Illinois House Bill HB2709

Illinois 2025-2026 Regular Session

• Filed/Introduced: 8/8/26
• Introduced: 2/4/25
• Refer: 2/6/25
• Refer: 3/4/25
• Refer: 3/21/25

Caption

PEN CD-TRS-457 PLANS

Summary

HB2709 amends the Downstate Teacher Article of the Illinois Pension Code to create a limited pilot framework for school districts that offer a 457(b) deferred compensation plan through a single vendor. Under the bill, qualifying districts could use a local single-vendor plan to satisfy the requirements of Public Act 102-540, but only up to 10% of school districts statewide would be allowed to participate. The bill also sets out plan design rules, including no surrender charges, no annuities, and a requirement that participants be able to transfer or roll over funds to the Illinois supplemental savings plan without cost and at the employee’s direction. The bill further imposes conflict-of-interest and fiduciary-style safeguards on the selection of the vendor. The plan sponsor must act solely in the best interests of participants and beneficiaries, and employees involved in selecting the vendor must avoid outside business interests, disclose those interests, and refrain from accepting gifts or preferential treatment. Vendors are barred from offering the plan if they provide anything of value to employees involved in vendor selection. The pilot is temporary and becomes inoperable on January 1, 2031.

Impact

HB2709 would add a new Section 16-207 to the Illinois Pension Code and would affect school districts, school boards, bargaining representatives, and vendors offering 457(b) deferred compensation plans. It would create a narrow exception allowing certain districts to use a single-vendor local plan to meet state requirements, while imposing specific consumer-protection and ethics rules on plan structure and vendor selection. The bill would not broadly change pension benefits, but it would regulate how a subset of school district retirement-savings plans are offered and administered until the provision sunsets in 2031.

Sentiment

No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available materials. Based on the bill text alone, the measure appears designed to be cautious and compliance-oriented, with a pilot limit and multiple anti-conflict provisions suggesting an effort to address administrative and ethical concerns while preserving a local plan option for some districts.

Contention

The main likely points of contention are the use of a single-vendor structure, the statewide cap limiting participation to 10% of school districts, and the restrictions on vendor selection and employee conduct. School districts or vendors favoring flexibility may object to the cap or the detailed operational limits, while proponents of stronger oversight may support the anti-gift, disclosure, and employment-restriction provisions as necessary safeguards against conflicts of interest. The temporary nature of the pilot also suggests the legislature may be testing the approach before deciding whether to extend it.