HB4712 Summary

• Amends the Illinois Pension Code to require each pension system board to establish and maintain a voluntary defined contribution plan within one year to address retirement preparedness gaps for participants not on track to maintain their standard of living in retirement.

• Tier 1 participants (joined before January 1, 2011) and existing Tier 2 participants may voluntarily enroll in the plan, while new Tier 2 participants (joining on or after plan establishment) are automatically enrolled unless they opt out within 60 days.

• Plan boards establish contribution rates and must offer a default investment option designed to generate retirement income replacement, with participants able to select alternative investment options.

• Plan operates as a qualified tax-deferred savings plan under Internal Revenue Code Section 401, with distributions complying with IRC Sections 401(a)(9) and 401(a)(37) requirements.

• Applies to all five pension systems: General Assembly, State Employees, State Universities, Downstate Teachers, and Judges; repeals a prior definition from Public Act 98-599 deemed unconstitutional; effective immediately upon enactment.