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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB2723

Introduced 2/6/2025, by Rep. Abdelnasser Rashid

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 06363 RPS 16399 b

A BILL FOR

HB2723
LRB104 06363 RPS 16399 b
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,

HB2723
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LRB104 06363 RPS 16399 b
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.

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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:

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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.

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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

HB2723
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LRB104 06363 RPS 16399 b
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.)

18

Section 99.
Effective date.
This Act takes effect upon
19
becoming law.

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