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| | 97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB1635 Introduced 2/9/2011, by Sen. Michael W. Frerichs SYNOPSIS AS INTRODUCED:
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| 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, 2012, 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 2012 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.
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| | | FISCAL NOTE ACT MAY APPLY | | PENSION IMPACT NOTE ACT MAY APPLY |
| | A BILL FOR |
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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 15-136 as follows:
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| 6 | | (40 ILCS 5/15-136) (from Ch. 108 1/2, par. 15-136)
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| 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.
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| 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:
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| 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
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| 21 | | after January 1, 1998, 2.2% of the final rate of earnings for |
| 22 | | each year of
service.
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| 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:
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| 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;
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| 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
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| 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.
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| 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
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| 23 | | 15-157(a).
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| 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.
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| 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.
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| 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.
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| 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
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| 26 | | more, except that the annuity for those persons having made an |
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| 1 | | 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.
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| 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
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| 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
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| 13 | | officer or firefighter in excess of 20. The retirement annuity |
| 14 | | for all other
service shall be computed under Rule 1.
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| 15 | | For purposes of this Rule 4, a participant's service as a |
| 16 | | firefighter
shall also include the following:
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| 17 | | (i) service that is performed while the person is an |
| 18 | | employee under
subsection (h) of Section 15-107; and
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| 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
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| 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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| 1 | | officer or firefighter, from the date of that transfer |
| 2 | | until the employee's
next termination of service with the |
| 3 | | University of Illinois.
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| 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
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| 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:
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| 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
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| 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
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| 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.
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| 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.
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| 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.
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| 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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| 1 | | the calculation of the
amount of a retirement annuity under |
| 2 | | this Rule 5.
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| 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.
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| 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.
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| 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:
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| 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;
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| 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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| 1 | | subsection (a) of Section 15-135; or
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| 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.
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| 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
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| 14 | | earnings.
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| 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:
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| 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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| 1 | | 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.
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| 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.
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| 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.
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| 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.
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| 21 | | On January 1, 2012, 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 2012 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
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| 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
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| 20 | | earnings was based.
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| 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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| 1 | | amount of such additional annuity.
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| 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.
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| 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.
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| 25 | | (i) On January 1, 1987, any annuitant whose retirement |
| 26 | | annuity began on or
before January 1, 1977, shall have the |