96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB2624


 
Introduced 2/20/2009, by Rep. Naomi D. Jakobsson
 
SYNOPSIS AS INTRODUCED:









  



40 ILCS 5/15-136
 from Ch. 108 1/2, par. 15-136







 Amends the State Universities Article of the Illinois Pension Code. Provides that, on January 1, 2010, the monthly pension of an annuitant who retired before January 1, 1980 shall be recalculated and increased to reflect the amount the annuitant would have received in January 2010 had the annuitant been receiving a 3% increase for each year he or she received a monthly annuity under Rule 1, Rule 2, Rule 3, Rule 4, or Rule 5. Provides for an additional increase of 3% of the amount of the retirement annuity then being received each January thereafter. Effective immediately.
















LRB096 10689 AMC 20863 b

















FISCAL NOTE ACT MAY APPLY


PENSION IMPACT NOTE ACT MAY APPLY
















 


 


A BILL FOR









 











HB2624

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1
 AN ACT concerning public employee benefits.


2
 Be it enacted by the People of the State of Illinois,

3
represented in the General Assembly:



4
 Section 5. The Illinois Pension Code is amended by changing 
5
Section 15-136 as follows:




6
 (40 ILCS 5/15-136) (from Ch. 108 1/2, par. 15-136)


7
 Sec. 15-136. Retirement annuities - Amount. The provisions 
8
of this
Section 15-136 apply only to those participants who are 
9
participating in the
traditional benefit package or the 
10
portable benefit package and do not
apply to participants who 
11
are participating in the self-managed plan.

12
 (a) The amount of a participant's retirement annuity, 
13
expressed in the form
of a single-life annuity, shall be 
14
determined by whichever of the following
rules is applicable 
15
and provides the largest annuity:

16
 Rule 1: The retirement annuity shall be 1.67% of final rate 
17
of earnings for
each of the first 10 years of service, 1.90% 
18
for each of the next 10 years of
service, 2.10% for each year 
19
of service in excess of 20 but not exceeding 30,
and 2.30% for 
20
each year in excess of 30; or for persons who retire on or

21
after January 1, 1998, 2.2% of the final rate of earnings for 
22
each year of
service.

23
 Rule 2: The retirement annuity shall be the sum of the 
 


 






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1
following,
determined from amounts credited to the participant 
2
in accordance with the
actuarial tables and the prescribed rate 
3
of interest in effect at the
time the retirement annuity 
4
begins:


5
  (i) the normal annuity which can be provided on an 
6
 actuarially
equivalent basis, by the accumulated normal 
7
 contributions as of
the date the annuity begins;


8
  (ii) an annuity from employer contributions of an 
9
 amount equal to that
which can be provided on an 
10
 actuarially equivalent basis from the accumulated
normal 
11
 contributions made by the participant under Section 
12
 15-113.6 and Section
15-113.7 plus 1.4 times all other 
13
 accumulated normal contributions made by
the participant; 
14
 and


15
  (iii) the annuity that can be provided on an 
16
 actuarially equivalent basis
from the entire contribution 
17
 made by the participant under Section 15-113.3.

18
 With respect to a police officer or firefighter who retires 
19
on or after
August 14, 1998, the accumulated normal 
20
contributions taken into account under
clauses (i) and (ii) of 
21
this Rule 2 shall include the additional normal
contributions 
22
made by the police officer or firefighter under Section

23
15-157(a).

24
 The amount of a retirement annuity calculated under this 
25
Rule 2 shall
be computed solely on the basis of the 
26
participant's accumulated normal
contributions, as specified 
 


 






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1
in this Rule and defined in Section 15-116.
Neither an employee 
2
or employer contribution for early retirement under
Section 
3
15-136.2 nor any other employer contribution shall be used in 
4
the
calculation of the amount of a retirement annuity under 
5
this Rule 2.

6
 This amendatory Act of the 91st General Assembly is a 
7
clarification of
existing law and applies to every participant 
8
and annuitant without regard to
whether status as an employee 
9
terminates before the effective date of this
amendatory Act.

10
 This Rule 2 does not apply to a person who first becomes an 
11
employee under this Article on or after July 1, 2005.

12
 Rule 3: The retirement annuity of a participant who is 
13
employed
at least one-half time during the period on which his 
14
or her final rate of
earnings is based, shall be equal to the 
15
participant's years of service
not to exceed 30, multiplied by 
16
(1) $96 if the participant's final rate
of earnings is less 
17
than $3,500, (2) $108 if the final rate of earnings is
at least 
18
$3,500 but less than $4,500, (3) $120 if the final rate of 
19
earnings
is at least $4,500 but less than $5,500, (4) $132 if 
20
the final rate
of earnings is at least $5,500 but less than 
21
$6,500, (5)
$144 if the final rate of earnings is at least 
22
$6,500 but less than
$7,500, (6) $156 if the final rate of 
23
earnings is at least $7,500 but less
than $8,500, (7) $168 if 
24
the final rate of earnings is at least $8,500 but
less than 
25
$9,500, and (8) $180 if the final rate of earnings is $9,500 or

26
more, except that the annuity for those persons having made an 
 


 






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election under
Section 15-154(a-1) shall be calculated and 
2
payable under the portable
retirement benefit program pursuant 
3
to the provisions of Section 15-136.4.

4
 Rule 4: A participant who is at least age 50 and has 25 or 
5
more years of
service as a police officer or firefighter, and a 
6
participant who is age 55 or
over and has at least 20 but less 
7
than 25 years of service as a police officer
or firefighter, 
8
shall be entitled to a retirement annuity of 2 1/4% of the

9
final rate of earnings for each of the first 10 years of 
10
service as a police
officer or firefighter, 2 1/2% for each of 
11
the next 10 years of service as a
police officer or 
12
firefighter, and 2 3/4% for each year of service as a police

13
officer or firefighter in excess of 20. The retirement annuity 
14
for all other
service shall be computed under Rule 1.

15
 For purposes of this Rule 4, a participant's service as a 
16
firefighter
shall also include the following:


17
  (i) service that is performed while the person is an 
18
 employee under
subsection (h) of Section 15-107; and


19
  (ii) in the case of an individual who was a 
20
 participating employee
employed in the fire department of 
21
 the University of Illinois's
Champaign-Urbana campus 
22
 immediately prior to the elimination of that fire

23
 department and who immediately after the elimination of 
24
 that fire department
transferred to another job with the 
25
 University of Illinois, service performed
as an employee of 
26
 the University of Illinois in a position other than police

 


 






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 officer or firefighter, from the date of that transfer 
2
 until the employee's
next termination of service with the 
3
 University of Illinois.

4
 Rule 5: The retirement annuity of a participant who elected 
5
early
retirement under the provisions of Section 15-136.2 and 
6
who, on or before
February 16, 1995, brought administrative 
7
proceedings pursuant to the
administrative rules adopted by the 
8
System to challenge the calculation of his
or her retirement 
9
annuity shall be the sum of the following, determined from

10
amounts credited to the participant in accordance with the 
11
actuarial tables and
the prescribed rate of interest in effect 
12
at the time the retirement annuity
begins:


13
  (i) the normal annuity which can be provided on an 
14
 actuarially equivalent
basis, by the accumulated normal 
15
 contributions as of the date the annuity
begins; and


16
  (ii) an annuity from employer contributions of an 
17
 amount equal to that
which can be provided on an 
18
 actuarially equivalent basis from the accumulated
normal 
19
 contributions made by the participant under Section 
20
 15-113.6 and Section
15-113.7 plus 1.4 times all other 
21
 accumulated normal contributions made by the
participant; 
22
 and


23
  (iii) an annuity which can be provided on an 
24
 actuarially equivalent basis
from the employee 
25
 contribution for early retirement under Section 15-136.2, 
26
 and
an annuity from employer contributions of an amount 
 


 






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1
 equal to that which can be
provided on an actuarially 
2
 equivalent basis from the employee contribution for
early 
3
 retirement under Section 15-136.2.

4
 In no event shall a retirement annuity under this Rule 5 be 
5
lower than the
amount obtained by adding (1) the monthly amount 
6
obtained by dividing the
combined employee and employer 
7
contributions made under Section 15-136.2 by the
System's 
8
annuity factor for the age of the participant at the beginning 
9
of the
annuity payment period and (2) the amount equal to the 
10
participant's annuity if
calculated under Rule 1, reduced under 
11
Section 15-136(b) as if no
contributions had been made under 
12
Section 15-136.2.

13
 With respect to a participant who is qualified for a 
14
retirement annuity under
this Rule 5 whose retirement annuity 
15
began before the effective date of this
amendatory Act of the 
16
91st General Assembly, and for whom an employee
contribution 
17
was made under Section 15-136.2, the System shall recalculate 
18
the
retirement annuity under this Rule 5 and shall pay any 
19
additional amounts due
in the manner provided in Section 
20
15-186.1 for benefits mistakenly set too low.

21
 The amount of a retirement annuity calculated under this 
22
Rule 5 shall be
computed solely on the basis of those 
23
contributions specifically set forth in
this Rule 5. Except as 
24
provided in clause (iii) of this Rule 5, neither an
employee 
25
nor employer contribution for early retirement under Section 
26
15-136.2,
nor any other employer contribution, shall be used in 
 


 






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the calculation of the
amount of a retirement annuity under 
2
this Rule 5.

3
 The General Assembly has adopted the changes set forth in 
4
Section 25 of this
amendatory Act of the 91st General Assembly 
5
in recognition that the decision of
the Appellate Court for the 
6
Fourth District in Mattis v. State Universities
Retirement 
7
System et al. might be deemed to give some right to the 
8
plaintiff in
that case. The changes made by Section 25 of this 
9
amendatory Act of the 91st
General Assembly are a legislative 
10
implementation of the decision of the
Appellate Court for the 
11
Fourth District in Mattis v. State Universities
Retirement 
12
System et al. with respect to that plaintiff.

13
 The changes made by Section 25 of this amendatory Act of 
14
the 91st General
Assembly apply without regard to whether the 
15
person is in service as an
employee on or after its effective 
16
date.

17
 (b) The retirement annuity provided under Rules 1 and 3 
18
above shall be
reduced by 1/2 of 1% for each month the 
19
participant is under age 60 at the
time of retirement. However, 
20
this reduction shall not apply in the following
cases:


21
  (1) For a disabled participant whose disability 
22
 benefits have been
discontinued because he or she has 
23
 exhausted eligibility for disability
benefits under clause 
24
 (6) of Section 15-152;


25
  (2) For a participant who has at least the number of 
26
 years of service
required to retire at any age under 
 


 






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 subsection (a) of Section 15-135; or


2
  (3) For that portion of a retirement annuity which has 
3
 been provided on
account of service of the participant 
4
 during periods when he or she performed
the duties of a 
5
 police officer or firefighter, if these duties were 
6
 performed
for at least 5 years immediately preceding the 
7
 date the retirement annuity
is to begin.

8
 (c) The maximum retirement annuity provided under Rules 1, 
9
2, 4,
and 5
shall be the lesser of (1) the annual limit of 
10
benefits as specified in
Section 415 of the Internal Revenue 
11
Code of 1986, as such Section may be
amended from time to time 
12
and as such benefit limits shall be adjusted by
the 
13
Commissioner of Internal Revenue, and (2) 80% of final rate of

14
earnings.

15
 (d) An annuitant whose status as an employee terminates 
16
after August 14,
1969 shall receive automatic increases in his 
17
or her retirement annuity as
follows:

18
 Effective January 1 immediately following the date the 
19
retirement annuity
begins, the annuitant shall receive an 
20
increase in his or her monthly
retirement annuity of 0.125% of 
21
the monthly retirement annuity provided under
Rule 1, Rule 2, 
22
Rule 3, Rule 4, or Rule 5, contained in this
Section, 
23
multiplied by
the number of full months which elapsed from the 
24
date the retirement annuity
payments began to January 1, 1972, 
25
plus 0.1667% of such annuity, multiplied by
the number of full 
26
months which elapsed from January 1, 1972, or the date the

 


 






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retirement annuity payments began, whichever is later, to 
2
January 1, 1978, plus
0.25% of such annuity multiplied by the 
3
number of full months which elapsed
from January 1, 1978, or 
4
the date the retirement annuity payments began,
whichever is 
5
later, to the effective date of the increase.

6
 The annuitant shall receive an increase in his or her 
7
monthly retirement
annuity on each January 1 thereafter during 
8
the annuitant's life of 3% of
the monthly annuity provided 
9
under Rule 1, Rule 2, Rule 3, Rule 4, or
Rule 5 contained
in 
10
this Section. The change made under this subsection by P.A. 
11
81-970 is
effective January 1, 1980 and applies to each 
12
annuitant whose status as
an employee terminates before or 
13
after that date.

14
 Beginning January 1, 1990, all automatic annual increases 
15
payable under
this Section shall be calculated as a percentage 
16
of the total annuity
payable at the time of the increase, 
17
including all increases previously
granted under this Article.

18
 The change made in this subsection by P.A. 85-1008 is 
19
effective January
26, 1988, and is applicable without regard to 
20
whether status as an employee
terminated before that date.

21
 On January 1, 2010, the monthly pension of an annuitant who 
22
retired before January 1, 1980 shall be recalculated and 
23
increased to reflect the amount the annuitant would have 
24
received in January 2010 had the annuitant been receiving a 3% 
25
increase for each year he or she received a monthly annuity 
26
under Rule 1, Rule 2, Rule 3, Rule 4, or Rule 5 contained in 
 


 






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1
this Section. Each January thereafter, he or she shall receive 
2
an additional increase of 3% of the amount of the retirement 
3
annuity then being received. 
4
 (e) If, on January 1, 1987, or the date the retirement 
5
annuity payment
period begins, whichever is later, the sum of 
6
the retirement annuity
provided under Rule 1 or Rule 2 of this 
7
Section
and the automatic annual increases provided under the 
8
preceding subsection
or Section 15-136.1, amounts to less than 
9
the retirement
annuity which would be provided by Rule 3, the 
10
retirement
annuity shall be increased as of January 1, 1987, or 
11
the date the
retirement annuity payment period begins, 
12
whichever is later, to the amount
which would be provided by 
13
Rule 3 of this Section. Such increased
amount shall be 
14
considered as the retirement annuity in determining
benefits 
15
provided under other Sections of this Article. This paragraph

16
applies without regard to whether status as an employee 
17
terminated before the
effective date of this amendatory Act of 
18
1987, provided that the annuitant was
employed at least 
19
one-half time during the period on which the final rate of

20
earnings was based.

21
 (f) A participant is entitled to such additional annuity as 
22
may be provided
on an actuarially equivalent basis, by any 
23
accumulated
additional contributions to his or her credit. 
24
However,
the additional contributions made by the participant 
25
toward the automatic
increases in annuity provided under this 
26
Section shall not be taken into
account in determining the 
 


 






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amount of such additional annuity.

2
 (g) If, (1) by law, a function of a governmental unit, as 
3
defined by Section
20-107 of this Code, is transferred in whole 
4
or in part to an employer, and (2)
a participant transfers 
5
employment from such governmental unit to such employer
within 
6
6 months after the transfer of the function, and (3) the sum of 
7
(A) the
annuity payable to the participant under Rule 1, 2, or 
8
3 of this Section (B)
all proportional annuities payable to the 
9
participant by all other retirement
systems covered by Article 
10
20, and (C) the initial primary insurance amount to
which the 
11
participant is entitled under the Social Security Act, is less 
12
than
the retirement annuity which would have been payable if 
13
all of the
participant's pension credits validated under 
14
Section 20-109 had been validated
under this system, a 
15
supplemental annuity equal to the difference in such
amounts 
16
shall be payable to the participant.

17
 (h) On January 1, 1981, an annuitant who was receiving
a 
18
retirement annuity on or before January 1, 1971 shall have his 
19
or her
retirement annuity then being paid increased $1 per 
20
month for
each year of creditable service. On January 1, 1982, 
21
an annuitant whose
retirement annuity began on or before 
22
January 1, 1977, shall have his or her
retirement annuity then 
23
being paid increased $1 per month for each year of
creditable 
24
service.

25
 (i) On January 1, 1987, any annuitant whose retirement 
26
annuity began on or
before January 1, 1977, shall have the 
 


 






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1
monthly retirement annuity increased by
an amount equal to 8¢ 
2
per year of creditable service times the number of years
that 
3
have elapsed since the annuity began.

4
(Source: P.A. 93-347, eff. 7-24-03; 94-4, eff. 6-1-05.)



5
 Section 99. Effective date. This Act takes effect upon 
6
becoming law.