40 ILCS 5/15-158.2
2021 Illinois Compiled Statutes|Chapter 40 - PENSIONS|40 ILCS 5/ - Illinois Pension Code.|Article 15 - State Universities Retirement System

Sec. 15-158.2. Self-managed plan.(a) Purpose.  The General Assembly finds that it is important for colleges  and universities to be able to attract and retain the most qualified employees  and that in order to attract and retain these employees, colleges and  universities should have the flexibility to provide a defined contribution  plan as an alternative for eligible employees who elect not to participate  in a defined benefit retirement program provided under this Article.  Accordingly, the State Universities Retirement System is hereby authorized to  establish and administer a self-managed plan, which shall offer participating  employees the opportunity to accumulate assets for retirement through a  combination of employee 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.(b) Adoption by employers.  Each employer subject to this Article may  elect to adopt the self-managed plan established under this Section; this  election is irrevocable.  An employer's election to adopt the self-managed  plan makes available to the eligible employees of that employer the elections  described in Section 15-134.5.The State Universities Retirement System 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, to the employers, or to a  combination of both.(c) Selection of service providers and funding vehicles.  The System, in  consultation with the employers, shall 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.  In reviewing the proposals received and approving and contracting with  no fewer than 2 and no more than 7 companies, the Board of Trustees of the System shall  consider, among other things, the following criteria:(1) the nature and extent of the benefits that would     be provided to the participants;(2) the reasonableness of the benefits in relation to     the premium charged;(3) the suitability of the benefits to the needs and     interests of the participating employees and the employer;(4) the ability of the company to provide benefits     under the contract and the financial stability of the company; and(5) the efficacy of the contract in the recruitment     and retention of employees.The System, in consultation with the employers, 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) Employee Direction.  Employees 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 participant 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. The System shall provide advance notice to the participant of the participant's obligation to direct the investment of employee and employer contributions into one or more investment funds selected by the System at the time he or she makes his or her initial retirement plan selection. If a participant fails to direct the investment of employee and employer contributions into the various investment options offered to the participant when making his or her initial retirement election choice, that failure shall require the System to invest the employee and employer contributions in a default investment fund on behalf of the participant, and the investment shall be deemed to have been made at the participant's investment direction.  The participant has the right to transfer account balances out of the default investment fund during time periods designated by the System.  Neither the System nor the employer guarantees any of the investments in the  employee's account balances.(e) Participation.  An employee eligible to participate in the  self-managed plan must make a written election in accordance with the  provisions of Section 15-134.5 and the procedures established by the System.  Participation in the self-managed plan by an electing employee shall begin  on the first day of the first pay period following the later of the date the  employee's election is filed with the System or the effective date as of  which the employee's employer begins to offer participation in the self-managed  plan.  Employers may not make the self-managed plan available earlier than  January 1, 1998.  An employee's participation in any other retirement program  administered by the System under this Article shall terminate on the date that  participation in the self-managed plan begins.An employee who has elected to participate in the self-managed plan under  this Section must continue participation while employed in an eligible  position, and may not participate in any other retirement program administered  by the System under this Article while employed by that employer or any other  employer that has adopted the self-managed plan, unless the self-managed plan  is terminated in accordance with subsection (i).Notwithstanding any other provision of this Article, a Tier 2 member shall have the option to enroll in the self-managed plan.Participation in the self-managed plan under this Section shall constitute  membership in the State Universities Retirement System.A participant under this Section shall be entitled to the benefits of  Article 20 of this Code.(f) Establishment of Initial Account Balance.  If at the time an employee  elects to participate in the self-managed plan he or she has rights and credits  in the System due to previous participation in the traditional benefit package,  the System shall establish for the employee an opening account balance in the  self-managed plan, equal to the amount of contribution refund that the employee  would be eligible to receive under Section 15-154 if the employee terminated  employment on that date and elected a refund of contributions, except that this  hypothetical refund shall include interest at the effective rate for the  respective years.  The System shall transfer assets from the defined benefit  retirement program to the self-managed plan, as a tax free transfer in  accordance with Internal Revenue Service guidelines, for purposes of funding  the employee's opening account balance.(g) No Duplication of Service Credit.  Notwithstanding any other provision  of this Article, an employee may not purchase or receive service or service  credit applicable to any other retirement program administered by the System  under this Article for any period during which the employee was a participant  in the self-managed plan established under this Section.(h) Contributions.  The self-managed plan shall be funded by contributions  from employees participating in the self-managed plan and employer  contributions as provided in this Section.The contribution rate for employees participating in the self-managed plan  under this Section shall be equal to the employee contribution rate for other  participants in the System, as provided in Section 15-157.  This required  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.  Any employee  participating in the System's traditional benefit package prior to his or her  election to participate in the self-managed plan shall continue to have the  employer pick up the contributions required under Section 15-157.  However, the  amounts picked up after the election of the self-managed plan shall be remitted  to and treated as assets of the self-managed plan.  In no event shall an  employee have an option of receiving these amounts in cash.  Employees may make  additional contributions to the  self-managed plan in accordance with procedures prescribed by the System, to  the extent permitted under rules prescribed by the System.The program shall provide for employer contributions to be credited to each  self-managed plan participant at a rate of 7.6%  of the participating employee's salary, less the amount used by  the System to provide disability benefits for the employee.  The amounts so credited  shall be paid into the participant's self-managed plan accounts in a manner  to be prescribed by the System.An amount of employer contribution, not exceeding 1% of the participating  employee's salary, shall be used for the purpose of providing the disability  benefits of the System to the employee.  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 employees in the  self-managed plan.The State of Illinois shall make contributions by appropriations to the  System of the employer contributions required for employees who participate in  the self-managed plan under this Section.  The amount required shall  be certified by the Board of Trustees of the System and paid by the State in  accordance with Section 15-165.  The System shall not be obligated to remit the  required employer contributions to any of the insurance and annuity  companies, mutual fund  companies, banks, trust companies, financial institutions, or other sponsors  of any of the funding vehicles offered under the self-managed plan  until it has received the required employer contributions from the State.  In  the event of a deficiency in the amount of State contributions, the System  shall implement those procedures described in subsection (c) of Section 15-165  to obtain the required funding from the General Revenue  Fund.(i) Termination.  The self-managed plan authorized under this  Section may be terminated by the System, subject to the terms  of any relevant  contracts, and the System shall have no obligation to  reestablish the self-managed plan under this Section.  This Section does not  create a right  to continued participation in any self-managed plan set up by the System under  this Section.  If the self-managed plan is terminated,  the participants shall have the right to participate in one of the other  retirement programs offered by the System and receive service credit in such  other retirement program for any years of employment following the termination.(j) Vesting; Withdrawal; Return to Service.  A participant in the  self-managed plan becomes vested in the employer contributions credited to his  or her accounts in the self-managed plan on the earliest to occur of the  following: (1) completion of 5 years of service with an employer described in  Section 15-106; (2) the death of the participating employee while employed by  an employer described in Section 15-106, if the participant has completed at  least 1 1/2 years of service; or (3) the participant's election to retire and  apply the reciprocal provisions of Article 20 of this Code.A participant in the self-managed plan who receives a distribution of his or  her vested amounts from the self-managed plan  while not yet eligible for retirement under this Article  (and Article 20, if applicable) shall forfeit all service credit  and accrued rights in the System; if subsequently re-employed, the participant  shall be considered a new  employee.  If a former participant again becomes a participating employee (or  becomes employed by a participating system under Article 20 of this Code) and  continues as such for at least 2 years, all such rights, service credits, and  previous status as a participant shall be restored upon repayment of the amount  of the distribution, without interest.(k) Benefit amounts.  If an employee who is vested in employer  contributions terminates employment, the employee shall be entitled to a  benefit which is based on the  account values attributable to both employer and  employee contributions and any  investment return thereon.If an employee who is not vested in employer contributions terminates  employment, the employee shall be entitled to a benefit based solely on the  account values attributable to the employee'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 held in escrow by the  company investing those contributions and shall be used as directed by the  System for future allocations of employer contributions or for the restoration  of amounts previously forfeited by former participants who again become  participating employees.  (Source: P.A. 98-92, eff. 7-16-13; 99-897, eff. 1-1-17.)