Springfield,
IL – At the Capitol - Friday, February 20, marked the last day for
substantial bills to be introduced in the Senate. The House of Representatives has until
Friday, February 27 to introduce bills.
State Universities Annuitants Association
MINI – Briefing, etc.
February 20, 2009Spring
Somewhat in order of significance -
Treasurer Alexi Giannoulias’ pension investment consolidation bill was
introduced on Friday as SB 1734
sponsored by Senator Jeffery Schoenberg.
At this writing, the bill has not been introduced in the House. However, it is most likely to be introduced
next week by Rep. Frank Mautino (D-76, Spring Valley).
Synopsis As Introduced - Amends the Illinois Pension Code. Creates the Illinois Public Employees' Retirement System as an
investment system for the 5 State-funded retirement systems. Provides
for the transfer of assets to the Illinois Public Employees' Retirement System
for investment purposes from the Teachers' Retirement System of the State of
Illinois, the State Universities Retirement System, and the Illinois State
Board of Investments (who currently invests for the General Assembly Retirement
System (GARS), the Judges Retirement System of Illinois (JRS), and the State
Employees' Retirement System of Illinois (SERS). Makes other changes related to
investment and the ethics of investing retirement system and pension fund
assets. Amends various Acts concerning ethics and to replace
references to the Illinois State Board of Investment with references to the
Illinois Public Employees' Retirement System. Effective
immediately.
Senator Kuame Raoul
(D-13, Chicago) introduced SB 1656 –
Pension Ethics.
Synopsis As Introduced
Amends the Illinois Governmental Ethics Act. Requires members of the board of any pension fund or retirement
system established under the Illinois Pension Code to file a statement of
economic interests. Amends the State Officials and Employees Ethics Act.
Includes appointed or elected commissioners, trustees,
directors, or board members of a board of a State agency, including the boards
found in the Illinois Pension Code, in the definition of "employee".
Amends the Illinois Pension Code. Makes
changes in provisions concerning the definition of "fiduciary",
allocation and delegation of fiduciary duties, and prohibited transactions.
Adds provisions concerning investment advisers, consultants, and investment
services for investment boards, pension funds, and retirement systems other
than downstate police and fire pension funds; investment transparency;
prohibitions on monetary gain on investments; fraud, prohibitions on gifts;
contingent fees; and procurements for pension funds, retirement systems, and
investment boards, except downstate police and fire pension funds. Requires the University of
Illinois to create the Illinois Fiduciary College for the purpose of education
pension fund, retirement system, and investment board members and staffs on
ethics.
Senator Bill Brady (R-44, Bloomington) with Senator Chris Lauzen (R-Aurora)
added as a chief Co-sponsor introduced SB
1454 – Pension Ethics.
Synopsis As Introduced
Amends the Illinois Governmental Ethics Act. Requires members of the board of the 5 State-funded retirement
systems and members of the Illinois State Board of Investment to file
statements of economic interests. Amends the State Officials and
Employees Ethics Act. Includes any appointed or elected
commissioner, trustee, director, or board member of a board of a State agency,
including the board of trustees of a State-funded retirement system to the
definition of "employee" under the Act. Amends
the Illinois Procurement Code to include all applicable procurements made by
the State-funded retirement system. Amends the
Illinois Pension Code. Makes changes with respect to consultants and
fiduciaries and prohibits certain activities relating to the State retirement
systems and the Illinois State Board of Investment. Adds
provisions concerning lobbying, conflicts of interests, disclosures, and investment
transparency. Makes other changes. Amends the State Mandates Act to require implementation without
reimbursement. Effective immediately.
At this time, Senator Raoul’s is the favored Pension Ethics bill. It requires the University of Illinois to create
the Illinois Fiduciary College for the purpose of education pension fund,
retirement system and investment board members and staffs on ethics.
As most members know, it was suggested that the Pension Investment
Consolidation Proposed Legislation be split into two bills: one focusing on the pension investment
consolidation and the other to contain the Ethics portion.
College Insurance Program – was
introduced on February 19 by Senator Donne Trotter (D-17, Chicago). SB
1638 is the bill to refer to now. Next week, Rep. Barbara Flynn Currie (D-25,
Chicago) will be introducing an identical bill in the House.
Synopsis As Introduced
Amends the State Employees Group Insurance Act of 1971 and
the State Pension Funds Continuing Appropriation Act. Beginning July 1, 2011, requires the Department of Central
Management Services to administer a program of health benefits coverage for
retirees, and their dependents, of certain community college districts
previously not participating in the Community College Health Insurance Security
Fund. Beginning January 1, 2011, provides for the collection and
use of contributions. Beginning July 1,
2010, establishes a committee to advise the State on the program and
necessary adjustments in funding sources. Amends the State
Mandates Act to require implementation without reimbursement.
The most important item to note is the change in dates. Otherwise the bill stays the same. A Fact Sheet is being written and will be
provided.
Inflation Loss Compensation – was introduced
on February 20 by Senator Michael Frerichs (D-52, Gifford).
Synopsis As Introduced
Amends the State Universities Article of the Illinois
Pension Code. Provides that, on January 1, 2010, the monthly pension of an
annuitant who retired before January 1, 1980 shall be recalculated and
increased to reflect the amount the annuitant would have received in January
2010 had the annuitant been receiving a 3% increase for each year he or she
received a monthly annuity under Rule 1, Rule 2, Rule 3, Rule 4, or Rule 5. Provides for an additional increase of 3% of the amount of the
retirement annuity then being received each January thereafter. Effective immediately.
This was an initiative by SUAA to assist in bringing those remaining 882
pre-1980 retirees a monthly increase equal to the retirees who are now
receiving 3%. It is still possible that
an identical bill will be introduced in the House.
Other information of importance
The Senate Pensions and Investments Committee now has
two sub-committees: Pension Benefit
Enhancements and Pension Reforms. Bills
assigned to PBE were SB 205, 234, 274, 299, 319 and 320. Nothing was assigned to PR. Those bills held in the Pensions and
Investments Committee were SB 214, 303 and 304. The under-lined bill numbers are of interest
to SUAA.
SUAA is a member of IRSI – Illinois Retirement Security Initiative. Accordingly, Senator Brady has been
approached regarding SB 303 and SB 304. Sen. Brady is aware of the opposition and
therefore will not call the bill.
However, testimony will be provided in opposition of SB 304 by IRSI, TRS
and one of the unions. Attached is an
updated paper called “Debunking Pension Myths” which others can use to contact
Sen. Brady. Other reasons to oppose are:
The primary
goal of SURS is to provide financial security for SURS members in
retirement. Basic financial protection should be provided for system
members beyond their normal working years. Another is the Benefits and
costs should be equitably allocated. Proposals should not discriminate
against certain groups of members or retirees, expend system assets
inequitably, or distribute increased costs disproportionately. (The
Defined Contributions would be more expensive in the long run – increase near
term costs for the state).
The Synopsis As Introduced for SB 303 – Pension – Defined
Contribution Plans
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.
The Synopsis As Introduced
for SB 304 – Pension – Defined Contribution Plans
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 automatically enroll its newly
eligible employees in a self-managed program of retirement benefits
instead of the program of retirement benefits currently offered and allows
currently eligible employees to elect to participate in the self-managed
program. 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.
The
significant differences between the two bills are highlighted.
SUAA should
take a position on SB 304; the more opposition the better. The bill will be called on Tuesday, February
24 in the Senate Pensions and Investments Committee. If there are any questions, you should
contact Linda by email at linda@suaa.com or call 217.553.1091.
As a sidebar, The Speaker is interested in Defined Contributions Plans.
Senator Frerichs along with Senator Larry Bomke (R-50, Springfield) as a
chief co-sponsor introduced SR 54.
Synopsis As Introduced
Instructs the Commission on Government Forecasting and
Accountability to study the economic impact on central Illinois of the number
of jobs that would be eliminated due to the consolidation of investment
authority in the State Universities Retirement System and the Teachers'
Retirement System of State of Illinois.
An identical resolution, HR 63, was
introduced in the House by Naomi Jakobsson (D-103, Urbana).
This report will provide information regarding the Treasurer’s predicted
savings for the consolidation of the pension investments.
So far 2,339
Senate Bills have been introduced and 2,672 House Bills. The 750’s are back as shell bills thus
far.
More
information is forth-coming. This has
been a very busy week.