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SECTION 1. DEFINITIONS. In this [Act]:
(1) "Acceptable actuarial cost method" means a recognized actuarial method used to determine the present value of the benefits and expenses of a retirement program and to develop an allocation of the value to time periods. The term includes the aggregate, attained age, entry age normal, frozen attained age, frozen entry age, and unit credit actuarial cost methods. The term does not include the terminal funding or current funding cost method.
(2) "Actuarial accrued liability" means that portion of the present value of the benefits and expenses of a retirement program which is not provided for by the annual cost of future retirement program benefits and expenses assigned to years following the date of the actuarial valuation as determined by an acceptable actuarial cost method or, for retirement systems using the aggregate actuarial cost method, as determined by an actuarial cost method other than the aggregate actuarial cost method that, in the actuary's opinion, will provide an accurate report of the program's actuarial status.
(3) "Actuarial value of system assets" means the fair value of the assets of a retirement system adjusted, as necessary and appropriate, to diminish the effects of short-term volatility.
(4) "Administrator" means an individual primarily responsible for the operation and administration of a retirement system or, if an individual is not clearly designated, the trustee of the system who has the ultimate authority to operate and administer the program.
(5) "Agent group of programs" means a group of retirement programs that shares administrative and investment functions, but that maintains separate accounts for each retirement program so that assets accumulated for a program may legally provide benefits only for that program's participants and beneficiaries.
(6) "Annual compensation" means the portion of an employee's total earnings from a public employer during a fiscal year on which contributions to a retirement program are based, as determined by the retirement system.
(7) "Appropriate group of programs" means:
(i) for defined benefit plans, a cost-sharing group of programs or an agent group of programs; and
(ii) for defined contribution plans, a group of retirement programs that shares administrative and investment functions.
(8) "Beneficiary" means a person designated by a participant or by a retirement program to receive a benefit under a program. The term does not include a participant.
(9) "Code" means the Internal Revenue Code of 1986, as amended.
(10) "Cost-sharing group of programs" means a group of retirement programs in which all assets accumulated for the payment of benefits may legally be used to pay benefits to participants and beneficiaries of any program in the group.
(11) "Defined benefit plan" means a retirement program other than a defined contribution plan.
(12) "Defined contribution plan" means a retirement program that provides for an individual account for each participant and for benefits based solely upon the amount contributed to the participant's account, and any income, expenses, gains, and losses, and any forfeitures of accounts of other participants which may be allocated to the participant's account.
(13) "Employee" means an employee or officer of a public employer.
(14) "Fair value" means the amount that a willing buyer would pay a willing seller for an asset in a current sale, as determined in good faith by a fiduciary.
(15) "Fiduciary" means a person who exercises any discretionary authority to manage the operation and administration of a retirement system or any authority to invest or manage assets of the system, or who renders investment advice for a fee or other compensation, direct or indirect, with respect to assets of the system, or has any authority or responsibility to do so.
(16) "Furnish" means to deliver personally, to mail to the last known place of employment or home address of the intended recipient or, if reasonable grounds exist to believe that the public employer will make a good faith effort to deliver personally or by mail, to provide to the intended recipient's employer.
(17) "Governing law" means state and local laws establishing or authorizing the creation of a retirement program or system and the principal state and local laws and regulations governing the operation, administration, or management of the assets of a program or system.
(18) "Nonforfeitable" means an immediate or deferred benefit that arises from a participant's service, is unconditional, and is legally enforceable against the retirement system.
(19) "Participant" means an individual who is or has been an employee enrolled in a retirement program and who is or may become eligible to receive a benefit under the program, or whose beneficiaries are or may become eligible to receive a benefit, but the term does not include an individual who is no longer an employee of an employer and has not accrued any nonforfeitable benefits under that employer's retirement program.
(20) "Present value", with respect to a liability, means the value actuarially adjusted to reflect anticipated events.
(21) "Public employer" means this State or any political subdivision, or any agency or instrumentality of this State or any political subdivision, whose employees are participants in a retirement program.
(22) "Qualified public accountant" means:
(i) an audit agency of this State or of a political subdivision of this State which has no direct relationship with the functions or activities of the retirement system or its fiduciaries other than functions relating to this [Act]; or
(ii) a person who is a certified public accountant, certified or licensed by a regulatory authority of a State.
(23) "Related person" means:
(i) a spouse, or parent or sibling of a spouse;
(ii) a child, grandchild, sibling, parent, or spouse of a child, grandchild, sibling, or parent;
(iii) an individual having the same home;
(iv) a trust or estate of which an individual described in subparagraph (i) through (iii) is a substantial beneficiary; or
(v) a trust, estate, incompetent, ward, or minor of which the person of interest is a fiduciary.
(24) "Retirement program" means a program of rights and obligations established or maintained for its employees by a public employer to the extent that by its express terms or as a result of surrounding circumstances the program, regardless of the method of calculating the contributions made to the program or the benefits under the program, or the method of distributing benefits from the program:
(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond.
(25) "Retirement system" means an entity established or maintained to operate or administer one or more retirement programs or to invest or manage the assets of one or more programs. [May list state retirement systems and statutes authorizing the formation of systems.]
(26) "Trustee" means one or more persons who have the ultimate authority to manage the operation and administration of a retirement system or to invest or manage assets of the system.
SECTION 2. SCOPE. This [Act] applies to all retirement programs and systems established or maintained on behalf of the employees of public employers, except:
(1) a retirement program that is unfunded and is maintained by an employer solely for the purpose of providing deferred compensation for a select group of management employees or employees who rank in the top five percent of employees of that employer based on compensation;
(2) a severance pay arrangement pursuant to which (i) payments are made solely on account of the termination of an employee's service and are not contingent, directly or indirectly, upon the employee's retiring; (ii) the total amount of the payments does not exceed the equivalent of twice the employee's total earnings from the employer during the year immediately preceding the termination of service; and (iii) all payments are completed within 24 months after the termination of service;
(3) a supplemental retirement income arrangement pursuant to which (i) payments are made solely to supplement the benefits of retired participants or their beneficiaries to account for some portion or all of the increases in the cost of living since retirement; (ii) the employer is not obligated to make the payments pursuant to the retirement program providing the basic benefits; and (iii) payments are made out of the general revenues of the employer, out of a separate trust fund established and maintained solely for that purpose, or out of a special appropriation received by the employer for that purpose;
(4) an arrangement or payment made on behalf of an employee because the employee is covered by Title II of the Social Security Act (42 U.S.C. Sections 401 et seq.);
(5) an individual retirement account or individual retirement annuity within the meaning of Section 408 of the Code;
(6) a retirement program consisting solely of annuity contracts or custodial accounts satisfying the requirements of Section 403(b) of the Code;
(7) an eligible deferred compensation plan satisfying the requirements of Section 457 of the Code; or
(8) a program maintained solely for the purpose of complying with applicable workers' compensation laws or disability insurance laws.
SECTION 3. ESTABLISHMENT OF TRUST.
(a) Subject to subsections (b) through (d), all assets of a retirement system must be held in trust. The trustee has exclusive authority, consistent with its duties under this [Act], to invest and manage the assets of the system so held in trust.
(b) Retirement system assets consisting of insurance contracts or policies issued by an insurer, assets of an insurer, and assets of the system held by an insurer need not be held in trust.
(c) If an insurer issues a guaranteed benefit policy to a retirement system, assets of the system include the policy, but not assets of the insurer.
(d) If a retirement system invests in a security issued by an investment company registered under the Investment Company Act of 1940 (15 U.S.C. Sections 80a-1 et seq.), the assets of the system include the security, but not assets of the investment company.
(e) In this section:
(1) "insurer" means an insurance company, insurance service, or insurance organization qualified to do business in this State.
(2) "guaranteed benefit policy" means an insurance policy or contract to the extent the policy or contract provides for benefits in a guaranteed amount. The term includes any surplus in a separate account, but excludes any other portion of a separate account.
SECTION 4. POWERS OF TRUSTEE.
(a) In addition to other powers provided by the governing law, a trustee has exclusive authority, consistent with its duties under this [Act]:
(1) to establish an administrative budget sufficient to fulfill its duties and, if necessary, to draw upon assets of the retirement system to fund the budget;
(2) to obtain by [employment or] contract the services necessary to exercise its powers and fulfill its duties, including actuarial, auditing, custodial, investment, and legal services; and
(3) to procure and dispose of the goods and property necessary to exercise its powers and fulfill its duties.
(b) In exercising its exclusive authority under this section, a trustee is subject to the fiduciary duties of this [Act], but not to [civil service, personnel,] procurement, or similar general laws of this State relating to the subjects of subsections (a)(1) through (3). No part of this section shall be deemed to be impliedly repealed by subsequent legislation on general laws relating to these subjects if such construction can reasonably be avoided.
SECTION 5. DELEGATION OF FUNCTIONS.
(a) A trustee or administrator may delegate functions that a prudent trustee or administrator acting in a like capacity and familiar with such matters could properly delegate under the circumstances. The trustee or administrator shall exercise reasonable care, skill, and caution in:
(1) selecting an agent;
(2) establishing the scope and terms of the delegation, consistent with the purposes and terms of the retirement program; and
(3) periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the terms of the delegation.
(b) In performing a delegated function, an agent owes a duty to the retirement system and to its participants and beneficiaries to comply with the terms of the delegation and, if a fiduciary, to comply with the duties imposed by Section 6.
(c) A trustee or administrator who complies with subsection (a) is not liable to the retirement system or to its participants or beneficiaries for the decisions or actions of the agent to whom the function was delegated.
(d) By accepting the delegation of a function from the trustee or administrator of a retirement system, an agent submits to the jurisdiction of the courts of this State.
(e) A trustee may limit the authority of an administrator to delegate functions under this section.
SECTION 6. GENERAL DUTIES OF TRUSTEE AND FIDUCIARY. Subject to Section 8(c) and (d), each trustee and other fiduciary shall discharge duties with respect to a retirement system:
(1) solely in the interest of the participants and beneficiaries;
(2) for the exclusive purpose of providing benefits to participants and beneficiaries and paying reasonable expenses of administering the system;
(3) with the care, skill, prudence, and diligence under the circumstances then prevailing which a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an activity of a like character and purpose;
(4) impartially, taking into account any differing interests of participants and beneficiaries; and
(5) in accordance with the governing law of the retirement program and system.
SECTION 7. DUTIES OF TRUSTEE IN INVESTING AND MANAGING ASSETS OF RETIREMENT SYSTEM.
(a) Subject to Section 8(c) and (d), a trustee who invests and manages assets of a retirement system shall comply with the duties imposed by Section 6 and this section.
(b) In investing and managing assets of a retirement system, a trustee shall consider among other circumstances:
(1) general economic conditions;
(2) the possible effect of inflation or deflation;
(3) the role that each investment or course of action plays within the overall portfolio of the retirement program or appropriate group of programs;
(4) the expected total return from income and the appreciation of capital;
(5) needs for liquidity, regularity of income, and preservation or appreciation of capital; and
(6) for defined benefit plans, the adequacy of funding for the plan.
(c) A trustee shall diversify the investments of each retirement program or appropriate group of programs unless the trustee reasonably determines that, because of special circumstances, it is clearly prudent not to do so.
(d) A trustee shall adopt a statement of investment objectives and policies for each retirement program or appropriate group of programs. The statement must include the desired rate of return on assets overall, the desired rates of return and acceptable levels of risk for each asset class, asset allocation goals, guidelines for the delegation of authority to investment managers, and information on the types of reports to be used to evaluate investment performance. At least once annually, the trustee shall review the statement and either change or reaffirm it.
(e) In investing and managing system assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets and the skills of the trustee.
(f) A trustee shall make a reasonable effort to verify facts relevant to the investment and management of assets of a retirement system.
(g) A trustee may invest in any kind of property or type of investment consistent with the standards of this [Act].
(h) In investing and managing system assets, a trustee may consider benefits created by an investment in addition to investment return only if the trustee determines that the investment providing the collateral benefits is expected to provide an investment return commensurate with available alternative investments having similar risks.
SECTION 8. APPLICATION OF TRUSTEE AND FIDUCIARY DUTIES.
(a) Compliance by a trustee or other fiduciary with Sections 5 through 7 must be determined in light of the facts and circumstances existing at the time of the trustee or fiduciary's decision or action and not by hindsight.
(b) A trustee's investment and management decisions must be evaluated not in isolation but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the program or appropriate group of programs.
(c) A trustee may return a contribution [with interest] to a public employer or employee, or make alternative arrangements for reimbursement, if the trustee determines the contribution was made because of a mistake of fact or law, or, upon termination of a retirement program, return to an employer any assets of the program remaining after all liabilities of the program to participants and beneficiaries have been satisfied.
(d) If a retirement program provides for individual accounts and permits a participant or beneficiary to exercise control over the assets in such an account and a participant or beneficiary exercises control over those assets:
(1) the participant or beneficiary is not a fiduciary by reason of the exercise; and
(2) a person who is otherwise a fiduciary is not liable under Section 6 or 7 for any loss, or by reason of any failure to meet the requirements of Section 6 or 7, resulting from the participant's or beneficiary's exercise of control.
SECTION 9. LIABILITY OF TRUSTEE OR FIDUCIARY.
(a) A trustee or other fiduciary who breaches a duty imposed by this [Act] is personally liable to the retirement system for any losses resulting from the breach and any profits made by the trustee or other fiduciary through use of assets of the system by the trustee or fiduciary. The trustee or other fiduciary is subject to other equitable or remedial relief as the court considers appropriate, including removal.
(b) Except as otherwise provided in section 5, any agreement which relieves a trustee or other fiduciary from responsibility or liability for any breach of duty under this [Act] is void, except:
(1) a retirement system may purchase insurance for a trustee or other fiduciary, or for itself, to cover liability or losses occurring because of an act or omission of a trustee or other fiduciary, if the insurance permits recourse by the insurer against the trustee or fiduciary in the case of a breach of duty under this [Act] by the trustee or fiduciary; and
(2) a trustee or other fiduciary may purchase insurance on their own account to cover liability or losses occurring because of a breach of duty under this [Act].
SECTION 10. [OPEN OR PUBLIC] RECORDS AND MEETINGS.
(a) Records that disclose a tentative or final investment or other financial decision are not [open or public] records under [the State Open Records Law] to the extent their disclosure would jeopardize the ability to implement the decision. The records become [open or public] records when their disclosure no longer jeopardizes the ability to implement the investment or other financial decision.
(b) Notwithstanding the [State Open Meetings Law], a multi-member body having authority to invest or manage assets of a retirement system may make a tentative or final investment or other financial decision in executive session if disclosure of the decision would jeopardize the ability to implement the decision.
SECTION 11. DISCLOSURE TO PUBLIC.
(a) The administrator of each retirement system shall publish:
(1) a summary plan description of each retirement program;
(2) a summary description of any material modification in the terms of the program and any material change in the information required to be included in the summary plan description, to the extent the modification or change has not been integrated into an updated summary plan description;
(3) an annual disclosure of financial and actuarial status; and
(4) an annual report which contains the schedules described in Section 16(c)(1) through (4); the percentage required by Section 18(b)(4)(v) for defined benefit plans; a brief description of, and information about how to interpret, the schedules and, when reported, the percentage; and other material necessary to summarize the annual disclosure of financial and actuarial status fairly and accurately.
(b) The administrator of a retirement system shall make available for public examination in the principal office of the administrator and in other places if necessary to make the information reasonably available to participants:
(1) the governing law of the retirement program and system;
(2) the most recent updated summary plan description;
(3) summary descriptions of modifications or changes described in subsection (a)(2) that have been provided to participants and beneficiaries but not yet integrated into the summary plan description;
(4) the most recent annual disclosure of financial and actuarial status; and
(5) the most recent annual report.
(c) Upon written request by a participant, beneficiary, or member of the public, the administrator shall provide a copy of any or all of the publications described in subsection (b). The administrator may impose a reasonable charge to cover the cost of providing copies, and shall provide the copies within 30 days after receiving payment.
SECTION 12. DISCLOSURE TO PARTICIPANTS AND BENEFICIARIES.
(a) The administrator of a retirement program shall furnish to each participant and to each beneficiary who is receiving benefits under a program:
(1) a copy of the most recent summary plan description, along with any summary descriptions of modifications or changes described in Section 11(a)(2):
(i) within three months after a person becomes a participant or, in the case of a beneficiary, within three months after a person first receives benefits, or, if later, within four months after the retirement system becomes subject to this [Act], and
(ii) thereafter, a copy of an updated summary plan description, which integrates all modifications and changes, at intervals separated by no more than five years;
(2) the summary description of any modifications or changes described in Section 11(a)(2), within [seven months] after the end of the fiscal year in which any modification or change has been made; and
(3) the annual report described in Section 11(a)(4) within [seven months] after the end of each fiscal year.
(b) The administrator of a retirement system shall provide to any participant or beneficiary, in the annual report or upon the participant or beneficiary's written request, a statement indicating, on the basis of the most recent available information, the administrator's best estimate of:
(1) the total benefits accrued; and
(2) the nonforfeitable benefits accrued, if any, or the earliest date on which benefits will become nonforfeitable.
(c) Each participant and each beneficiary who is receiving benefits under a program is entitled to receive without charge one statement under subsection (b) during any fiscal year. The administrator may impose a reasonable charge to cover the cost of providing other statements. The administrator shall provide the statements within 30 days after the participant or beneficiary's request or, if a charge is imposed, within 30 days after receiving payment.
SECTION 13. REPORTS TO [AGENCY]. The administrator of a retirement system shall file with the [Agency] [and others]:
(1) a copy of the governing law of the retirement program and system within four months after the system becomes subject to this [Act] and an updated copy at least once every five years thereafter;
(2) a copy of the summary plan description within four months after the system becomes subject to this [Act] and of updated summary plan descriptions at the same time they are first provided to any participant or beneficiary under Section 12(a)(1);
(3) a copy of any summary description of modifications or changes within [seven months] of the end of the fiscal year in which any modification or change has been made; and
(4) a copy of the annual disclosure of financial and actuarial status and annual report within [seven months] of the end of each fiscal year.
SECTION 14. SUMMARY PLAN DESCRIPTION.
(a) A summary plan description and any summary description of modifications or changes under Section 11(a)(2) must be written in a manner calculated to be understood by the average participant and be accurate and sufficiently comprehensive reasonably to inform participants and beneficiaries of their rights and obligations under the retirement program.
(b) A summary plan description must contain:
(1) the name of the retirement program and system and type of administration;
(2) the name and business address of the administrator;
(3) the name and business address of each agent for the service of process;
(4) the name, title, and business address of each trustee and a brief description of how the trustee was selected;
(5) citations to the governing law of the retirement program and system;
(6) a description of the program's requirements respecting eligibility for participation and benefits;
(7) a description of the program's provisions providing for nonforfeitable benefits;
(8) a description of circumstances that may result in disqualification, ineligibility, or denial or loss of benefits;
(9) a description of the benefits provided by the program, including the manner of calculating benefits and the benefits, if any, provided for spouses and survivors;
(10) the source of financing of the program;
(11) the identity of any organization through which benefits are provided;
(12) the date of the end of the fiscal year; and
(13) the procedures to be followed to present claims for benefits under the program and the administrative remedies available under the program for the redress of claims that are denied in whole or in part.
SECTION 15. ANNUAL DISCLOSURE OF FINANCIAL AND ACTUARIAL STATUS.
(a) The annual disclosure of financial and actuarial status must contain:
(1) The name of the retirement system and, if subsection (b) applies, identification of each retirement program and appropriate group of programs;
(2) the name and business address of the administrator and trustee;
(3) the name and business address of each agent for the service of process;
(4) the number of employees covered by the system and, if subsection (b) applies, by each program and appropriate group of programs;
(5) the name and business address of each fiduciary;
(6) the current statement of investment objectives and policies required by Section 6(h);
(7) a financial statement complying with Section 16;
(8) an opinion on the financial statement complying with Section 17;
(9) in the case of a defined benefit plan, an actuarial statement complying with Section 18;
(10) in the case of a defined benefit plan, an opinion on the actuarial statement complying with Section 19; and
(11) if applicable, any statements described in Section 20.
(b) In the case of a retirement system that administers or manages the assets of more than one retirement program, the administrator shall present the information in the annual disclosure of financial and actuarial status so that it reasonably and fairly conveys the financial status of each appropriate group of programs and, for defined benefit plans, the actuarial status of each cost-sharing group of programs and of each retirement program in an agent group of programs.
SECTION 16. FINANCIAL STATEMENT.
(a) The financial statement in the annual disclosure of financial and actuarial status must contain a statement of assets, liabilities, and net assets available for retirement program benefits for the retirement system or, if Section 15(b) applies, for each appropriate group of programs.
(b) In the notes to the financial statement, a qualified public accountant shall disclose the following items:
(1) a description of the retirement system, including any significant changes in the system made during the fiscal year and the impact of the changes on benefits;
(2) the funding policy, including, if applicable, policy with respect to a ratio less than one between the actuarial value of system assets and actuarial accrued liability, and any changes in the policy during the fiscal year;
(3) a description of any significant changes in retirement program benefits made during the fiscal year;
(4) a description of material lease commitments, other commitments, and contingent liabilities;
(5) a general description of priorities upon termination of the system, if any;
(6) a description of agreements and transactions during the fiscal year with any public employer participating in the system and any employee organization representing employees covered by the system;
(7) a description of any material interest held by any trustee, administrator, or employee who is a fiduciary with respect to the investment and management of system assets, or a related person, in any material transaction with the system within the last three years or proposed to be effected; and
(8) any other matters necessary to present fully and fairly the financial condition of the system.
(c) A financial statement must also contain in separate schedules:
(1) a statement of assets and liabilities aggregated by categories and valued at their fair value, and the same data displayed in comparative form for the end of the preceding fiscal year;
(2) a statement of receipts and disbursements during the fiscal year aggregated by general sources and applications;
(3) a statement of the rates of return, net of total investment expense, on system assets overall and on assets aggregated by category over the most recent one-year, three-year, five-year, and 10-year periods, to the extent available, and the rates of return on appropriate benchmarks for system assets overall and for each category over each time period;
(4) a statement of the sum of total investment expense and total general administrative expense for the fiscal year expressed as a percentage of the fair value of system assets on the last day of the fiscal year, and an equivalent percentage for the preceding five fiscal years; and
(5) a schedule of all assets held for investment purposes on the last day of the fiscal year aggregated and identified by issuer, borrower, lessor, or similar party to the transaction; providing, if relevant, the asset's maturity date, rate of interest, par or maturity value, number of shares, cost, and fair value; and identifying any asset that is in default or classified as uncollectible.
SECTION 17. OPINION ON THE FINANCIAL STATEMENT.
(a) A trustee shall engage an independent qualified public accountant to conduct such an examination of any financial statements of the retirement system, and of other books and records of the system, as the accountant considers necessary to enable the accountant to form an opinion as to whether the financial statement and schedules required to be contained in the annual disclosure of financial and actuarial status are presented fairly and in conformity with generally accepted accounting principles on a basis consistent with that of the preceding year. The examination must be conducted in accordance with generally accepted auditing standards and involve tests of the books and records of the system which the accountant considers necessary.
(b) The accountant shall also offer an opinion as to whether the separate schedules specified in Section 16(c)(1) through (5) and the annual report required by Section 11(a)(4) present fairly and in all material respects the information contained in the separate schedules and annual report when considered in conjunction with the financial statements taken as a whole. In formulating the opinion, the accountant may rely on the correctness of any actuarial matter as to which a qualified actuary has expressed an opinion, if the accountant so indicates.
SECTION 18. ACTUARIAL STATEMENT FOR DEFINED BENEFIT PLANS.
(a) The actuarial statement required for a defined benefit plan must contain the information required by this section for the retirement system or, if Section 15(b) applies, for each cost-sharing group of programs and each retirement program in an agent group of programs.
(b) The trustee shall engage a qualified actuary to prepare the actuarial statement. The statement must contain:
(1) the dates of the fiscal year and the most recent actuarial valuation;
(2) the total amount of the contributions made by participants and the total amount of all other contributions, including public employer contributions, received for the fiscal year and for each preceding fiscal year for which the information was not previously reported;
(3) the number of participants, whether or not retired, and beneficiaries receiving benefits covered as of the last day of the fiscal year;
(4) the following information as of the date of the most recent actuarial valuation and, if available and sufficiently comparable so as not to be misleading, for at least the two preceding actuarial valuations:
(i) the aggregate annual compensation of participants;
(ii) the actuarial value of system assets;
(iii) the actuarial accrued liability;
(iv) the difference between the actuarial value of system assets and actuarial accrued liability;
(v) the actuarial value of system assets expressed as a percentage of actuarial accrued liability;
(vi) the difference between the actuarial value of system assets and actuarial accrued liability expressed as a percentage of the aggregate annual compensation of participants; and
(vii) the actuarial assumptions and methods used in determining the information described in this paragraph and other factors that significantly affect the information described in the paragraph; and
(5) such other information as may be necessary to disclose fully and fairly the actuarial condition of the retirement system, each cost-sharing group of programs, or each retirement program in an agent group of programs.
SECTION 19. OPINION ON ACTUARIAL STATEMENT FOR DEFINED BENEFIT PLANS.
(a) The qualified actuary who prepares an actuarial statement shall issue an opinion stating that:
(1) to the best of the actuary's knowledge the statement is complete and accurate;
(2) each assumption and method used in preparing the statement is reasonable and the assumptions and methods in the aggregate are reasonable, taking into account the experience of the retirement system, each cost-sharing group of programs, or each retirement program in an agent group of programs and reasonable expectations; and
(3) the assumptions and methods in combination offer the actuary's best estimate of anticipated experience.
(b) In formulating an opinion, the actuary may rely on the correctness of any accounting matter as to which any qualified public accountant has expressed an opinion, if the actuary so indicates.
(c) An actuarial valuation of the retirement system or, if Section 15(b) applies, of each cost-sharing group of programs or each retirement program in an agent group of programs must be made at least once every two years. More frequent actuarial valuations must be made if the actuary determines that a more frequent valuation is necessary to support the actuary's opinion.
SECTION 20. STATEMENT ON GUARANTEED BENEFITS.
(a) If some or all of the benefits under a retirement program are purchased from and guaranteed by an insurance company, insurance service, or insurance organization qualified to do business in this State, the annual disclosure of financial and actuarial status must contain a statement from the company, service, or organization covering the fiscal year and enumerating with respect to the program:
(1) the premium rate or subscription charge;
(2) the total premium or subscription charges paid to the company, service, or organization;
(3) the approximate number of persons covered by each class of benefits;
(4) the total claims paid by the company, service, or organization;
(5) dividends or retroactive rate adjustments, commissions, administrative service or other fees, and other costs incurred by the company, service, or organization for the acquisition or retention of the retirement system;
(6) any amounts held to provide benefits after retirement;
(7) the remainder of premiums or subscription charges; and
(8) the names and business addresses of brokers, agents, or other persons to whom commissions or fees were paid, and the amount and purpose of each payment.
(b) If a company, service, or organization does not maintain separate experience records covering the specific groups it serves, the annual disclosure of financial and actuarial status must contain instead of the information required by subsection (a):
(1) a statement as to the basis of its premium rate or subscription charge;
(2) the total amount of premiums or subscription charges received from the retirement system;
(3) a copy of the most recent financial report of the company, service, or organization; and
(4) if the company, service, or organization incurs specific costs for the acquisition or retention of the system, a detailed statement of the costs.
SECTION 21. ENFORCEMENT.
(a) An action may be brought [in an appropriate court] by:
(1) a public employer, participant, beneficiary, or fiduciary for appropriate relief under Section 9;
(2) a public employer, participant, beneficiary, or fiduciary to enjoin any act, practice, or omission that violates this [Act] or to obtain other appropriate equitable relief to redress the violation or to enforce this [Act]; or
(3) [the Agency] to enjoin any violation of Section 13.
(b) An action under subsection (a)(1) or (2) must be filed within one year after the challenged act, practice, or omission, but the time is extended:
(1) during the pendency of the petitioner's timely attempts to exhaust available administrative remedies, if the attempts are not clearly frivolous or repetitious; and
(2) during any period that the petitioner did not know and was under no duty to discover, or did not know and was under a duty to discover but could not reasonably have discovered, that the challenged act, practice, or omission occurred.
(c) In an action under this section by a participant, beneficiary, or fiduciary, the court may allow a reasonable attorney's fee and costs of action to either party.
SECTION 22. ANTI-ALIENATION. Benefits of a retirement program may not be assigned or alienated, except to the extent specifically permitted by another statute of this State.
[SECTION 23. PURCHASE OF SERVICE CREDIT.
(a) In this section:
(1) "Employer" means any employer.
(2) "Pension benefit" means a retirement, death, or permanent disability benefit that the participant, or a beneficiary, is or will be entitled to receive based on the participant's service during a year of employment or on employee or employer contributions made for the participant's benefit during the year, but the term does not include benefits:
(i) from arrangements or payments made pursuant to the Social Security Act (42 U.S.C. Sections 401 et seq.);
(ii) from an individual retirement account or individual retirement annuity within the meaning of Section 408 of the Code, but the term includes an amount that derives from contributions made during a year that are rolled over from a qualified plan into an individual retirement account or individual retirement annuity, unless the total amount deriving from contributions made during the year is used to purchase service credit pursuant to subsection (e)(2);
(iii) deriving from employee or employer contributions that have been distributed to the participant, or a beneficiary, and subjected to federal income taxation; or
(iv) deriving from employee or employer contributions that have been rolled over pursuant to subsection (e)(1) to purchase years of service credit under this section.
(3) "Year of full-time employment" means a calendar or academic year during which the participant has completed 1,000 or more hours of service. For an academic year, the year of full-time employment is deemed earned during the calendar year in which the last day of the academic year falls.
(b) A retirement program must permit each participant in a defined benefit plan to purchase years of service credit for any period of employment with any prior employer provided that:
(1) years of service credit may be purchased only in full-year increments;
(2) one year of service credit may be purchased for each year of full-time employment with an employer;
(3) no more than one year of full-time employment may be credited for any given calendar year;
(4) service credit is not purchased for any year of employment for which the participant receives a pension benefit, other than a benefit resulting from the purchase of service credit under this section;
(5) the participant provides certification from former employers as to dates of employment, hours of service worked each calendar or academic year, and pension benefits resulting from the employment and agrees to a payment method and schedule complying with subsections (d) through (f); and
(6) a participant may not revoke a decision to purchase service credit.
(c) Purchased years of service credit must be taken into account to determine whether benefits are nonforfeitable, to determine the amount of retirement, death, or permanent disability benefits, and for all other purposes under the retirement program[, but purchased years of service credit may not be taken into account to establish eligibility for retiree health benefits].
(d) For each year of service credit purchased under this section, a participant shall pay an amount equal to the present value of the increased benefits resulting from the year of service credit purchased. Each retirement program must establish a method to determine the present value of the increased benefits, based on reasonable actuarial factors. To the extent a participant does not pay the full amount within 180 days after making the decision to purchase service credit, a reasonable rate of interest must be added to the amount due, commencing 180 days after the participant makes the decision and continuing until full payment is made.
(e) A participant may pay for years of service credit purchased in any one or any combination of the following ways:
(1) by the transfer of any portion of an eligible rollover distribution from a qualified trust, but only to the extent the transfer meets the requirements of Section 402(c) of the Code to be excluded from the gross income of the participant for the taxable year in which the distribution is paid;
(2) by the transfer of any portion of an individual retirement account or individual retirement annuity, but only to the extent the transfer is a rollover contribution that meets the requirements of Section 408 of the Code to be excluded from the gross income of the participant for the taxable year in which the amount is paid or distributed out of the individual retirement account or individual retirement annuity to the participant;
(3) by a lump-sum payment; or
(4) by installment payments over a period of time not exceeding 10 years.
(f) A participant may not make a payment under subsection (e) if it would result in payments exceeding the annual ceiling for tax-deferred contributions under Section 415 of the Code. To the extent any payment would result in payments by the participant exceeding the annual ceiling, the payment must be deferred until the next year in which payments can be made without exceeding the annual ceiling and appropriate adjustments must be made to the amount of interest added to the amount due under subsection (d). If a participant is unable to complete payments within the 10-year period of subsection (e)(4) because of the limitations of this subsection, subsection (g) applies.
(g) If a participant is unable to complete payments for years of service purchased for any reason, the administrator shall:
(1) determine the amount of money the participant paid for the purchase of service credit and when the payments were made;
(2) discount the amount determined under paragraph (1) to its value as of the date 180 days after the participant made the decision to purchase service credit, based on the actuarial and interest assumptions used at the time the participant made the decision to purchase service credit; and
(3) credit the participant for a number of years of service to the nearest one-hundredth of a year equal to the number the participant would have been able to purchase on the date the participant made the decision to purchase service credit for the amount determined under paragraph (2), based on the actuarial and interest assumptions used at the time the participant made the decision to purchase service credit.
(h) The administrator of a retirement program shall adopt rules and regulations to implement the provisions of this section.]
SECTION 24. UNIFORMITY OF APPLICATION AND CONSTRUCTION. This [Act] shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this [Act] among states enacting it.
SECTION 25. SHORT TITLE. This [Act] may be cited as the [Uniform or Model] Management of Public Employee Pension Funds Act.
SECTION 26. SEVERABILITY. If any provision of this [Act] or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this [Act] which can be given effect without the invalid provision or application, and to this end the provisions of this [Act] are severable.
SECTION 27. EFFECTIVE DATE. This [Act] takes effect . . .
SECTION 28. REPEALS. The following acts and parts of acts are repealed:
(1) . . .
(2) . . .
(3) . . .
SECTION 29. SAVINGS AND TRANSITIONAL PROVISIONS.