Two new laws require Article 3 and 4 pension fund trustees in Illinois to participate in education and training on various topics relevant to their roles as pension board members. P.A. 96-006 (effective April 3, 2009) and P.A. 96-429 (effective August 13, 2009) call for pension trustees to receive a certain number of educational hours each year. The following questions and answers cover the details of the new training and education requirements for Article 3 and 4 pension fund trustees.
How much training must pension fund trustees complete?
New trustees must complete an initial 32-hour certification under new Section 1-109.3 of the Illinois Pension Code (40 ILCS 5/1-109.3; P.A. 96-429). Any pension fund trustee who was not a board member on or before August 13, 2009, must first complete the 32 hours of initial training under this new provision. (40 ILCS 5/1-109.3(b))
New Section 1-109.3(b) also requires all elected and appointed trustees of an Article 3 or 4 pension fund to "participate in a minimum of 16 hours of continuing trustee education each year after the first year that the trustee is elected or appointed."
P.A. 96-006 creates new Section 1-113.18 of the Illinois Pension Code and requires 8 hours of training per year for board members of any pension fund or retirement system in Illinois. (40 ILCS 5/1-113.18) Although it is unclear from the language of the two new provisions, the 16-hour requirement in Section 1-109.3(b) would seem to overlap with – and not be in addition to – the 8-hour requirement in Section 1-113.18.
What topics must be included in pension fund trustee training?
The training may be on a variety of topics. The new laws specify what must be included in the 32-hour initial certification, and provide a non-exhaustive list of subjects for the annual training.
New Section 1-113.18 of the Illinois Pension Code requires in part that:
All board members of a retirement system, pension fund, or investment board created under this Code must attend ethics training of at least 8 hours per year. The training required under this Section shall include training on ethics, fiduciary duty, and investment issues and any other curriculum that the board of the retirement system, pension fund, or investment board establishes as being important for the administration of the retirement system, pension fund, or investment board. (emphasis added) (40 ILCS 5/1-113.18)
Note that the training under this section may be on:
- Ethics
- Fiduciary duty
- Investment issues
- Any curriculum that the pension fund board establishes as being important for the administration of the fund, which allows the board discretion in determining what "counts" for training.
Although the annual training requirement under Section 1-109.3 does not specify what topics that particular training must entail, Section 1-109.3(a) -- which outlines the 32-hour initial training for new trustees in the future -- requires the initial training to include:
- Duties and liabilities of a fiduciary
- Adjudication of pension claims
- Basic accounting and actuarial training
- Trustee ethics
- Open Meetings Act
- Freedom of Information Act
In short, the 32-hour initial training must include the items listed in Section 1-109.3(a), and the 16 hours can be on a myriad of topics, as long as it is related to the pension fund trustee responsibilities.
How can pension fund trustees obtain their required annual training?
Pension boards can devote time at each board meeting to training which any professional advisor -- your investment advisor, accountant, auditor, attorney, or other knowledgeable person -- can provide. Pension boards may want to consider coordinating periodic training provided by outside speakers with other pension boards.
During the year, training will also be available on these issues through statewide pension organizations, fire and police service organizations, and unions. Some organizations have indicated that they are preparing on-line training courses and at-home study options, which should help trustees capture that training time as well. Pension trustees may find they can capture pension training time through seminars sponsored by professional organizations to which they belong, such as a bar association or municipal finance officer organization.
Who pays for the required training?
Section 1-109.3(c) specifically provides that the training required shall be paid for by the pension fund. (40 ILCS 5/1-109.3(c)) By board policy, trustees may seek reimbursement for training expenses from the pension board. Prior to reimbursing trustees for training expenses, however, a pension board should have in place a policy governing reimbursement of these expenses. This policy should detail the process for approving training costs, obtaining reimbursement, and specifically identify those expenses eligible for reimbursement.
Can members of a pension board receive paid time off to attend trustee training?
Yes, Section 1-109.3(a) provides that elected and appointed trustees who work for the municipality in any capacity must be given time off without a reduction of accrued leave time to attend the initial 32-hour mandatory training. Although unclear from this provision, it would appear this same obligation would apply to the annual 16-hour training requirement.
Who is responsible for maintaining training records?
Each pension board will be responsible for maintaining their board members’ training records throughout the year. Under Section 1-113.18, boards must annually certify to the Illinois Department of Insurance that members have completed their required training. Pension boards should consider maintaining separate files for each board member that include proof of attendance at training conferences. For training or education that does not result in a certificate, pension boards will need to provide their own documentation.
Are there any consequences to failing to obtain the required training?
Any board member who fails to obtain the necessary annual training within six months of the year in which it is to be completed will be ineligible to serve on the pension board. Section 1-109.3(d) calls for the replacement of ineligible board members by appointment or election in the same manner board members are normally chosen to serve.
