Illinois Compiled Statutes
40 ILCS 5/ - Illinois Pension Code.
Article 1A - Regulation Of Public Pension Funds

(40 ILCS 5/Art. 1A heading)

 
(40 ILCS 5/1A-101)
Sec. 1A-101.
Creation of Public Pension Division.
There is created in the
Department of Insurance a Public Pension Division which, under the supervision
and direction of the Director of Insurance, shall exercise the powers and
perform the duties and functions prescribed under this Code. The Division
shall consist of an administrator, a supervisor, a technical staff trained in
the fundamentals of public pension fund planning, operations, administration,
and investment of public pension funds, and such other personnel as may be
necessary properly and effectively to discharge the functions of the
Division.

(Source: P.A. 90-507, eff. 8-22-97.)
 
(40 ILCS 5/1A-102)
Sec. 1A-102. Definitions. As used in this Article, the following terms
have the meanings ascribed to them in this Section, unless the context
otherwise requires:
"Accrued liability" means the actuarial present value of future benefit
payments and appropriate administrative expenses under a plan, reduced by the
actuarial present value of all future normal costs (including any participant
contributions) with respect to the participants included in the actuarial
valuation of the plan.
"Actuarial present value" means the single amount, as of a given valuation
date, that results from applying actuarial assumptions to an amount or series
of amounts payable or receivable at various times.
"Actuarial value of assets" means the value assigned by the actuary to the
assets of a plan for the purposes of an actuarial valuation.
"Basis point" means 1/100th of one percent.
"Beneficiary" means a person eligible for or receiving benefits from a
pension fund as provided in the Article of this Code under which the fund is
established.
"Consolidated Fund" means: (i) with respect to the pension funds established under Article 3 of this Code, the Police Officers' Pension Investment Fund established under Article 22B of this Code; and (ii) with respect to the pension funds established under Article 4 of this Code, the Firefighters' Pension Investment Fund established under Article 22C of this Code.
"Credited projected benefit" means that portion of a participant's projected
benefit based on an allocation taking into account service to date determined
in accordance with the terms of the plan based on anticipated future
compensation.
"Current value" means the fair market value when available; otherwise, the
fair value as determined in good faith by a trustee, assuming an orderly
liquidation at the time of the determination.
"Department" means the Department of Insurance of the State of Illinois.
"Director" means the Director of the Department of Insurance.
"Division" means the Public Pension Division of the Department of Insurance.
"Governmental unit" means the State of Illinois, any instrumentality or
agency thereof (except transit authorities or agencies operating within or
within and without cities with a population over 3,000,000), and any political
subdivision or municipal corporation that establishes and maintains a public
pension fund.
"Normal cost" means that part of the actuarial present value of all future
benefit payments and appropriate administrative expenses assigned to the
current year under the actuarial valuation method used by the plan (excluding
any amortization of the unfunded accrued liability).
"Participant" means a participating member or deferred pensioner or annuitant
of a pension fund as provided in the Article of this Code under which the
pension fund is established, or a beneficiary thereof.
"Pension fund" means any public pension fund, annuity and benefit fund, or
retirement system established under this Code.
"Plan year" means the calendar or fiscal year on which the records of a given
plan are kept.
"Projected benefits" means benefit amounts under a plan which are expected
to be paid at various future times under a particular set of actuarial
assumptions, taking into account, as applicable, the effect of advancement
in age and past and anticipated future compensation and service credits.
"Supplemental annual cost" means that portion of the unfunded accrued
liability assigned to the current year under one of the following bases:
"Total annual cost" means the sum of the normal cost plus the supplemental
annual cost.
"Transition period" means the period described in Section 22B-120 with respect to the pension funds established under Article 3 of this Code and the period described in Section 22C-120 with respect to the pension funds established under Article 4 of this Code.
"Unfunded accrued liability" means the excess of the accrued liability over
the actuarial value of the assets of a plan.
"Vested pension benefit" means an interest obtained by a participant or
beneficiary in that part of an immediate or deferred benefit under a plan
which arises from the participant's service and is not conditional upon the
participant's continued service for an employer any of whose employees are
covered under the plan, and which has not been forfeited under the terms of the
plan.

(Source: P.A. 101-610, eff. 1-1-20.)
 
(40 ILCS 5/1A-103)
Sec. 1A-103.
Rules.
The Department is authorized to promulgate rules
necessary for the administration and enforcement of this Code. Except as
otherwise provided under this Code, these rules shall apply only to pension
funds established under Article 3 or Article 4 of this Code. Rules adopted
pursuant to this Section shall govern where conflict with local rules and
regulations exists.

(Source: P.A. 90-507, eff. 8-22-97.)
 
(40 ILCS 5/1A-104)
Sec. 1A-104. Examinations and investigations.
(a) Except as described in the following paragraph with respect to pension funds established under Article 3 or 4 of this Code, the Division shall make periodic examinations and investigations of all
pension funds established under this Code and maintained for the benefit of
employees and officers of governmental units in the State of Illinois.
However, in lieu of making an examination and investigation, the Division
may accept and rely upon a report of audit or examination of any pension fund
made by an independent certified public accountant pursuant to the provisions
of the Article of this Code governing the pension fund. The acceptance of the
report of audit or examination does not bar the Division from making a further
audit, examination, and investigation if deemed necessary by the Division.
For pension funds established under Article 3 or 4 of this Code: (i) prior to the conclusion of the transition period, the Division shall make the periodic examinations and investigations described in the preceding paragraph; and (ii) after the conclusion of the transition period, the Division may accept and rely upon a report of audit or examination of such pension fund made by an independent certified public accountant retained by the Consolidated Fund. The acceptance of the report of audit or examination does not bar the Division from making a further audit, examination, and investigation if deemed necessary by the Division.
The Department may implement a flexible system of examinations under
which it directs resources as it deems necessary or appropriate. In
consultation with the pension fund being examined, the Division may retain
attorneys, independent actuaries, independent certified public accountants, and
other professionals and specialists as examiners, the cost of which (except in
the case of pension funds established under Article 3 or 4) shall be borne by
the pension fund that is the subject of the examination.
(b) The Division or the Consolidated Fund, as appropriate, shall examine or investigate each pension fund established
under Article 3 or Article 4 of this Code. The schedule of each examination shall be such that each fund shall be examined once every 3 years.
Each examination shall include the following:
In addition, the Division or the Consolidated Fund, as appropriate, may conduct investigations, which shall be
identified as such and which may include one or more of the items listed in
this subsection.
A copy of the report of examination or investigation as prepared by the
Division or the Consolidated Fund, as appropriate, shall be submitted to the secretary of the board of trustees of the
pension fund examined or investigated and to the chief executive officer of the municipality. The Director, upon request, shall grant
a hearing to the officers or trustees of the pension fund and to the officers or trustees of the Consolidated Fund, as appropriate, or their duly
appointed representatives, upon any facts contained in the report of
examination. The hearing shall be conducted before filing the report or making
public any information contained in the report. The Director may withhold the
report from public inspection for up to 60 days following the hearing.

(Source: P.A. 101-610, eff. 1-1-20.)
 
(40 ILCS 5/1A-105)
Sec. 1A-105.
Examination and subpoena of records and witnesses.
The
Director may administer oaths and affirmations and summon and compel the
attendance before him or her and examine under oath any officer, trustee,
agent, actuary, attorney, or employee connected either directly or indirectly
with any pension fund, or any other person having information regarding the
condition, affairs, management, administration, or methods of conducting a
pension fund. The Director may require any person having possession of any
record, book, paper, contract, or other document pertaining to a pension fund
to surrender it or to otherwise afford the Director access to it and for
failure so to do the Director may attach the same.
Should any person fail to obey the summons of the Director or refuse to
surrender to him or her or afford him or her access to any such record, book,
paper, contract, or other document, the Director may apply to the circuit court
of the county in which the principal office of the pension fund involved is
located, and the court, if it finds that the Director has not exceeded his or
her authority in the matter, may, by order duly entered, require the attendance
of witnesses and the production of all relevant documents required by the
Director in carrying out his or her responsibilities under this Code. Upon
refusal or neglect to obey the order of the court, the court may compel
obedience by proceedings for contempt of court.

(Source: P.A. 90-507, eff. 8-22-97.)
 
(40 ILCS 5/1A-106)
Sec. 1A-106.
Advisory services.
The Division shall render advisory
services to the pension funds on all matters pertaining to their operations
and shall recommend any corrective or clarifying legislation that it may deem
necessary. These recommendations shall be made in the report of examination of
the particular pension fund and in the biennial report to the General Assembly
under Section 1A-108. The recommendations may embrace all substantive
legislative and administrative policies, including, but not limited to, matters
dealing with the payment of annuities and benefits, the investment of funds,
and the condition of the books, records, and accounts of the pension fund.

(Source: P.A. 90-507, eff. 8-22-97.)
 
(40 ILCS 5/1A-107)
Sec. 1A-107.
Automation of services.
The Division shall automate its
operations, services, and communications to the fullest practical extent. This
automation shall include, but need not be limited to, the acquisition, use, and
maintenance of electronic data processing technology to (i) automate Division
operations as necessary to carry out its duties and responsibilities under this
Code, (ii) provide by FY 2000 electronic exchange of information between the
Division and pension funds subject to this Code, (iii) provide to pension funds
and the general public and receive from pension funds and the general public
data on computer processible media, and (iv) control access to information when
necessary to protect the confidentiality of persons identified in the
information.
The Division shall ensure that this automation is designed so as to
protect any confidential data it may receive from a pension fund. This Section
does not authorize the Division or the Department of Insurance to disclose any
information identifying specific pension fund participants or relating to an
identifiable pension fund participant.

(Source: P.A. 90-507, eff. 8-22-97.)
 
(40 ILCS 5/1A-108)
Sec. 1A-108. Report to the Governor and General Assembly. On or before
October 1 following the convening of a regular session of the General Assembly,
the Division shall submit a report to the Governor and General Assembly setting
forth the latest financial statements on the pension funds operating in the
State of Illinois, a summary of the current provisions underlying these funds,
and a report on any changes that have occurred in these provisions since the
date of the last such report submitted by the Division.
The report shall also include the results of examinations made by the
Division of any pension fund and any specific recommendations for legislative
and administrative correction that the Division deems necessary. The report
may embody general recommendations concerning desirable changes in any existing
pension, annuity, or retirement laws designed to standardize and establish
uniformity in their basic provisions and to bring about an improvement in the
financial condition of the pension funds. The purposes of these
recommendations and the objectives sought shall be clearly expressed in the
report.
The requirement for reporting to the General Assembly shall be satisfied by
filing copies of the report as required by
Section 3.1 of the General Assembly Organization Act, and filing additional
copies with the State Government Report Distribution Center for the General
Assembly as required under paragraph (t) of Section 7 of the State Library
Act.
Upon request, the Division shall distribute additional copies of the report
at no charge to the secretary of each pension fund established under Article 3
or 4, the treasurer or fiscal officer of each municipality with an established
police or firefighter pension fund, the executive director of every other
pension fund established under this Code, and to public libraries, State
agencies, and police, firefighter, and municipal organizations active in the
public pension area.

(Source: P.A. 100-1148, eff. 12-10-18.)
 
(40 ILCS 5/1A-108.5)
Sec. 1A-108.5. Economic opportunity investments.
(a) For the purposes of this Section:
"Economic opportunity investment" means a qualified investment, managed passively or actively by the pension fund, that promotes economic development within the State of Illinois by providing financially prudent investment opportunities in or through the use of (a) Illinois businesses or (b) Illinois-based projects that promote the economy of the State or a region of the State, including without limitation promotion of venture capital programs, coal and other natural resource development, tourism development, infrastructure development, real estate development, and job development within the State of Illinois, while producing a competitive rate of return commensurate with the risk of investment.
"Illinois business" means a business, including an investment adviser, that is headquartered in Illinois.
"Illinois-based project" means an individual project of a business, including the provision of products and investment and other services to the pension fund, that will result in the conduct of business within the State, the employment of individuals within the State, or the acquisition of real property located within the State.
(b) It is the public policy of the State of Illinois to encourage the pension funds, and any State entity investing funds on behalf of pension funds, to promote the economy of Illinois through the use of economic opportunity investments to the greatest extent feasible within the bounds of financial and fiduciary prudence.
(c) Each pension fund, except pension funds created under Articles 3 and 4 of this Code, shall submit a report to the Governor and the General Assembly by September 1 of each year, beginning in 2009, that identifies the economic opportunity investments made by the fund, the primary location of the business or project, the percentage of the fund's assets in economic opportunity investments, and the actions that the fund has undertaken to increase the use of economic opportunity investments.
(d) Pension funds created under Articles 2, 14, 15, 16, and 18 of this Act, and any State agency investing funds on behalf of those pension funds, must make reasonable efforts to invest in economic opportunity investments.
(e) In making economic opportunity investments, trustees and fiduciaries must comply with the relevant requirements and restrictions set forth in Sections 1-109, 1-109.1, 1-109.2, 1-110, and 1-111 of this Code. Economic opportunity investments that otherwise comply with this Code shall not be deemed imprudent solely because they are investments in an Illinois business or Illinois-based project.


(Source: P.A. 96-753, eff. 8-25-09.)
 
(40 ILCS 5/1A-109)
Sec. 1A-109. Annual statements by pension funds. Each pension fund shall
furnish to the Division an annual statement in a format prepared by the
Division.
The Division shall design the form and prescribe the content of the
annual statement and, at least 60 days prior to the filing date, shall furnish
the form to each pension fund for completion. The annual statement shall be
prepared by each fund, properly certified by its officers, and submitted to the
Division within 6 months following the close of the fiscal year of the pension
fund.
The annual statement shall include, but need not be limited to, the
following:
For pension funds under Article 3 or 4 of this Code, after the conclusion of the transition period, the Consolidated Fund shall furnish directly to the Division the information described in items (1) and (6) of this Section and shall otherwise cooperate with the pension fund in the preparation of the annual statement.
A pension fund that fails to file its annual statement within the time
prescribed under this Section is subject to the penalty provisions of Section
1A-113.

(Source: P.A. 101-610, eff. 1-1-20.)
 
(40 ILCS 5/1A-110)
Sec. 1A-110.

Actuarial statements by pension funds established under
Articles other than 3 or 4.
(a) Each pension fund established under an Article of this Code other than
Article 3 or 4 shall include as part of its annual statement a complete
actuarial statement applicable to the plan year.
The actuarial statement shall be filed with the Division within 9 months
after the close of the fiscal year of the pension fund. Any pension fund that
fails to file within that time is subject to the penalty provisions of Section
1A-113.
The board of trustees of each pension fund subject to this Section, on
behalf of all its participants, shall engage an enrolled actuary who shall
be responsible for the preparation of the materials comprising the actuarial
statement. The enrolled actuary shall utilize such assumptions and methods
as are necessary for the contents of the matters reported in the actuarial
statement to be reasonably related to the experience of the plan and to
reasonable expectations, and to represent in the aggregate the actuary's best
estimate of anticipated experience under the plan.
The actuarial statement shall include a description of the actuarial
assumptions and methods used to determine the actuarial values in the
statement and shall disclose the impact of significant changes in the
actuarial assumptions and methods, plan provisions, and other pertinent
factors on the actuarial position of the plan.
The actuarial statement shall include a statement by the enrolled actuary
that to the best of his or her knowledge the actuarial statement is complete
and accurate and has been prepared in accordance with generally accepted
actuarial principles and practice.
For the purposes of this Section, "enrolled actuary" means an actuary who (1)
is a member of the Society of Actuaries or the American Academy of Actuaries
and (2) either is enrolled under Subtitle C of Title III of the Employee
Retirement Income Security Act of 1974 or was engaged in providing actuarial
services to a public retirement plan in Illinois on July 1, 1983.
(b) The actuarial statement referred to in subsection (a) shall
include all of the following:
(Source: P.A. 90-507, eff. 8-22-97.)
 
(40 ILCS 5/1A-111)
Sec. 1A-111. Actuarial statements by pension funds established under
Article 3 or 4.
(a) For each pension fund established under Article 3 or 4 of this Code, a complete actuarial statement applicable to its plan year shall be included
as part of its annual statement in accordance with the following:
(a-5) Prior to the conclusion of the transition period, the actuarial statements may be prepared utilizing the method for calculating the actuarially required contribution for the pension fund that was in effect prior to the effective date of this amendatory Act of the 101st General Assembly.
After the conclusion of the transition period, the actuarial statements shall be prepared by or under the supervision of a qualified actuary retained by the Consolidated Fund, and if a change occurs in an actuarial or investment assumption that increases or decreases the actuarially required contribution for the pension fund, that change shall be implemented in equal annual amounts over the 3-year period beginning in the fiscal year of the pension fund in which such change first occurs.
The actuarially required contribution as described in this subsection shall determine the annual required employer contribution.
(b) For the purposes of this Section, "qualified actuary" means (i) a
member of the American Academy of Actuaries, or (ii) an individual who has
demonstrated to the satisfaction of the Director that he or she has the
educational background necessary for the practice of actuarial science and has
at least 7 years of actuarial experience.

(Source: P.A. 101-610, eff. 1-1-20.)
 
(40 ILCS 5/1A-112)
Sec. 1A-112. Fees.
(a) Every pension fund that is required to file an annual statement under
Section 1A-109 shall pay to the Department an annual compliance fee. In the
case of a pension fund under Article 3 or 4 of this Code, (i) prior to the conclusion of the transition period, the annual compliance
fee shall be 0.02% (2 basis points) of the total
assets of the pension
fund, as reported in the most current annual statement of the fund, but not
more than $8,000 and (ii) after the conclusion of the transition period, the annual compliance fee shall be $8,000 and shall be paid by the Consolidated Fund. In the case of all other pension funds and
retirement
systems, the annual compliance fee shall be $8,000.
(b) The annual compliance fee shall be due on June 30 for the following
State fiscal year, except that the fee payable in 1997 for fiscal year 1998
shall be due no earlier than 30 days following the effective date of this
amendatory Act of 1997.
(c) Any information obtained by the Division that is available to the public
under the Freedom of Information Act and is either compiled in published form
or maintained on a computer processible medium shall be furnished upon the
written request of any applicant and the payment of a reasonable information
services fee established by the Director, sufficient to cover the total cost to
the Division of compiling, processing, maintaining, and generating the
information. The information may be furnished by means of published copy or on
a computer processed or computer processible medium.
No fee may be charged to any person for information that the Division is
required by law to furnish to that person.
(d) Except as otherwise provided in this Section, all fees and penalties
collected by the Department under this Code shall be deposited into the Public
Pension Regulation Fund.
(e) Fees collected under subsection (c) of this Section and money collected
under Section 1A-107 shall be deposited into the Technology Management Revolving Fund and credited to the account of the Department's Public Pension
Division. This income shall be used exclusively for the
purposes set forth in Section 1A-107. Notwithstanding the provisions of
Section 408.2 of the Illinois Insurance Code, no surplus funds remaining in
this account shall be deposited in the Insurance Financial Regulation Fund.
All money in this account that the Director certifies is not needed for the
purposes set forth in Section 1A-107 of this Code shall be transferred to the
Public Pension Regulation Fund.
(f) Nothing in this Code prohibits the General Assembly from appropriating
funds from the General Revenue Fund to the Department for the purpose of
administering or enforcing this Code.

(Source: P.A. 100-23, eff. 7-6-17; 101-610, eff. 1-1-20.)
 
(40 ILCS 5/1A-113)
Sec. 1A-113. Penalties.
(a) A pension fund that fails, without just cause, to file its annual
statement within the time prescribed under Section 1A-109 shall pay to the
Department a penalty to be determined by the Department, which shall not exceed
$100 for each day's delay.
(b) A pension fund that fails, without just cause, to file its actuarial
statement within the time prescribed under Section 1A-110 or 1A-111 shall pay
to the Department a penalty to be determined by the Department, which shall not
exceed $100 for each day's delay.
(c) A pension fund that fails to pay a fee within the time prescribed under
Section 1A-112 shall pay to the Department a penalty of 5% of the amount of the
fee for each month or part of a month that the fee is late. The entire penalty
shall not exceed 25% of the fee due.
(d) This subsection applies to any governmental unit, as defined in Section
1A-102, that is subject to any law establishing a pension fund or retirement
system for the benefit of employees of the governmental unit.
Whenever the Division determines by examination, investigation, or in any
other manner that the governing body or any elected or appointed officer or
official of a governmental unit has failed to comply with any provision of that
law:
The Director shall develop by rule, with as much specificity as
practicable, the standards and criteria to be used in assessing penalties and
their amounts. The standards and criteria shall include, but need not be
limited to, consideration of evidence of efforts made in good faith to comply
with applicable legal requirements. This rulemaking is subject to the
provisions of the Illinois Administrative Procedure Act.
If a penalty is not paid within 30 days of the date of assessment, the
Director without further notice shall report the act of noncompliance to the
Attorney General of this State. It shall be the duty of the Attorney General
or, if the Attorney General so designates, the State's Attorney of the county
in which the governmental unit is located to apply promptly by complaint on
relation of the Director of Insurance in the name of the people of the State of
Illinois, as plaintiff, to the circuit court of the county in which the
governmental unit is located for enforcement of the penalty prescribed in this
subsection or for such additional relief as the nature of the case and the
interest of the employees of the governmental unit or the public may require.
(e) Whoever knowingly makes a false certificate, entry, or memorandum upon
any of the books or papers pertaining to any pension fund or upon any
statement, report, or exhibit filed or offered for file with the Division or
the Director of Insurance in the course of any examination, inquiry, or
investigation, with intent to deceive the Director, the Division, or any of its
employees is guilty of a Class A misdemeanor.
(f) Subsections (b) and (c) shall apply to pension funds established under Article 3 or Article 4 of this Code only prior to the conclusion of the transition period, and this Section shall not apply to the Consolidated Funds.
(Source: P.A. 101-610, eff. 1-1-20.)
 
(40 ILCS 5/1A-201)
Sec. 1A-201. Advisory Commission on Pension Benefits.
(a) There is created an Advisory Commission on Pension Benefits. The Commission shall consist of 15 persons, of whom 8 shall be appointed by the Governor and one each shall be appointed by the President and Minority Leader of the Senate and the Speaker and Minority Leader of the House of Representatives. Four of the persons appointed by the Governor shall represent different statewide labor organizations, of which 2 shall be organizations that represent primarily teachers and 2 shall be organizations that represent primarily State employees other than teachers. The Directors of the retirement systems established under Articles 14, 15, and 16 of this Code shall be ex officio members of the Commission.
(b) The Commission shall consider and make its recommendations concerning changing the age and service requirements, automatic annual increase benefits, and employee contribution rates of the State-funded retirement systems and other pension-related issues as determined by the Commission. On or before November 1, 2005, the Commission shall report its findings and recommendations to the Governor and the General Assembly.
(c) The Commission may request actuarial data from any of the 5 State-funded retirement systems established under this Code. That data may include, but is not limited to, the dates of birth, years of service, salaries, and life expectancies of members. A retirement system shall provide the requested information as soon as practical after the request is received, but in no event later than any reasonable deadline imposed by the Commission.


(Source: P.A. 94-4, eff. 6-1-05.)

Structure Illinois Compiled Statutes