Bill Text: IL SB1440 | 2009-2010 | 96th General Assembly | Enrolled

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Bill Title: Amends the Illinois Pension Code. Makes a technical change in a Section concerning State universities.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2009-08-18 - Public Act . . . . . . . . . 96-0586 [SB1440 Detail]

Download: Illinois-2009-SB1440-Enrolled.html

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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 changing
Sections 1-106 and 15-136.4 as follows:
(40 ILCS 5/1-106) (from Ch. 108 1/2, par. 1-106)
Sec. 1-106. Payment of distribution other than direct.
(a) The board of trustees of any retirement fund or system
operating under this Code may, at the written direction and
request of any annuitant, solely as an accommodation to the
annuitant, pay the annuity due the annuitant to a bank, savings
and loan association, or any other financial institution
insured by an agency of the federal government, for deposit to
the account of the annuitant, or to a bank, savings and loan
association, or trust company for deposit in a trust
established by the annuitant for his or her benefit with that
bank, savings and loan association, or trust company. The
annuitant may withdraw the direction at any time.
(b) Beginning January 1, 1993, each pension fund or
retirement system operating under this Code may, and to the
extent required by federal law shall, at the request of any
person entitled to receive a refund, lump-sum benefit, or other
nonperiodic distribution from the pension fund or retirement

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system, pay the taxable portion of that distribution directly
to any entity that (1) is designated in writing by the person,
(2) is qualified under federal law to accept an eligible
rollover distribution from a qualified plan, and (3) has agreed
to accept the distribution.
(Source: P.A. 87-1265.)
(40 ILCS 5/15-136.4)
Sec. 15-136.4. Retirement and Survivor Benefits Under
Portable Benefit Package.
(a) This Section 15-136.4 describes the form of annuity and
survivor benefits available to a participant who has elected
the portable benefit package and has completed the one-year
waiting period required under subsection (e) of Section
15-134.5. For purposes of this Section, the term "eligible
spouse" means the husband or wife of a participant to whom the
participant is married on the date the participant's retirement
annuity payment period begins, provided however, that if the
participant should die prior to the commencement of retirement
annuity benefits, then "eligible spouse" means the husband or
wife, if any, to whom the participant was married throughout
the one-year period preceding the date of his or her death.
(b) This subsection (b) describes the normal form of
annuity payable to a participant subject to this Section
15-136.4. If the participant is unmarried on the date his or
her annuity payment period begins payments commence, then the

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annuity payments shall be made in the form of a single-life
annuity as described in Section 15-118. If the participant is
married on the date his or her annuity payments commence, then
the annuity payments shall be paid in the form of a qualified
joint and survivor annuity that is the actuarial equivalent of
the single-life annuity. Under the "qualified joint and
survivor annuity", a reduced amount shall be paid to the
participant for his or her lifetime and his or her eligible
spouse, if surviving at the participant's death, shall be
entitled to receive thereafter a lifetime survivorship annuity
in a monthly amount equal to 50% of the reduced monthly amount
that was payable to the participant. The last payment of a
qualified joint and survivor annuity shall be made as of the
first day of the month in which the death of the survivor
occurs.
(c) Instead of the normal form of annuity that would be
paid under subsection (b), a participant may elect in writing
within the 90-day period prior to the date his or her annuity
payments commence to waive the normal form of annuity payment
and receive an optional form of payment annuity as described in
subsection (h). If the participant is married and elects an
optional form of payment annuity under subsection (h) other
than a joint and survivor annuity with the eligible spouse
designated as the contingent annuitant, then such election
shall require the consent of his or her eligible spouse in the
manner described in subsection (d). At any time during the

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90-day period preceding the date the participant's payment
period begins annuity commences, the participant may revoke the
optional form of payment elected under this subsection (c) and
reinstate coverage under the qualified joint and survivor
annuity without the spouse's consent, but an election to revoke
the optional form elected and elect a new optional form of
payment or designate a different contingent annuitant shall not
be effective without the eligible spouse's consent.
(d) The eligible spouse's consent to any election made
pursuant to this Section that requires the eligible spouse's
consent shall be in writing and shall acknowledge the effect of
the consent. In addition, the eligible spouse's signature on
the written consent must be witnessed by a notary public. The
eligible spouse's consent need not be obtained if the system is
satisfied that there is no eligible spouse, that the eligible
spouse cannot be located, or because of any other relevant
circumstances. An eligible spouse's consent under this Section
is valid only with respect to the specified optional form of
payment and, if applicable, contingent annuitant designated by
the participant. If the optional form of payment or the
contingent annuitant is subsequently changed (other than by a
revocation of the optional form of payment and reinstatement of
the qualified joint and survivor annuity), a new consent by the
eligible spouse is required. The eligible spouse's consent to
an election made by a participant pursuant to this Section,
once made, may not be revoked by the eligible spouse.

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(e) Within a reasonable period of time preceding the date a
participant's annuity commences, a participant shall be
supplied with a written explanation of (1) the terms and
conditions of the normal form single-life annuity and qualified
joint and survivor annuity, (2) the participant's right to
elect a single-life annuity or an optional form of payment
under subsection (h) subject to his or her eligible spouse's
consent, if applicable, and (3) the participant's right to
reinstate coverage under the qualified joint and survivor
annuity prior to his or her annuity commencement date by
revoking an election of an optional form of payment benefit
under subsection (h).
(f) If a married participant with at least 1.5 years of
service dies prior to commencing retirement annuity payments
and prior to taking a refund under Section 15-154, his or her
eligible spouse is entitled to receive a pre-retirement
survivor annuity, if there is not then in effect a waiver of
the pre-retirement survivor annuity. The pre-retirement
survivor annuity payable under this subsection shall be a
monthly annuity payable for the eligible spouse's life,
commencing as of the beginning of the month next following the
later of the date of the participant's death or the date the
participant would have first met the eligibility requirements
for retirement, and continuing through the beginning of the
month in which the death of the eligible spouse occurs. The
monthly amount payable to the spouse under the pre-retirement

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survivor annuity shall be equal to the monthly amount that
would be payable as a survivor annuity under the qualified
joint and survivor annuity described in subsection (b) if: (1)
in the case of a participant who dies on or after the date on
which the participant has met the eligibility requirements for
retirement, the participant had retired with an immediate
qualified joint and survivor annuity on the day before the
participant's date of death; or (2) in the case of a
participant who dies before the earliest date on which the
participant would have met the eligibility requirements for
retirement age, the participant had separated from service on
the date of death, survived to the earliest retirement age
based on service prior to his or her death, retired with an
immediate qualified joint and survivor annuity at the earliest
retirement age, and died on the day after the day on which the
participant would have attained the earliest retirement age.
(g) A married participant who has not retired may elect at
any time to waive the pre-retirement survivor annuity described
in subsection (f). Any such election shall require the consent
of the participant's eligible spouse in the manner described in
subsection (d) (e). A waiver of the pre-retirement survivor
annuity shall increase the lump sum death benefit payable under
subsection (b) of Section 15-141. Prior to electing any waiver
of the pre-retirement survivor annuity, the participant shall
be provided with a written explanation of (1) the terms and
conditions of the pre-retirement survivor annuity and the death

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benefits payable from the system both with and without the
pre-retirement survivor annuity, (2) the participant's right
to elect a waiver of the pre-retirement survivor annuity
coverage subject to his or her spouse's consent, and (3) the
participant's right to reinstate pre-retirement survivor
annuity coverage at any time by revoking a prior waiver of such
coverage.
(h) By filing a timely election with the system, a
participant who will be eligible to receive a retirement
annuity under this Section may waive the normal form of annuity
payment described in subsection (b), subject to obtaining the
consent of his or her eligible spouse, if applicable, and elect
to receive any one of the following optional forms of payment:
(1) Joint and Survivor Annuity Options: The
participant may elect to receive a reduced annuity payable
for his or her life and to have a lifetime survivorship
annuity in a monthly amount equal to 50%, 75%, or 100% (as
elected by the participant) of that reduced monthly amount,
to be paid after the participant's death to his or her
contingent annuitant, if the contingent annuitant is alive
at the time of the participant's death.
(2) Single-Life Annuity Option (optional for married
participants). The participant may elect to receive a
single-life annuity payable for his or her life only.
(3) Lump sum retirement benefit. The participant may
elect to receive a lump sum retirement benefit that is

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equal to the amount of a refund payable under Section
15-154(a-2).
All joint and survivor optional annuity forms shall be in an
amount that is the actuarial equivalent of the single-life
annuity.
For the purposes of this Section, the term "contingent
annuitant" means the beneficiary who is designated by a
participant at the time the participant elects a joint and
survivor annuity to receive the lifetime survivorship annuity
in the event the beneficiary survives the participant at the
participant's death.
(i) Under no circumstances may an option be elected,
changed, or revoked after the date the participant's retirement
annuity commences.
(j) An election made pursuant to subsection (h) shall
become inoperative if the participant or the contingent
annuitant dies before the date the participant's annuity
payments commence, or if the eligible spouse's consent is
required and not given.
(k) (Blank).
(l) The automatic annual increases described in subsection
(d) of Section 15-136 shall apply to retirement benefits under
the portable benefit package and the automatic annual increases
described in subsection (j) of Section 15-145 shall apply to
survivor benefits under the portable benefit package.
(Source: P.A. 90-448, eff. 8-16-97; 90-766, eff. 8-14-98;

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91-887, eff. 7-6-00.)
Section 99. Effective date. This Act takes effect upon
becoming law.