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90_HB2481
40 ILCS 5/7-137.1 from Ch. 108 1/2, par. 7-137.1
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 hold an elected office and receive
compensation for holding that office, so long as the
annuitant does not participate in the Fund with respect to
that office while receiving early retirement incentives.
Removes the January 1, 1992 deadline for revoking an election
to participate in the Fund with respect to an elected office.
Amends the State Mandates Act to require implementation
without reimbursement. Effective immediately.
LRB9008863EGfg
LRB9008863EGfg
1 AN ACT to amend the Illinois Pension Code by changing
2 Sections 7-137.1 and 7-141.1 and to amend the State Mandates
3 Act.
4 Be it enacted by the People of the State of Illinois,
5 represented in the General Assembly:
6 Section 5. The Illinois Pension Code is amended by
7 changing Sections 7-137.1 and 7-141.1 as follows:
8 (40 ILCS 5/7-137.1) (from Ch. 108 1/2, par. 7-137.1)
9 Sec. 7-137.1. Elected officials.
10 (a) A person holding an elective office who has elected
11 to participate in the Fund with respect to while in that
12 office may revoke that election and cease participating in
13 the Fund by notifying the Board in writing before January 1,
14 1992.
15 Upon such revocation, the person shall forfeit all
16 creditable service earned with respect to while holding that
17 office, and the Board shall refund to the person, without
18 interest, all employee contributions paid for the forfeited
19 creditable service. The Board shall also refund or credit to
20 the employing municipality, without interest, the employer
21 contributions relating to the forfeited service, except those
22 for death and disability.
23 (b) Notwithstanding the provisions of Sections 7-141 and
24 7-144, beginning January 1, 1992, a person who holds an
25 elective office and has not elected to participate in the
26 Fund with respect to that office (or has revoked his or her
27 election to participate with respect to that office under
28 subsection (a) of this Section) shall not be disqualified
29 from receiving a retirement annuity by reason of holding that
30 such office, provided that the annuity is not based on any
31 credits received for participating with respect to while
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1 holding that office.
2 (Source: P.A. 87-740.)
3 (40 ILCS 5/7-141.1)
4 Sec. 7-141.1. Early retirement incentive.
5 (a) The General Assembly finds and declares that:
6 (1) Units of local government across the State have
7 been functioning under a financial crisis.
8 (2) This financial crisis is expected to continue.
9 (3) Units of local government must depend on
10 additional sources of revenue and, when those sources are
11 not forthcoming, must establish cost-saving programs.
12 (4) An early retirement incentive designed
13 specifically to target highly-paid senior employees could
14 result in significant annual cost savings.
15 (5) The early retirement incentive should be made
16 available only to those units of local government that
17 determine that an early retirement incentive is in their
18 best interest.
19 (6) A unit of local government adopting a program
20 of early retirement incentives under this Section is
21 encouraged to implement personnel procedures to prohibit,
22 for at least 5 years, the rehiring (whether on payroll or
23 by independent contract) of employees who receive early
24 retirement incentives.
25 (7) A unit of local government adopting a program
26 of early retirement incentives under this Section is also
27 encouraged to replace as few of the participating
28 employees as possible and to hire replacement employees
29 for salaries totaling no more than 80% of the total
30 salaries formerly paid to the employees who participate
31 in the early retirement program.
32 It is the primary purpose of this Section to encourage
33 units of local government that can realize true cost savings,
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1 or have determined that an early retirement program is in
2 their best interest, to implement an early retirement
3 program.
4 (b) Until the effective date of this amendatory Act of
5 1997, this Section does not apply to any employer that is a
6 city, village, or incorporated town, nor to the employees of
7 any such employer. Beginning on the effective date of this
8 amendatory Act of 1997, any employer under this Article,
9 including an employer that is a city, village, or
10 incorporated town, may establish an early retirement
11 incentive program for its employees under this Section. The
12 decision of a city, village, or incorporated town to consider
13 or establish an early retirement program is at the sole
14 discretion of that city, village, or incorporated town, and
15 nothing in this amendatory Act of 1997 limits or otherwise
16 diminishes this discretion. Nothing contained in this
17 Section shall be construed to require a city, village, or
18 incorporated town to establish an early retirement program
19 and no city, village, or incorporated town may be compelled
20 to implement such a program.
21 The benefits provided in this Section are available only
22 to members employed by a participating employer that has
23 filed with the Board of the Fund a resolution or ordinance
24 expressly providing for the creation of an early retirement
25 incentive program under this Section for its employees and
26 specifying the effective date of the early retirement
27 incentive program. Subject to the limitation in subsection
28 (h), an employer may adopt a resolution or ordinance
29 providing a program of early retirement incentives under this
30 Section at any time.
31 The resolution or ordinance shall be in substantially the
32 following form:
33 RESOLUTION (ORDINANCE) NO. ....
34 A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
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1 RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
2 IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
3 WHEREAS, Section 7-141.1 of the Illinois Pension Code
4 provides that a participating employer may elect to adopt an
5 early retirement incentive program offered by the Illinois
6 Municipal Retirement Fund by adopting a resolution or
7 ordinance; and
8 WHEREAS, The goal of adopting an early retirement program
9 is to realize a substantial savings in personnel costs by
10 offering early retirement incentives to employees who have
11 accumulated many years of service credit; and
12 WHEREAS, Implementation of the early retirement program
13 will provide a budgeting tool to aid in controlling payroll
14 costs; and
15 WHEREAS, The (name of governing body) has determined that
16 the adoption of an early retirement incentive program is in
17 the best interests of the (name of participating employer);
18 therefore be it
19 RESOLVED (ORDAINED) by the (name of governing body) of
20 (name of participating employer) that:
21 (1) The (name of participating employer) does hereby
22 adopt the Illinois Municipal Retirement Fund early retirement
23 incentive program as provided in Section 7-141.1 of the
24 Illinois Pension Code. The early retirement incentive
25 program shall take effect on (date).
26 (2) In order to help achieve a true cost savings, a
27 person who retires under the early retirement incentive
28 program shall lose those incentives if he or she later
29 accepts employment with any IMRF employer in a position for
30 which participation in IMRF is required or is elected by the
31 employee.
32 (3) In order to utilize an early retirement incentive as
33 a budgeting tool, the (name of participating employer) will
34 use its best efforts either to limit the number of employees
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1 who replace the employees who retire under the early
2 retirement program or to limit the salaries paid to the
3 employees who replace the employees who retire under the
4 early retirement program.
5 (4) The effective date of each employee's retirement
6 under 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
10 retirement date set by the employer be no later than the June
11 30 next occurring after the effective date of the program and
12 no earlier than the date upon which the employee qualifies
13 for retirement.
14 (5) To be eligible for the early retirement incentive
15 under this Section, the employee must have attained age 50
16 and have at least 20 years of creditable service by his or
17 her retirement date.
18 (6) The (clerk or secretary) shall promptly file a
19 certified copy of this resolution (ordinance) with the Board
20 of Trustees of the Illinois Municipal Retirement Fund.
21 CERTIFICATION
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
26 is a true and correct copy of a resolution (ordinance) duly
27 adopted by the (governing body) at a meeting duly convened
28 and held on (date).
29 SEAL
30 (Signature of clerk or secretary)
31 (c) To be eligible for the benefits provided under an
32 early retirement incentive program adopted under this
33 Section, a member must:
34 (1) be a participating employee of this Fund who,
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1 on the effective date of the program, (i) is in active
2 payroll status as an employee of a participating employer
3 that has filed the required ordinance or resolution with
4 the Board, (ii) is on layoff status from such a position
5 with a right of re-employment or recall to service, (iii)
6 is on a leave of absence from such a position, or (iv) is
7 on disability but has not been receiving benefits under
8 Section 7-146 or 7-150 for a period of more than 2 years
9 from the date of application;
10 (2) have never previously received a retirement
11 annuity under this Article or under the Retirement
12 Systems Reciprocal Act using service credit established
13 under this Article;
14 (3) file with the Board within 60 days of the
15 effective date of the program an application requesting
16 the benefits provided in this Section;
17 (4) have at least 20 years of creditable service in
18 the Fund by the date of retirement, without the use of
19 any creditable service established under this Section;
20 (5) have attained age 50 by the date of retirement,
21 without the use of any age enhancement received under
22 this Section; and
23 (6) be eligible to receive a retirement annuity
24 under this Article by the date of retirement, for which
25 purpose the age enhancement and creditable service
26 established under this Section may be considered.
27 (d) The employer shall determine the retirement date for
28 each employee participating in the early retirement program
29 adopted under this Section. The retirement date shall be no
30 earlier than the effective date of the program and no later
31 than one year after that effective date, except that the
32 employee may require that the retirement date set by the
33 employer be no later than the June 30 next occurring after
34 the effective date of the program and no earlier than the
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1 date upon which the employee qualifies for retirement. The
2 employer shall give each employee participating in the early
3 retirement program at least 30 days written notice of the
4 employee's designated retirement date, unless the employee
5 waives this notice requirement.
6 (e) An eligible person may establish up to 5 years of
7 creditable service under this Section. In addition, for each
8 period of creditable service established under this Section,
9 a person shall have his or her age at retirement deemed
10 enhanced by an equivalent period.
11 The creditable service established under this Section may
12 be used for all purposes under this Article and the
13 Retirement Systems Reciprocal Act, except for the computation
14 of final rate of earnings and the determination of earnings,
15 salary, or compensation under this or any other Article of
16 the Code.
17 The age enhancement established under this Section may be
18 used for all purposes under this Article (including
19 calculation of the reduction imposed under subdivision
20 (a)1b(iv) of Section 7-142), except for purposes of a
21 reversionary annuity under Section 7-145 and any
22 distributions required because of age. The age enhancement
23 established under this Section may be used in calculating a
24 proportionate annuity payable by this Fund under the
25 Retirement Systems Reciprocal Act, but shall not be used in
26 determining benefits payable under other Articles of this
27 Code under the Retirement Systems Reciprocal Act.
28 (f) For all creditable service established under this
29 Section, the member must pay to the Fund an employee
30 contribution consisting of 4.5% of the member's highest
31 annual salary rate used in the determination of the final
32 rate of earnings for retirement annuity purposes for each
33 year of creditable service granted under this Section. For
34 creditable service established under this Section by a person
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1 who is a sheriff's law enforcement employee to be deemed
2 service as a sheriff's law enforcement employee, the employee
3 contribution shall be at the rate of 6.5% of highest annual
4 salary per year of creditable service granted. Contributions
5 for fractions of a year of service shall be prorated. Any
6 amounts that are disregarded in determining the final rate of
7 earnings under subdivision (d)(5) of Section 7-116 (the 125%
8 rule) shall also be disregarded in determining the required
9 contribution under this subsection (f).
10 The employee contribution shall be paid to the Fund as
11 follows: If the member is entitled to a lump sum payment for
12 accumulated vacation, sick leave, or personal leave upon
13 withdrawal from service, the employer shall deduct the
14 employee contribution from that lump sum and pay the deducted
15 amount directly to the Fund. If there is no such lump sum
16 payment or the required employee contribution exceeds the net
17 amount of the lump sum payment, then the remaining amount
18 due, at the option of the employee, may either be paid to the
19 Fund before the annuity commences or deducted from the
20 retirement annuity in 24 equal monthly installments.
21 (g) An annuitant who has received any age enhancement or
22 creditable service under this Section and thereafter accepts
23 employment with or enters into a personal services contract
24 with an employer under this Article thereby forfeits that age
25 enhancement and creditable service. However, this does not
26 prohibit an annuitant who is receiving early retirement
27 incentives under this Section from holding an elected office
28 and receiving compensation for holding that office, so long
29 as the annuitant does not participate in the Fund with
30 respect to that office while receiving early retirement
31 incentives under this Section.
32 A person forfeiting early retirement incentives under
33 this subsection (i) must repay to the Fund that portion of
34 the retirement annuity already received which is attributable
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1 to the early retirement incentives that are being forfeited,
2 (ii) shall not be eligible to participate in any future early
3 retirement program adopted under this Section, and (iii) is
4 entitled to a refund of the employee contribution paid under
5 subsection (f). The Board shall deduct the required
6 repayment from the refund and may impose a reasonable payment
7 schedule for repaying the amount, if any, by which the
8 required repayment exceeds the refund amount.
9 (h) The additional unfunded liability accruing as a
10 result of the adoption of a program of early retirement
11 incentives under this Section by an employer shall be
12 amortized over a period of 10 years beginning on January 1 of
13 the second calendar year following the calendar year in which
14 the latest date for beginning to receive a retirement annuity
15 under the program (as determined by the employer under
16 subsection (d) of this Section) occurs; except that the
17 employer may provide for a shorter amortization period (of no
18 less than 5 years) by adopting an ordinance or resolution
19 specifying the length of the amortization period and
20 submitting a certified copy of the ordinance or resolution to
21 the Fund no later than 6 months after the effective date of
22 the program. An employer, at its discretion, may accelerate
23 payments to the Fund.
24 An employer may provide more than one early retirement
25 incentive program for its employees under this Section.
26 However, an employer that has provided an early retirement
27 incentive program for its employees under this Section may
28 not provide another early retirement incentive program under
29 this Section until the liability arising from the earlier
30 program has been fully paid to the Fund.
31 (Source: P.A. 89-329, eff. 8-17-95; 90-32, eff. 6-27-97.)
32 Section 90. The State Mandates Act is amended by adding
33 Section 8.22 as follows:
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1 (30 ILCS 805/8.22 new)
2 Sec. 8.22. Exempt mandate. Notwithstanding Sections 6
3 and 8 of this Act, no reimbursement by the State is required
4 for the implementation of any mandate created by this
5 amendatory Act of 1998.
6 Section 99. Effective date. This Act takes effect upon
7 becoming law.