HB0834 96TH GENERAL ASSEMBLY

LRB096 03828 AMC 13860 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB0834

Introduced 2/9/2009, by Rep. Mark H. Beaubien, Jr.

SYNOPSIS AS INTRODUCED:

40 ILCS 5/1-113.1
40 ILCS 5/3-135.1 new
40 ILCS 5/4-128.1 new
40 ILCS 5/7-201.2 new

Amends the Illinois Pension Code. Provides that the board of trustees of downstate police and downstate firefighter pension funds may, by a resolution adopted by a majority vote of its membership, transfer moneys of the pension fund to the Illinois Municipal Retirement Fund for management and administration. Provides guidelines for the Illinois Municipal Retirement Fund to follow in investment of the money of downstate police and downstate firefighter pension funds, including the transfer of the funds assets and quarterly and annual reports to the pension funds. Effective January 1, 2010.

PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

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 1-113.1 and by adding Sections 3-135.1, 4-128.1, and 7-201.2 as follows:

(40 ILCS 5/1-113.1)

Sec. 1-113.1. Investment authority of pension funds established under Article 3 or 4.

(a) The board of trustees of a police pension fund established under Article 3 of this Code or firefighter pension fund established under Article 4 of this Code shall draw pension funds from the treasurer of the municipality and, beginning January 1, 1998, invest any part thereof in the name of the board in the items listed in Sections 1-113.2 through 1-113.4 according to the limitations and requirements of this Article. The board of trustees may also transfer moneys to the Illinois Municipal Retirement Fund for investment as provided under Section 7-201.2. The Illinois Municipal Retirement Fund is not limited to the items listed in Sections 1-113.2 through 1-113.4 when investing these moneys, but it shall invest them in accordance with Section 7-201.

(b) These investments shall be made with the care, skill, prudence, and diligence that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of like character with like aims.

(c) Interest and any other income from the investments shall be credited to the pension fund.

(d) For the purposes of Sections 1-113.2 through 1-113.11, the "net assets" of a pension fund include both the cash and invested assets of the pension fund.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/3-135.1 new)

Sec. 3-135.1. Optional investment management by the Illinois Municipal Retirement Fund. The board may, by a resolution adopted by a majority vote of its membership, transfer moneys of the pension fund to the Illinois Municipal Retirement Fund for management and administration. Upon the completion of the transfer, the authority of the board to make investments of the transferred moneys terminates, and all investments of those moneys must be made by the Illinois Municipal Retirement Fund. All transfers and investments under this Section must be made in accordance with Section 7-201.2 of this Code.

(40 ILCS 5/4-128.1 new)

Sec. 4-128.1. Optional investment management by the Illinois Municipal Retirement Fund. The board may, by a resolution adopted by a majority vote of its membership, transfer moneys of the pension fund to the Illinois Municipal Retirement Fund for management and administration. Upon the completion of the transfer, the authority of the board to make investments of the transferred moneys terminates, and all investments of those moneys must be made by the Illinois Municipal Retirement Fund. All transfers and investments under this Section must be made in accordance with Section 7-201.2 of this Code.

(40 ILCS 5/7-201.2 new)

Sec. 7-201.2. Investment of moneys of public safety pension funds.

(a) The board shall invest the moneys of any public safety pension fund that elects to transfer those moneys, under Section 3-135.1 or 4-128.1, to the Illinois Municipal Retirement Fund for the management of its investments and the performance of investment functions previously performed by the board of that pension fund, with respect to those moneys.

(b) Any election, transfer, investment, administration, and management of the moneys of any public safety pension fund must be in accordance with the provisions of Section 3-135.1 or 4-128.1, the provisions of this Article, and with the provisions of any rule adopted under Section 7-198.

(c) The public safety pension fund must transfer the moneys not later than the first day of the 4th month next following the date of the resolution adopted under Section 3-135.1 or 4-128.1. The transfer must be made in cash assets, unless otherwise specified by the Illinois Municipal Retirement Fund. The authority of the Illinois Municipal Retirement Fund is effective upon the transfer. These transfers must be receipted for in detail by both the Chairman and the director of the board.

(d) In the management of the moneys of the public safety pension funds under this Section, the board:

(1) may, for investment purposes, commingle all or a part of the invested assets of one or more public safety pension funds under its jurisdiction and authority;

(2) shall carry assets of all funds at cost or a value determined in accordance with generally accepted accounting principles and accounting procedures approved by the board. Each investment initially transferred to the board by a public safety pension fund must be similarly valued, except that the board may elect to place a conditional value on any investment; in which case, the amount of any later realization of that asset in cash that is in excess of or is less than the conditional value must be credited or charged to the pension fund that made the transfer;

(3) shall keep proper books of account that, at all times, reflect the value of all investments held by the board for a public safety pension fund, whether for the separate account of the fund or in a commingled fund;

(4) may charge each public safety pension fund with its share of all of the expenses of the board that are related to the investments of public safety pension funds under this Section. These charges must be made at quarter yearly periods pro rata according to the value of the investments held for the respective funds at the beginning of the quarter or any other equitable formula; and

(5) shall charge all distributions made by the board to or for a public safety pension fund to the account maintained for that fund.

(e) For the quarterly periods ending September 30, December 31, and March 31, the board shall submit to each pension fund under its jurisdiction a report setting forth, among other things, the following information:

(1) a full description of the investments acquired, showing average costs;

(2) a full description of the securities sold or exchanged, showing average proceeds or other conditions of an exchange;

(3) gains or losses realized during the period;

(4) income from investments;

(5) administrative expenses of the board; and

(6) the proportion of administrative expenses allocable to each pension fund.

(f) The board shall prepare and submit an annual report to each pension fund under its jurisdiction within 6 months after the close of each fiscal year of the Illinois Municipal Retirement Fund. This report must set forth full information concerning the results of investment operations of the board for the year. In addition to the information required under subsection (e), the annual report must include the following:

(1) a listing of the investments held by the board at the end of the year showing their book values and market values and their income yields on market values;

(2) the amounts, as determined under item (1) of this subsection (f) that are allocable to each pension fund managed by the board;

(3) comments on the pertinent factors affecting the operations of the board for the year;

(4) a review of the policies maintained by the board and any changes to those policies that occurred during the year;

(5) a copy of the audited financial statements for the year;

(6) recommendations for possible changes in the law governing the operations of the board; and

(7) a listing of the names of securities brokers and dealers dealt with during the year showing the total amount of commissions received by each on transactions with the board.

(h) For the purposes of this Section, "public safety pension fund" means any pension fund established under Article 3 or 4 of this Code. In no event may a public safety pension fund be considered to be a participating municipality, as defined under Section 7-108.

Section 99. Effective date. This Act takes effect January 1, 2010.