093_HB0403

 
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 1        AN ACT in relation to 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    adding  Sections  6-106.2  and  6-127.1 and changing Sections
 6    6-128 and 6-164 as follows:

 7        (40 ILCS 5/6-106.2 new)
 8        Sec.   6-106.2.    Deferred   Retirement   Option   Plan.
 9    "Deferred Retirement Option Plan" or "DROP  plan"  means  the
10    Deferred  Retirement  Option  Plan  established under Section
11    6-127.1.

12        (40 ILCS 5/6-127.1 new)
13        Sec. 6-127.1.  Deferred Retirement Option Plan.
14        (a)  The Deferred Retirement Option Plan created by  this
15    Section  shall  first become available to eligible firemen on
16    January 1, 2004.
17        (b)  To be eligible to participate in the  DROP  plan,  a
18    fireman must (i) be in active service, (ii) have attained age
19    50, and (iii) have at least 20 years of creditable service in
20    the  Fund.   A  fireman may participate in the DROP plan only
21    once.
22        (c)  An election to participate in the DROP plan must  be
23    made  within 3 years after becoming eligible under subsection
24    (b) or by January 1, 2007, whichever is later.  The election,
25    once made, is irrevocable.
26        The election to participate in the  DROP  plan  shall  be
27    made  in  writing  on  forms provided for that purpose by the
28    Board and shall be filed with  the  Board.   The  application
29    must  indicate  the date upon which participation in the DROP
30    plan is to begin, which shall be the first day of a  calendar
 
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 1    month  and  not less than 30 days nor more than 90 days after
 2    the date of filing the application.
 3        As a part of the application, the fireman must file  with
 4    the  Board and with his or her employer an irrevocable letter
 5    of resignation from employment,  effective  on  the  date  of
 6    termination  of  the fireman's participation in the DROP plan
 7    (unless  that  termination  results  from  acceptance  of   a
 8    disability benefit).
 9        (d)  A  fireman's  participation  in  the DROP plan shall
10    commence on the date specified in the application  and  shall
11    end  upon  (i)  termination  of  service,  (ii)  death of the
12    fireman, (iii) disability for which the  fireman  receives  a
13    benefit  under  Section  6-151,  6-151.1,  or  6-152, or (iv)
14    expiration  of  3  years  from   the   date   the   fireman's
15    participation in the DROP plan began, whichever occurs first.
16        (e)  A  fireman  who  is  participating  in the DROP plan
17    shall be considered an active fireman  for  the  purposes  of
18    this  Article,  including Section 6-174, but shall be subject
19    to the special conditions of the DROP plan.
20        A fireman shall continue to make the  contributions  that
21    are   required   for   active   firemen  during  his  or  her
22    participation in the DROP plan.  These contributions shall be
23    accumulated in  the  fireman's  DROP  account  and  shall  be
24    treated  as  being  "picked up" within the meaning of Section
25    6-165.1 of this Code and Section 414(h)(2)  of  the  Internal
26    Revenue Code of 1986, as amended.
27        A fireman who is participating in the DROP plan shall not
28    receive  service credit for the period of that participation,
29    and the salary earned during that period shall be disregarded
30    in calculating the fireman's benefits under this Article.
31        (f)  A fireman who participates  in  the  DROP  plan  may
32    terminate  service  at  any  time during participation in the
33    DROP plan.  A fireman who participates in the DROP plan  must
34    terminate  service  on  the  last day of participation in the
 
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 1    DROP plan, unless participation in the DROP plan is ended due
 2    to acceptance of a disability benefit.
 3        (g)  A fireman who is  participating  in  the  DROP  plan
 4    remains  eligible  to  apply  for  a disability benefit under
 5    Section 6-151, 6-151.1, or 6-152, but  participation  in  the
 6    DROP  plan  ceases upon acceptance of the disability benefit.
 7    If participation in the DROP plan is ended due to  acceptance
 8    of  a  disability  benefit, (1) the disabled fireman shall be
 9    credited with employee contributions and  creditable  service
10    for  the  period  of  participation in the DROP plan, (2) the
11    fireman's letter of resignation from service that is required
12    to be filed at the time of application to participate in  the
13    DROP  plan  is  void,  and  (3)  the  amounts in the disabled
14    fireman's DROP account are forfeited to the Fund.
15        (h)  The Fund shall maintain a separate DROP account  for
16    the  benefit of each fireman who becomes a participant in the
17    DROP plan.  The  Fund  shall  pay  into  the  fireman's  DROP
18    account:
19             (1)  for  each  month of the fireman's participation
20        in  the  DROP  plan,  an  amount  equal  to  the  monthly
21        retirement annuity  that  the  fireman  would  have  been
22        eligible to receive if the fireman had terminated service
23        and  taken  a  retirement  annuity on the date his or her
24        participation in  the  DROP  plan  began,  including  any
25        increases  in  annuity  for  which the fireman would have
26        been eligible under Section 6-164;
27             (2)  the employee contributions paid by the  fireman
28        during the period of participation in the DROP plan; and
29             (3)  interest on the balance in the DROP account, at
30        the  rate  of  7% per annum, paid and compounded monthly,
31        throughout the period of participation in the DROP  plan.
32        The  DROP  account  shall cease earning interest when the
33        fireman's participation in the DROP plan ends.
34        (i)  For a fireman  who  retires  at  the  conclusion  of
 
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 1    participation  in the DROP plan, calculation of the amount of
 2    the retirement annuity,  including  any  alternative  minimum
 3    annuity calculated under Section 6-128, shall be based on the
 4    fireman's  average  salary  and accumulated service as of the
 5    date he or she began participation in the DROP plan and shall
 6    include any annual increases that would  have  accrued  under
 7    Section 6-164 if the fireman had retired on that date.
 8        In  addition  to  the  retirement  annuity, a fireman who
 9    terminates service and retires at the conclusion  of  his  or
10    her  participation  in  the  DROP  plan  shall  receive, upon
11    retirement, a DROP  benefit  equal  to  the  balance  in  the
12    fireman's DROP account at the time of retirement.
13        At  the time of application for a retirement annuity, the
14    fireman shall elect to receive the DROP benefit in  the  form
15    of either a lump sum or an actuarially equivalent annuity for
16    life.   If  a  lump  sum payment is elected, it may be rolled
17    over  into  an  individual  retirement  account  (IRA)  or  a
18    qualified retirement plan.  A DROP  benefit  payable  in  the
19    form  of an annuity shall be in a fixed amount not subject to
20    annual or other increases.  A DROP benefit shall  be  treated
21    as  a  retirement  benefit  for the purposes of Section 1-119
22    (QILDROs).
23        (j)  If a fireman receiving a DROP benefit in the form of
24    an  annuity  re-enters  service,  the  DROP  benefit  annuity
25    payments shall be suspended until  the  fireman's  subsequent
26    retirement.
27        (k)  If  a  fireman  dies while participating in the DROP
28    plan, the DROP benefit shall be paid as a  lump  sum  to  the
29    surviving spouse or other survivor of the fireman entitled to
30    an  annuity  under  this  Article  or,  if  there  is no such
31    survivor, then to the deceased fireman's estate.
32        (l)  If a retired fireman dies  while  receiving  a  DROP
33    benefit  in  the  form  of  an  annuity, and the DROP account
34    balance at the time of retirement exceeds the total amount of
 
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 1    DROP benefit annuity payments received, the excess  shall  be
 2    refunded  to  the  surviving  spouse or other survivor of the
 3    fireman entitled to an annuity  under  this  Article  or,  if
 4    there  is  no  such  survivor, then to the deceased fireman's
 5    estate.

 6        (40 ILCS 5/6-128) (from Ch. 108 1/2, par. 6-128)
 7        Sec. 6-128. Alternative minimum  retirement  annuity  for
 8    future entrants.
 9        (a)  A  future entrant who withdraws on or after July 21,
10    1959, after completing at least 23 years of service, and  for
11    whom  the  annuity otherwise provided in this Article is less
12    than that stated in this Section,  has  a  right  to  receive
13    annuity as follows:
14        If  he is age 53 or more on withdrawal, his annuity after
15    withdrawal, shall be equal  to  50%  of  his  average  salary
16    determined  by  striking  an average of 4 consecutive highest
17    years  of  salary  within  the  last  10  years  of   service
18    immediately preceding the date of withdrawal.
19        An employee who reaches compulsory retirement age and who
20    has  less  than  23  years  of service shall be entitled to a
21    minimum annuity equal to an amount determined by the  product
22    of  (1) his years of service and (2) 2% of his average salary
23    for the 4 consecutive highest years of salary within the last
24    10  years  of  service  immediately  prior  to  his  reaching
25    compulsory retirement age.
26        An employee who remains in service after  qualifying  for
27    annuity  under  this section shall have added to this annuity
28    an additional 1% of salary for each completed year of service
29    or fraction thereof rendered until  July  21,  1959,  and  an
30    additional 1% for a total of 2% of salary from July 21, 1959.
31    Each  future  entrant  who  has completed 23 years of service
32    before reaching age 53 shall have added to this annuity 1% of
33    salary for each completed year of service or fraction thereof
 
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 1    in excess of 23 years up to age 53.  "Salary" as referred  to
 2    in  this paragraph shall be determined by striking an average
 3    of the 4 consecutive highest years of salary within the  last
 4    10 years of service immediately preceding withdrawal.
 5        (b)  In  lieu  of  the  annuity provided in the foregoing
 6    provisions of this Section any future entrant  who  withdraws
 7    from  the  service either (i) after December 31, 1983 with at
 8    least 22 years of service credit and having attained  age  52
 9    in the service, or (ii) after December 31, 1984 with at least
10    21  years of service credit and having attained age 51 in the
11    service, or (iii) after December 31, 1985 with  at  least  20
12    years  of  service  credit  and having attained age 50 in the
13    service, or (iv) after December 31, 1990  with  at  least  20
14    years  of  service regardless of age, may elect to receive an
15    annuity, to begin not earlier than upon attainment of age  50
16    if  under  that  age  at withdrawal, computed as follows:  an
17    annuity equal to 50% of the average salary for the 4  highest
18    consecutive  years  of  the  last  10  years of service, plus
19    additional annuity equal to 2% of  such  average  salary  for
20    each  completed  year of service or fraction thereof rendered
21    after his completion  of  the  minimum  number  of  years  of
22    service required for him to be eligible under this subsection
23    (b).  However, the annuity provided under this subsection (b)
24    may not exceed 75% of such average salary.
25        (c)  For  a  fireman  who  retires  at  the conclusion of
26    participation in the DROP plan, calculation of the amount  of
27    the  retirement  annuity,  including  any alternative minimum
28    annuity calculated under this Section, shall be based on  the
29    fireman's  average  salary  and accumulated service as of the
30    date he or she began participation in the DROP plan and shall
31    include any annual increases that would  have  accrued  under
32    Section 6-164 if the fireman had retired on that date.
33    (Source: P.A. 86-1488.)
 
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 1        (40 ILCS 5/6-164) (from Ch. 108 1/2, par. 6-164)
 2        Sec.  6-164.  Automatic annual increase; retirement after
 3    September 1, 1959.
 4        (a)  A fireman  qualifying  for  a  minimum  annuity  who
 5    retires  from  service  after  September  1, 1959 shall, upon
 6    either the first of the month following the first anniversary
 7    of his date of retirement if he is age 60  (age  55  if  born
 8    before  January 1, 1945) or over on that anniversary date, or
 9    upon the first of the month following his attainment  of  age
10    60  (age  55  if  born before January 1, 1945) if that occurs
11    after the first anniversary of his retirement date, have  his
12    then  fixed  and payable monthly annuity increased by 1 1/2%,
13    and  such  first  fixed  annuity  as  granted  at  retirement
14    increased by an additional 1 1/2% in  January  of  each  year
15    thereafter  up  to a maximum increase of 30%.  Beginning July
16    1,  1982  for  firemen  born  before  January  1,  1930,  and
17    beginning January 1, 1990 for firemen born after December 31,
18    1929 and before January 1, 1940,  and  beginning  January  1,
19    1996  for  firemen  born  after  December 31, 1939 but before
20    January 1, 1945, such increases shall be 3% and such  firemen
21    shall not be subject to the 30% maximum increase.
22        Any fireman born before January 1, 1945 who qualifies for
23    a minimum annuity and retires after September 1, 1967 but has
24    not  received  the  initial  increase  under  this subsection
25    before January 1, 1996 is entitled  to  receive  the  initial
26    increase  under  this  subsection on (1) January 1, 1996, (2)
27    the first anniversary of  the  date  of  retirement,  or  (3)
28    attainment  of age 55, whichever occurs last.  The changes to
29    this Section made  by  this  amendatory  Act  of  1995  apply
30    beginning January 1, 1996 and apply without regard to whether
31    the  fireman  or  annuitant  terminated  service  before  the
32    effective date of this amendatory Act of 1995.
33        For  the purpose of calculating eligibility for increases
34    under this Section, the date of retirement of a  fireman  who
 
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 1    retires  at  the conclusion of participation in the DROP plan
 2    shall be deemed to be the date he or she began  participation
 3    in the DROP plan.
 4        (b)  Subsection  (a) of this Section is not applicable to
 5    an employee receiving a term annuity.
 6        (c)  To  help  defray  the  cost  of  such  increases  in
 7    annuity, there shall  be  deducted,  beginning  September  1,
 8    1959,  from each payment of salary to a fireman, 1/8 of 1% of
 9    each  such  salary  payment  and  an  additional  1/8  of  1%
10    beginning on  September  1,  1961,  and  September  1,  1963,
11    respectively, concurrently with and in addition to the salary
12    deductions otherwise made for annuity purposes.
13        Each  such  additional  1/8  of  1% deduction from salary
14    which shall, on September 1, 1963, result in a total increase
15    of 3/8 of 1% of salary, shall be credited  to  the  Automatic
16    Increase   Reserve,   to   be   used,   together   with  city
17    contributions as provided in this Article, to defray the cost
18    of the 1  1/2%  annuity  increments  herein  specified.   Any
19    balance  in such reserve as of the beginning of each calendar
20    year shall be credited with interest at the rate  of  3%  per
21    annum.
22        The  salary  deductions  provided in this Section are not
23    subject to refund, except to the fireman himself, in any case
24    in which a  fireman  withdraws  prior  to  qualification  for
25    minimum  annuity  and  applies  for  refund,  or  applies for
26    annuity, and also where a term annuity  becomes  payable.  In
27    such  cases,  the  total  of  such salary deductions shall be
28    refunded to the fireman, without interest, and charged to the
29    aforementioned reserve.
30    (Source: P.A. 89-136, eff. 7-14-95.)

31        Section 90.  The State Mandates Act is amended by  adding
32    Section 8.27 as follows:
 
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 1        (30 ILCS 805/8.27 new)
 2        Sec.  8.27.  Exempt  mandate.  Notwithstanding Sections 6
 3    and 8 of this Act, no reimbursement by the State is  required
 4    for  the  implementation  of  any  mandate  created  by  this
 5    amendatory Act of the 93rd General Assembly.

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