103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3004

 

Introduced 2/16/2023, by Rep. Janet Yang Rohr

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/4-105e new
40 ILCS 5/4-109  from Ch. 108 1/2, par. 4-109
40 ILCS 5/4-109.1  from Ch. 108 1/2, par. 4-109.1
40 ILCS 5/4-109.4 new
30 ILCS 805/8.47 new

    Amends the Downstate Firefighter Article of the Pension Code. Provides for a Deferred Retirement Option Plan, under which a firefighter who is at least age 50 with 20 years of service may continue in active service for up to 3 years while having his or her retirement pension paid into a special account, to be distributed to the firefighter upon retirement. Bases the retirement pension on the firefighter's service and salary at the time of joining the DROP plan. Requires termination of service at the end of the DROP plan participation period. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB103 30209 RPS 56637 b

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT
MAY APPLY

 

 

A BILL FOR

 

HB3004LRB103 30209 RPS 56637 b

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 adding
5Sections 4-105e and 4-109.4 and changing Sections 4-109 and
64-109.1 as follows:
 
7    (40 ILCS 5/4-105e new)
8    Sec. 4-105e. Deferred Retirement Option Plan. "Deferred
9Retirement Option Plan" or "DROP plan" means the Deferred
10Retirement Option Plan established under Section 4-109.3.
 
11    (40 ILCS 5/4-109)  (from Ch. 108 1/2, par. 4-109)
12    Sec. 4-109. Pension.
13    (a) A firefighter age 50 or more with 20 or more years of
14creditable service, who is no longer in service as a
15firefighter, shall receive a monthly pension of 1/2 the
16monthly salary attached to the rank held by him or her in the
17fire service at the date of retirement.
18    The monthly pension shall be increased by 1/12 of 2.5% of
19such monthly salary for each additional month over 20 years of
20service through 30 years of service, to a maximum of 75% of
21such monthly salary.
22    The changes made to this subsection (a) by this amendatory

 

 

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1Act of the 91st General Assembly apply to all pensions that
2become payable under this subsection on or after January 1,
31999. All pensions payable under this subsection that began on
4or after January 1, 1999 and before the effective date of this
5amendatory Act shall be recalculated, and the amount of the
6increase accruing for that period shall be payable to the
7pensioner in a lump sum.
8    For a firefighter who retires at the conclusion of
9participation in the DROP plan, calculation of the amount of
10the retirement pension shall be based on the firefighter's
11salary and accumulated service on the date he or she began
12participation in the DROP plan and shall include any annual
13increases that would have accrued under Section 4-109.1 if the
14firefighter had retired on that date.
15    (b) A firefighter who retires or is separated from service
16having at least 10 but less than 20 years of creditable
17service, who is not entitled to receive a disability pension,
18and who did not apply for a refund of contributions at his or
19her last separation from service shall receive a monthly
20pension upon attainment of age 60 based on the monthly salary
21attached to his or her rank in the fire service on the date of
22retirement or separation from service according to the
23following schedule:
24    For 10 years of service, 15% of salary;
25    For 11 years of service, 17.6% of salary;
26    For 12 years of service, 20.4% of salary;

 

 

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1    For 13 years of service, 23.4% of salary;
2    For 14 years of service, 26.6% of salary;
3    For 15 years of service, 30% of salary;
4    For 16 years of service, 33.6% of salary;
5    For 17 years of service, 37.4% of salary;
6    For 18 years of service, 41.4% of salary;
7    For 19 years of service, 45.6% of salary.
8    (c) Notwithstanding any other provision of this Article,
9the provisions of this subsection (c) apply to a person who
10first becomes a firefighter under this Article on or after
11January 1, 2011.
12    A firefighter age 55 or more who has 10 or more years of
13service in that capacity shall be entitled at his option to
14receive a monthly pension for his service as a firefighter
15computed by multiplying 2.5% for each year of such service by
16his or her final average salary.
17    The pension of a firefighter who is retiring after
18attaining age 50 with 10 or more years of creditable service
19shall be reduced by one-half of 1% for each month that the
20firefighter's age is under age 55.
21    The maximum pension under this subsection (c) shall be 75%
22of final average salary.
23    For the purposes of this subsection (c), "final average
24salary" means the greater of: (i) the average monthly salary
25obtained by dividing the total salary of the firefighter
26during the 48 consecutive months of service within the last 60

 

 

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1months of service in which the total salary was the highest by
2the number of months of service in that period; or (ii) the
3average monthly salary obtained by dividing the total salary
4of the firefighter during the 96 consecutive months of service
5within the last 120 months of service in which the total salary
6was the highest by the number of months of service in that
7period.
8    Beginning on January 1, 2011, for all purposes under this
9Code (including without limitation the calculation of benefits
10and employee contributions), the annual salary based on the
11plan year of a member or participant to whom this Section
12applies shall not exceed $106,800; however, that amount shall
13annually thereafter be increased by the lesser of (i) 3% of
14that amount, including all previous adjustments, or (ii) the
15annual unadjusted percentage increase (but not less than zero)
16in the consumer price index-u for the 12 months ending with the
17September preceding each November 1, including all previous
18adjustments.
19    For a firefighter who retires at the conclusion of
20participation in the DROP plan, calculation of the amount of
21the retirement pension shall be based on the firefighter's
22salary and accumulated service on the date he or she began
23participation in the DROP plan and shall include any annual
24increases that would have accrued under Section 4-109.1 if the
25firefighter had retired on that date.
26    Nothing in this amendatory Act of the 101st General

 

 

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1Assembly shall cause or otherwise result in any retroactive
2adjustment of any employee contributions.
3(Source: P.A. 101-610, eff. 1-1-20.)
 
4    (40 ILCS 5/4-109.1)  (from Ch. 108 1/2, par. 4-109.1)
5    Sec. 4-109.1. Increase in pension.
6    (a) Except as provided in subsection (e), the monthly
7pension of a firefighter who retires after July 1, 1971 and
8prior to January 1, 1986, shall, upon either the first of the
9month following the first anniversary of the date of
10retirement if 60 years of age or over at retirement date, or
11upon the first day of the month following attainment of age 60
12if it occurs after the first anniversary of retirement, be
13increased by 2% of the originally granted monthly pension and
14by an additional 2% in each January thereafter. Effective
15January 1976, the rate of the annual increase shall be 3% of
16the originally granted monthly pension.
17    (b) The monthly pension of a firefighter who retired from
18service with 20 or more years of service, on or before July 1,
191971, shall be increased, in January of the year following the
20year of attaining age 65 or in January 1972, if then over age
2165, by 2% of the originally granted monthly pension, for each
22year the firefighter received pension payments. In each
23January thereafter, he or she shall receive an additional
24increase of 2% of the original monthly pension. Effective
25January 1976, the rate of the annual increase shall be 3%.

 

 

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1    (c) The monthly pension of a firefighter who is receiving
2a disability pension under this Article shall be increased, in
3January of the year following the year the firefighter attains
4age 60, or in January 1974, if then over age 60, by 2% of the
5originally granted monthly pension for each year he or she
6received pension payments. In each January thereafter, the
7firefighter shall receive an additional increase of 2% of the
8original monthly pension. Effective January 1976, the rate of
9the annual increase shall be 3%.
10    (c-1) On January 1, 1998, every child's disability benefit
11payable on that date under Section 4-110 or 4-110.1 shall be
12increased by an amount equal to 1/12 of 3% of the amount of the
13benefit, multiplied by the number of months for which the
14benefit has been payable. On each January 1 thereafter, every
15child's disability benefit payable under Section 4-110 or
164-110.1 shall be increased by 3% of the amount of the benefit
17then being paid, including any previous increases received
18under this Article. These increases are not subject to any
19limitation on the maximum benefit amount included in Section
204-110 or 4-110.1.
21    (c-2) On July 1, 2004, every pension payable to or on
22behalf of a minor or disabled surviving child that is payable
23on that date under Section 4-114 shall be increased by an
24amount equal to 1/12 of 3% of the amount of the pension,
25multiplied by the number of months for which the benefit has
26been payable. On July 1, 2005, July 1, 2006, July 1, 2007, and

 

 

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1July 1, 2008, every pension payable to or on behalf of a minor
2or disabled surviving child that is payable under Section
34-114 shall be increased by 3% of the amount of the pension
4then being paid, including any previous increases received
5under this Article. These increases are not subject to any
6limitation on the maximum benefit amount included in Section
74-114.
8    (d) The monthly pension of a firefighter who retires after
9January 1, 1986, shall, upon either the first of the month
10following the first anniversary of the date of retirement if
1155 years of age or over, or upon the first day of the month
12following attainment of age 55 if it occurs after the first
13anniversary of retirement, be increased by 1/12 of 3% of the
14originally granted monthly pension for each full month that
15has elapsed since the pension began, and by an additional 3% in
16each January thereafter.
17    The changes made to this subsection (d) by this amendatory
18Act of the 91st General Assembly apply to all initial
19increases that become payable under this subsection on or
20after January 1, 1999. All initial increases that became
21payable under this subsection on or after January 1, 1999 and
22before the effective date of this amendatory Act shall be
23recalculated and the additional amount accruing for that
24period, if any, shall be payable to the pensioner in a lump
25sum.
26    For the purpose of calculating eligibility for increases

 

 

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1under this Section, the date of retirement of a firefighter
2who retires at the conclusion of participation in the DROP
3plan shall be deemed to be the date he or she began
4participation in the DROP plan.
5    (e) Notwithstanding the provisions of subsection (a), upon
6the first day of the month following (1) the first anniversary
7of the date of retirement, or (2) the attainment of age 55, or
8(3) July 1, 1987, whichever occurs latest, the monthly pension
9of a firefighter who retired on or after January 1, 1977 and on
10or before January 1, 1986 and did not receive an increase under
11subsection (a) before July 1, 1987, shall be increased by 3% of
12the originally granted monthly pension for each full year that
13has elapsed since the pension began, and by an additional 3% in
14each January thereafter. The increases provided under this
15subsection are in lieu of the increases provided in subsection
16(a).
17    (f) In July 2009, the monthly pension of a firefighter who
18retired before July 1, 1977 shall be recalculated and
19increased to reflect the amount that the firefighter would
20have received in July 2009 had the firefighter been receiving
21a 3% compounded increase for each year he or she received
22pension payments after January 1, 1986, plus any increases in
23pension received for each year prior to January 1, 1986. In
24each January thereafter, he or she shall receive an additional
25increase of 3% of the amount of the pension then being paid.
26The changes made to this Section by this amendatory Act of the

 

 

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196th General Assembly apply without regard to whether the
2firefighter was in service on or after its effective date.
3    (g) Notwithstanding any other provision of this Article,
4the monthly pension of a person who first becomes a
5firefighter under this Article on or after January 1, 2011
6shall be increased on the January 1 occurring either on or
7after the attainment of age 60 or the first anniversary of the
8pension start date, whichever is later. Each annual increase
9shall be calculated at 3% or one-half the annual unadjusted
10percentage increase (but not less than zero) in the consumer
11price index-u for the 12 months ending with the September
12preceding each November 1, whichever is less, of the
13originally granted pension. If the annual unadjusted
14percentage change in the consumer price index-u for a 12-month
15period ending in September is zero or, when compared with the
16preceding period, decreases, then the pension shall not be
17increased.
18    For the purposes of this subsection (g), "consumer price
19index-u" means the index published by the Bureau of Labor
20Statistics of the United States Department of Labor that
21measures the average change in prices of goods and services
22purchased by all urban consumers, United States city average,
23all items, 1982-84 = 100. The new amount resulting from each
24annual adjustment shall be determined by the Public Pension
25Division of the Department of Insurance and made available to
26the boards of the pension funds.

 

 

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1    For the purpose of calculating eligibility for increases
2under this Section, the date of retirement of a firefighter
3who retires at the conclusion of participation in the DROP
4plan shall be deemed to be the date he or she began
5participation in the DROP plan.
6(Source: P.A. 96-775, eff. 8-28-09; 96-1495, eff. 1-1-11.)
 
7    (40 ILCS 5/4-109.4 new)
8    Sec. 4-109.4. Deferred Retirement Option Plan.
9    (a) The Deferred Retirement Option Plan created by this
10Section shall first become available to eligible firefighters
11on January 1, 2024.
12    (b) To be eligible to participate in the DROP plan, a
13firefighter must (i) be in active service, (ii) have attained
14age 50, and (iii) have at least 20 years of creditable service
15in the fund. A firefighter may participate in the DROP plan
16only once.
17    (c) An election to participate in the DROP plan must be
18made within 3 years after becoming eligible under subsection
19(b).
20    The election to participate in the DROP plan shall be made
21in writing on forms provided for that purpose by the Board and
22shall be filed with the Board. The application must indicate
23the date upon which participation in the DROP plan is to begin,
24which shall be the first day of a calendar month and not less
25than 30 days nor more than 90 days after the date of filing the

 

 

HB3004- 11 -LRB103 30209 RPS 56637 b

1application.
2    As a part of the application, the firefighter must file
3with the Board and with his or her employer an irrevocable
4letter of resignation from employment, effective on the date
5of termination of the firefighter's participation in the DROP
6plan (unless that termination results from acceptance of a
7disability benefit).
8    (d) A firefighter's participation in the DROP plan shall
9commence on the date specified in the application and shall
10end upon (i) termination of service, (ii) death of the
11firefighter, (iii) disability for which the firefighter
12receives a benefit under Section 4-110, 4-110.1, or 4-111, or
13(iv) expiration of 3 years from the date the firefighter's
14participation in the DROP plan began, whichever occurs first.
15    (e) A firefighter who is participating in the DROP plan
16shall be considered an active firefighter for the purposes of
17this Article, including Section 4-121, but shall be subject to
18the special conditions of the DROP plan.
19    A firefighter shall continue to make the contributions
20that are required for active firefighters during his or her
21participation in the DROP plan. These contributions shall be
22accumulated in the firefighter's DROP account and shall be
23treated as being "picked up" within the meaning of Section
244-118.2 of this Code and Section 414(h)(2) of the Internal
25Revenue Code of 1986, as amended.
26    A firefighter who is participating in the DROP plan shall

 

 

HB3004- 12 -LRB103 30209 RPS 56637 b

1not receive service credit for the period of that
2participation, and the salary earned during that period shall
3be disregarded in calculating the firefighter's benefits under
4this Article.
5    (f) A firefighter who participates in the DROP plan may
6terminate service at any time during participation in the DROP
7plan. A firefighter who participates in the DROP plan must
8terminate service on the last day of participation in the DROP
9plan, unless participation in the DROP plan is ended due to
10acceptance of a disability benefit.
11    (g) A firefighter who is participating in the DROP plan
12remains eligible to apply for a disability benefit under
13Section 4-110, 4-110.1, or 4-111, but participation in the
14DROP plan ceases upon acceptance of the disability benefit. If
15participation in the DROP plan is ended due to acceptance of a
16disability benefit, (1) the disabled firefighter shall be
17credited with employee contributions and creditable service
18for the period of participation in the DROP plan, (2) the
19firefighter's letter of resignation from service that is
20required to be filed at the time of application to participate
21in the DROP plan is void, and (3) the amounts in the disabled
22firefighter's DROP account are forfeited to the fund.
23    (h) The fund shall maintain a separate DROP account for
24the benefit of each firefighter who becomes a participant in
25the DROP plan. The fund shall pay into the firefighter's DROP
26account:

 

 

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1        (1) for each month of the firefighter's participation
2    in the DROP plan, an amount equal to the monthly
3    retirement pension that the firefighter would have been
4    eligible to receive if the firefighter had terminated
5    service and taken a retirement pension on the date his or
6    her participation in the DROP plan began, including any
7    increases in pension for which the firefighter would have
8    been eligible under Section 4-109.1;
9        (2) the employee contributions paid by the firefighter
10    during the period of participation in the DROP plan; and
11        (3) interest on the balance in the DROP account, at
12    the rate of 7% per annum, paid and compounded monthly,
13    throughout the period of participation in the DROP plan.
14    The DROP account shall cease earning interest when the
15    firefighter's participation in the DROP plan ends.
16    (i) In addition to the retirement pension under Section
174-109, a firefighter who terminates service and retires at the
18conclusion of his or her participation in the DROP plan shall
19receive, upon retirement, a DROP benefit equal to the balance
20in the firefighter's DROP account at the time of retirement.
21    At the time of application for a retirement pension, the
22firefighter shall elect to receive the DROP benefit in the
23form of either a lump sum or an actuarially equivalent annuity
24for life. If a lump sum payment is elected, it may be rolled
25over into an individual retirement account or a qualified
26retirement plan. A DROP benefit payable in the form of an

 

 

HB3004- 14 -LRB103 30209 RPS 56637 b

1annuity shall be in a fixed amount not subject to annual or
2other increases. A DROP benefit shall be treated as a
3retirement benefit for the purposes of Section 1-119.
4    (j) If a firefighter receiving a DROP benefit in the form
5of an annuity re-enters service, the DROP benefit annuity
6payments shall be suspended until the firefighter's subsequent
7retirement.
8    (k) If a firefighter dies while participating in the DROP
9plan, the DROP benefit shall be paid as a lump sum to the
10surviving spouse or other survivor of the firefighter entitled
11to a pension under Section 4-114 or, if there is no such
12survivor, then to the deceased firefighter's estate.
13    (l) If a retired firefighter dies while receiving a DROP
14benefit in the form of an annuity, and the DROP account balance
15at the time of retirement exceeds the total amount of DROP
16benefit annuity payments received, the excess shall be
17refunded to the surviving spouse or other survivor of the
18firefighter entitled to a pension under Section 4-114 or, if
19there is no such survivor, then to the deceased firefighter's
20estate.
 
21    Section 90. The State Mandates Act is amended by adding
22Section 8.47 as follows:
 
23    (30 ILCS 805/8.47 new)
24    Sec. 8.47. Exempt mandate. Notwithstanding Sections 6 and

 

 

HB3004- 15 -LRB103 30209 RPS 56637 b

18 of this Act, no reimbursement by the State is required for
2the implementation of any mandate created by this amendatory
3Act of the 103rd General Assembly.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.