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HB 2920

Oklahoma Historical Society; Office of Tribal Relations; format; sources; material; effective date.

2025 Regular Session Introduced by Ajay Pittman

Allows eligible state university employees to defer retirement up to 5 years by placing their accrued annuity into a notional DROP account, paid as lump sum later.

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Bill Summary · HB 2920

Summary — HB 2920 (Pension Code: SURS Deferred Retirement Option Plan)

Note: The package of text provided contains material from multiple jurisdictions with the same bill number. This summary focuses on the Illinois provision titled “Deferred retirement option plan” (adds Section 1‑168 to the Illinois Pension Code), consistent with the bill title “PEN CD‑SURS‑DROP.”

Purpose

Create a Deferred Retirement Option Plan (DROP) for eligible Article 15 (State Universities/related) members. The DROP lets an eligible employee who is otherwise entitled to a full, unreduced retirement annuity remain in active service for up to five years while their otherwise‑payable monthly retirement annuity is placed into a notional DROP account.

Key provisions

  • Adds new Section 1‑168 to the Illinois Pension Code (40 ILCS 5/1‑168).
  • Availability: DROP must be available to eligible members no later than January 1, 2026. Election deadline for participation is January 1, 2029.
  • Eligibility:
    • Member must be eligible for a full, unreduced retirement under the applicable Article at time of election.
    • Not already receiving a disability or retirement annuity.
    • Actively employed in a position covered by a collective bargaining agreement.
  • Participation period: Up to 5 years from date of election.
  • Account mechanics:
    • Monthly retirement annuity amounts that the member would receive if retired are credited into a notional DROP account held by the retirement system.
    • DROP account balances do not accrue interest.
    • Automatic annual increases that would have applied if the member retired accrue to the credited monthly payments placed into the account prior to DROP expiration and apply to the annuity after DROP ends.
    • Employee contributions must continue during DROP participation; those contributions are credited to the DROP account (less any administrative costs).
    • The retirement system may reduce the notional account to cover administrative costs.
  • Termination / payout:
    • Upon DROP expiration or termination, the account balance is paid to the member as a lump sum (with transfer/rollover options consistent with law).
    • DROP participation may not extend beyond January 1, 2034 (i.e., members must expire/terminate participation by that date).
  • Election: Irrevocable. Members generally may not access the account before the end date except as provided in the section (truncated text indicates early termination triggers but full list not provided).
  • Other administrative items: Elections must be made in writing; retirement‑related elections (optional service purchases, benefit options, QDRO obligations) must be completed at or before election.

Who is affected

  • Eligible Article 15 members (e.g., SURS participants) who meet retirement eligibility criteria and are in covered employment.
  • Retirement system administrators (must implement account tracking, payroll and accounting changes).
  • Employers may be affected by workforce timing (employees who would otherwise retire can remain up to 5 more years).
  • Actuarial/financial stakeholders: pension fund liabilities and cash flow timing will be altered.

Potential impacts

  • Workforce: May incentivize experienced employees to defer formal retirement while receiving retirement credits placed into DROP accounts.
  • Fiscal/actuarial: Creates notional liabilities and potential lump‑sum payouts; because accounts do not earn interest, some costs may be limited, but actuarial projections and employer contribution rates may shift.
  • Administrative: Systems must implement new recordkeeping, contribution handling, and payout procedures; administrative costs may be charged to DROP accounts.
  • Member financial planning: Provides a mechanism to “bank” retirement annuities while continuing employment, with implications for Social Security, retiree benefits, and taxation of lump sums.

Legislative status (from provided record)

  • Introduced in Illinois General Assembly: filed 2/5/2025; introduced 2/6/2025 by Rep. Katie Stuart.
  • Bill text indicates immediate effect if enacted.
  • (Provided document includes other procedural entries and items from other states; consult official legislative tracking for current status.)

Compiled from official sources — confirm details with the bill’s official record.

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