the employee. The
amounts so credited shall be paid into the participant's

SB0303 - 39 - LRB096 02849 AMC 12862 b
self-managed plan accounts in a manner to be prescribed by the
System.
An amount of employer contribution, not exceeding 1% of the
participating employee's salary, shall be used for the purpose
of providing the disability benefits of the System to the
employee. Prior to the beginning of each plan year under the
self-managed plan, the Board of Trustees shall determine, as a
percentage of salary, the amount of employer contributions to
be allocated during that plan year for providing disability
benefits for employees in the self-managed plan.
The State of Illinois shall make contributions by
appropriations to the System of the employer contributions
required for employees who participate in the self-managed plan
under this Section. The amount required shall be certified by
the Board of Trustees of the System and paid by the State in
accordance with Section 15-165. The System shall not be
obligated to remit the required employer contributions to any
of the insurance and annuity companies, mutual fund companies,
banks, trust companies, financial institutions, or other
sponsors of any of the funding vehicles offered under the
self-managed plan until it has received the required employer
contributions from the State. In the event of a deficiency in
the amount of State contributions, the System shall implement
those procedures described in subsection (c) of Section 15-165
to obtain the required funding from the General Revenue Fund.
(i) (Blank) Termination. The self-managed plan authorized

SB0303 - 40 - LRB096 02849 AMC 12862 b
under this Section may be terminated by the System, subject to
the terms of any relevant contracts, and the System shall have
no obligation to reestablish the self-managed plan under this
Section. This Section does not create a right to continued
participation in any self-managed plan set up by the System
under this Section. If the self-managed plan is terminated, the
participants shall have the right to participate in one of the
other retirement programs offered by the System and receive
service credit in such other retirement program for any years
of employment following the termination.
(j) Vesting; Withdrawal; Return to Service. A participant
in the self-managed plan becomes vested in the employer
contributions credited to his or her accounts in the
self-managed plan on the earliest to occur of the following:
(1) completion of 5 years of service with an employer described
in Section 15-106; (2) the death of the participating employee
while employed by an employer described in Section 15-106, if
the participant has completed at least 1 1/2 years of service;
or (3) the participant's election to retire and apply the
reciprocal provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article
(and Article 20, if applicable) shall forfeit all service
credit and accrued rights in the System; if subsequently
re-employed, the participant shall be considered a new

SB0303 - 41 - LRB096 02849 AMC 12862 b
employee. If a former participant again becomes a participating
employee (or becomes employed by a participating system under
Article 20 of this Code) and continues as such for at least 2
years, all such rights, service credits, and previous status as
a participant shall be restored upon repayment of the amount of
the distribution, without interest.
(k) Benefit amounts. If an employee who is vested in
employer contributions terminates employment, the employee
shall be entitled to a benefit which is based on the account
values attributable to both employer and employee
contributions and any investment return thereon.
If an employee who is not vested in employer contributions
terminates employment, the employee shall be entitled to a
benefit based solely on the account values attributable to the
employee's contributions and any investment return thereon,
and the employer contributions and any investment return
thereon shall be forfeited. Any employer contributions which
are forfeited shall be held in escrow by the company investing
those contributions and shall be used as directed by the System
for future allocations of employer contributions or for the
restoration of amounts previously forfeited by former
participants who again become participating employees.
(Source: P.A. 93-347, eff. 7-24-03.)
(40 ILCS 5/15-198.1 new)
Sec. 15-198.1. New benefit increases. To the extent that

SB0303 - 42 - LRB096 02849 AMC 12862 b
the changes made to this Article by this amendatory Act of the
96th General Assembly authorizing the System to offer a
self-managed plan are determined to be a new benefit increase
within the meaning of Section 15-198, the changes made by this
amendatory Act are exempt from the provisions of subsection (d)
of Section 15-198.
(40 ILCS 5/16-104.1 new)
Sec. 16-104.1. Traditional benefit package. "Traditional
benefit package" means the defined benefit retirement program
maintained by the System, which includes retirement annuities
payable directly from the System, as provided in Sections
16-132 through 16-136.4; disability benefits payable under
Sections 16-149 through 16-149.5; survivor's benefits payable
directly from the System, as provided in Sections 16-140
through 16-143.1; and contribution refunds, as provided in
Sections 16-138, 16-143.2, and 16-151.
(40 ILCS 5/16-104.2 new)
Sec. 16-104.2. Self-managed plan. "Self-managed plan"
means the defined contribution retirement program maintained
by the System, as described in Section 16-158.2. The
self-managed plan also includes disability benefits, as
provided in Sections 16-149 through 16-149.5 (but disregarding
disability retirement annuities under Section 16-149.2). The
self-managed plan does not include retirement annuities or

SB0303 - 43 - LRB096 02849 AMC 12862 b
survivor's benefits payable directly from the System as
provided in Sections 16-132 through 16-136.4, Sections 16-140
through 16-143.1, and Section 16-149.2, or refunds determined
under Sections 16-138, 16-143.2, and 16-151.
(40 ILCS 5/16-131.7 new)
Sec. 16-131.7. Retirement program elections.
(a) For the purposes of this Act:
"Eligible member" means a either a currently eligible
member or a newly eligible member.
"Currently eligible member" means a member who is employed
by an employer on the date on which the employer first offers
to its employees the self-managed plan as an alternative to the
traditional benefit package.
"Newly eligible member" is a member who first becomes
employed by an employer after the date on which the employer
first offers its members the self-managed plan as an
alternative to the traditional benefit package.
(b) Effective as of the date that an employer adopts the
self-managed plan as described in Section 16-158.2 as an
alternative to the traditional benefit package, each of that
employer's currently eligible members shall be given the choice
to elect which retirement program he or she wishes to
participate in with respect to all periods of covered
employment occurring on and after the effective date of the
employee's election.

SB0303 - 44 - LRB096 02849 AMC 12862 b
The retirement program election made by an eligible member
must be made in writing, in the manner prescribed by the
System, and within the time period described in this Section.
If an eligible member elects the self-managed plan, then
that election is irrevocable. If an eligible member who elected
to participate or participated by default in the traditional
benefit plan terminates employment under this Article, then the
member, upon his or her subsequent re-employment under this
Article, may make an election under this Section.
An eligible member who fails to make an election under this
Section shall, by default, participate in the traditional
benefit package.
(c) An eligible member may elect to participate in the
traditional benefit package or the self-managed plan.
A currently eligible member must make this election within
5 years after the effective date of the employer's adoption of
the self-managed plan or, in the case of a currently eligible
member who terminates employment under this Article, within 6
months after his or her re-employment under this Article.
A newly eligible member must make this election within 6
months after he or she begins employment under this Article.
(d) If the eligible member elects to participate in the
self-managed plan, the System shall fund their account as
stated in subsection (f) of Section 16-158.2. Employer
contributions to the self-managed plan shall commence as of the
first pay period that begins after the System receives the

SB0303 - 45 - LRB096 02849 AMC 12862 b
member's election.
(e) An eligible member shall be provided with written
information prepared or prescribed by the System that describes
the member's retirement program choices. The eligible member
shall be offered an opportunity to receive counseling from the
System prior to making his or her election. This counseling may
consist of videotaped materials, group presentations,
individual consultation with an employee or authorized
representative of the System in person or by telephone or other
electronic means, or any combination of these methods.
(40 ILCS 5/16-152) (from Ch. 108 1/2, par. 16-152)
Sec. 16-152. Contributions by members.
(a) Each member shall make contributions for membership
service to this System as follows:
(1) Effective July 1, 1998, contributions of 7.50% of
salary towards the cost of the retirement annuity. Such
contributions shall be deemed "normal contributions".
(2) Effective July 1, 1969, contributions of 1/2 of 1%
of salary toward the cost of the automatic annual increase
in retirement annuity provided under Section 16-133.1.
(3) Effective July 24, 1959, contributions of 1% of
salary towards the cost of survivor benefits. Such
contributions shall not be credited to the individual
account of the member and shall not be subject to refund
except as provided under Section 16-143.2.

SB0303 - 46 - LRB096 02849 AMC 12862 b
(4) Effective July 1, 2005, contributions of 0.40% of
salary toward the cost of the early retirement without
discount option provided under Section 16-133.2. This
contribution shall cease upon termination of the early
retirement without discount option as provided in Section
16-176. The contributions made under this paragraph (4)
shall be used by the System to fund benefits under Sections
16-149 through 16-149.5 for those that participate in the
self-managed plan.
(b) The minimum required contribution for any year of
full-time teaching service shall be $192.
(c) Contributions shall not be required of any annuitant
receiving a retirement annuity who is given employment as
permitted under Section 16-118 or 16-150.1.
(d) A person who (i) was a member before July 1, 1998, (ii)
retires with more than 34 years of creditable service, and
(iii) does not elect to qualify for the augmented rate under
Section 16-129.1 shall be entitled, at the time of retirement,
to receive a partial refund of contributions made under this
Section for service occurring after the later of June 30, 1998
or attainment of 34 years of creditable service, in an amount
equal to 1.00% of the salary upon which those contributions
were based.
(e) A member's contributions toward the cost of early
retirement without discount made under item (a)(4) of this
Section shall not be refunded if the member has elected early

SB0303 - 47 - LRB096 02849 AMC 12862 b
retirement without discount under Section 16-133.2 and has
begun to receive a retirement annuity under this Article
calculated in accordance with that election. Otherwise, a
member's contributions toward the cost of early retirement
without discount made under item (a)(4) of this Section shall
be refunded according to whichever one of the following
circumstances occurs first:
(1) The contributions shall be refunded to the member,
without interest, within 120 days after the member's
retirement annuity commences, if the member does not elect
early retirement without discount under Section 16-133.2.
(2) The contributions shall be included, without
interest, in any refund claimed by the member under Section
16-151.
(3) The contributions shall be refunded to the member's
designated beneficiary (or if there is no beneficiary, to
the member's estate), without interest, if the member dies
without having begun to receive a retirement annuity under
this Article.
(4) The contributions shall be refunded to the member,
without interest, within 120 days after the early
retirement without discount option provided under Section
16-133.2 is terminated under Section 16-176.
(Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)
(40 ILCS 5/16-158.2 new)

SB0303 - 48 - LRB096 02849 AMC 12862 b
Sec. 16-158.2. Self-managed plan.
(a) The General Assembly finds that it is important for
schools to be able to attract and retain the most qualified
employees and that in order to attract and retain these
employees, schools should have the flexibility to provide a
defined contribution (self-managed) plan for eligible members.
Accordingly, the Teachers' Retirement System of the State of
Illinois is hereby authorized to establish and administer a
self-managed plan, which shall offer participating members the
opportunity to accumulate assets for retirement through a
combination of member and employer contributions that may be
invested in mutual funds, collective investment funds, or other
investment products and used to purchase annuity contracts,
either fixed or variable or a combination of fixed and
variable. The plan must be qualified under the Internal Revenue
Code of 1986.
(b) Each employer subject to this Article shall adopt the
self-managed plan established under this Section. This
election is irrevocable. An employer's election to adopt the
self-managed plan makes available to the eligible members of
that employer the elections described in Section 16-131.7.
The Teachers' Retirement System of the State of Illinois
shall be the plan sponsor for the self-managed plan and shall
prepare a plan document and adopt any rules and procedures as
are considered necessary or desirable for the administration of
the self-managed plan. Consistent with its fiduciary duty to

SB0303 - 49 - LRB096 02849 AMC 12862 b
the participants and beneficiaries of the self-managed plan,
the Board of Trustees of the System may delegate aspects of
plan administration as it sees fit to companies authorized to
do business in this State, to the employers, or to a
combination of both.
(c) Selection of service providers and funding vehicles.
The System shall solicit proposals to provide administrative
services and funding vehicles for the self-managed 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 members and employers;
(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.

SB0303 - 50 - LRB096 02849 AMC 12862 b
The System shall periodically review each approved
company. A company may continue to provide administrative
services and funding vehicles for the self-managed plan only so
long as it continues to be an approved company under contract
with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the System.
(d) Participants in the program must be allowed to direct
the transfer of their account balances among the various
investment options offered, subject to applicable contractual
provisions. The participant shall not be deemed a fiduciary by
reason of providing such investment direction. A person who is
a fiduciary shall not be liable for any loss resulting from
such investment direction and shall not be deemed to have
breached any fiduciary duty by acting in accordance with that
direction. Neither the System nor the employer guarantees any
of the investments in the participant's account balances.
(e) An eligible member, as defined in Section 16-131.7,
must make a written election to participate in the self-managed
plan in accordance with the provisions of Section 16-131.7 and
the procedures established by the System. Participation in the
self-managed plan shall begin on the first day of the month
immediately following the month in which the eligible member's
election is filed with the System, but not sooner than the
effective date of the self-managed plan. The System shall make

SB0303 - 51 - LRB096 02849 AMC 12862 b
the self-managed plan available under this Article by January
1, 2010. A member's participation in the traditional retirement
package under this Article shall terminate on the date that
participation in the self-managed plan begins.
A member who has elected to participate in the self-managed
plan under this Section must continue participation while he or
she remains a member, and may not participate in the
traditional benefit package while employed by that employer or
any other employer under this Article.
Participation in the self-managed plan under this Section
shall constitute membership in the Teachers' Retirement System
of the State of Illinois.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.
(f) If, at the time an employee elects to participate in
the self-managed plan, the employee has rights and credits in
the System due to previous participation in the traditional
benefit package, the System shall establish for the employee an
opening account balance in the self-managed plan, equal to (i)
the amount of the contribution refund that the employee would
be eligible to receive under Section 16-143.2 and 16-151 if the
employee terminated employment on that date and elected a
refund of contributions, plus (ii) an amount equal to the
regular employer contribution that would be required to fund
the actual regular cost incurred for each year of service
credit earned, provided that the total opening account balance

SB0303 - 52 - LRB096 02849 AMC 12862 b
does not exceed 7.6% of that participant's salary for that
year, plus interest. The interest used in this subsection (f)
is calculated as the average annual rate of return that the
System has earned over the past 20 fiscal years and is
compounded. The System shall transfer assets from the defined
benefit retirement program to the self-managed plan, as a
tax-free transfer in accordance with Internal Revenue Service
guidelines, for purposes of funding the employee's opening
account balance.
(g) Notwithstanding any other provision of this Article, a
member may not purchase or receive service or service credit
applicable to the traditional benefit package under this
Article for any period during which the member was a
participant in the self-managed plan established under this
Section.
(h) The self-managed plan shall be funded by contributions
from participants in the self-managed plan and employer
contributions as provided in this Section.
The contribution rate for participants in the self-managed
plan under this Section shall be equal to the member
contribution rate for all participants in the System, as
provided in Section 16-152. This required contribution shall be
made as an employer pick-up under Section 414(h) of the
Internal Revenue Code of 1986 or any successor Section thereof.
A participant in the System's traditional benefit package prior
to his or her election to participate in the self-managed plan

SB0303 - 53 - LRB096 02849 AMC 12862 b
shall continue to have the employer pick up the contributions
required under Section 16-152. However, the amounts picked up
after the election of the self-managed plan shall be remitted
to and treated as assets of the self-managed plan. In no event
shall a member have the option of receiving these amounts in
cash. Members may make additional contributions to the
self-managed plan in accordance with procedures prescribed by
the System, to the extent permitted under rules prescribed by
the System.
The program shall provide for State contributions to be
credited to each self-managed plan participant in an amount
equal to the regular employer contribution that would be
required to fund the actual regular cost incurred for each year
of service credit earned had the participant chosen to enroll
in the traditional benefit plan.
An amount of employer contribution, not exceeding 1% of the
participating member's salary, shall be used for the purpose of
providing the disability benefits of the System to the member.
Prior to the beginning of each plan year under the self-managed
plan, the Board of Trustees shall determine, as a percentage of
salary, the amount of member contributions to be allocated
during that plan year for providing disability benefits for
members in the self-managed plan. The provisions of this
paragraph shall be administered in conjunction with the
provisions of Section 16-132.
The State of Illinois shall make contributions by

SB0303 - 54 - LRB096 02849 AMC 12862 b
appropriations to the System of the employer contributions
required for participants in the self-managed plan under this
Section. The amount required shall be certified by the Board of
Trustees of the System and paid by the State in accordance with
Section 16-158. The System shall not be obligated to remit the
required employer contributions to any of the insurance and
annuity companies, mutual fund companies, banks, trust
companies, financial institutions, or other sponsors of any of
the funding vehicles offered under the self-managed plan until
it has received the required employer contributions from the
State. In the event of a deficiency in the amount of State
contributions, the System shall implement those procedures
described in subsection (b-1) of Section 16-158 to obtain the
required funding from the Common School Fund.
(i) A participant in the self-managed plan becomes vested
in the employer contributions credited to his or her accounts
in the self-managed plan on the earliest to occur of the
following: (1) attainment of at least 5 years of creditable
service under this Article; (2) the death of the participating
member while employed under this Article, if the participant
has completed at least 1.5 years of service; or (3) the
participant's election to retire and apply the reciprocal
provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article

SB0303 - 55 - LRB096 02849 AMC 12862 b
(and Article 20, if applicable) shall forfeit all service
credit and accrued rights in the System; if subsequently
re-employed under this Article, the participant shall be
considered a new member. If a former participant in the
self-managed plan again becomes a member (or becomes employed
by a participating system under Article 20 of this Code) and
continues as such for at least 2 years, all such rights,
service credits, and previous status as a participant shall be
restored upon repayment of the amount of the distribution,
without interest.
(j) If a member participating in the self-managed plan who
is vested in employer contributions terminates employment, the
member shall be entitled to a benefit that is based on the
account values attributable to both employer and member
contributions and any investment return thereon.
If a member participating in the self-managed plan who is
not vested in employer contributions terminates employment,
the member shall be entitled to a benefit based solely on the
account values attributable to the member's contributions and
any investment return thereon, and the employer contributions
and any investment return thereon shall be forfeited. Any
employer contributions that are forfeited shall be held in
escrow by the company investing those contributions and shall
be used, as directed by the System, for future allocations of
employer contributions or for the restoration of amounts
previously forfeited by former participants who again become

SB0303 - 56 - LRB096 02849 AMC 12862 b
participants in the self-managed plan.
(40 ILCS 5/16-203.1 new)
Sec. 16-203.1. New benefit increases. To the extent that
the changes made to this Article by this amendatory Act of the
96th General Assembly authorizing the System to offer a
self-managed plan are determined to be a new benefit increase
within the meaning of Section 16-203, the changes made by this
amendatory Act are exempt from the provisions of subsection (d)
of Section 16-203.
(40 ILCS 5/18-105.1 new)
Sec. 18-105.1. Traditional benefit package. "Traditional
benefit package" means the defined benefit retirement program
maintained by the System, which includes retirement annuities
payable directly from the System, as provided in Sections
18-124 through 18-125.1; disability retirement annuities
payable under Sections 18-126 and 18-126.1; survivor's
annuities payable directly from the System, as provided in
Section 18-123 and Sections 18-128 through 18-128.1 and Section
18-128.3; and contribution refunds as provided in Section
18-129.
(40 ILCS 5/18-105.2 new)
Sec. 18-105.2. Self-managed plan. "Self-managed plan"
means the defined contribution retirement program maintained

SB0303 - 57 - LRB096 02849 AMC 12862 b
by the System, as described in Section 18-133.2. The
self-managed plan also includes disability benefits, as
provided in Section 18-126.1. The self-managed plan does not
include retirement annuities or survivor's annuities payable
directly from the System, as provided in Section 18-123,
Sections 18-124 through 18-126, Sections 18-128 through
18-128.1, and Section 18-128.3 or refunds determined under
Section 18-129.
(40 ILCS 5/18-123.3 new)
Sec. 18-123.3. Retirement program elections.
(a) For the purposes of this Section:
"Eligible participant" means either a currently eligible
participant or a newly eligible participant.
"Currently eligible participant" means a participant who
is employed as a judge on the date on which the System first
offers the self-managed plan as an alternative to the
traditional benefit package.
"Newly eligible participant" means a participant who first
becomes employed as a judge after the date on which the System
first offers the self-managed plan as an alternative to the
traditional benefit package.
(b) When the System offers to participants the self-managed
plan as an alternative to the traditional benefit package, each
currently eligible participant shall be given the choice to
elect which retirement program he or she wishes to participate

SB0303 - 58 - LRB096 02849 AMC 12862 b
in with respect to all periods of covered employment occurring
on or after the effective date of the participant's election.
The retirement program election made by an eligible
participant must be made in writing, in the manner prescribed
by the System, and within the time period described in this
Section.
If an eligible participant elects the self-managed plan,
then that election is irrevocable. If an eligible participant
who elected to participate or participated by default in the
traditional benefit plan terminates employment under this
Article, then the participant, upon his or her subsequent
re-employment under this Article, may make an election under
this Section.
An eligible participant who fails to make an election under
this Section shall, by default, participate in the traditional
benefit package.
(c) An eligible participant may elect to participate in the
traditional benefit package or the self-managed plan.
A currently eligible participant must make this election
within 5 years after the effective date of the employer's
adoption of the self-managed plan or, in the case of a
currently eligible participant who terminates employment under
this Article, within 6 months after his or her re-employment
under this Article.
A newly eligible participant must make this election within
6 months after he or she begins employment under this Article.

SB0303 - 59 - LRB096 02849 AMC 12862 b
(d) If an eligible participant elects to participate in the
self-managed plan, the System shall fund their account as
stated in subsection (f) of Section 18-133.2. Employer
contributions to the self-managed plan shall commence as of the
first pay period that begins after the System receives the
member's election.
(e) An eligible participant shall be provided with written
information prepared or prescribed by the System that describes
the participant's retirement program choices. The eligible
participant shall be offered an opportunity to receive
counseling from the System prior to making his or her election.
This counseling may consist of videotaped materials, group
presentations, individual consultation with an employee or
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods.
(40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)
Sec. 18-133. Financing; employee contributions.
(a) Effective July 1, 1967, each participant is required to
contribute 7 1/2% of each payment of salary toward the
retirement annuity. Such contributions shall continue during
the entire time the participant is in service, with the
following exceptions:
(1) Contributions for the retirement annuity are not
required on salary received after 18 years of service by

SB0303 - 60 - LRB096 02849 AMC 12862 b
persons who were participants before January 2, 1954.
(2) A participant who continues to serve as a judge
after becoming eligible to receive the maximum rate of
annuity may elect, through a written direction filed with
the Board, to discontinue contributing to the System. Any
such option elected by a judge shall be irrevocable unless
prior to January 1, 2000, and while continuing to serve as
judge, the judge (A) files with the Board a letter
cancelling the direction to discontinue contributing to
the System and requesting that such contributing resume,
and (B) pays into the System an amount equal to the total
of the discontinued contributions plus interest thereon at
5% per annum. Service credits earned in any other
"participating system" as defined in Article 20 of this
Code shall be considered for purposes of determining a
judge's eligibility to discontinue contributions under
this subdivision (a)(2).
(3) A participant who (i) has attained age 60, (ii)
continues to serve as a judge after becoming eligible to
receive the maximum rate of annuity, and (iii) has not
elected to discontinue contributing to the System under
subdivision (a)(2) of this Section (or has revoked any such
election) may elect, through a written direction filed with
the Board, to make contributions to the System based only
on the amount of the increases in salary received by the
judge on or after the date of the election, rather than the

SB0303 - 61 - LRB096 02849 AMC 12862 b
total salary received. If a judge who is making
contributions to the System on the effective date of this
amendatory Act of the 91st General Assembly makes an
election to limit contributions under this subdivision
(a)(3) within 90 days after that effective date, the
election shall be deemed to become effective on that
effective date and the judge shall be entitled to receive a
refund of any excess contributions paid to the System
during that 90-day period; any other election under this
subdivision (a)(3) becomes effective on the first of the
month following the date of the election. An election to
limit contributions under this subdivision (a)(3) is
irrevocable. Service credits earned in any other
participating system as defined in Article 20 of this Code
shall be considered for purposes of determining a judge's
eligibility to make an election under this subdivision
(a)(3).
(b) Beginning July 1, 1969, each participant is required to
contribute 1% of each payment of salary towards the automatic
increase in annuity provided in Section 18-125.1. However, such
contributions need not be made by any participant who has
elected prior to September 15, 1969, not to be subject to the
automatic increase in annuity provisions.
(c) Effective July 13, 1953, each married participant
subject to the survivor's annuity provisions is required to
contribute 2 1/2% of each payment of salary, whether or not he

SB0303 - 62 - LRB096 02849 AMC 12862 b
or she is required to make any other contributions under this
Section. Such contributions shall be made concurrently with the
contributions made for annuity purposes.
Notwithstanding any provision in this subsection (c) to the
contrary, in the case of an employee who participates in the
self-managed plan under Section 18-133.2, contributions for
survivor's annuity shall be used to fund benefits under Section
18-133.2.
(Source: P.A. 91-653, eff. 12-10-99.)
(40 ILCS 5/18-133.2 new)
Sec. 18-133.2. Self-managed plan.
(a) The General Assembly finds that it is important to be
able to attract and retain the most qualified judges and that
in order to attract and retain these judges, the System should
have the flexibility to provide a defined contribution
(self-managed) plan for eligible participants. Accordingly,
the Judges Retirement System of Illinois is hereby authorized
to establish and administer a self-managed plan, which shall
offer participants the opportunity to accumulate assets for
retirement through a combination of participant and employer
contributions that may be invested in mutual funds, collective
investment funds, or other investment products and used to
purchase annuity contracts, either fixed or variable or a
combination thereof. The plan must be qualified under the
Internal Revenue Code of 1986.

SB0303 - 63 - LRB096 02849 AMC 12862 b
(b) The Board shall adopt the self-managed plan established
under this Section. An employer's election to adopt the
self-managed plan makes available to the eligible participants
of that employer the elections described in Section 18-133.2.
The Judges Retirement System of Illinois shall be the plan
sponsor for the self-managed plan and shall prepare a plan
document and prescribe such rules and procedures as are
considered necessary or desirable for the administration of the
self-managed plan. Consistent with its fiduciary duty to the
participants and beneficiaries of the self-managed plan, the
Board of Trustees of the System may delegate aspects of plan
administration as it sees fit to companies authorized to do
business in this State.
(c) The System shall solicit proposals to provide
administrative services and funding vehicles for the
self-managed 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;

SB0303 - 64 - LRB096 02849 AMC 12862 b
(3) the suitability of the benefits to the needs and
interests of the participants 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 judges.
The System shall periodically review each approved
company. A company may continue to provide administrative
services and funding vehicles for the self-managed plan only so
long as it continues to be an approved company under contract
with the Board.
In addition to the companies approved by the System under
this subsection (c), the System may offer its participants an
investment fund managed by the System.
(d) Participants who are under the self-managed plan must
be allowed to direct the transfer of their account balances
among the various investment options offered, subject to
applicable contractual provisions. The participant shall not
be deemed a fiduciary by reason of providing such investment
direction. A person who is a fiduciary shall not be liable for
any loss resulting from such investment direction and shall not
be deemed to have breached any fiduciary duty by acting in
accordance with that direction. Neither the System nor the
State guarantees any of the investments in the participant's
account balances.

SB0303 - 65 - LRB096 02849 AMC 12862 b
(e) An eligible participant, as defined in Section
18-123.3, must make a written election to participate in the
self-managed plan in accordance with the provisions of Section
18-133.2 and the procedures established by the System.
Participation in the self-managed plan shall begin on the first
day of the month immediately following the month in which the
eligible participant's election is filed with the System, but
not sooner than the effective date of the self-managed plan.
The System shall make the self-managed plan available under
this Article by January 1, 2010. A participant's participation
in the traditional retirement package under this Article shall
terminate on the date that participation in the self-managed
plan begins.
A participant who has elected to participate in the
self-managed plan under this Section must continue
participation while employed as a judge, and may not
participate in the traditional benefit package administered by
the System under this Article while employed as a judge.
Participation in the self-managed plan under this Section
shall constitute membership in the Judges Retirement System of
Illinois.
A participant under this Section shall be entitled to the
benefits of Article 20 of this Code.
(f) If, at the time a participant elects to participate in
the self-managed plan, the participant rights and credits in
the System due to previous participation in the traditional

SB0303 - 66 - LRB096 02849 AMC 12862 b
benefit package, the System shall establish for the participant
an opening account balance in the self-managed plan, equal to
(i) the amount of the contribution refund that the participant
would be eligible to receive under Section 18-129 if the
participant terminated employment on that date and elected a
refund of contributions, plus (ii) an amount equal to the
regular employer contribution that would be required to fund
the actual regular cost incurred for each year of service
credit earned, provided that the total opening account balance
does not exceed 7.6% of that participant's salary for that
year, plus interest. The interest used in this subsection (f)
is calculated as the average annual rate of return that the
System has earned over the past 20 fiscal years and is
compounded. The System shall transfer assets from the defined
benefit retirement program to the self-managed plan, as a
tax-free transfer in accordance with Internal Revenue Service
guidelines, for purposes of funding the participant's opening
account balance.
(g) Notwithstanding any other provision of this Article, a
participant may not purchase or receive service or service
credit applicable to the traditional benefit package under this
Article for any period during which the participant was covered
under the self-managed plan established under this Section.
(h) The self-managed plan shall be funded by contributions
from participants participating in the self-managed plan and
State contributions as provided in this Section.

SB0303 - 67 - LRB096 02849 AMC 12862 b
The contribution rate for persons participating in the
self-managed plan under this Section shall be equal to the
participant contribution rate for other participants in the
System, as provided in Section 18-133. This required
contribution shall be made as an employer pick-up under Section
414(h) of the Internal Revenue Code of 1986 or any successor
Section thereof. Any employee participating in the System's
traditional benefit package prior to his or her election to
participate in the self-managed plan shall continue to have the
employer pick up that contribution. However, the amounts picked
up after the election of the self-managed plan shall be
remitted to and treated as assets of the self-managed plan. In
no event shall a participant have the option of receiving these
amounts in cash. Participants may make additional
contributions to the self-managed plan in accordance with
procedures prescribed by the System, to the extent permitted
under rules prescribed by the System.
The program shall provide for State contributions to be
credited to each self-managed plan participant in an amount
equal to the regular employer contribution that would be
required to fund the actual regular cost incurred for each year
of service credit earned had the participant chosen to enroll
in the traditional benefit plan.
An amount of participant contribution, not exceeding 1% of
the participant's salary, shall be used for the purpose of
providing the disability benefits of the System to the

SB0303 - 68 - LRB096 02849 AMC 12862 b
employee. Prior to the beginning of each plan year under the
self-managed plan, the Board of Trustees shall determine, as a
percentage of salary, the amount of participant contributions
to be allocated during that plan year for providing disability
benefits for participants in the self-managed plan. The
provisions of this paragraph shall be administered in
conjunction with the provisions of Section 18-124.
The State of Illinois shall make contributions by
appropriations to the System of the employer contributions
required for participants who are covered under the
self-managed plan under this Section. The amount required shall
be certified by the Board of Trustees of the System and paid by
the State in accordance with Section 18-140. The System shall
not be obligated to remit the required employer contributions
to any of the insurance and annuity companies, mutual fund
companies, banks, trust companies, financial institutions, or
other sponsors of any of the funding vehicles offered under the
self-managed plan until it has received the required employer
contributions from the State. In the event of a deficiency in
the amount of State contributions, the System shall implement
those procedures described in subsection (b) of Section 18-140
to obtain the required funding from the General Revenue Fund.
(i) A participant in the self-managed plan becomes vested
in the employer contributions credited to his or her accounts
in the self-managed plan on the earliest to occur of the
following: (1) attainment of 5 years of service credit; (2) the

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death of the participant while employed as a judge, if the
participant has completed at least 1.5 years of service; or (3)
the participant's election to retire and apply the reciprocal
provisions of Article 20 of this Code.
A participant in the self-managed plan who receives a
distribution of his or her vested amounts from the self-managed
plan while not yet eligible for retirement under this Article
(and Article 20, if applicable) shall forfeit all service
credit and accrued rights in the System; if subsequently
re-employed as a judge, the participant shall be considered a
new employee. If a former participant again becomes a
participating employee (or becomes employed by a participating
system under Article 20 of this Code) and continues as such for
at least 2 years, all such rights, service credits, and
previous status as a participant shall be restored upon
repayment of the amount of the distribution, without interest.
(j) If a participant who is vested in employer
contributions terminates employment, the participant shall be
entitled to a benefit which is based on the account values
attributable to both employer and participant contributions
and any investment return thereon.
If a participant who is not vested in employer
contributions terminates employment, the participant shall be
entitled to a benefit based solely on the account values
attributable to the participant's contributions and any
investment return thereon, and the employer contributions and

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any investment return thereon shall be forfeited. Any employer
contributions which are forfeited shall be held in escrow by
the company investing those contributions and shall be used, as
directed by the System, for future allocations of employer
contributions or for the restoration of amounts previously
forfeited by former participants who again become
participating employees.
(40 ILCS 5/18-169.1 new)
Sec. 18-169.1. New benefit increases. To the extent that
the changes made to this Article by this amendatory Act of the
96th General Assembly authorizing the System to offer a
self-managed plan are determined to be a new benefit increase
within the meaning of Section 18-169, the changes made by this
amendatory Act are exempt from the provisions of subsection (d)
of Section 18-169.
Section 99. Effective date. This Act takes effect upon
becoming law.
SB0303 - 71 - LRB096 02849 AMC 12862 b
INDEX
Statutes amended in order of appearance
40 ILCS 5/2-103.1 new
40 ILCS 5/2-103.2 new
40 ILCS 5/2-117.4 new
40 ILCS 5/2-126 from Ch. 108 1/2, par. 2-126
40 ILCS 5/2-126.2 new
40 ILCS 5/2-162.1 new
40 ILCS 5/14-103.40 new
40 ILCS 5/14-103.41 new
40 ILCS 5/14-105.8 new
40 ILCS 5/14-133 from Ch. 108 1/2, par. 14-133
40 ILCS 5/14-133.2 new
40 ILCS 5/14-152.2
40 ILCS 5/15-103.3
40 ILCS 5/15-134.5
40 ILCS 5/15-158.2
40 ILCS 5/15-198.1 new
40 ILCS 5/16-104.1 new
40 ILCS 5/16-104.2 new
40 ILCS 5/16-131.7 new
40 ILCS 5/16-152 from Ch. 108 1/2, par. 16-152
40 ILCS 5/16-158.2 new
40 ILCS 5/16-203.1 new
40 ILCS 5/18-105.1 new
SB0303 - 72 - LRB096 02849 AMC 12862 b
40 ILCS 5/18-105.2 new
40 ILCS 5/18-123.3 new
40 ILCS 5/18-133 from Ch. 108 1/2, par. 18-133
40 ILCS 5/18-133.2 new
40 ILCS 5/18-169.1 new