93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
SB2979

 

Introduced 2/6/2004, by Lawrence M. Walsh

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-141   from Ch. 108 1/2, par. 7-141
40 ILCS 5/7-142   from Ch. 108 1/2, par. 7-142
40 ILCS 5/7-173   from Ch. 108 1/2, par. 7-173
40 ILCS 5/7-173.3 new
30 ILCS 805/8.28 new

    Amends the IMRF Article of the Illinois Pension Code. Increases the regular retirement formula to 1.96% of final earnings for the first 15 years of service and 2.28% of final earnings for each additional year of service, for service earned on or after July 1, 2004. For service before that date, authorizes augmentation of the old retirement formula by payment of a specified contribution. Increases the normal employee contribution rate by 1.5% of earnings. Allows a person to retire without penalty at any age which, when added to the number of years of creditable service, equals at least 85. Changes the way the early retirement penalty is calculated. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB093 20934 LRD 46912 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

SB2979 LRB093 20934 LRD 46912 b

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 changing
5 Sections 7-141, 7-142, and 7-173 and adding Section 7-173.3 as
6 follows:
 
7     (40 ILCS 5/7-141)  (from Ch. 108 1/2, par. 7-141)
8     Sec. 7-141. Retirement annuities - Conditions. Retirement
9 annuities shall be payable as hereinafter set forth:
10     (a) A participating employee who, regardless of cause, is
11 separated from the service of all participating municipalities
12 and instrumentalities thereof and participating
13 instrumentalities shall be entitled to a retirement annuity
14 provided:
15         1. He is at least age 55 or, beginning January 1, 2005,
16     any lesser age which, when added to the number of years of
17     his creditable service, equals at least 85, or in the case
18     of a person who is eligible to have his annuity calculated
19     under Section 7-142.1, he is at least age 50;
20         2. He is (i) an employee who was employed by any
21     participating municipality or participating
22     instrumentality which had not elected to exclude persons
23     employed in positions normally requiring performance of
24     duty for less than 1000 hours per year or was employed in a
25     position normally requiring performance of duty for 600
26     hours or more per year prior to such election by any
27     participating municipality or participating
28     instrumentality included in and subject to this Article on
29     or before the effective date of this amendatory Act of 1981
30     which made such election and is not entitled to receive
31     earnings for employment in a position normally requiring
32     performance of duty for 600 hours or more per year for any

 

 

SB2979 - 2 - LRB093 20934 LRD 46912 b

1     participating municipality and instrumentalities thereof
2     and participating instrumentality; or (ii) an employee who
3     was employed only by a participating municipality or
4     participating instrumentality, or participating
5     municipalities or participating instrumentalities, which
6     have elected to exclude persons in positions normally
7     requiring performance of duty for less than 1000 hours per
8     year after the effective date of such exclusion or which
9     are included under and subject to the Article after the
10     effective date of this amendatory Act of 1981 and elects to
11     exclude persons in such positions, and is not entitled to
12     receive earnings for employment in a position normally
13     requiring performance of duty for 1000 hours or more per
14     year by such a participating municipality or participating
15     instrumentality;
16         3. The amount of his annuity, before the application of
17     paragraph (b) of Section 7-142 is at least $10 per month;
18         4. If he first became a participating employee after
19     December 31, 1961, he has at least 8 years of service. This
20     service requirement shall not apply to any participating
21     employee, regardless of participation date, if the General
22     Assembly terminates the Fund.
23     (b) Retirement annuities shall be payable:
24         1. As provided in Section 7-119;
25         2. Except as provided in item 3, upon receipt by the
26     fund of a written application. The effective date may be
27     not more than one year prior to the date of the receipt by
28     the fund of the application;
29         3. Upon attainment of age 70 1/2 if the member (i) is
30     no longer in service, and (ii) is otherwise entitled to an
31     annuity under this Article;
32         4. To the beneficiary of the deceased annuitant for the
33     unpaid amount accrued to date of death, if any.
34 (Source: P.A. 91-887, eff. 7-6-00.)
 
35     (40 ILCS 5/7-142)  (from Ch. 108 1/2, par. 7-142)

 

 

SB2979 - 3 - LRB093 20934 LRD 46912 b

1     Sec. 7-142. Retirement annuities - Amount.
2     (a) The amount of a retirement annuity shall be the sum of
3 the following, determined in accordance with the actuarial
4 tables in effect at the time of the grant of the annuity:
5         1. For employees with 8 or more years of service, an
6     annuity computed pursuant to subparagraphs a or b of this
7     subparagraph 1, whichever is the higher, and for employees
8     with less than 8 years of service the annuity computed
9     pursuant to subparagraph a:
10             a. The monthly annuity which can be provided from
11         the total accumulated normal, municipality and prior
12         service credits, as of the attained age of the employee
13         on the date the annuity begins provided that such
14         annuity shall not exceed 75% of the final rate of
15         earnings of the employee.
16             b.(i) The monthly annuity amount determined as
17         follows:
18             (i) For unaugmented creditable service earned
19         before July 1, 2004, by multiplying (a) 1 2/3% for
20         annuitants with not more than 15 years or (b) 1 2/3% of
21         the employee's final rate of earnings for each of the
22         first 15 years of creditable service and 2% for each
23         year in excess of 15 years, with any remaining fraction
24         of a year for annuitants with more than 15 years by the
25         number of years plus fractional years, prorated on the
26         a basis of months of creditable service and multiply
27         the product thereof by the employee's final rate of
28         earnings.
29             For creditable service earned on or after July 1,
30         2004 and creditable service earned before that date
31         that has been augmented as provided in Section 7-173.3,
32         1.96% of the employee's final rate of earnings for each
33         of the first 15 years of creditable service, and 2.28%
34         for each year in excess of 15 years with any remaining
35         fraction of a year prorated on the basis of months.
36             (ii) For the sole purpose of computing the formula

 

 

SB2979 - 4 - LRB093 20934 LRD 46912 b

1         (and not for the purposes of the limitations
2         hereinafter stated) $125 shall be considered the final
3         rate of earnings in all cases where the final rate of
4         earnings is less than such amount.
5             (iii) The monthly annuity computed in accordance
6         with this subparagraph b, shall not exceed an amount
7         equal to 75% of the final rate of earnings.
8             (iv) For employees who have less than 35 years of
9         service and less than 85 years of combined age and
10         service, the annuity computed in accordance with this
11         subparagraph b (as reduced by application of
12         subparagraph (iii) above) shall be reduced by 0.25%
13         thereof (0.5% if service was terminated before January
14         1, 1988) for each month or fraction thereof (1) that
15         the employee's age is less than 60 years, or (2) if the
16         employee has at least 30 years of service credit, that
17         the employee's service credit is less than 35 years, or
18         (3) if the employee has at least 80 years of combined
19         age and service, that the employee's combined age and
20         service is less than 85 years whichever is least less,
21         on the date the annuity begins.
22         2. The annuity which can be provided from the total
23     accumulated additional credits as of the attained age of
24     the employee on the date the annuity begins.
25     (b) If payment of an annuity begins prior to the earliest
26 age at which the employee will become eligible for an old age
27 insurance benefit under the Federal Social Security Act, he may
28 elect that the annuity payments from this fund shall exceed
29 those payable after his attaining such age by an amount,
30 computed as determined by rules of the Board, but not in excess
31 of his estimated Social Security Benefit, determined as of the
32 effective date of the annuity, provided that in no case shall
33 the total annuity payments made by this fund exceed in
34 actuarial value the annuity which would have been payable had
35 no such election been made.
36     (c) The retirement annuity shall be increased each year by

 

 

SB2979 - 5 - LRB093 20934 LRD 46912 b

1 2%, not compounded, of the monthly amount of annuity, taking
2 into consideration any adjustment under paragraph (b) of this
3 Section. This increase shall be effective each January 1 and
4 computed from the effective date of the retirement annuity, the
5 first increase being .167% of the monthly amount times the
6 number of months from the effective date to January 1.
7 Beginning January 1, 1984 and thereafter, the retirement
8 annuity shall be increased by 3% each year, not compounded.
9 This increase shall not be applicable to annuitants who are not
10 in service on or after September 8, 1971.
11 (Source: P.A. 91-357, eff. 7-29-99.)
 
12     (40 ILCS 5/7-173)  (from Ch. 108 1/2, par. 7-173)
13     Sec. 7-173. Contributions by employees.
14     (a) Each participating employee shall make contributions
15 to the fund as follows:
16         1. For retirement annuity purposes, normal
17     contributions of 3 3/4% of earnings through June 30, 2004,
18     and 5.25% of earnings thereafter.
19         2. Additional contributions of such percentages of
20     each payment of earnings, as shall be elected by the
21     employee for retirement annuity purposes, but not in excess
22     of 10%. The selected rate shall be applicable to all
23     earnings beginning on the first day of the second month
24     following receipt by the Board of written notice of
25     election to make such contributions. Additional
26     contributions at the selected rate shall be made
27     concurrently with normal contributions.
28         3. Survivor contributions, by each participating
29     employee, of 3/4% of each payment of earnings.
30     (b) Each employee shall make contributions to the fund for
31 federal Social Security taxes, for periods during which he is a
32 covered employee, as required by the Social Security Enabling
33 Act. For participating employees, such contributions shall be
34 in addition to those required under paragraph (a) of this
35 Section.

 

 

SB2979 - 6 - LRB093 20934 LRD 46912 b

1     (c) Contributions shall be deducted from each
2 corresponding payment of earnings paid to each employee and
3 shall be remitted to the board by the participating
4 municipality or participating instrumentality making such
5 payment. The remittance, together with a report of the earnings
6 and contributions shall be made as directed by the board. For
7 township treasurers and employees of township treasurers
8 qualifying as employees hereunder, the contributions herein
9 required as deductions from salary shall be withheld by the
10 school township trustees from funds available for the payment
11 of the compensation of such treasurers and employees as
12 provided in the School Code and remitted to the board.
13     (d) An employee who has made additional contributions under
14 paragraph (a)2 of this Section may upon retirement or at any
15 time prior thereto, elect to withdraw the total of such
16 additional contributions including interest credited thereon
17 to the end of the preceding calendar year.
18     (e) Failure to make the deductions for employee
19 contributions provided in paragraph (c) of this Section shall
20 not relieve the employee from liability for such contributions.
21 The amount of such liability may be deducted, with interest
22 charged under Section 7-209, from any annuities or benefits
23 payable hereunder to the employee or any other person receiving
24 an annuity or benefit by reason of such employee's
25 participation.
26     (f) A participating employee who has at least 40 years of
27 creditable service in the Fund may elect to cease making the
28 contributions required under this Section. The status of the
29 employee under this Article shall be unaffected by this
30 election, except that the employee shall not receive any
31 additional creditable service for the periods of employment
32 following the election. An election under this subsection
33 relieves the employer from making additional employer
34 contributions in relation to that employee.
35 (Source: P.A. 87-1265.)
 

 

 

SB2979 - 7 - LRB093 20934 LRD 46912 b

1     (40 ILCS 5/7-173.3 new)
2     Sec. 7-173.3. Optional contribution for augmented
3 retirement formula.
4     (a) A member of the Fund may qualify for the augmented rate
5 under subdivision (a)1.b.(i) of Section 7-142 for all years of
6 creditable service earned before July 1, 2004 by making the
7 optional contribution specified in subsection (b) of this
8 Section. A member may not elect to qualify for the augmented
9 rate for only a portion of his or her creditable service earned
10 before July 1, 2004.
11     (b) The contribution shall be an amount equal to 0.5% of
12 the member's salary rate during the 12 consecutive months
13 immediately prior to but not including the year in which the
14 application occurs, multiplied by the number of years of
15 creditable service earned by the member before July 1, 2004.
16     The contribution required by this subsection shall be paid
17 in one of the following ways or in a combination of the
18 following ways that does not extend over more than 5 years:
19         (i) in a lump sum on or before the date of retirement;
20         (ii) in substantially equal installments over a period
21     of time not to exceed 5 years, as a deduction from salary;
22         (iii) if the member becomes an annuitant on or before
23     June 30, 2008, in substantially equal monthly installments
24     over a 24-month period, by reducing the annuitant's monthly
25     benefit over a 24-month period by the amount of the
26     otherwise applicable contribution. For federal and
27     Illinois tax purposes, the monthly amount by which the
28     annuitant's benefit is reduced shall not be treated as a
29     contribution by the annuitant, but rather as a reduction of
30     the annuitant's monthly benefit.
31     (c) If the member fails to make the full contribution under
32 this Section in a timely fashion, the payments made under this
33 Section shall be refunded to the member, without interest. If
34 the member dies before making the full contribution, the
35 payments made under this Section, together with regular
36 interest thereon, shall be refunded to the member's designated

 

 

SB2979 - 8 - LRB093 20934 LRD 46912 b

1 beneficiary.
2     (d) For purposes of this Section and the retirement formula
3 in Section 7-142, optional creditable service established by a
4 member shall be deemed to have been earned at the time of the
5 employment or other qualifying event upon which the service is
6 based, rather than at the time the credit was established in
7 this Fund.
8     (e) The contributions required under this Section are the
9 responsibility of the employee and not the employer. However,
10 an employer may specifically agree, through collective
11 bargaining or otherwise, to make the contributions required by
12 this Section on behalf of its employees.
 
13     Section 90. The State Mandates Act is amended by adding
14 Section 8.28 as follows:
 
15     (30 ILCS 805/8.28 new)
16     Sec. 8.28. Exempt mandate. Notwithstanding Sections 6 and 8
17 of this Act, no reimbursement by the State is required for the
18 implementation of any mandate created by this amendatory Act of
19 the 93rd General Assembly.
 
20     Section 99. Effective date. This Act takes effect upon
21 becoming law.