State of Illinois
90th General Assembly
Legislation

   [ Search ]   [ Legislation ]   [ Bill Summary ]
[ Home ]   [ Back ]   [ Bottom ]



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.

[ Top ]