97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB1902

 

Introduced 2/10/2011, by Sen. Dale E. Risinger

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/3-110  from Ch. 108 1/2, par. 3-110
30 ILCS 805/8.35 new

    Amends the Downstate Police Article of the Illinois Pension Code. Provides that if, as a result of the publication of the 2010 federal census data, a city, village, or incorporated town is first recognized as having a population of 5,000 or more inhabitants and is, therefore, required to create a downstate police pension fund, then an employee of such a city, village, or town who transfers credit from an IMRF fund to that fund shall pay the true cost of establishing service credit in that fund. Specifies that if the board of trustees of the applicable downstate police fund determines that the amount transferred is less than the true cost to the pension fund of allowing service credit to be transferred, then the amount of creditable service the police officer may establish shall be reduced by an amount equal to the difference between those 2 amounts, as determined by the board. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


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

 

 

A BILL FOR

 

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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
5Section 3-110 as follows:
 
6    (40 ILCS 5/3-110)  (from Ch. 108 1/2, par. 3-110)
7    Sec. 3-110. Creditable service.
8    (a) "Creditable service" is the time served by a police
9officer as a member of a regularly constituted police force of
10a municipality. In computing creditable service furloughs
11without pay exceeding 30 days shall not be counted, but all
12leaves of absence for illness or accident, regardless of
13length, and all periods of disability retirement for which a
14police officer has received no disability pension payments
15under this Article shall be counted.
16    (a-5) Up to 3 years of time during which the police officer
17receives a disability pension under Section 3-114.1, 3-114.2,
183-114.3, or 3-114.6 shall be counted as creditable service,
19provided that (i) the police officer returns to active service
20after the disability for a period at least equal to the period
21for which credit is to be established and (ii) the police
22officer makes contributions to the fund based on the rates
23specified in Section 3-125.1 and the salary upon which the

 

 

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1disability pension is based. These contributions may be paid at
2any time prior to the commencement of a retirement pension. The
3police officer may, but need not, elect to have the
4contributions deducted from the disability pension or to pay
5them in installments on a schedule approved by the board. If
6not deducted from the disability pension, the contributions
7shall include interest at the rate of 6% per year, compounded
8annually, from the date for which service credit is being
9established to the date of payment. If contributions are paid
10under this subsection (a-5) in excess of those needed to
11establish the credit, the excess shall be refunded. This
12subsection (a-5) applies to persons receiving a disability
13pension under Section 3-114.1, 3-114.2, 3-114.3, or 3-114.6 on
14the effective date of this amendatory Act of the 91st General
15Assembly, as well as persons who begin to receive such a
16disability pension after that date.
17    (b) Creditable service includes all periods of service in
18the military, naval or air forces of the United States entered
19upon while an active police officer of a municipality, provided
20that upon applying for a permanent pension, and in accordance
21with the rules of the board, the police officer pays into the
22fund the amount the officer would have contributed if he or she
23had been a regular contributor during such period, to the
24extent that the municipality which the police officer served
25has not made such contributions in the officer's behalf. The
26total amount of such creditable service shall not exceed 5

 

 

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1years, except that any police officer who on July 1, 1973 had
2more than 5 years of such creditable service shall receive the
3total amount thereof.
4    (b-5) Creditable service includes all periods of service in
5the military, naval, or air forces of the United States entered
6upon before beginning service as an active police officer of a
7municipality, provided that, in accordance with the rules of
8the board, the police officer pays into the fund the amount the
9police officer would have contributed if he or she had been a
10regular contributor during such period, plus an amount
11determined by the Board to be equal to the municipality's
12normal cost of the benefit, plus interest at the actuarially
13assumed rate calculated from the date the employee last became
14a police officer under this Article. The total amount of such
15creditable service shall not exceed 2 years.
16    (c) Creditable service also includes service rendered by a
17police officer while on leave of absence from a police
18department to serve as an executive of an organization whose
19membership consists of members of a police department, subject
20to the following conditions: (i) the police officer is a
21participant of a fund established under this Article with at
22least 10 years of service as a police officer; (ii) the police
23officer received no credit for such service under any other
24retirement system, pension fund, or annuity and benefit fund
25included in this Code; (iii) pursuant to the rules of the board
26the police officer pays to the fund the amount he or she would

 

 

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1have contributed had the officer been an active member of the
2police department; and (iv) the organization pays a
3contribution equal to the municipality's normal cost for that
4period of service.
5        (d)(1) Creditable service also includes periods of
6    service originally established in another police pension
7    fund under this Article or in the Fund established under
8    Article 7 of this Code for which (i) the contributions have
9    been transferred under Section 3-110.7 or Section 7-139.9
10    and (ii) any additional contribution required under
11    paragraph (2) of this subsection has been paid in full in
12    accordance with the requirements of this subsection (d).
13        (2) If the board of the pension fund to which
14    creditable service and related contributions are
15    transferred under Section 7-139.9 determines that the
16    amount transferred is less than the true cost to the
17    pension fund of allowing that creditable service to be
18    established, then in order to establish that creditable
19    service the police officer must pay to the pension fund,
20    within the payment period specified in paragraph (3) of
21    this subsection, an additional contribution equal to the
22    difference, as determined by the board in accordance with
23    the rules and procedures adopted under paragraph (6) of
24    this subsection. If the board of the pension fund to which
25    creditable service and related contributions are
26    transferred under Section 3-110.7 determines that the

 

 

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1    amount transferred is less than the true cost to the
2    pension fund of allowing that creditable service to be
3    established, then the police officer may elect (A) to
4    establish that creditable service by paying to the pension
5    fund, within the payment period specified in paragraph (3)
6    of this subsection (d), an additional contribution equal to
7    the difference, as determined by the board in accordance
8    with the rules and procedures adopted under paragraph (6)
9    of this subsection (d) or (B) to have his or her creditable
10    service reduced by an amount equal to the difference
11    between the amount transferred under Section 3-110.7 and
12    the true cost to the pension fund of allowing that
13    creditable service to be established, as determined by the
14    board in accordance with the rules and procedures adopted
15    under paragraph (6) of this subsection (d).
16        (2.5) If, as a result of the publication of the 2010
17    federal census data, a city, village, or incorporated town
18    is first recognized as having a population of 5,000 or more
19    inhabitants and is, therefore, required to create a fund
20    under this Article, then an employee of such a city,
21    village, or town who transfers credit from an Article 7
22    fund to a fund created under this Article shall pay the
23    true cost of establishing service credit in the fund
24    created under this Article. If the board determines that
25    the amount transferred is less than the true cost to the
26    pension fund of allowing service credit to be transferred,

 

 

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1    then the amount of creditable service the police officer
2    may establish shall be reduced by an amount equal to the
3    difference between those 2 amounts, as determined by the
4    board in accordance with the rules and procedures adopted
5    under paragraph (6) of this subsection (d).
6        (3) Except as provided in paragraph (4), the additional
7    contribution that is required or elected under paragraph
8    (2) of this subsection (d) must be paid to the board (i)
9    within 5 years from the date of the transfer of
10    contributions under Section 3-110.7 or 7-139.9 and (ii)
11    before the police officer terminates service with the fund.
12    The additional contribution may be paid in a lump sum or in
13    accordance with a schedule of installment payments
14    authorized by the board.
15        (4) If the police officer dies in service before
16    payment in full has been made and before the expiration of
17    the 5-year payment period, the surviving spouse of the
18    officer may elect to pay the unpaid amount on the officer's
19    behalf within 6 months after the date of death, in which
20    case the creditable service shall be granted as though the
21    deceased police officer had paid the remaining balance on
22    the day before the date of death.
23        (5) If the additional contribution that is required or
24    elected under paragraph (2) of this subsection (d) is not
25    paid in full within the required time, the creditable
26    service shall not be granted and the police officer (or the

 

 

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1    officer's surviving spouse or estate) shall be entitled to
2    receive a refund of (i) any partial payment of the
3    additional contribution that has been made by the police
4    officer and (ii) those portions of the amounts transferred
5    under subdivision (a)(1) of Section 3-110.7 or
6    subdivisions (a)(1) and (a)(3) of Section 7-139.9 that
7    represent employee contributions paid by the police
8    officer (but not the accumulated interest on those
9    contributions) and interest paid by the police officer to
10    the prior pension fund in order to reinstate service
11    terminated by acceptance of a refund.
12        At the time of paying a refund under this item (5), the
13    pension fund shall also repay to the pension fund from
14    which the contributions were transferred under Section
15    3-110.7 or 7-139.9 the amount originally transferred under
16    subdivision (a)(2) of that Section, plus interest at the
17    rate of 6% per year, compounded annually, from the date of
18    the original transfer to the date of repayment. Amounts
19    repaid to the Article 7 fund under this provision shall be
20    credited to the appropriate municipality.
21        Transferred credit that is not granted due to failure
22    to pay the additional contribution within the required time
23    is lost; it may not be transferred to another pension fund
24    and may not be reinstated in the pension fund from which it
25    was transferred.
26        (6) The Public Employee Pension Fund Division of the

 

 

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1    Department of Insurance shall establish by rule the manner
2    of making the calculation required under paragraph (2) of
3    this subsection, taking into account the appropriate
4    actuarial assumptions; the police officer's service, age,
5    and salary history; the level of funding of the pension
6    fund to which the credits are being transferred; and any
7    other factors that the Division determines to be relevant.
8    The rules may require that all calculations made under
9    paragraph (2) be reported to the Division by the board
10    performing the calculation, together with documentation of
11    the creditable service to be transferred, the amounts of
12    contributions and interest to be transferred, the manner in
13    which the calculation was performed, the numbers relied
14    upon in making the calculation, the results of the
15    calculation, and any other information the Division may
16    deem useful.
17        (e)(1) Creditable service also includes periods of
18    service originally established in the Fund established
19    under Article 7 of this Code for which the contributions
20    have been transferred under Section 7-139.11.
21        (2) If the board of the pension fund to which
22    creditable service and related contributions are
23    transferred under Section 7-139.11 determines that the
24    amount transferred is less than the true cost to the
25    pension fund of allowing that creditable service to be
26    established, then the amount of creditable service the

 

 

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1    police officer may establish under this subsection (e)
2    shall be reduced by an amount equal to the difference, as
3    determined by the board in accordance with the rules and
4    procedures adopted under paragraph (3) of this subsection.
5        (3) The Public Pension Division of the Department of
6    Financial and Professional Regulation shall establish by
7    rule the manner of making the calculation required under
8    paragraph (2) of this subsection, taking into account the
9    appropriate actuarial assumptions; the police officer's
10    service, age, and salary history; the level of funding of
11    the pension fund to which the credits are being
12    transferred; and any other factors that the Division
13    determines to be relevant. The rules may require that all
14    calculations made under paragraph (2) be reported to the
15    Division by the board performing the calculation, together
16    with documentation of the creditable service to be
17    transferred, the amounts of contributions and interest to
18    be transferred, the manner in which the calculation was
19    performed, the numbers relied upon in making the
20    calculation, the results of the calculation, and any other
21    information the Division may deem useful.
22        (4) Until January 1, 2010, a police officer who
23    transferred service from the Fund established under
24    Article 7 of this Code under the provisions of Public Act
25    94-356 may establish additional credit, but only for the
26    amount of the service credit reduction in that transfer, as

 

 

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1    calculated under paragraph (3) of this subsection (e). This
2    credit may be established upon payment by the police
3    officer of an amount to be determined by the board, equal
4    to (1) the amount that would have been contributed as
5    employee and employer contributions had all of the service
6    been as an employee under this Article, plus interest
7    thereon at the rate of 6% per year, compounded annually
8    from the date of service to the date of transfer, less (2)
9    the total amount transferred from the Article 7 Fund, plus
10    (3) interest on the difference at the rate of 6% per year,
11    compounded annually, from the date of the transfer to the
12    date of payment. The additional service credit is allowed
13    under this amendatory Act of the 95th General Assembly
14    notwithstanding the provisions of Article 7 terminating
15    all transferred credits on the date of transfer.
16(Source: P.A. 95-812, eff. 8-13-08; 96-297, eff. 8-11-09;
1796-1260, eff. 7-23-10.)
 
18    Section 90. The State Mandates Act is amended by adding
19Section 8.35 as follows:
 
20    (30 ILCS 805/8.35 new)
21    Sec. 8.35. Exempt mandate. Notwithstanding Sections 6 and 8
22of this Act, no reimbursement by the State is required for the
23implementation of any mandate created by this amendatory Act of
24the 97th General Assembly.
 

 

 

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1    Section 99. Effective date. This Act takes effect upon
2becoming law.