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91_HB2048 LRB9102888EGfg 1 AN ACT to amend the Illinois Pension Code by changing 2 Sections 7-137.1 and 7-141.1 and to amend the State Mandates 3 Act. 4 Be it enacted by the People of the State of Illinois, 5 represented in the General Assembly: 6 Section 5. The Illinois Pension Code is amended by 7 changing Sections 7-137.1 and 7-141.1 as follows: 8 (40 ILCS 5/7-137.1) (from Ch. 108 1/2, par. 7-137.1) 9 Sec. 7-137.1. Elected officials. 10 (a) A person holding an elective office who has elected 11 to participate in the Fund while in that office may revoke 12 that election and cease participating in the Fund by 13 notifying the Board in writing
before January 1, 1992. 14 Upon such revocation, the person shall forfeit all 15 creditable service earned while holding that office, and the 16 Board shall refund to the person, without interest, all 17 employee contributions paid for the forfeited creditable 18 service. The Board shall also refund or credit to the 19 employing municipality, without interest, the employer 20 contributions relating to the forfeited service, except those 21 for death and disability. 22 (b) Notwithstanding the provisions of Sections 7-141 and 23 7-144, beginning January 1, 1992, a person who holds an 24 elective office and has not elected to participate in the 25 Fund with respect to that office (or has revoked his election 26 to participate with respect to that office under subsection 27 (a) of this Section) shall not be disqualified from receiving 28 a retirement annuity by reason of holding such office, 29 provided that the annuity is not based on any credits 30 received for participating while holding that office. 31 (Source: P.A. 87-740.) -2- LRB9102888EGfg 1 (40 ILCS 5/7-141.1) 2 Sec. 7-141.1. Early retirement incentive. 3 (a) The General Assembly finds and declares that: 4 (1) Units of local government across the State have 5 been functioning under a financial crisis. 6 (2) This financial crisis is expected to continue. 7 (3) Units of local government must depend on 8 additional sources of revenue and, when those sources are 9 not forthcoming, must establish cost-saving programs. 10 (4) An early retirement incentive designed 11 specifically to target highly-paid senior employees could 12 result in significant annual cost savings. 13 (5) The early retirement incentive should be made 14 available only to those units of local government that 15 determine that an early retirement incentive is in their 16 best interest. 17 (6) A unit of local government adopting a program 18 of early retirement incentives under this Section is 19 encouraged to implement personnel procedures to prohibit, 20 for at least 5 years, the rehiring (whether on payroll or 21 by independent contract) of employees who receive early 22 retirement incentives. 23 (7) A unit of local government adopting a program 24 of early retirement incentives under this Section is also 25 encouraged to replace as few of the participating 26 employees as possible and to hire replacement employees 27 for salaries totaling no more than 80% of the total 28 salaries formerly paid to the employees who participate 29 in the early retirement program. 30 It is the primary purpose of this Section to encourage 31 units of local government that can realize true cost savings, 32 or have determined that an early retirement program is in 33 their best interest, to implement an early retirement 34 program. -3- LRB9102888EGfg 1 (b) Until the effective date of this amendatory Act of 2 1997, this Section does not apply to any employer that is a 3 city, village, or incorporated town, nor to the employees of 4 any such employer. Beginning on the effective date of this 5 amendatory Act of 1997, any employer under this Article, 6 including an employer that is a city, village, or 7 incorporated town, may establish an early retirement 8 incentive program for its employees under this Section. The 9 decision of a city, village, or incorporated town to consider 10 or establish an early retirement program is at the sole 11 discretion of that city, village, or incorporated town, and 12 nothing in this amendatory Act of 1997 limits or otherwise 13 diminishes this discretion. Nothing contained in this 14 Section shall be construed to require a city, village, or 15 incorporated town to establish an early retirement program 16 and no city, village, or incorporated town may be compelled 17 to implement such a program. 18 The benefits provided in this Section are available only 19 to members employed by a participating employer that has 20 filed with the Board of the Fund a resolution or ordinance 21 expressly providing for the creation of an early retirement 22 incentive program under this Section for its employees and 23 specifying the effective date of the early retirement 24 incentive program. Subject to the limitation in subsection 25 (h), an employer may adopt a resolution or ordinance 26 providing a program of early retirement incentives under this 27 Section at any time. 28 The resolution or ordinance shall be in substantially the 29 following form: 30 RESOLUTION (ORDINANCE) NO. .... 31 A RESOLUTION (ORDINANCE) ADOPTING AN EARLY 32 RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES 33 IN THE ILLINOIS MUNICIPAL RETIREMENT FUND 34 WHEREAS, Section 7-141.1 of the Illinois Pension Code -4- LRB9102888EGfg 1 provides that a participating employer may elect to adopt an 2 early retirement incentive program offered by the Illinois 3 Municipal Retirement Fund by adopting a resolution or 4 ordinance; and 5 WHEREAS, The goal of adopting an early retirement program 6 is to realize a substantial savings in personnel costs by 7 offering early retirement incentives to employees who have 8 accumulated many years of service credit; and 9 WHEREAS, Implementation of the early retirement program 10 will provide a budgeting tool to aid in controlling payroll 11 costs; and 12 WHEREAS, The (name of governing body) has determined that 13 the adoption of an early retirement incentive program is in 14 the best interests of the (name of participating employer); 15 therefore be it 16 RESOLVED (ORDAINED) by the (name of governing body) of 17 (name of participating employer) that: 18 (1) The (name of participating employer) does hereby 19 adopt the Illinois Municipal Retirement Fund early retirement 20 incentive program as provided in Section 7-141.1 of the 21 Illinois Pension Code. The early retirement incentive 22 program shall take effect on (date). 23 (2) In order to help achieve a true cost savings, a 24 person who retires under the early retirement incentive 25 program shall lose those incentives if he or she later 26 accepts employment with any IMRF employer in a position for 27 which participation in IMRF is required or is elected by the 28 employee. 29 (3) In order to utilize an early retirement incentive as 30 a budgeting tool, the (name of participating employer) will 31 use its best efforts either to limit the number of employees 32 who replace the employees who retire under the early 33 retirement program or to limit the salaries paid to the 34 employees who replace the employees who retire under the -5- LRB9102888EGfg 1 early retirement program. 2 (4) The effective date of each employee's retirement 3 under this early retirement program shall be set by (name of 4 employer) and shall be no earlier than the effective date of 5 the program and no later than one year after that effective 6 date; except that the employee may require that the 7 retirement date set by the employer be no later than the June 8 30 next occurring after the effective date of the program and 9 no earlier than the date upon which the employee qualifies 10 for retirement. 11 (5) To be eligible for the early retirement incentive 12 under this Section, the employee must have attained age 50 13 and have at least 20 years of creditable service by his or 14 her retirement date. 15 (6) The (clerk or secretary) shall promptly file a 16 certified copy of this resolution (ordinance) with the Board 17 of Trustees of the Illinois Municipal Retirement Fund. 18 CERTIFICATION 19 I, (name), the (clerk or secretary) of the (name of 20 participating employer) of the County of (name), State of 21 Illinois, do hereby certify that I am the keeper of the books 22 and records of the (name of employer) and that the foregoing 23 is a true and correct copy of a resolution (ordinance) duly 24 adopted by the (governing body) at a meeting duly convened 25 and held on (date). 26 SEAL 27 (Signature of clerk or secretary) 28 (c) To be eligible for the benefits provided under an 29 early retirement incentive program adopted under this 30 Section, a member must: 31 (1) be a participating employee of this Fund who, 32 on the effective date of the program, (i) is in active 33 payroll status as an employee of a participating employer 34 that has filed the required ordinance or resolution with -6- LRB9102888EGfg 1 the Board, (ii) is on layoff status from such a position 2 with a right of re-employment or recall to service, (iii) 3 is on a leave of absence from such a position, or (iv) is 4 on disability but has not been receiving benefits under 5 Section 7-146 or 7-150 for a period of more than 2 years 6 from the date of application; 7 (2) have never previously received a retirement 8 annuity under this Article or under the Retirement 9 Systems Reciprocal Act using service credit established 10 under this Article; 11 (3) file with the Board within 60 days of the 12 effective date of the program an application requesting 13 the benefits provided in this Section; 14 (4) have at least 20 years of creditable service in 15 the Fund by the date of retirement, without the use of 16 any creditable service established under this Section; 17 (5) have attained age 50 by the date of retirement, 18 without the use of any age enhancement received under 19 this Section; and 20 (6) be eligible to receive a retirement annuity 21 under this Article by the date of retirement, for which 22 purpose the age enhancement and creditable service 23 established under this Section may be considered. 24 (d) The employer shall determine the retirement date for 25 each employee participating in the early retirement program 26 adopted under this Section. The retirement date shall be no 27 earlier than the effective date of the program and no later 28 than one year after that effective date, except that the 29 employee may require that the retirement date set by the 30 employer be no later than the June 30 next occurring after 31 the effective date of the program and no earlier than the 32 date upon which the employee qualifies for retirement. The 33 employer shall give each employee participating in the early 34 retirement program at least 30 days written notice of the -7- LRB9102888EGfg 1 employee's designated retirement date, unless the employee 2 waives this notice requirement. 3 (e) An eligible person may establish up to 5 years of 4 creditable service under this Section. In addition, for each 5 period of creditable service established under this Section, 6 a person shall have his or her age at retirement deemed 7 enhanced by an equivalent period. 8 The creditable service established under this Section may 9 be used for all purposes under this Article and the 10 Retirement Systems Reciprocal Act, except for the computation 11 of final rate of earnings and the determination of earnings, 12 salary, or compensation under this or any other Article of 13 the Code. 14 The age enhancement established under this Section may be 15 used for all purposes under this Article (including 16 calculation of the reduction imposed under subdivision 17 (a)1b(iv) of Section 7-142), except for purposes of a 18 reversionary annuity under Section 7-145 and any 19 distributions required because of age. The age enhancement 20 established under this Section may be used in calculating a 21 proportionate annuity payable by this Fund under the 22 Retirement Systems Reciprocal Act, but shall not be used in 23 determining benefits payable under other Articles of this 24 Code under the Retirement Systems Reciprocal Act. 25 (f) For all creditable service established under this 26 Section, the member must pay to the Fund an employee 27 contribution consisting of 4.5% of the member's highest 28 annual salary rate used in the determination of the final 29 rate of earnings for retirement annuity purposes for each 30 year of creditable service granted under this Section. For 31 creditable service established under this Section by a person 32 who is a sheriff's law enforcement employee to be deemed 33 service as a sheriff's law enforcement employee, the employee 34 contribution shall be at the rate of 6.5% of highest annual -8- LRB9102888EGfg 1 salary per year of creditable service granted. Contributions 2 for fractions of a year of service shall be prorated. Any 3 amounts that are disregarded in determining the final rate of 4 earnings under subdivision (d)(5) of Section 7-116 (the 125% 5 rule) shall also be disregarded in determining the required 6 contribution under this subsection (f). 7 The employee contribution shall be paid to the Fund as 8 follows: If the member is entitled to a lump sum payment for 9 accumulated vacation, sick leave, or personal leave upon 10 withdrawal from service, the employer shall deduct the 11 employee contribution from that lump sum and pay the deducted 12 amount directly to the Fund. If there is no such lump sum 13 payment or the required employee contribution exceeds the net 14 amount of the lump sum payment, then the remaining amount 15 due, at the option of the employee, may either be paid to the 16 Fund before the annuity commences or deducted from the 17 retirement annuity in 24 equal monthly installments. 18 (g) An annuitant who has received any age enhancement or 19 creditable service under this Section and thereafter accepts 20 employment with or enters into a personal services contract 21 with an employer under this Article thereby forfeits that age 22 enhancement and creditable service; except that this 23 restriction does not apply to service in an elective office, 24 so long as the annuitant does not participate in this Fund 25 with respect to that office. A person forfeiting early 26 retirement incentives under this subsection (i) must repay to 27 the Fund that portion of the retirement annuity already 28 received which is attributable to the early retirement 29 incentives that are being forfeited, (ii) shall not be 30 eligible to participate in any future early retirement 31 program adopted under this Section, and (iii) is entitled to 32 a refund of the employee contribution paid under subsection 33 (f). The Board shall deduct the required repayment from the 34 refund and may impose a reasonable payment schedule for -9- LRB9102888EGfg 1 repaying the amount, if any, by which the required repayment 2 exceeds the refund amount. 3 (h) The additional unfunded liability accruing as a 4 result of the adoption of a program of early retirement 5 incentives under this Section by an employer shall be 6 amortized over a period of 10 years beginning on January 1 of 7 the second calendar year following the calendar year in which 8 the latest date for beginning to receive a retirement annuity 9 under the program (as determined by the employer under 10 subsection (d) of this Section) occurs; except that the 11 employer may provide for a shorter amortization period (of no 12 less than 5 years) by adopting an ordinance or resolution 13 specifying the length of the amortization period and 14 submitting a certified copy of the ordinance or resolution to 15 the Fund no later than 6 months after the effective date of 16 the program. An employer, at its discretion, may accelerate 17 payments to the Fund. 18 An employer may provide more than one early retirement 19 incentive program for its employees under this Section. 20 However, an employer that has provided an early retirement 21 incentive program for its employees under this Section may 22 not provide another early retirement incentive program under 23 this Section until the liability arising from the earlier 24 program has been fully paid to the Fund. 25 (Source: P.A. 89-329, eff. 8-17-95; 90-32, eff. 6-27-97.) 26 Section 90. The State Mandates Act is amended by adding 27 Section 8.23 as follows: 28 (30 ILCS 805/8.23 new) 29 Sec. 8.23. Exempt mandate. Notwithstanding Sections 6 30 and 8 of this Act, no reimbursement by the State is required 31 for the implementation of any mandate created by this 32 amendatory Act of the 91st General Assembly. -10- LRB9102888EGfg 1 Section 99. Effective date. This Act takes effect upon 2 becoming law.
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