Bill Text: IL SB3789 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the State Universities Article of the Illinois Pension Code. Provides that the System shall require that the deferred compensation recordkeeper agree that, in performing services with respect to the deferred compensation plan, the recordkeeper: (i) will not use information received as a result of providing services with respect to the deferred compensation plan or the participants in the deferred compensation plan to solicit the participants in the deferred compensation plan for the purpose of cross-selling nonplan products and services, unless in response to a request by a participant in the deferred compensation plan or a request by the System (currently, a request by a participant in the deferred compensation plan); and (ii) will not promote, recommend, endorse, or solicit participants in the deferred compensation plan to purchase any financial products or services outside of the deferred compensation plan, except that links to parts of the recordkeeper's or the recordkeeper's affiliate's (currently, recordkeeper's) website that are generally available to the public, are about commercial products, and may be encountered by a participant in the regular course of navigating the recordkeeper's or the recordkeeper's affiliate's website (currently, recordkeeper's) does not constitute a violation of the prohibition. Amends the University Employees Custodial Accounts Act. Makes similar changes. In a provision prohibiting a defined contribution plan recordkeeper from promoting credit cards, life insurance, or banking products, provides an exception if a request to provide those products is made by the governing board of the public institution of higher education or its authorized delegate. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-02-09 - Referred to Assignments [SB3789 Detail]

Download: Illinois-2023-SB3789-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB3789 Introduced 2/9/2024, by Sen. Robert F. Martwick SYNOPSIS AS INTRODUCED:
40 ILCS 5/15-202
110 ILCS 95/2 from Ch. 144, par. 1702
Amends the State Universities Article of the Illinois Pension Code. Provides that the System shall require that the deferred compensation recordkeeper agree that, in performing services with respect to the deferred compensation plan, the recordkeeper: (i) will not use information received as a result of providing services with respect to the deferred compensation plan or the participants in the deferred compensation plan to solicit the participants in the deferred compensation plan for the purpose of cross-selling nonplan products and services, unless in response to a request by a participant in the deferred compensation plan or a request by the System (currently, a request by a participant in the deferred compensation plan); and (ii) will not promote, recommend, endorse, or solicit participants in the deferred compensation plan to purchase any financial products or services outside of the deferred compensation plan, except that links to parts of the recordkeeper's or the recordkeeper's affiliate's (currently, recordkeeper's) website that are generally available to the public, are about commercial products, and may be encountered by a participant in the regular course of navigating the recordkeeper's or the recordkeeper's affiliate's website (currently, recordkeeper's) does not constitute a violation of the prohibition. Amends the University Employees Custodial Accounts Act. Makes similar changes. In a provision prohibiting a defined contribution plan recordkeeper from promoting credit cards, life insurance, or banking products, provides an exception if a request to provide those products is made by the governing board of the public institution of higher education or its authorized delegate. Effective immediately.
LRB103 37547 RPS 67671 b
A BILL FOR
SB3789 LRB103 37547 RPS 67671 b
AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Pension Code is amended by
changing Section 15-202 as follows:
(40 ILCS 5/15-202)
Sec. 15-202. Optional deferred compensation plan.
(a) As soon as practicable after August 10, 2018 (the
effective date of Public Act 100-769), the System shall offer
a deferred compensation plan that is eligible under Section
457(b) of the Internal Revenue Code of 1986, as amended, to
participating employees of the System employed by employers
described in Section 15-106 of this Code that qualify as
eligible employers under Section 457(e)(1)(A) of the Internal
Revenue Code of 1986, as amended. Such eligible employers
shall adopt the plan with an effective date no later than
September 1, 2021. Participating employees may voluntarily
elect to make elective deferrals to the eligible deferred
compensation plan. Eligible employers may make optional
employer contributions to the plan on behalf of participating
employees, which contributions may be maintained, increased,
reduced, or eliminated at the discretion of the employer from
plan year to plan year. The plan shall collect voluntary

SB3789 - 2 - LRB103 37547 RPS 67671 b
employee and optional employer contributions into an account
for each participant and shall offer investment options to the
participant. The plan under this Section shall be operated in
full compliance with any applicable State and federal laws,
and the System shall utilize generally accepted practices in
creating and maintaining the plan for the best interest of the
participants. In administering the deferred compensation plan,
the System shall require that the deferred compensation plan
recordkeeper agree that, in performing services with respect
to the deferred compensation plan, the recordkeeper: (i) will
not use information received as a result of providing services
with respect to the deferred compensation plan or the
participants in the deferred compensation plan to solicit the
participants in the deferred compensation plan for the purpose
of cross-selling nonplan products and services, unless in
response to a request by a participant in the deferred
compensation plan or a request by the System; and (ii) will not
promote, recommend, endorse, or solicit participants in the
deferred compensation plan to purchase any financial products
or services outside of the deferred compensation plan, except
that links to parts of the recordkeeper's or the
recordkeeper's affiliate's website that are generally
available to the public, are about commercial products, and
may be encountered by a participant in the regular course of
navigating the recordkeeper's or the recordkeeper's
affiliate's website will not constitute a violation of this

SB3789 - 3 - LRB103 37547 RPS 67671 b
item (ii). The System may use funds from the employee and
employer contributions to defray any and all costs of creating
and maintaining the plan. The System shall produce an annual
report on the participation in the plan and shall make the
report public.
(b) The System shall automatically enroll in the eligible
deferred compensation plan any employee of an eligible
employer who first becomes a participating employee of the
System on or after July 1, 2023 under an eligible automatic
contribution arrangement that is subject to Section 414(w) of
the Internal Revenue Code of 1986, as amended, and the United
States Department of Treasury regulations promulgated
thereunder. An employee who is automatically enrolled under
this subsection (b) shall have 3% of his or her compensation,
as defined by the plan, for each pay period deferred on a
pre-tax basis into his or her account, subject to any
contribution limits applicable to the plan. The Board may
increase the default percentage of compensation deferred under
this subsection (b).
An employee shall have 30 days from the date on which the
System provides the notice required under Section 414(w) of
the Internal Revenue Code of 1986, as amended, to elect to not
participate in the eligible deferred compensation plan or to
elect to increase or reduce the initial amount of elective
deferrals made to the plan. In the absence of such affirmative
election, the employee shall be automatically enrolled in the

SB3789 - 4 - LRB103 37547 RPS 67671 b
plan on the first day of the calendar month, or as soon as
administratively practicable thereafter, following the 30th
day from the date on which the System provides the required
notice. An employee who has been automatically enrolled in the
plan under this subsection (b) may elect, within 90 days of
enrollment, to withdraw from the plan and receive a refund of
amounts deferred, adjusted by applicable earnings and fees. An
employee making such an election shall forfeit all employer
matching contributions, if any, made with respect to such
refunded elective deferrals and such forfeited amounts shall
be used to defray plan expenses. Any refunded elective
deferrals shall be included in the employee's gross income for
the taxable year in which the refund is issued.
(c) The System may provide for one or more automatic
contribution arrangements, which shall comply with all
applicable Internal Revenue Service rules and regulations, in
conjunction with or in lieu of the eligible automatic
contribution arrangement under subsection (b), for
participating employees of eligible employers whose annual
earnings are limited by application of subsection (b) of
Section 15-111 of this Code. The amount of elective deferrals
made for the employee each pay period under an automatic
contribution arrangement shall equal the default percentage
specified by resolution of the Board multiplied by the
employee's compensation as defined by the plan, subject to any
contribution limits applicable to the plan, and shall be made

SB3789 - 5 - LRB103 37547 RPS 67671 b
on a pre-tax basis. An employee subject to this subsection (c)
shall have 30 days from the date on which the System provides
written notice to the employee to elect to not participate in
the eligible deferred compensation plan or to elect to
increase or reduce the amount of initial elective deferrals
made to the plan. In the absence of such affirmative election,
the employee shall be automatically enrolled in the plan
beginning the first day of the calendar month, or as soon as
administratively practicable thereafter, following the 30th
day from the date on which the System provides the required
notice.
(d) The System may provide that the default percentage for
any employee automatically enrolled in the eligible deferred
compensation plan under subsection (b) or (c) be increased by
a specified percentage each plan year after the plan year in
which the employee is automatically enrolled in the plan. The
amount of automatic annual increases in any plan year shall
not exceed 1% of compensation as defined by the plan.
(e) The changes made to this Section by this amendatory
Act of the 102nd General Assembly are corrections of existing
law and are intended to be retroactive to the effective date of
Public Act 100-769, notwithstanding Section 1-103.1 of this
Code.
(Source: P.A. 102-540, eff. 8-20-21; 103-552, eff. 8-11-23.)
Section 10. The University Employees Custodial Accounts

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Act is amended by changing Section 2 as follows:
(110 ILCS 95/2) (from Ch. 144, par. 1702)
Sec. 2. The governing board of any public institution of
higher education has the power to establish a defined
contribution plan to make payments to custodial accounts for
investment in regulated investment company stock to provide
retirement benefits as described in Section 403(b)(7) of the
Internal Revenue Code for eligible employees of such
institutions. Such payments shall be made with funds made
available by deductions from or reductions in salary or wages
of eligible employees who authorize in writing deductions or
reductions for such purpose. Such stock shall be purchased
only from persons authorized to sell such stock in this State.
In administering the defined contribution plan, the
governing board of any public institution of higher education
shall require that the defined contribution plan recordkeeper
agree that, in performing services with respect to the defined
contribution plan, the recordkeeper: (i) will not use
information received as a result of providing services with
respect to the defined contribution plan or the participants
in the defined contribution plan to solicit the participants
in the defined contribution plan for the purpose of
cross-selling nonplan products and services, unless in
response to a request by a participant in the defined
contribution plan or a request by the governing board of the

SB3789 - 7 - LRB103 37547 RPS 67671 b
public institution of higher education or its authorized
delegate; and (ii) will not promote, recommend, endorse, or
solicit participants in the defined contribution plan to
purchase any financial products or services outside of the
defined contribution plan, except that links to parts of the
recordkeeper's or the recordkeeper's affiliate's website that
are generally available to the public, are about commercial
products, and may be encountered by a participant in the
regular course of navigating the recordkeeper's or the
recordkeeper's affiliate's website will not constitute a
violation of this item (ii). However, a public institution of
higher education may allow promotion of limited services if
the public institution of higher education receives no
compensation from the recordkeeper for promoting or providing
such services. Such limited services may include educational,
counseling, debt reduction, student loan repayment or
forgiveness, or other services intended to enhance retirement
savings opportunities. Such limited services may not include
credit cards, life insurance, or banking products, unless a
request to provide those products is made by the governing
board of the public institution of higher education or its
authorized delegate.
(Source: P.A. 103-552, eff. 8-11-23.)