104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 SB2462 Introduced 2/7/2025, by Sen. Mike Porfirio - Karina Villa - Graciela Guzmn - Rachel Ventura SYNOPSIS AS INTRODUCED: 40 ILCS 5/1-110.16 Amends the General Provisions Article of the Illinois Pension Code. Removes provisions requiring the Illinois Investment Policy Board to include companies that boycott Israel in its list of restricted companies. Makes conforming changes. Effective immediately. LRB104 09315 RPS 19373 b A BILL FOR 104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 SB2462 Introduced 2/7/2025, by Sen. Mike Porfirio - Karina Villa - Graciela Guzmn - Rachel Ventura SYNOPSIS AS INTRODUCED: 40 ILCS 5/1-110.16 40 ILCS 5/1-110.16 Amends the General Provisions Article of the Illinois Pension Code. Removes provisions requiring the Illinois Investment Policy Board to include companies that boycott Israel in its list of restricted companies. Makes conforming changes. Effective immediately. LRB104 09315 RPS 19373 b LRB104 09315 RPS 19373 b A BILL FOR
104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 SB2462 Introduced 2/7/2025, by Sen. Mike Porfirio - Karina Villa - Graciela Guzmn - Rachel Ventura SYNOPSIS AS INTRODUCED:
40 ILCS 5/1-110.16 40 ILCS 5/1-110.16
40 ILCS 5/1-110.16
Amends the General Provisions Article of the Illinois Pension Code. Removes provisions requiring the Illinois Investment Policy Board to include companies that boycott Israel in its list of restricted companies. Makes conforming changes. Effective immediately.
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A BILL FOR
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1 AN ACT concerning public employee benefits.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Pension Code is amended by
5 changing Section 1-110.16 as follows:
6 (40 ILCS 5/1-110.16)
7 Sec. 1-110.16. Transactions prohibited by retirement
8 systems; companies that boycott Israel, for-profit companies
9 that contract to shelter migrant children, Iran-restricted
10 companies, Sudan-restricted companies, expatriated entities,
11 companies that are domiciled or have their principal place of
12 business in Russia or Belarus, and companies that are subject
13 to Russian Harmful Foreign Activities Sanctions.
14 (a) As used in this Section:
15 "Boycott Israel" means engaging in actions that are
16 politically motivated and are intended to penalize,
17 inflict economic harm on, or otherwise limit commercial
18 relations with the State of Israel or companies based in
19 the State of Israel or in territories controlled by the
20 State of Israel.
21 "Company" means any sole proprietorship, organization,
22 association, corporation, partnership, joint venture,
23 limited partnership, limited liability partnership,
104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 SB2462 Introduced 2/7/2025, by Sen. Mike Porfirio - Karina Villa - Graciela Guzmn - Rachel Ventura SYNOPSIS AS INTRODUCED:
40 ILCS 5/1-110.16 40 ILCS 5/1-110.16
40 ILCS 5/1-110.16
Amends the General Provisions Article of the Illinois Pension Code. Removes provisions requiring the Illinois Investment Policy Board to include companies that boycott Israel in its list of restricted companies. Makes conforming changes. Effective immediately.
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A BILL FOR
40 ILCS 5/1-110.16
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1 limited liability company, or other entity or business
2 association, including all wholly owned subsidiaries,
3 majority-owned subsidiaries, parent companies, or
4 affiliates of those entities or business associations,
5 that exist for the purpose of making profit.
6 "Company that is subject to Russian Harmful Foreign
7 Activities Sanctions" means a company that is subject to
8 sanctions under the Russian Harmful Foreign Activities
9 Sanctions Regulations (31 CFR Part 587), any Presidential
10 Executive Order imposing sanctions against Russia, or any
11 federal directive issued pursuant to any such Executive
12 Order.
13 "Contract to shelter migrant children" means entering
14 into a contract with the federal government to shelter
15 migrant children under the federal Unaccompanied Alien
16 Children Program or a substantially similar federal
17 program.
18 "Direct holdings" in a company means all publicly
19 traded securities of that company that are held directly
20 by the retirement system in an actively managed account or
21 fund in which the retirement system owns all shares or
22 interests.
23 "Expatriated entity" has the meaning ascribed to it in
24 Section 1-15.120 of the Illinois Procurement Code.
25 "Illinois Investment Policy Board" means the board
26 established under subsection (b) of this Section.
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1 "Indirect holdings" in a company means all securities
2 of that company that are held in an account or fund, such
3 as a mutual fund, managed by one or more persons not
4 employed by the retirement system, in which the retirement
5 system owns shares or interests together with other
6 investors not subject to the provisions of this Section or
7 that are held in an index fund.
8 "Iran-restricted company" means a company that meets
9 the qualifications under Section 1-110.15 of this Code.
10 "Private market fund" means any private equity fund,
11 private equity funds of funds, venture capital fund, hedge
12 fund, hedge fund of funds, real estate fund, or other
13 investment vehicle that is not publicly traded.
14 "Restricted companies" means companies that boycott
15 Israel, for-profit companies that contract to shelter
16 migrant children, Iran-restricted companies,
17 Sudan-restricted companies, expatriated entities,
18 companies that are domiciled or have their principal place
19 of business in Russia or Belarus, and companies that are
20 subject to Russian Harmful Foreign Activities Sanctions.
21 "Retirement system" means a retirement system
22 established under Article 2, 14, 15, 16, or 18 of this Code
23 or the Illinois State Board of Investment.
24 "Sudan-restricted company" means a company that meets
25 the qualifications under Section 1-110.6 of this Code.
26 (b) There shall be established an Illinois Investment
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1 Policy Board. The Illinois Investment Policy Board shall
2 consist of 7 members. Each board of a pension fund or
3 investment board created under Article 15, 16, or 22A of this
4 Code shall appoint one member, and the Governor shall appoint
5 4 members. The Governor shall designate one member of the
6 Board as the Chairperson.
7 (b-5) The term of office of each member appointed by the
8 Governor, who is serving on the Board on June 30, 2022, is
9 abolished on that date. The terms of office of members
10 appointed by the Governor after June 30, 2022 shall be as
11 follows: 2 initial members shall be appointed for terms of 2
12 years, and 2 initial members shall be appointed for terms of 4
13 years. Thereafter, the members appointed by the Governor shall
14 hold office for 4 years, except that any member chosen to fill
15 a vacancy occurring otherwise than by expiration of a term
16 shall be appointed only for the unexpired term of the member
17 whom he or she shall succeed. Board members may be
18 reappointed. The Governor may remove a Governor's appointee to
19 the Board for incompetence, neglect of duty, malfeasance, or
20 inability to serve.
21 (c) Notwithstanding any provision of law to the contrary,
22 beginning January 1, 2016, Sections 1-110.15 and 1-110.6 of
23 this Code shall be administered in accordance with this
24 Section.
25 (d) By April 1, 2016, the Illinois Investment Policy Board
26 shall make its best efforts to identify all Iran-restricted
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1 companies and , Sudan-restricted companies, and companies that
2 boycott Israel and assemble those identified companies into a
3 list of restricted companies, to be distributed to each
4 retirement system.
5 These efforts shall include the following, as appropriate
6 in the Illinois Investment Policy Board's judgment:
7 (1) reviewing and relying on publicly available
8 information regarding Iran-restricted companies and ,
9 Sudan-restricted companies, and companies that boycott
10 Israel, including information provided by nonprofit
11 organizations, research firms, and government entities;
12 (2) contacting asset managers contracted by the
13 retirement systems that invest in Iran-restricted
14 companies and , Sudan-restricted companies, and companies
15 that boycott Israel;
16 (3) contacting other institutional investors that have
17 divested from or engaged with Iran-restricted companies
18 and , Sudan-restricted companies, and companies that
19 boycott Israel; and
20 (4) retaining an independent research firm to identify
21 Iran-restricted companies and , Sudan-restricted
22 companies, and companies that boycott Israel.
23 The Illinois Investment Policy Board shall review the list
24 of restricted companies on a quarterly basis based on evolving
25 information from, among other sources, those listed in this
26 subsection (d) and distribute any updates to the list of
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1 restricted companies to the retirement systems and the State
2 Treasurer.
3 By April 1, 2018, the Illinois Investment Policy Board
4 shall make its best efforts to identify all expatriated
5 entities and include those companies in the list of restricted
6 companies distributed to each retirement system and the State
7 Treasurer. These efforts shall include the following, as
8 appropriate in the Illinois Investment Policy Board's
9 judgment:
10 (1) reviewing and relying on publicly available
11 information regarding expatriated entities, including
12 information provided by nonprofit organizations, research
13 firms, and government entities;
14 (2) contacting asset managers contracted by the
15 retirement systems that invest in expatriated entities;
16 (3) contacting other institutional investors that have
17 divested from or engaged with expatriated entities; and
18 (4) retaining an independent research firm to identify
19 expatriated entities.
20 By July 1, 2022, the Illinois Investment Policy Board
21 shall make its best efforts to identify all for-profit
22 companies that contract to shelter migrant children and
23 include those companies in the list of restricted companies
24 distributed to each retirement system. These efforts shall
25 include the following, as appropriate in the Illinois
26 Investment Policy Board's judgment:
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1 (1) reviewing and relying on publicly available
2 information regarding for-profit companies that contract
3 to shelter migrant children, including information
4 provided by nonprofit organizations, research firms, and
5 government entities;
6 (2) contacting asset managers contracted by the
7 retirement systems that invest in for-profit companies
8 that contract to shelter migrant children;
9 (3) contacting other institutional investors that have
10 divested from or engaged with for-profit companies that
11 contract to shelter migrant children; and
12 (4) retaining an independent research firm to identify
13 for-profit companies that contract to shelter migrant
14 children.
15 No later than 6 months after the effective date of this
16 amendatory Act of the 102nd General Assembly, the Illinois
17 Investment Policy Board shall make its best efforts to
18 identify all companies that are domiciled or have their
19 principal place of business in Russia or Belarus and companies
20 that are subject to Russian Harmful Foreign Activities
21 Sanctions and include those companies in the list of
22 restricted companies distributed to each retirement system.
23 These efforts shall include the following, as appropriate in
24 the Illinois Investment Policy Board's judgment:
25 (1) reviewing and relying on publicly available
26 information regarding companies that are domiciled or have
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1 their principal place of business in Russia or Belarus and
2 companies that are subject to Russian Harmful Foreign
3 Activities Sanctions, including information provided by
4 nonprofit organizations, research firms, and government
5 entities;
6 (2) contacting asset managers contracted by the
7 retirement systems that invest in companies that are
8 domiciled or have their principal place of business in
9 Russia or Belarus and companies that are subject to
10 Russian Harmful Foreign Activities Sanctions;
11 (3) contacting other institutional investors that have
12 divested from or engaged with companies that are domiciled
13 or have their principal place of business in Russia or
14 Belarus and companies that are subject to Russian Harmful
15 Foreign Activities Sanctions; and
16 (4) retaining an independent research firm to identify
17 companies that are domiciled or have their principal place
18 of business in Russia or Belarus and companies that are
19 subject to Russian Harmful Foreign Activities Sanctions.
20 (e) The Illinois Investment Policy Board shall adhere to
21 the following procedures for companies on the list of
22 restricted companies:
23 (1) For each company newly identified in subsection
24 (d), the Illinois Investment Policy Board, unless it
25 determines by an affirmative vote that it is unfeasible,
26 shall send a written notice informing the company of its
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1 status and that it may become subject to divestment or
2 shareholder activism by the retirement systems.
3 (2) If, following the Illinois Investment Policy
4 Board's engagement pursuant to this subsection (e) with a
5 restricted company, that company ceases activity that
6 designates the company to be an Iran-restricted company, a
7 Sudan-restricted company, a company that boycotts Israel,
8 an expatriated entity, or a for-profit company that
9 contracts to shelter migrant children, the company shall
10 be removed from the list of restricted companies and the
11 provisions of this Section shall cease to apply to it
12 unless it resumes such activities.
13 (3) For a company that is domiciled or has its
14 principal place of business in Russia or Belarus, if,
15 following the Illinois Investment Policy Board's
16 engagement pursuant to this subsection (e), that company
17 is no longer domiciled or has its principal place of
18 business in Russia or Belarus, the company shall be
19 removed from the list of restricted companies and the
20 provisions of this Section shall cease to apply to it
21 unless it becomes domiciled or has its principal place of
22 business in Russia or Belarus.
23 (4) For a company that is subject to Russian Harmful
24 Foreign Activities Sanctions, if, following the Illinois
25 Investment Policy Board's engagement pursuant to this
26 subsection (e), that company is no longer subject to
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1 Russian Harmful Foreign Activities Sanctions, the company
2 shall be removed from the list of restricted companies and
3 the provisions of this Section shall cease to apply to it
4 unless it becomes subject to Russian Harmful Foreign
5 Activities Sanctions.
6 (f) Except as provided in subsection (f-1) of this Section
7 the retirement system shall adhere to the following procedures
8 for companies on the list of restricted companies:
9 (1) The retirement system shall identify those
10 companies on the list of restricted companies in which the
11 retirement system owns direct holdings and indirect
12 holdings.
13 (2) The retirement system shall instruct its
14 investment advisors to sell, redeem, divest, or withdraw
15 all direct holdings of restricted companies from the
16 retirement system's assets under management in an orderly
17 and fiduciarily responsible manner within 12 months after
18 the company's most recent appearance on the list of
19 restricted companies.
20 (3) The retirement system may not acquire securities
21 of restricted companies.
22 (4) The provisions of this subsection (f) do not apply
23 to the retirement system's indirect holdings or private
24 market funds. The Illinois Investment Policy Board shall
25 submit letters to the managers of those investment funds
26 containing restricted companies requesting that they
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1 consider removing the companies from the fund or create a
2 similar actively managed fund having indirect holdings
3 devoid of the companies. If the manager creates a similar
4 fund, the retirement system shall replace all applicable
5 investments with investments in the similar fund in an
6 expedited timeframe consistent with prudent investing
7 standards.
8 (f-1) The retirement system shall adhere to the following
9 procedures for restricted companies that are expatriated
10 entities or for-profit companies that contract to shelter
11 migrant children:
12 (1) To the extent that the retirement system believes
13 that shareholder activism would be more impactful than
14 divestment, the retirement system shall have the authority
15 to engage with a restricted company prior to divesting.
16 (2) Subject to any applicable State or Federal laws,
17 methods of shareholder activism utilized by the retirement
18 system may include, but are not limited to, bringing
19 shareholder resolutions and proxy voting on shareholder
20 resolutions.
21 (3) The retirement system shall report on its
22 shareholder activism and the outcome of such efforts to
23 the Illinois Investment Policy Board by April 1 of each
24 year.
25 (4) If the engagement efforts of the retirement system
26 are unsuccessful, then it shall adhere to the procedures
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1 under subsection (f) of this Section.
2 (f-5) Beginning on the effective date of this amendatory
3 Act of the 102nd General Assembly, no retirement system shall
4 invest moneys in Russian or Belarusian sovereign debt, Russian
5 or Belarusian government-backed securities, any investment
6 instrument issued by an entity that is domiciled or has its
7 principal place of business in Russia or Belarus, or any
8 investment instrument issued by a company that is subject to
9 Russian Harmful Foreign Activities Sanctions, and no
10 retirement system shall invest or deposit State moneys in any
11 bank that is domiciled or has its principal place of business
12 in Russia or Belarus. As soon as practicable after the
13 effective date of this amendatory Act of the 102nd General
14 Assembly, each retirement system shall instruct its investment
15 advisors to sell, redeem, divest, or withdraw all direct
16 holdings of Russian or Belarusian sovereign debt and direct
17 holdings of Russian or Belarusian government-backed securities
18 from the retirement system's assets under management in an
19 orderly and fiduciarily responsible manner.
20 Notwithstanding any provision of this Section to the
21 contrary, a retirement system may cease divestment pursuant to
22 this subsection (f-5) if clear and convincing evidence shows
23 that the value of investments in such Russian or Belarusian
24 sovereign debt and Russian or Belarusian government-backed
25 securities becomes equal to or less than 0.05% of the market
26 value of all assets under management by the retirement system.
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1 For any cessation of divestment authorized by this subsection
2 (f-5), the retirement system shall provide a written notice to
3 the Illinois Investment Policy Board in advance of the
4 cessation of divestment, setting forth the reasons and
5 justification, supported by clear and convincing evidence, for
6 its decision to cease divestment under this subsection (f-5).
7 The provisions of this subsection (f-5) do not apply to
8 the retirement system's indirect holdings or private market
9 funds.
10 (g) Upon request, and by April 1 of each year, each
11 retirement system shall provide the Illinois Investment Policy
12 Board with information regarding investments sold, redeemed,
13 divested, or withdrawn in compliance with this Section.
14 (h) Notwithstanding any provision of this Section to the
15 contrary, a retirement system may cease divesting from
16 companies pursuant to subsection (f) if clear and convincing
17 evidence shows that the value of investments in such companies
18 becomes equal to or less than 0.5% of the market value of all
19 assets under management by the retirement system. For any
20 cessation of divestment authorized by this subsection (h), the
21 retirement system shall provide a written notice to the
22 Illinois Investment Policy Board in advance of the cessation
23 of divestment, setting forth the reasons and justification,
24 supported by clear and convincing evidence, for its decision
25 to cease divestment under subsection (f).
26 (i) The cost associated with the activities of the
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1 Illinois Investment Policy Board shall be borne by the boards
2 of each pension fund or investment board created under Article
3 15, 16, or 22A of this Code.
4 (j) With respect to actions taken in compliance with this
5 Section, including all good-faith determinations regarding
6 companies as required by this Section, the retirement system
7 and Illinois Investment Policy Board are exempt from any
8 conflicting statutory or common law obligations, including any
9 fiduciary duties under this Article and any obligations with
10 respect to choice of asset managers, investment funds, or
11 investments for the retirement system's securities portfolios.
12 (k) It is not the intent of the General Assembly in
13 enacting this amendatory Act of the 99th General Assembly to
14 cause divestiture from any company based in the United States
15 of America. The Illinois Investment Policy Board shall
16 consider this intent when developing or reviewing the list of
17 restricted companies.
18 (l) If any provision of this amendatory Act of the 99th
19 General Assembly or its application to any person or
20 circumstance is held invalid, the invalidity of that provision
21 or application does not affect other provisions or
22 applications of this amendatory Act of the 99th General
23 Assembly that can be given effect without the invalid
24 provision or application.
25 If any provision of Public Act 100-551 or its application
26 to any person or circumstance is held invalid, the invalidity
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1 of that provision or application does not affect other
2 provisions or applications of Public Act 100-551 that can be
3 given effect without the invalid provision or application.
4 If any provision of Public Act 102-118 or its application
5 to any person or circumstance is held invalid, the invalidity
6 of that provision or application does not affect other
7 provisions or applications of Public Act 102-118 that can be
8 given effect without the invalid provision or application.
9 If any provision of this amendatory Act of the 102nd
10 General Assembly or its application to any person or
11 circumstance is held invalid, the invalidity of that provision
12 or application does not affect other provisions or
13 applications of this amendatory Act of the 102nd General
14 Assembly that can be given effect without the invalid
15 provision or application.
16 (Source: P.A. 102-118, eff. 7-23-21; 102-699, eff. 4-19-22;
17 102-1108, eff. 12-21-22.)
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