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90_SB1848 40 ILCS 5/7-141.1 30 ILCS 805/8.22 new Amends the IMRF Article of the Pension Code. Provides that an annuitant who is receiving early retirement incentives may work under a personal services contract for a municipality with a population of 5000 or less, with the approval of the municipality's governing body. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately. LRB9011454EGfgA LRB9011454EGfgA 1 AN ACT to amend the Illinois Pension Code by changing 2 Section 7-141.1 and to amend the State Mandates Act. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The Illinois Pension Code is amended by 6 changing Section 7-141.1 as follows: 7 (40 ILCS 5/7-141.1) 8 Sec. 7-141.1. Early retirement incentive. 9 (a) The General Assembly finds and declares that: 10 (1) Units of local government across the State have 11 been functioning under a financial crisis. 12 (2) This financial crisis is expected to continue. 13 (3) Units of local government must depend on 14 additional sources of revenue and, when those sources are 15 not forthcoming, must establish cost-saving programs. 16 (4) An early retirement incentive designed 17 specifically to target highly-paid senior employees could 18 result in significant annual cost savings. 19 (5) The early retirement incentive should be made 20 available only to those units of local government that 21 determine that an early retirement incentive is in their 22 best interest. 23 (6) A unit of local government adopting a program 24 of early retirement incentives under this Section is 25 encouraged to implement personnel procedures to prohibit, 26 for at least 5 years, the rehiring (whether on payroll or 27 by independent contract) of employees who receive early 28 retirement incentives. 29 (7) A unit of local government adopting a program 30 of early retirement incentives under this Section is also 31 encouraged to replace as few of the participating -2- LRB9011454EGfgA 1 employees as possible and to hire replacement employees 2 for salaries totaling no more than 80% of the total 3 salaries formerly paid to the employees who participate 4 in the early retirement program. 5 It is the primary purpose of this Section to encourage 6 units of local government that can realize true cost savings, 7 or have determined that an early retirement program is in 8 their best interest, to implement an early retirement 9 program. 10 (b) Until the effective date of this amendatory Act of 11 1997, this Section does not apply to any employer that is a 12 city, village, or incorporated town, nor to the employees of 13 any such employer. Beginning on the effective date of this 14 amendatory Act of 1997, any employer under this Article, 15 including an employer that is a city, village, or 16 incorporated town, may establish an early retirement 17 incentive program for its employees under this Section. The 18 decision of a city, village, or incorporated town to consider 19 or establish an early retirement program is at the sole 20 discretion of that city, village, or incorporated town, and 21 nothing in this amendatory Act of 1997 limits or otherwise 22 diminishes this discretion. Nothing contained in this 23 Section shall be construed to require a city, village, or 24 incorporated town to establish an early retirement program 25 and no city, village, or incorporated town may be compelled 26 to implement such a program. 27 The benefits provided in this Section are available only 28 to members employed by a participating employer that has 29 filed with the Board of the Fund a resolution or ordinance 30 expressly providing for the creation of an early retirement 31 incentive program under this Section for its employees and 32 specifying the effective date of the early retirement 33 incentive program. Subject to the limitation in subsection 34 (h), an employer may adopt a resolution or ordinance -3- LRB9011454EGfgA 1 providing a program of early retirement incentives under this 2 Section at any time. 3 The resolution or ordinance shall be in substantially the 4 following form: 5 RESOLUTION (ORDINANCE) NO. .... 6 A RESOLUTION (ORDINANCE) ADOPTING AN EARLY 7 RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES 8 IN THE ILLINOIS MUNICIPAL RETIREMENT FUND 9 WHEREAS, Section 7-141.1 of the Illinois Pension Code 10 provides that a participating employer may elect to adopt an 11 early retirement incentive program offered by the Illinois 12 Municipal Retirement Fund by adopting a resolution or 13 ordinance; and 14 WHEREAS, The goal of adopting an early retirement program 15 is to realize a substantial savings in personnel costs by 16 offering early retirement incentives to employees who have 17 accumulated many years of service credit; and 18 WHEREAS, Implementation of the early retirement program 19 will provide a budgeting tool to aid in controlling payroll 20 costs; and 21 WHEREAS, The (name of governing body) has determined that 22 the adoption of an early retirement incentive program is in 23 the best interests of the (name of participating employer); 24 therefore be it 25 RESOLVED (ORDAINED) by the (name of governing body) of 26 (name of participating employer) that: 27 (1) The (name of participating employer) does hereby 28 adopt the Illinois Municipal Retirement Fund early retirement 29 incentive program as provided in Section 7-141.1 of the 30 Illinois Pension Code. The early retirement incentive 31 program shall take effect on (date). 32 (2) In order to help achieve a true cost savings, a 33 person who retires under the early retirement incentive 34 program shall lose those incentives if he or she later -4- LRB9011454EGfgA 1 accepts employment with any IMRF employer in a position for 2 which participation in IMRF is required or is elected by the 3 employee. 4 (3) In order to utilize an early retirement incentive as 5 a budgeting tool, the (name of participating employer) will 6 use its best efforts either to limit the number of employees 7 who replace the employees who retire under the early 8 retirement program or to limit the salaries paid to the 9 employees who replace the employees who retire under the 10 early retirement program. 11 (4) The effective date of each employee's retirement 12 under this early retirement program shall be set by (name of 13 employer) and shall be no earlier than the effective date of 14 the program and no later than one year after that effective 15 date; except that the employee may require that the 16 retirement date set by the employer be no later than the June 17 30 next occurring after the effective date of the program and 18 no earlier than the date upon which the employee qualifies 19 for retirement. 20 (5) To be eligible for the early retirement incentive 21 under this Section, the employee must have attained age 50 22 and have at least 20 years of creditable service by his or 23 her retirement date. 24 (6) The (clerk or secretary) shall promptly file a 25 certified copy of this resolution (ordinance) with the Board 26 of Trustees of the Illinois Municipal Retirement Fund. 27 CERTIFICATION 28 I, (name), the (clerk or secretary) of the (name of 29 participating employer) of the County of (name), State of 30 Illinois, do hereby certify that I am the keeper of the books 31 and records of the (name of employer) and that the foregoing 32 is a true and correct copy of a resolution (ordinance) duly 33 adopted by the (governing body) at a meeting duly convened 34 and held on (date). -5- LRB9011454EGfgA 1 SEAL 2 (Signature of clerk or secretary) 3 (c) To be eligible for the benefits provided under an 4 early retirement incentive program adopted under this 5 Section, a member must: 6 (1) be a participating employee of this Fund who, 7 on the effective date of the program, (i) is in active 8 payroll status as an employee of a participating employer 9 that has filed the required ordinance or resolution with 10 the Board, (ii) is on layoff status from such a position 11 with a right of re-employment or recall to service, (iii) 12 is on a leave of absence from such a position, or (iv) is 13 on disability but has not been receiving benefits under 14 Section 7-146 or 7-150 for a period of more than 2 years 15 from the date of application; 16 (2) have never previously received a retirement 17 annuity under this Article or under the Retirement 18 Systems Reciprocal Act using service credit established 19 under this Article; 20 (3) file with the Board within 60 days of the 21 effective date of the program an application requesting 22 the benefits provided in this Section; 23 (4) have at least 20 years of creditable service in 24 the Fund by the date of retirement, without the use of 25 any creditable service established under this Section; 26 (5) have attained age 50 by the date of retirement, 27 without the use of any age enhancement received under 28 this Section; and 29 (6) be eligible to receive a retirement annuity 30 under this Article by the date of retirement, for which 31 purpose the age enhancement and creditable service 32 established under this Section may be considered. 33 (d) The employer shall determine the retirement date for 34 each employee participating in the early retirement program -6- LRB9011454EGfgA 1 adopted under this Section. The retirement date shall be no 2 earlier than the effective date of the program and no later 3 than one year after that effective date, except that the 4 employee may require that the retirement date set by the 5 employer be no later than the June 30 next occurring after 6 the effective date of the program and no earlier than the 7 date upon which the employee qualifies for retirement. The 8 employer shall give each employee participating in the early 9 retirement program at least 30 days written notice of the 10 employee's designated retirement date, unless the employee 11 waives this notice requirement. 12 (e) An eligible person may establish up to 5 years of 13 creditable service under this Section. In addition, for each 14 period of creditable service established under this Section, 15 a person shall have his or her age at retirement deemed 16 enhanced by an equivalent period. 17 The creditable service established under this Section may 18 be used for all purposes under this Article and the 19 Retirement Systems Reciprocal Act, except for the computation 20 of final rate of earnings and the determination of earnings, 21 salary, or compensation under this or any other Article of 22 the Code. 23 The age enhancement established under this Section may be 24 used for all purposes under this Article (including 25 calculation of the reduction imposed under subdivision 26 (a)1b(iv) of Section 7-142), except for purposes of a 27 reversionary annuity under Section 7-145 and any 28 distributions required because of age. The age enhancement 29 established under this Section may be used in calculating a 30 proportionate annuity payable by this Fund under the 31 Retirement Systems Reciprocal Act, but shall not be used in 32 determining benefits payable under other Articles of this 33 Code under the Retirement Systems Reciprocal Act. 34 (f) For all creditable service established under this -7- LRB9011454EGfgA 1 Section, the member must pay to the Fund an employee 2 contribution consisting of 4.5% of the member's highest 3 annual salary rate used in the determination of the final 4 rate of earnings for retirement annuity purposes for each 5 year of creditable service granted under this Section. For 6 creditable service established under this Section by a person 7 who is a sheriff's law enforcement employee to be deemed 8 service as a sheriff's law enforcement employee, the employee 9 contribution shall be at the rate of 6.5% of highest annual 10 salary per year of creditable service granted. Contributions 11 for fractions of a year of service shall be prorated. Any 12 amounts that are disregarded in determining the final rate of 13 earnings under subdivision (d)(5) of Section 7-116 (the 125% 14 rule) shall also be disregarded in determining the required 15 contribution under this subsection (f). 16 The employee contribution shall be paid to the Fund as 17 follows: If the member is entitled to a lump sum payment for 18 accumulated vacation, sick leave, or personal leave upon 19 withdrawal from service, the employer shall deduct the 20 employee contribution from that lump sum and pay the deducted 21 amount directly to the Fund. If there is no such lump sum 22 payment or the required employee contribution exceeds the net 23 amount of the lump sum payment, then the remaining amount 24 due, at the option of the employee, may either be paid to the 25 Fund before the annuity commences or deducted from the 26 retirement annuity in 24 equal monthly installments. 27 (g) Except as provided in subsection (g-1), an annuitant 28 who has received any age enhancement or creditable service 29 under this Section and thereafter accepts employment with or 30 enters into a personal services contract with an employer 31 under this Article thereby forfeits that age enhancement and 32 creditable service. 33 A person forfeiting early retirement incentives under 34 this subsection (i) must repay to the Fund that portion of -8- LRB9011454EGfgA 1 the retirement annuity already received which is attributable 2 to the early retirement incentives that are being forfeited, 3 (ii) shall not be eligible to participate in any future early 4 retirement program adopted under this Section, and (iii) is 5 entitled to a refund of the employee contribution paid under 6 subsection (f). The Board shall deduct the required 7 repayment from the refund and may impose a reasonable payment 8 schedule for repaying the amount, if any, by which the 9 required repayment exceeds the refund amount. 10 (g-1) An annuitant who is receiving early retirement 11 incentives under this Section may work as an independent 12 contractor under a personal services contract with a 13 municipality having a population of 5,000 or less, provided 14 that (1) the contract has been approved by the governing body 15 of the municipality after disclosure of the early retirement 16 status of the annuitant, (2) the contract calls for the 17 annuitant to provide no more than 600 hours of personal 18 services per year (or no more than 1000 hours if the employer 19 has adopted the 1000 hour standard under subsection (e) of 20 Section 7-137), and (3) the annuitant does not participate in 21 the Fund with respect to that work while receiving early 22 retirement incentives under this Section. 23 In order to qualify under this subsection, the annuitant 24 must file with the Fund before beginning work under the 25 contract a copy of the ordinance, resolution, or other 26 document establishing the approval of the governing body of 27 the municipality. 28 (h) The additional unfunded liability accruing as a 29 result of the adoption of a program of early retirement 30 incentives under this Section by an employer shall be 31 amortized over a period of 10 years beginning on January 1 of 32 the second calendar year following the calendar year in which 33 the latest date for beginning to receive a retirement annuity 34 under the program (as determined by the employer under -9- LRB9011454EGfgA 1 subsection (d) of this Section) occurs; except that the 2 employer may provide for a shorter amortization period (of no 3 less than 5 years) by adopting an ordinance or resolution 4 specifying the length of the amortization period and 5 submitting a certified copy of the ordinance or resolution to 6 the Fund no later than 6 months after the effective date of 7 the program. An employer, at its discretion, may accelerate 8 payments to the Fund. 9 An employer may provide more than one early retirement 10 incentive program for its employees under this Section. 11 However, an employer that has provided an early retirement 12 incentive program for its employees under this Section may 13 not provide another early retirement incentive program under 14 this Section until the liability arising from the earlier 15 program has been fully paid to the Fund. 16 (Source: P.A. 89-329, eff. 8-17-95; 90-32, eff. 6-27-97.) 17 Section 90. The State Mandates Act is amended by adding 18 Section 8.22 as follows: 19 (30 ILCS 805/8.22 new) 20 Sec. 8.22. Exempt mandate. Notwithstanding Sections 6 21 and 8 of this Act, no reimbursement by the State is required 22 for the implementation of any mandate created by this 23 amendatory Act of 1998. 24 Section 99. Effective date. This Act takes effect upon 25 becoming law.
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