Illinois Gov. J.B. Pritzker on Wednesday signed into law the consolidation of 649 downstate and suburban police and fire pension plans into two new pension funds.
The law creates the Police Officers' Pension Investment Fund, and Firefighters' Pension Investment Fund, which together consolidate an estimated $15 billion in assets.
According to a fact sheet from the Illinois Municipal League, the police officers' fund will manage an estimated $8.7 billion in assets, while the firefighters' fund will manage an estimated $6.3 billion in assets.
In November, the Illinois General Assembly voted to approve the bill, which was the result of findings of a Pension Consolidation Feasibility Task Force that Mr. Pritzker created earlier this year.
In October, the task force recommended consolidating the assets of the plans. Doing so would generate investment returns far beyond the annualized 2% its report said the plans achieved in the past 10 years because of their small sizes. Of the total 649 plans, 424 plans, or 65.3%, have less than $20 million in assets each.
The law, which is effective Jan. 1, calls for the transfer of investment authority for the municipal pension funds' assets to the Police Officers' Pension Investment Fund and Firefighters' Pension Investment Fund no later than June 30, 2022.
The first step, which by law will take place by Feb. 1, is the creation of transition boards of trustees consisting of nine members each: Three members representing the municipalities recommended by the Illinois Municipal League; three members representing participants; two members representing beneficiaries; and one member who is a representative of the Illinois Municipal League. They will serve until the election of permanent nine-member boards of trustees, consisting of the same types of representatives.
No later than March 31, the transition boards will appoint interim executive directors who will serve until a permanent executive director is appointed by a deadline of no later than six months after the end of the transition period. The deadline for the election of permanent boards of trustees is Dec. 31.
Other timelines, such as the deadlines by which the boards must hire custodians and investment consultants, were not immediately available.
Non-hazardous municipal and school district employees in Illinois outside of Chicago are part of the $42.8 billion Illinois Municipal Retirement Fund, Oak Brook, created in 1939.