PENCD-SURS-TIER 3

Amends the State Universities Article of the Illinois Pension Code. Changes the definition of "effective rate of interest" for a fiscal year to the interest rate of 30-year United States Treasury bonds as of the beginning of that fiscal year, plus 75 basis points. Defines "Tier 1" and "Tier 3" participants and creates a new Tier 3 benefit program, applicable to all new participants and to Tier 2 participants who elect to participate, consisting of both a Tier 3 defined contribution component and a Tier 3 defined benefit component. Excludes Tier 3 participants from the portable benefit package and the self-managed plan. Imposes an additional contribution on Tier 1 participants, which increases incrementally until it reaches 2.0% of earnings; excludes these contributions from being considered under the Rule 2 money-purchase formula. Reduces the automatic annual increase in retirement annuity for Tier 1 participants to one-half of the annual unadjusted percentage increase in the consumer price index-u; increases the automatic annual increase in retirement annuity for Tier 3 participants over the Tier 2 level by compounding the increases and removing the 3% annual maximum. Adds 2 additional members to the Board of Trustees, to be appointed by the Governor with the advice and consent of the Senate. Also, beginning in 2015, converts 2 of the elected active participant positions on the Board into active participant positions appointed by the Governor. Includes a new benefit increase exemption. Also makes technical and conforming changes. Amends the State Mandates Act to require implementation without reimbursement. Contains a severability provision. Effective immediately.