Voluntary Supplemental DC Plan Created in Illinois

A measure creating a voluntary statewide defined contribuition plan in Illinois is now on the books. Gov. Bruce Rauner (R) signed HB 5137 into law on Aug. 10; Public Act 100-0769 went into effect immediately.

The new law amends the Downstate Teacher Article and the State Universities Article of the Illinois Pension Code. Those articles now provide that:

• the public employee benefit system shall offer a defined contribution benefit to its active members;

• the defined contribution benefit shall collect optional employee and optional employer contributions into an account and shall offer investment options to participants;

• the DC benefit shall be operated in full compliance with any applicable State and federal laws; and

• the system shall utilize generally accepted practices in creating and maintaining the benefit for the participants’ best interest;

• the system is authorized to use funds from the employee and employer contributions to defray any and all costs of creating and maintaining the benefit; and

• the system must report annually on participation in the benefit and make that report public.

Note that while the measure amends the Downstate Teacher Article and the State Universities Article of the Illinois Pension Code, its wording consistently refers to defined contribution benefits. DC benefits include more than the 403(b)s that are available to the education community; they also entail other benefits, such as 401(k)s. It remains to be seen if such wording in the new law will have an effect on the application of the program and the benefits it offers.