State of Illinois
90th General Assembly
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90_HB0199

      40 ILCS 5/7-141.1
          Amends the Illinois Municipal Retirement Fund Article  of
      the  Pension  Code  to  make  the  early  retirement  program
      available   to   employees   of  municipalities.    Effective
      immediately.
                                                     LRB9000637EGfg
                                               LRB9000637EGfg
 1        AN ACT to amend the Illinois  Pension  Code  by  changing
 2    Section 7-141.1.
 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-                LRB9000637EGfg
 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)  This  Section does not apply to any employer that is
11    a city, village, or incorporated town, nor to  the  employees
12    of  any  such employer.  All references in this Section to an
13    "employer" or "unit of  local  government"  are  specifically
14    intended  to  exclude every employer that is a city, village,
15    or incorporated town.
16        The benefits provided in this Section are available  only
17    to  members  employed  by  a  participating employer that has
18    filed with the Board of the Fund a  resolution  or  ordinance
19    expressly  providing  for the creation of an early retirement
20    incentive program under this Section for  its  employees  and
21    specifying   the  effective  date  of  the  early  retirement
22    incentive program.  Subject to the limitation  in  subsection
23    (h),   an  employer  may  adopt  a  resolution  or  ordinance
24    providing a program of early retirement incentives under this
25    Section at any time, but no more often than once in 5  years.
26        The resolution or ordinance shall be in substantially the
27    following form:
28                   RESOLUTION (ORDINANCE) NO. ....
29             A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
30             RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
31              IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
32        WHEREAS,  Section  7-141.1  of  the Illinois Pension Code
33    provides that a participating employer may elect to adopt  an
34    early  retirement  incentive  program offered by the Illinois
                            -3-                LRB9000637EGfg
 1    Municipal  Retirement  Fund  by  adopting  a  resolution   or
 2    ordinance; and
 3        WHEREAS, The goal of adopting an early retirement program
 4    is  to  realize  a  substantial savings in personnel costs by
 5    offering early retirement incentives to  employees  who  have
 6    accumulated many years of service credit; and
 7        WHEREAS,  Implementation  of the early retirement program
 8    will provide a budgeting tool to aid in  controlling  payroll
 9    costs; and
10        WHEREAS, The (name of governing body) has determined that
11    the  adoption  of an early retirement incentive program is in
12    the best interests of the (name of  participating  employer);
13    therefore be it
14        RESOLVED  (ORDAINED)  by  the (name of governing body) of
15    (name of participating employer) that:
16        (1)  The (name of  participating  employer)  does  hereby
17    adopt the Illinois Municipal Retirement Fund early retirement
18    incentive  program  as  provided  in  Section  7-141.1 of the
19    Illinois  Pension  Code.   The  early  retirement   incentive
20    program shall take effect on (date).
21        (2)  In  order  to  help  achieve  a true cost savings, a
22    person who  retires  under  the  early  retirement  incentive
23    program  shall  lose  those  incentives  if  he  or she later
24    accepts employment with any IMRF employer in a  position  for
25    which  participation in IMRF is required or is elected by the
26    employee.
27        (3)  In order to utilize an early retirement incentive as
28    a budgeting tool, the (name of participating  employer)  will
29    use  its best efforts either to limit the number of employees
30    who  replace  the  employees  who  retire  under  the   early
31    retirement  program  or  to  limit  the  salaries paid to the
32    employees who replace the  employees  who  retire  under  the
33    early retirement program.
34        (4)  The  effective  date  of  each employee's retirement
                            -4-                LRB9000637EGfg
 1    under this early retirement program shall be set by (name  of
 2    employer)  and shall be no earlier than the effective date of
 3    the program and no later than one year after  that  effective
 4    date;   except   that  the  employee  may  require  that  the
 5    retirement date set by the employer be no later than the June
 6    30 next occurring after the effective date of the program and
 7    no earlier than the date upon which  the  employee  qualifies
 8    for retirement.
 9        (5)  To  be  eligible  for the early retirement incentive
10    under this Section, the employee must have  attained  age  50
11    and  have  at  least 20 years of creditable service by his or
12    her retirement date.
13        (6)  The (clerk  or  secretary)  shall  promptly  file  a
14    certified  copy of this resolution (ordinance) with the Board
15    of Trustees of the Illinois Municipal Retirement Fund.
16    CERTIFICATION
17        I, (name), the (clerk  or  secretary)  of  the  (name  of
18    participating  employer)  of  the  County of (name), State of
19    Illinois, do hereby certify that I am the keeper of the books
20    and records of the (name of employer) and that the  foregoing
21    is  a  true and correct copy of a resolution (ordinance) duly
22    adopted by the (governing body) at a  meeting  duly  convened
23    and held on (date).
24    SEAL
25    (Signature of clerk or secretary)
26        (c)  To  be  eligible  for the benefits provided under an
27    early  retirement  incentive  program  adopted   under   this
28    Section, a member must:
29             (1)  be  a  participating employee of this Fund who,
30        on the effective date of the program, (i)  is  in  active
31        payroll status as an employee of a participating employer
32        that  has filed the required ordinance or resolution with
33        the Board, (ii) is on layoff status from such a  position
34        with a right of re-employment or recall to service, (iii)
                            -5-                LRB9000637EGfg
 1        is on a leave of absence from such a position, or (iv) is
 2        on  disability  but has not been receiving benefits under
 3        Section 7-146 or 7-150 for a period of more than 2  years
 4        from the date of application;
 5             (2)  have  never  previously  received  a retirement
 6        annuity  under  this  Article  or  under  the  Retirement
 7        Systems Reciprocal Act using service  credit  established
 8        under this Article;
 9             (3)  file  with  the  Board  within  60  days of the
10        effective date of the program an  application  requesting
11        the benefits provided in this Section;
12             (4)  have at least 20 years of creditable service in
13        the  Fund  by  the date of retirement, without the use of
14        any creditable service established under this Section;
15             (5)  have attained age 50 by the date of retirement,
16        without the use of any  age  enhancement  received  under
17        this Section; and
18             (6)  be  eligible  to  receive  a retirement annuity
19        under this Article by the date of retirement,  for  which
20        purpose   the  age  enhancement  and  creditable  service
21        established under this Section may be considered.
22        (d)  The employer shall determine the retirement date for
23    each employee participating in the early  retirement  program
24    adopted  under this Section.  The retirement date shall be no
25    earlier than the effective date of the program and  no  later
26    than  one  year  after  that  effective date, except that the
27    employee may require that the  retirement  date  set  by  the
28    employer  be  no  later than the June 30 next occurring after
29    the effective date of the program and  no  earlier  than  the
30    date  upon  which the employee qualifies for retirement.  The
31    employer shall give each employee participating in the  early
32    retirement  program  at  least  30 days written notice of the
33    employee's designated retirement date,  unless  the  employee
34    waives this notice requirement.
                            -6-                LRB9000637EGfg
 1        (e)  An  eligible  person  may establish up to 5 years of
 2    creditable service under this Section.  In addition, for each
 3    period of creditable service established under this  Section,
 4    a  person  shall  have  his  or  her age at retirement deemed
 5    enhanced by an equivalent period.
 6        The creditable service established under this Section may
 7    be  used  for  all  purposes  under  this  Article  and   the
 8    Retirement Systems Reciprocal Act, except for the computation
 9    of  final rate of earnings and the determination of earnings,
10    salary, or compensation under this or any  other  Article  of
11    the Code.
12        The age enhancement established under this Section may be
13    used   for   all   purposes  under  this  Article  (including
14    calculation  of  the  reduction  imposed  under   subdivision
15    (a)1b(iv)  of  Section  7-142),   except  for  purposes  of a
16    reversionary   annuity   under   Section   7-145   and    any
17    distributions  required  because of age.  The age enhancement
18    established under this Section may be used in  calculating  a
19    proportionate   annuity   payable  by  this  Fund  under  the
20    Retirement Systems Reciprocal Act, but shall not be  used  in
21    determining  benefits  payable  under  other Articles of this
22    Code under the Retirement Systems Reciprocal Act.
23        (f)  For all creditable service  established  under  this
24    Section,  the  member  must  pay  to  the  Fund  an  employee
25    contribution  consisting  of  4.5%  of  the  member's highest
26    annual salary rate used in the  determination  of  the  final
27    rate  of  earnings  for  retirement annuity purposes for each
28    year of creditable service granted under this  Section.   For
29    creditable service established under this Section by a person
30    who  is  a  sheriff's  law  enforcement employee to be deemed
31    service as a sheriff's law enforcement employee, the employee
32    contribution shall be at the rate of 6.5% of  highest  annual
33    salary per year of creditable service granted.  Contributions
34    for  fractions  of  a year of service shall be prorated.  Any
                            -7-                LRB9000637EGfg
 1    amounts that are disregarded in determining the final rate of
 2    earnings under subdivision (d)(5) of Section 7-116 (the  125%
 3    rule)  shall  also be disregarded in determining the required
 4    contribution under this subsection (f).
 5        The employee contribution shall be paid to  the  Fund  as
 6    follows:  If the member is entitled to a lump sum payment for
 7    accumulated  vacation,  sick  leave,  or  personal leave upon
 8    withdrawal  from  service,  the  employer  shall  deduct  the
 9    employee contribution from that lump sum and pay the deducted
10    amount directly to the Fund.  If there is no  such  lump  sum
11    payment or the required employee contribution exceeds the net
12    amount  of  the  lump  sum payment, then the remaining amount
13    due, at the option of the employee, may either be paid to the
14    Fund before  the  annuity  commences  or  deducted  from  the
15    retirement annuity in 24 equal monthly installments.
16        (g)  An annuitant who has received any age enhancement or
17    creditable  service under this Section and thereafter accepts
18    employment with or enters into a personal  services  contract
19    with an employer under this Article thereby forfeits that age
20    enhancement  and  creditable  service.   A  person forfeiting
21    early retirement incentives under this  subsection  (i)  must
22    repay  to  the  Fund  that  portion of the retirement annuity
23    already  received  which  is  attributable   to   the   early
24    retirement  incentives  that  are being forfeited, (ii) shall
25    not be eligible to participate in any future early retirement
26    program adopted under this Section, and (iii) is entitled  to
27    a  refund  of the employee contribution paid under subsection
28    (f).  The Board shall deduct the required repayment from  the
29    refund  and  may  impose  a  reasonable  payment schedule for
30    repaying the amount, if any, by which the required  repayment
31    exceeds the refund amount.
32        (h)  The  additional  unfunded  liability  accruing  as a
33    result of the adoption  of  a  program  of  early  retirement
34    incentives  under  this  Section  by  an  employer  shall  be
                            -8-                LRB9000637EGfg
 1    amortized over a period of 10 years beginning on January 1 of
 2    the second calendar year following the calendar year in which
 3    the latest date for beginning to receive a retirement annuity
 4    under  the  program  (as  determined  by  the  employer under
 5    subsection (d) of  this  Section)  occurs;  except  that  the
 6    employer may provide for a shorter amortization period (of no
 7    less  than  5  years)  by adopting an ordinance or resolution
 8    specifying  the  length  of  the  amortization   period   and
 9    submitting a certified copy of the ordinance or resolution to
10    the  Fund  no later than 6 months after the effective date of
11    the program.  An employer, at its discretion, may  accelerate
12    payments to the Fund.
13        An  employer  may  provide more than one early retirement
14    incentive program  for  its  employees  under  this  Section.
15    However,  an  employer  that has provided an early retirement
16    incentive program for its employees under  this  Section  may
17    not  provide another early retirement incentive program under
18    this Section until (1) the liability arising from the earlier
19    program has been fully paid to the Fund and (2)  at  least  6
20    years  have  elapsed  from the effective date of the previous
21    program.
22    (Source: P.A. 89-329, eff. 8-17-95.)
23        Section 99.  Effective date.  This Act takes effect  upon
24    becoming law.

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