100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB5472

 

Introduced , by Rep. Robert Martwick

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the State Employee, State Universities, and Downstate Teacher Articles of the Illinois Pension Code. Requires each System to implement an accelerated pension benefit payment option for Tier 1 members who have submitted an application for a retirement annuity and meet other requirements. Requires each System to offer an eligible Tier 1 member the opportunity to irrevocably elect to have his or her automatic annual increases in retirement annuity calculated using the Tier 2 formula in exchange for an accelerated pension benefit payment equal to 70% of the difference of the present value of the automatic annual increases in the Tier 1 member's retirement annuity using the formula applicable to the Tier 1 member and the present value of the automatic annual increases in the Tier 1 member's retirement annuity using the Tier 2 formula. Contains provisions concerning definitions; return to active service; depositing the payments into other qualified retirement plans; qualified plan status; and rulemaking. Excludes the amendatory Act from the definition of "new benefit increase". Adds provisions defining "Tier 1 member" and repeals the definitions of "Tier 1 member" added by Public Act 98-599, which has been held unconstitutional. Effective immediately.


LRB100 16255 RPS 31378 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5472LRB100 16255 RPS 31378 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Sections 14-152.1, 15-198, and 16-203 and by adding Sections
614-103.41, 14-147.5, 15-185.5, 16-106.41, and 16-190.5 as
7follows:
 
8    (40 ILCS 5/14-103.41 new)
9    Sec. 14-103.41. Tier 1 member. "Tier 1 member": A member of
10this System who first became a member or participant before
11January 1, 2011 under any reciprocal retirement system or
12pension fund established under this Code other than a
13retirement system or pension fund established under Article 2,
143, 4, 5, 6, or 18 of this Code.
 
15    (40 ILCS 5/14-147.5 new)
16    Sec. 14-147.5. Accelerated pension benefit payment.
17    (a) As used in this Section:
18    "Accelerated pension benefit payment" means a lump sum
19payment equal to 70% of the difference of the present value of
20the automatic annual increases to a Tier 1 member's retirement
21annuity using the formula applicable to the Tier 1 member and
22the present value of the automatic annual increases to the Tier

 

 

HB5472- 2 -LRB100 16255 RPS 31378 b

11 member's retirement annuity using the formula provided under
2subsection (e) of Section 1-160.
3    "Eligible person" means a person who:
4        (1) is a Tier 1 member;
5        (2) has submitted an application for a retirement
6    annuity under this Article;
7        (3) meets the age and service requirements for
8    receiving a retirement annuity under this Article;
9        (4) has not received any retirement annuity under this
10    Article; and
11        (5) does not have a QILDRO in effect against him or her
12    under this Article.
13    (b) As soon as practical on or after the effective date of
14this amendatory Act of the 100th General Assembly, the System
15shall implement an accelerated pension benefit payment option
16for eligible persons. The System shall calculate, using
17actuarial tables and other assumptions adopted by the Board, an
18accelerated pension benefit payment amount for each eligible
19person and shall offer that eligible person the opportunity to
20irrevocably elect to have his or her automatic annual increases
21in retirement annuity calculated in accordance with the formula
22provided under subsection (e) of Section 1-160 in exchange for
23the accelerated pension benefit payment. The election under
24this subsection must be made before the eligible person
25receives a retirement annuity.
26    (c) If a person who has received an accelerated pension

 

 

HB5472- 3 -LRB100 16255 RPS 31378 b

1benefit payment returns to active service under this Article,
2then:
3        (1) the calculation of any future automatic annual
4    increase in retirement annuity shall be calculated in
5    accordance with the formula provided under subsection (e)
6    of Section 1-160; and
7        (2) the accelerated pension benefit payment may not be
8    repaid to the System.
9    (d) As a condition of receiving an accelerated pension
10benefit payment, an eligible person must have another
11retirement plan or account qualified under the Internal Revenue
12Code of 1986, as amended, for the accelerated pension benefit
13payment to be rolled into. The accelerated pension benefit
14payment under this Section may be subject to withholding or
15payment of applicable taxes, but to the extent permitted by
16federal law, a person who receives an accelerated pension
17benefit payment under this Section must direct the System to
18pay all of that payment as a rollover into another retirement
19plan or account qualified under the Internal Revenue Code of
201986, as amended.
21    (e) The Board shall adopt any rules necessary to implement
22this Section.
23    (f) No provision of this Section shall be interpreted in a
24way that would cause the applicable System to cease to be a
25qualified plan under the Internal Revenue Code of 1986.
 

 

 

HB5472- 4 -LRB100 16255 RPS 31378 b

1    (40 ILCS 5/14-152.1)
2    Sec. 14-152.1. Application and expiration of new benefit
3increases.
4    (a) As used in this Section, "new benefit increase" means
5an increase in the amount of any benefit provided under this
6Article, or an expansion of the conditions of eligibility for
7any benefit under this Article, that results from an amendment
8to this Code that takes effect after June 1, 2005 (the
9effective date of Public Act 94-4). "New benefit increase",
10however, does not include any benefit increase resulting from
11the changes made to Article 1 or this Article by Public Act
1296-37, Public Act 100-23, or this amendatory Act of the 100th
13General Assembly by this amendatory Act of the 100th General
14Assembly.
15    (b) Notwithstanding any other provision of this Code or any
16subsequent amendment to this Code, every new benefit increase
17is subject to this Section and shall be deemed to be granted
18only in conformance with and contingent upon compliance with
19the provisions of this Section.
20    (c) The Public Act enacting a new benefit increase must
21identify and provide for payment to the System of additional
22funding at least sufficient to fund the resulting annual
23increase in cost to the System as it accrues.
24    Every new benefit increase is contingent upon the General
25Assembly providing the additional funding required under this
26subsection. The Commission on Government Forecasting and

 

 

HB5472- 5 -LRB100 16255 RPS 31378 b

1Accountability shall analyze whether adequate additional
2funding has been provided for the new benefit increase and
3shall report its analysis to the Public Pension Division of the
4Department of Insurance. A new benefit increase created by a
5Public Act that does not include the additional funding
6required under this subsection is null and void. If the Public
7Pension Division determines that the additional funding
8provided for a new benefit increase under this subsection is or
9has become inadequate, it may so certify to the Governor and
10the State Comptroller and, in the absence of corrective action
11by the General Assembly, the new benefit increase shall expire
12at the end of the fiscal year in which the certification is
13made.
14    (d) Every new benefit increase shall expire 5 years after
15its effective date or on such earlier date as may be specified
16in the language enacting the new benefit increase or provided
17under subsection (c). This does not prevent the General
18Assembly from extending or re-creating a new benefit increase
19by law.
20    (e) Except as otherwise provided in the language creating
21the new benefit increase, a new benefit increase that expires
22under this Section continues to apply to persons who applied
23and qualified for the affected benefit while the new benefit
24increase was in effect and to the affected beneficiaries and
25alternate payees of such persons, but does not apply to any
26other person, including without limitation a person who

 

 

HB5472- 6 -LRB100 16255 RPS 31378 b

1continues in service after the expiration date and did not
2apply and qualify for the affected benefit while the new
3benefit increase was in effect.
4(Source: P.A. 100-23, eff. 7-6-17.)
 
5    (40 ILCS 5/15-185.5 new)
6    Sec. 15-185.5. Accelerated pension benefit payment.
7    (a) As used in this Section:
8    "Accelerated pension benefit payment" means a lump sum
9payment equal to 70% of the difference of the present value of
10the automatic annual increases to a Tier 1 member's retirement
11annuity using the formula applicable to the Tier 1 member and
12the present value of the automatic annual increases to the Tier
131 member's retirement annuity using the formula provided under
14subsection (d-5) of Section 15-136.
15    "Eligible person" means a person who:
16        (1) is a Tier 1 member;
17        (2) has submitted an application for a retirement
18    annuity under this Article;
19        (3) meets the age and service requirements for
20    receiving a retirement annuity under this Article;
21        (4) has not received any retirement annuity under this
22    Article;
23        (5) is not a participant in the self-managed plan; and
24        (6) does not have a QILDRO in effect against him or her
25    under this Article.

 

 

HB5472- 7 -LRB100 16255 RPS 31378 b

1    (b) As soon as practical on or after the effective date of
2this amendatory Act of the 100th General Assembly, the System
3shall implement an accelerated pension benefit payment option
4for eligible persons. The System shall calculate, using
5actuarial tables and other assumptions adopted by the Board, an
6accelerated pension benefit payment amount for each eligible
7person and shall offer that eligible person the opportunity to
8irrevocably elect to have his or her automatic annual increases
9in retirement annuity calculated in accordance with the formula
10provided in subsection (d-5) of Section 15-136 in exchange for
11the accelerated pension benefit payment. The election under
12this subsection must be made before the eligible person
13receives a retirement annuity.
14    (c) If a person who has received an accelerated pension
15benefit payment returns to active service under this Article,
16then:
17        (1) the calculation of any future automatic annual
18    increase in retirement annuity shall be calculated in
19    accordance with the formula provided in subsection (d-5) of
20    Section 15-136; and
21        (2) the accelerated pension benefit payment may not be
22    repaid to the System.
23    (d) As a condition of receiving an accelerated pension
24benefit payment, an eligible person must have another
25retirement plan or account qualified under the Internal Revenue
26Code of 1986, as amended, for the accelerated pension benefit

 

 

HB5472- 8 -LRB100 16255 RPS 31378 b

1payment to be rolled into. The accelerated pension benefit
2payment under this Section may be subject to withholding or
3payment of applicable taxes, but to the extent permitted by
4federal law, a person who receives an accelerated pension
5benefit payment under this Section must direct the System to
6pay all of that payment as a rollover into another retirement
7plan or account qualified under the Internal Revenue Code of
81986, as amended.
9    (e) The Board shall adopt any rules necessary to implement
10this Section.
11    (f) No provision of this Section shall be interpreted in a
12way that would cause the applicable System to cease to be a
13qualified plan under the Internal Revenue Code of 1986.
 
14    (40 ILCS 5/15-198)
15    Sec. 15-198. Application and expiration of new benefit
16increases.
17    (a) As used in this Section, "new benefit increase" means
18an increase in the amount of any benefit provided under this
19Article, or an expansion of the conditions of eligibility for
20any benefit under this Article, that results from an amendment
21to this Code that takes effect after the effective date of this
22amendatory Act of the 94th General Assembly. "New benefit
23increase", however, does not include any benefit increase
24resulting from the changes made to Article 1 or this Article by
25Public Act 100-23 or this amendatory Act of the 100th General

 

 

HB5472- 9 -LRB100 16255 RPS 31378 b

1Assembly this amendatory Act of the 100th General Assembly.
2    (b) Notwithstanding any other provision of this Code or any
3subsequent amendment to this Code, every new benefit increase
4is subject to this Section and shall be deemed to be granted
5only in conformance with and contingent upon compliance with
6the provisions of this Section.
7    (c) The Public Act enacting a new benefit increase must
8identify and provide for payment to the System of additional
9funding at least sufficient to fund the resulting annual
10increase in cost to the System as it accrues.
11    Every new benefit increase is contingent upon the General
12Assembly providing the additional funding required under this
13subsection. The Commission on Government Forecasting and
14Accountability shall analyze whether adequate additional
15funding has been provided for the new benefit increase and
16shall report its analysis to the Public Pension Division of the
17Department of Insurance. A new benefit increase created by a
18Public Act that does not include the additional funding
19required under this subsection is null and void. If the Public
20Pension Division determines that the additional funding
21provided for a new benefit increase under this subsection is or
22has become inadequate, it may so certify to the Governor and
23the State Comptroller and, in the absence of corrective action
24by the General Assembly, the new benefit increase shall expire
25at the end of the fiscal year in which the certification is
26made.

 

 

HB5472- 10 -LRB100 16255 RPS 31378 b

1    (d) Every new benefit increase shall expire 5 years after
2its effective date or on such earlier date as may be specified
3in the language enacting the new benefit increase or provided
4under subsection (c). This does not prevent the General
5Assembly from extending or re-creating a new benefit increase
6by law.
7    (e) Except as otherwise provided in the language creating
8the new benefit increase, a new benefit increase that expires
9under this Section continues to apply to persons who applied
10and qualified for the affected benefit while the new benefit
11increase was in effect and to the affected beneficiaries and
12alternate payees of such persons, but does not apply to any
13other person, including without limitation a person who
14continues in service after the expiration date and did not
15apply and qualify for the affected benefit while the new
16benefit increase was in effect.
17(Source: P.A. 100-23, eff. 7-6-17.)
 
18    (40 ILCS 5/16-106.41 new)
19    Sec. 16-106.41. Tier 1 member. "Tier 1 member": A member
20under this Article who first became a member or participant
21before January 1, 2011 under any reciprocal retirement system
22or pension fund established under this Code other than a
23retirement system or pension fund established under Article 2,
243, 4, 5, 6, or 18 of this Code.
 

 

 

HB5472- 11 -LRB100 16255 RPS 31378 b

1    (40 ILCS 5/16-190.5 new)
2    Sec. 16-190.5. Accelerated pension benefit payment.
3    (a) As used in this Section:
4    "Accelerated pension benefit payment" means a lump sum
5payment equal to 70% of the difference of the present value of
6the automatic annual increases to a Tier 1 member's retirement
7annuity using the formula applicable to the Tier 1 member and
8the present value of the automatic annual increases to the Tier
91 member's retirement annuity using the formula provided under
10subsection (e) of Section 1-160.
11    "Eligible person" means a person who:
12        (1) is a Tier 1 member;
13        (2) has submitted an application for a retirement
14    annuity under this Article;
15        (3) meets the age and service requirements for
16    receiving a retirement annuity under this Article;
17        (4) has not received any retirement annuity under this
18    Article; and
19        (5) does not have a QILDRO in effect against him or her
20    under this Article.
21    (b) As soon as practical on or after the effective date of
22this amendatory Act of the 100th General Assembly, the System
23shall implement an accelerated pension benefit payment option
24for eligible persons. The System shall calculate, using
25actuarial tables and other assumptions adopted by the Board, an
26accelerated pension benefit payment amount for each eligible

 

 

HB5472- 12 -LRB100 16255 RPS 31378 b

1person and shall offer that eligible person the opportunity to
2irrevocably elect to have his or her automatic annual increases
3in retirement annuity calculated in accordance with the formula
4provided under subsection (e) of Section 1-160 in exchange for
5the accelerated pension benefit payment. The election under
6this subsection must be made before the eligible person
7receives a retirement annuity.
8    (c) If a person who has received an accelerated pension
9benefit payment returns to active service under this Article,
10then:
11        (1) the calculation of any future automatic annual
12    increase in retirement annuity shall be calculated in
13    accordance with the formula provided under subsection (e)
14    of Section 1-160; and
15        (2) the accelerated pension benefit payment may not be
16    repaid to the System.
17    (d) As a condition of receiving an accelerated pension
18benefit payment, an eligible person must have another
19retirement plan or account qualified under the Internal Revenue
20Code of 1986, as amended, for the accelerated pension benefit
21payment to be rolled into. The accelerated pension benefit
22payment under this Section may be subject to withholding or
23payment of applicable taxes, but to the extent permitted by
24federal law, a person who receives an accelerated pension
25benefit payment under this Section must direct the System to
26pay all of that payment as a rollover into another retirement

 

 

HB5472- 13 -LRB100 16255 RPS 31378 b

1plan or account qualified under the Internal Revenue Code of
21986, as amended.
3    (e) The Board shall adopt any rules necessary to implement
4this Section.
5    (f) No provision of this Section shall be interpreted in a
6way that would cause the applicable System to cease to be a
7qualified plan under the Internal Revenue Code of 1986.
 
8    (40 ILCS 5/16-203)
9    Sec. 16-203. Application and expiration of new benefit
10increases.
11    (a) As used in this Section, "new benefit increase" means
12an increase in the amount of any benefit provided under this
13Article, or an expansion of the conditions of eligibility for
14any benefit under this Article, that results from an amendment
15to this Code that takes effect after June 1, 2005 (the
16effective date of Public Act 94-4). "New benefit increase",
17however, does not include any benefit increase resulting from
18the changes made to Article 1 or this Article by Public Act
1995-910, Public Act 100-23, or this amendatory Act of the 100th
20General Assembly or this amendatory Act of the 100th General
21Assembly.
22    (b) Notwithstanding any other provision of this Code or any
23subsequent amendment to this Code, every new benefit increase
24is subject to this Section and shall be deemed to be granted
25only in conformance with and contingent upon compliance with

 

 

HB5472- 14 -LRB100 16255 RPS 31378 b

1the provisions of this Section.
2    (c) The Public Act enacting a new benefit increase must
3identify and provide for payment to the System of additional
4funding at least sufficient to fund the resulting annual
5increase in cost to the System as it accrues.
6    Every new benefit increase is contingent upon the General
7Assembly providing the additional funding required under this
8subsection. The Commission on Government Forecasting and
9Accountability shall analyze whether adequate additional
10funding has been provided for the new benefit increase and
11shall report its analysis to the Public Pension Division of the
12Department of Insurance. A new benefit increase created by a
13Public Act that does not include the additional funding
14required under this subsection is null and void. If the Public
15Pension Division determines that the additional funding
16provided for a new benefit increase under this subsection is or
17has become inadequate, it may so certify to the Governor and
18the State Comptroller and, in the absence of corrective action
19by the General Assembly, the new benefit increase shall expire
20at the end of the fiscal year in which the certification is
21made.
22    (d) Every new benefit increase shall expire 5 years after
23its effective date or on such earlier date as may be specified
24in the language enacting the new benefit increase or provided
25under subsection (c). This does not prevent the General
26Assembly from extending or re-creating a new benefit increase

 

 

HB5472- 15 -LRB100 16255 RPS 31378 b

1by law.
2    (e) Except as otherwise provided in the language creating
3the new benefit increase, a new benefit increase that expires
4under this Section continues to apply to persons who applied
5and qualified for the affected benefit while the new benefit
6increase was in effect and to the affected beneficiaries and
7alternate payees of such persons, but does not apply to any
8other person, including without limitation a person who
9continues in service after the expiration date and did not
10apply and qualify for the affected benefit while the new
11benefit increase was in effect.
12(Source: P.A. 100-23, eff. 7-6-17.)
 
13    (40 ILCS 5/14-103.40 rep.)
14    (40 ILCS 5/16-106.4 rep.)
15    Section 10. The Illinois Pension Code is amended by
16repealing Sections 14-103.40 and 16-106.4.
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.

 

 

HB5472- 16 -LRB100 16255 RPS 31378 b

1 INDEX
2 Statutes amended in order of appearance
3    40 ILCS 5/14-103.41 new
4    40 ILCS 5/14-147.5 new
5    40 ILCS 5/14-152.1
6    40 ILCS 5/15-185.5 new
7    40 ILCS 5/15-198
8    40 ILCS 5/16-106.41 new
9    40 ILCS 5/16-190.5 new
10    40 ILCS 5/16-203
11    40 ILCS 5/14-103.40 rep.
12    40 ILCS 5/16-106.4 rep.