Monday, November 7, 2011

Amendment to SB 512: Self-Managed Plan

Amendment SB512 (Nov. 7, 2011) pages 261-65
(40 ILCS 5/16-133.8 new)
Sec. 16-133.8. Self-managed plan:

(a) Purpose. The Teachers' Retirement System of the State of Illinois shall establish and administer a self-managed plan, which shall offer 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 thereof. The plan must be qualified under the Internal Revenue Code of 1986.

The plan shall not include the retirement annuities, survivors' benefits, death benefits, or refunds provided under this Article.

(b) 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 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) Selection of service providers and funding vehicles. The System may 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. 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.

(d) Member direction. Members 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 member 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 member's employer guarantees any of the investments in the member's account balances.

(e) Participation. A member eligible to participate in the self-managed plan must make a written election under Section 16-133.6 and the procedures established by the System. A member who has elected to participate in the self-managed plan under Section 16-133.6 must continue participation while employed as a teacher. Participation in the self-managed plan under this Section shall constitute membership in the Teachers' Retirement System. A member under this Section shall be entitled to the benefits of Article 20 of this Code.

(f) Contributions. The self-managed plan shall be funded by contributions pursuant to salary reduction agreements for members participating in the self-managed plan and employer contributions as provided in this Section.

The member 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. In no event shall a member have an option of receiving these amounts in cash, and payment of the member contribution shall be a condition of employment. The member contribution shall be deducted from the member's salary in the amount specified by paragraph 3 of subsection (f) of Section 16-152, unless the employer agrees to pick up and pay the member contribution in addition to the member's salary, pursuant to Section 16-152.1.

The program shall provide for employer contributions to be credited to each self-managed plan participant at a rate of 6% of the member's salary. The amounts so credited shall be paid into the member's self-managed plan account in a manner to be prescribed by the System. An additional amount of employer contributions 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 employer contributions to be allocated during that plan year for providing disability benefits for members in the self-managed plan.

The State of Illinois shall make contributions by appropriations to the System of the employer contributions required for members who participate in the self-managed plan under this Section. The amount required and the payment schedule shall be certified by the Board of Trustees of the System and paid by the State in accordance with Section 16-158.2.

The System shall not be obligated to remit the required State contributions to any person or entity until it has received the required contributions from the State.

(g) Vesting; withdrawal; return to service. A member in the self-managed plan becomes vested in the employer contributions credited to his or her account in the self-managed plan on the earliest to occur of the following: (1) completion of 5 years of creditable service; (2) the death of the member while in active service, if the member has completed at least 1 ½ years of service; or (3) the member's election to retire and apply the reciprocal provisions of Article 20 of this Code.

(h) If a member who is vested in employer contributions terminates employment, the member shall be entitled to the account values attributable to employer and member contributions and any investment return thereon.

If a member who is not vested in employer contributions terminates employment, the member shall be entitled to 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 which are forfeited shall be used as directed by the System for future allocations of employer contributions.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.