Bill Text: IL HB3592 | 2015-2016 | 99th General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Amends the Illinois Municipal Retirement Fund Article of the Illinois Pension Code. In a provision concerning payment for purchasing service credit under an early retirement incentive program, changes the required contribution rate from a specified percentage to the total employee contribution rate in effect for the applicable plan at the time the member purchases the service. Effective immediately.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Passed) 2015-08-17 - Public Act . . . . . . . . . 99-0382 [HB3592 Detail]
Download: Illinois-2015-HB3592-Introduced.html
Bill Title: Amends the Illinois Municipal Retirement Fund Article of the Illinois Pension Code. In a provision concerning payment for purchasing service credit under an early retirement incentive program, changes the required contribution rate from a specified percentage to the total employee contribution rate in effect for the applicable plan at the time the member purchases the service. Effective immediately.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Passed) 2015-08-17 - Public Act . . . . . . . . . 99-0382 [HB3592 Detail]
Download: Illinois-2015-HB3592-Introduced.html
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1 | AN ACT concerning public employee benefits.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Pension Code is amended by changing | ||||||||||||||||||||||||
5 | Section 7-141.1 as follows:
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6 | (40 ILCS 5/7-141.1)
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7 | Sec. 7-141.1. Early retirement incentive.
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8 | (a) The General Assembly finds and declares that:
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9 | (1) Units of local government across the State have | ||||||||||||||||||||||||
10 | been functioning
under a financial crisis.
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11 | (2) This financial crisis is expected to continue.
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12 | (3) Units of local government must depend on additional | ||||||||||||||||||||||||
13 | sources of
revenue and, when those sources are not | ||||||||||||||||||||||||
14 | forthcoming, must establish
cost-saving programs.
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15 | (4) An early retirement incentive designed | ||||||||||||||||||||||||
16 | specifically to target
highly-paid senior employees could | ||||||||||||||||||||||||
17 | result in significant annual cost
savings.
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18 | (5) The early retirement incentive should be made | ||||||||||||||||||||||||
19 | available only to
those units of local government that | ||||||||||||||||||||||||
20 | determine that an early retirement
incentive is in their | ||||||||||||||||||||||||
21 | best interest.
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22 | (6) A unit of local government adopting a program of | ||||||||||||||||||||||||
23 | early retirement
incentives under this Section is |
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1 | encouraged to implement personnel procedures
to prohibit, | ||||||
2 | for at least 5 years, the rehiring (whether on payroll or | ||||||
3 | by
independent contract) of employees who receive early | ||||||
4 | retirement incentives.
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5 | (7) A unit of local government adopting a program of | ||||||
6 | early retirement
incentives under this Section is also | ||||||
7 | encouraged to replace as few of the
participating employees | ||||||
8 | as possible and to hire replacement employees for
salaries | ||||||
9 | totaling no more than 80% of the total salaries formerly | ||||||
10 | paid to the
employees who participate in the early | ||||||
11 | retirement program.
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12 | It is the primary purpose of this Section to encourage | ||||||
13 | units of local
government that can realize true cost savings, | ||||||
14 | or have determined that an early
retirement program is in their | ||||||
15 | best interest, to implement an early retirement
program.
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16 | (b) Until the effective date of this amendatory Act of | ||||||
17 | 1997, this
Section does not apply to any employer that is a | ||||||
18 | city, village, or incorporated
town, nor to the employees of | ||||||
19 | any such employer. Beginning on the effective
date of this | ||||||
20 | amendatory Act of 1997, any employer under this Article, | ||||||
21 | including
an employer that is a city, village, or incorporated | ||||||
22 | town, may establish an
early retirement incentive program for | ||||||
23 | its employees under this Section. The
decision of a city, | ||||||
24 | village, or incorporated town to consider or establish an
early | ||||||
25 | retirement program is at the sole discretion of that city, | ||||||
26 | village, or
incorporated town, and nothing in this amendatory |
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1 | Act of 1997 limits or
otherwise diminishes this discretion. | ||||||
2 | Nothing contained in this Section shall
be construed to require | ||||||
3 | a city, village, or incorporated town to establish an
early | ||||||
4 | retirement program and no city, village, or incorporated town | ||||||
5 | may be
compelled to implement such a program.
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6 | The benefits provided in this Section are available only to | ||||||
7 | members
employed by a participating employer that has filed | ||||||
8 | with the Board of the
Fund a resolution or ordinance expressly | ||||||
9 | providing for the creation of an
early retirement incentive | ||||||
10 | program under this Section for its employees and
specifying the | ||||||
11 | effective date of the early retirement incentive program.
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12 | Subject to the limitation in subsection (h), an employer may | ||||||
13 | adopt a resolution
or ordinance providing a program of early | ||||||
14 | retirement incentives under this
Section at any time.
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15 | The resolution or ordinance shall be in substantially the | ||||||
16 | following form:
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17 | RESOLUTION (ORDINANCE) NO. ....
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18 | A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
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19 | RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
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20 | IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
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21 | WHEREAS, Section 7-141.1 of the Illinois Pension Code | ||||||
22 | provides that a
participating employer may elect to adopt an | ||||||
23 | early retirement
incentive program offered by the Illinois | ||||||
24 | Municipal Retirement Fund by
adopting a resolution or | ||||||
25 | ordinance; and
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1 | WHEREAS, The goal of adopting an early retirement program | ||||||
2 | is
to realize a substantial savings in personnel costs by | ||||||
3 | offering early
retirement incentives to employees who have | ||||||
4 | accumulated many years of
service credit; and
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5 | WHEREAS, Implementation of the early retirement program | ||||||
6 | will provide a
budgeting tool to aid in controlling payroll | ||||||
7 | costs; and
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8 | WHEREAS, The (name of governing body) has determined that | ||||||
9 | the adoption of an
early retirement incentive program is in the | ||||||
10 | best interests of the (name of
participating employer); | ||||||
11 | therefore be it
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12 | RESOLVED (ORDAINED) by the (name of governing body) of | ||||||
13 | (name of
participating employer) that:
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14 | (1) The (name of participating employer) does hereby adopt | ||||||
15 | the Illinois
Municipal Retirement Fund early retirement | ||||||
16 | incentive program as provided in
Section 7-141.1 of the | ||||||
17 | Illinois Pension Code. The early retirement incentive
program | ||||||
18 | shall take effect on (date).
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19 | (2) In order to help achieve a true cost savings, a person | ||||||
20 | who retires under
the early retirement incentive program shall | ||||||
21 | lose those incentives if he or she
later accepts employment | ||||||
22 | with any IMRF employer in a position for which
participation in | ||||||
23 | IMRF is required or is elected by the employee.
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24 | (3) In order to utilize an early retirement incentive as a | ||||||
25 | budgeting
tool, the (name of participating employer) will use | ||||||
26 | its best efforts either
to limit the number of employees who |
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1 | replace the employees who retire under
the early retirement | ||||||
2 | program or to limit the salaries paid to the employees who
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3 | replace the employees who retire under the early retirement | ||||||
4 | program.
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5 | (4) The effective date of each employee's retirement under | ||||||
6 | this early
retirement program shall be set by (name of | ||||||
7 | employer) and shall be no
earlier than the effective date of | ||||||
8 | the program and no later than one year after
that effective | ||||||
9 | date; except that the employee may require that the retirement
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10 | date set by the employer be no later than the June 30 next | ||||||
11 | occurring after the
effective date of the program and no | ||||||
12 | earlier than the date upon which the
employee qualifies for | ||||||
13 | retirement.
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14 | (5) To be eligible for the early retirement incentive under | ||||||
15 | this Section,
the employee must have attained age 50 and have | ||||||
16 | at least 20 years of creditable
service by his or her | ||||||
17 | retirement date.
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18 | (6) The (clerk or secretary) shall promptly file a | ||||||
19 | certified copy of
this resolution (ordinance) with the Board of | ||||||
20 | Trustees of the Illinois
Municipal Retirement Fund.
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21 | CERTIFICATION
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22 | I, (name), the (clerk or secretary) of the (name of | ||||||
23 | participating
employer) of the County of (name), State of | ||||||
24 | Illinois, do hereby certify
that I am the keeper of the books | ||||||
25 | and records of the (name of employer)
and that the foregoing is | ||||||
26 | a true and correct copy of a resolution
(ordinance) duly |
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1 | adopted by the (governing body) at a meeting duly convened
and | ||||||
2 | held on (date).
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3 | SEAL
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4 | (Signature of clerk or secretary)
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5 | (c) To be eligible for the benefits provided under an early | ||||||
6 | retirement
incentive program adopted under this Section, a | ||||||
7 | member must:
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8 | (1) be a participating employee of this Fund who, on | ||||||
9 | the effective date of
the program, (i) is in active payroll | ||||||
10 | status as an employee of a participating
employer that has | ||||||
11 | filed the required ordinance or resolution with the Board,
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12 | (ii) is on layoff status from such a position with a right | ||||||
13 | of re-employment or
recall to service, (iii) is on a leave | ||||||
14 | of absence from such a position, or (iv)
is on disability | ||||||
15 | but has not been receiving benefits under Section 7-146 or
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16 | 7-150 for a period of more than 2 years from the date of | ||||||
17 | application;
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18 | (2) have never previously received a retirement | ||||||
19 | annuity under
this Article or under the Retirement Systems | ||||||
20 | Reciprocal Act using service
credit established under this | ||||||
21 | Article;
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22 | (3) (blank);
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23 | (4) have at least 20 years of creditable service in the | ||||||
24 | Fund by the date
of retirement, without the use of any | ||||||
25 | creditable service established under this
Section;
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1 | (5) have attained age 50 by the date of retirement, | ||||||
2 | without the use of any
age enhancement received under this | ||||||
3 | Section; and
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4 | (6) be eligible to receive a retirement annuity under | ||||||
5 | this Article by the
date of retirement, for which purpose | ||||||
6 | the age enhancement and creditable
service established | ||||||
7 | under this Section may be considered.
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8 | (d) The employer shall determine the retirement date for | ||||||
9 | each employee
participating in the early retirement program | ||||||
10 | adopted under this Section. The
retirement date shall be no | ||||||
11 | earlier than the effective date of the program and
no later | ||||||
12 | than one year after that effective date, except that the | ||||||
13 | employee may
require that the retirement date set by the | ||||||
14 | employer be no later than the June
30 next occurring after the | ||||||
15 | effective date of the program and no earlier than
the date upon | ||||||
16 | which the employee qualifies for retirement. The employer shall
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17 | give each employee participating in the early retirement | ||||||
18 | program at least 30
days written notice of the employee's | ||||||
19 | designated retirement date, unless the
employee waives this | ||||||
20 | notice requirement.
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21 | (e) An eligible person may establish up to 5 years of | ||||||
22 | creditable service
under this Section. In addition, for each | ||||||
23 | period of creditable service
established under this Section, a | ||||||
24 | person shall have his or her age at
retirement deemed enhanced | ||||||
25 | by an equivalent period.
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26 | The creditable service established under this Section may |
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1 | be used for all
purposes under this Article and the Retirement | ||||||
2 | Systems Reciprocal Act,
except for the computation of final | ||||||
3 | rate of earnings and the determination
of earnings, salary, or | ||||||
4 | compensation under this or any other Article of the
Code.
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5 | The age enhancement established under this Section may be | ||||||
6 | used for all
purposes under this Article (including calculation | ||||||
7 | of the reduction imposed
under subdivision (a)1b(iv) of Section | ||||||
8 | 7-142), except for purposes of a
reversionary annuity under | ||||||
9 | Section 7-145 and any distributions required because
of age. | ||||||
10 | The age enhancement established under this Section may be used | ||||||
11 | in
calculating a proportionate annuity payable by this Fund | ||||||
12 | under the Retirement
Systems Reciprocal Act, but shall not be | ||||||
13 | used in determining benefits payable
under other Articles of | ||||||
14 | this Code under the Retirement Systems Reciprocal Act.
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15 | (f) For all creditable service established under this | ||||||
16 | Section, the
member must pay to the Fund an employee | ||||||
17 | contribution consisting of the total employee contribution | ||||||
18 | rate in effect at the time the member purchases the service for | ||||||
19 | the plan in which the member was participating with the | ||||||
20 | employer at that time multiplied by 4.5%
of the member's | ||||||
21 | highest annual salary rate used in the determination of the
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22 | final rate of earnings for retirement annuity purposes for each | ||||||
23 | year of
creditable service granted under this Section. For | ||||||
24 | creditable service
established under this Section by a person | ||||||
25 | who is a sheriff's law
enforcement employee to be deemed | ||||||
26 | service as a sheriff's law enforcement
employee, the employee |
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1 | contribution shall be at the rate of 6.5%
of highest annual | ||||||
2 | salary per year of creditable service granted.
Contributions | ||||||
3 | for fractions of a year of service shall be prorated.
Any | ||||||
4 | amounts that are disregarded in determining the final rate of | ||||||
5 | earnings
under subdivision (d)(5) of Section 7-116 (the 125% | ||||||
6 | rule) shall also be
disregarded in determining the required | ||||||
7 | contribution under this subsection (f).
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8 | The employee contribution shall be paid to the Fund as | ||||||
9 | follows: If the
member is entitled to a lump sum payment for | ||||||
10 | accumulated vacation, sick leave,
or personal leave upon | ||||||
11 | withdrawal from service, the employer shall deduct the
employee | ||||||
12 | contribution from that lump sum and pay the deducted amount | ||||||
13 | directly
to the Fund. If there is no such lump sum payment or | ||||||
14 | the required employee
contribution exceeds the net amount of | ||||||
15 | the lump sum payment, then the remaining
amount due, at the | ||||||
16 | option of the employee, may either be paid to the Fund
before | ||||||
17 | the annuity commences or deducted from the retirement annuity | ||||||
18 | in 24
equal monthly installments.
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19 | (g) An annuitant who has received any age enhancement or | ||||||
20 | creditable service
under this Section and thereafter accepts | ||||||
21 | employment with or enters into a
personal services contract | ||||||
22 | with an employer under this Article thereby forfeits
that age | ||||||
23 | enhancement and creditable service; except that this | ||||||
24 | restriction
does not apply to (1) service in an elective | ||||||
25 | office, so long as the annuitant
does not participate in this | ||||||
26 | Fund with respect to that office, (2) a person appointed as an |
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1 | officer under subsection (f) of Section 3-109 of this Code, and | ||||||
2 | (3) a person appointed as an auxiliary police officer pursuant | ||||||
3 | to Section 3.1-30-5 of the Illinois Municipal Code. A person
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4 | forfeiting early retirement incentives under this subsection | ||||||
5 | (i) must repay to
the Fund that portion of the retirement | ||||||
6 | annuity already received which is
attributable to the early | ||||||
7 | retirement incentives that are being forfeited, (ii)
shall not | ||||||
8 | be eligible to participate in any future early retirement | ||||||
9 | program
adopted under this Section, and (iii) is entitled to a | ||||||
10 | refund of the employee
contribution paid under subsection (f). | ||||||
11 | The Board shall deduct the required
repayment from the refund | ||||||
12 | and may impose a reasonable payment schedule for
repaying the | ||||||
13 | amount, if any, by which the required repayment exceeds the | ||||||
14 | refund
amount.
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15 | (h) The additional unfunded liability accruing as a result | ||||||
16 | of the adoption
of a program of early retirement incentives | ||||||
17 | under this Section by an employer
shall be amortized over a | ||||||
18 | period of 10 years beginning on January 1 of the
second | ||||||
19 | calendar year following the calendar year in which the latest | ||||||
20 | date for
beginning to receive a retirement annuity under the | ||||||
21 | program (as determined by
the employer under subsection (d) of | ||||||
22 | this Section) occurs; except that the
employer may provide for | ||||||
23 | a shorter amortization period (of no less than 5
years) by | ||||||
24 | adopting an ordinance or resolution specifying the length of | ||||||
25 | the
amortization period and submitting a certified copy of the | ||||||
26 | ordinance or
resolution to the Fund no later than 6 months |
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1 | after the effective date of the
program. An employer, at its | ||||||
2 | discretion, may accelerate payments to the Fund.
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3 | An employer may provide more than one early retirement | ||||||
4 | incentive program
for its employees under this Section. | ||||||
5 | However, an employer that has provided
an early retirement | ||||||
6 | incentive program for its employees under this Section may
not | ||||||
7 | provide another early retirement incentive program under this | ||||||
8 | Section until the liability arising from the earlier program | ||||||
9 | has been fully paid to
the Fund.
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10 | (Source: P.A. 96-775, eff. 8-28-09; 97-609, eff. 8-26-11.)
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11 | Section 99. Effective date. This Act takes effect upon | ||||||
12 | becoming law.
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