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91_HB2734
LRB9102383EGfg
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
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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) Until the effective date of this amendatory Act of
11 1997, this Section does not apply to any employer that is a
12 city, village, or incorporated town, nor to the employees of
13 any such employer. Beginning on the effective date of this
14 amendatory Act of 1997, any employer under this Article,
15 including an employer that is a city, village, or
16 incorporated town, may establish an early retirement
17 incentive program for its employees under this Section. The
18 decision of a city, village, or incorporated town to consider
19 or establish an early retirement program is at the sole
20 discretion of that city, village, or incorporated town, and
21 nothing in this amendatory Act of 1997 limits or otherwise
22 diminishes this discretion. Nothing contained in this
23 Section shall be construed to require a city, village, or
24 incorporated town to establish an early retirement program
25 and no city, village, or incorporated town may be compelled
26 to implement such a program.
27 The benefits provided in this Section are available only
28 to members employed by a participating employer that has
29 filed with the Board of the Fund a resolution or ordinance
30 expressly providing for the creation of an early retirement
31 incentive program under this Section for its employees and
32 specifying the effective date of the early retirement
33 incentive program. Subject to the limitation in subsection
34 (h), an employer may adopt a resolution or ordinance
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1 providing a program of early retirement incentives under this
2 Section at any time.
3 The resolution or ordinance shall be in substantially the
4 following form:
5 RESOLUTION (ORDINANCE) NO. ....
6 A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
7 RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
8 IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
9 WHEREAS, Section 7-141.1 of the Illinois Pension Code
10 provides that a participating employer may elect to adopt an
11 early retirement incentive program offered by the Illinois
12 Municipal Retirement Fund by adopting a resolution or
13 ordinance; and
14 WHEREAS, The goal of adopting an early retirement program
15 is to realize a substantial savings in personnel costs by
16 offering early retirement incentives to employees who have
17 accumulated many years of service credit; and
18 WHEREAS, Implementation of the early retirement program
19 will provide a budgeting tool to aid in controlling payroll
20 costs; and
21 WHEREAS, The (name of governing body) has determined that
22 the adoption of an early retirement incentive program is in
23 the best interests of the (name of participating employer);
24 therefore be it
25 RESOLVED (ORDAINED) by the (name of governing body) of
26 (name of participating employer) that:
27 (1) The (name of participating employer) does hereby
28 adopt the Illinois Municipal Retirement Fund early retirement
29 incentive program as provided in Section 7-141.1 of the
30 Illinois Pension Code. The early retirement incentive
31 program shall take effect on (date).
32 (2) In order to help achieve a true cost savings, a
33 person who retires under the early retirement incentive
34 program shall lose those incentives if he or she later
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1 accepts employment with any IMRF employer in a position for
2 which participation in IMRF is required or is elected by the
3 employee.
4 (3) In order to utilize an early retirement incentive as
5 a budgeting tool, the (name of participating employer) will
6 use its best efforts either to limit the number of employees
7 who replace the employees who retire under the early
8 retirement program or to limit the salaries paid to the
9 employees who replace the employees who retire under the
10 early retirement program.
11 (4) The effective date of each employee's retirement
12 under this early retirement program shall be set by (name of
13 employer) and shall be no earlier than the effective date of
14 the program and no later than one year after that effective
15 date; except that the employee may require that the
16 retirement date set by the employer be no later than the June
17 30 next occurring after the effective date of the program and
18 no earlier than the date upon which the employee qualifies
19 for retirement.
20 (5) To be eligible for the early retirement incentive
21 under this Section, the employee must have attained age 50
22 and have at least 20 years of creditable service by his or
23 her retirement date.
24 (6) The (clerk or secretary) shall promptly file a
25 certified copy of this resolution (ordinance) with the Board
26 of Trustees of the Illinois Municipal Retirement Fund.
27 CERTIFICATION
28 I, (name), the (clerk or secretary) of the (name of
29 participating employer) of the County of (name), State of
30 Illinois, do hereby certify that I am the keeper of the books
31 and records of the (name of employer) and that the foregoing
32 is a true and correct copy of a resolution (ordinance) duly
33 adopted by the (governing body) at a meeting duly convened
34 and held on (date).
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1 SEAL
2 (Signature of clerk or secretary)
3 (c) To be eligible for the benefits provided under an
4 early retirement incentive program adopted under this
5 Section, a member must:
6 (1) be a participating employee of this Fund who,
7 on the effective date of the program, (i) is in active
8 payroll status as an employee of a participating employer
9 that has filed the required ordinance or resolution with
10 the Board, (ii) is on layoff status from such a position
11 with a right of re-employment or recall to service, (iii)
12 is on a leave of absence from such a position, or (iv) is
13 on disability but has not been receiving benefits under
14 Section 7-146 or 7-150 for a period of more than 2 years
15 from the date of application;
16 (2) have never previously received a retirement
17 annuity under this Article or under the Retirement
18 Systems Reciprocal Act using service credit established
19 under this Article;
20 (3) file with the Board within 60 days of the
21 effective date of the program an application requesting
22 the benefits provided in this Section;
23 (4) have at least 20 years of creditable service in
24 the Fund by the date of retirement, without the use of
25 any creditable service established under this Section;
26 (5) have attained age 50 by the date of retirement,
27 without the use of any age enhancement received under
28 this Section; and
29 (6) be eligible to receive a retirement annuity
30 under this Article by the date of retirement, for which
31 purpose the age enhancement and creditable service
32 established under this Section may be considered.
33 (d) The employer shall determine the retirement date for
34 each employee participating in the early retirement program
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1 adopted under this Section. The retirement date shall be no
2 earlier than the effective date of the program and no later
3 than one year after that effective date, except that the
4 employee may require that the retirement date set by the
5 employer be no later than the June 30 next occurring after
6 the effective date of the program and no earlier than the
7 date upon which the employee qualifies for retirement. The
8 employer shall give each employee participating in the early
9 retirement program at least 30 days written notice of the
10 employee's designated retirement date, unless the employee
11 waives this notice requirement.
12 (e) An eligible person may establish up to 5 years of
13 creditable service under this Section. In addition, for each
14 period of creditable service established under this Section,
15 a person shall have his or her age at retirement deemed
16 enhanced by an equivalent period.
17 The creditable service established under this Section may
18 be used for all purposes under this Article and the
19 Retirement Systems Reciprocal Act, except for the computation
20 of final rate of earnings and the determination of earnings,
21 salary, or compensation under this or any other Article of
22 the Code.
23 The age enhancement established under this Section may be
24 used for all purposes under this Article (including
25 calculation of the reduction imposed under subdivision
26 (a)1b(iv) of Section 7-142), except for purposes of a
27 reversionary annuity under Section 7-145 and any
28 distributions required because of age. The age enhancement
29 established under this Section may be used in calculating a
30 proportionate annuity payable by this Fund under the
31 Retirement Systems Reciprocal Act, but shall not be used in
32 determining benefits payable under other Articles of this
33 Code under the Retirement Systems Reciprocal Act.
34 (f) For all creditable service established under this
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1 Section, the member must pay to the Fund an employee
2 contribution consisting of 4.5% of the member's highest
3 annual salary rate used in the determination of the final
4 rate of earnings for retirement annuity purposes for each
5 year of creditable service granted under this Section. For
6 creditable service established under this Section by a person
7 who is a sheriff's law enforcement employee to be deemed
8 service as a sheriff's law enforcement employee, the employee
9 contribution shall be at the rate of 6.5% of highest annual
10 salary per year of creditable service granted. Contributions
11 for fractions of a year of service shall be prorated. Any
12 amounts that are disregarded in determining the final rate of
13 earnings under subdivision (d)(5) of Section 7-116 (the 125%
14 rule) shall also be disregarded in determining the required
15 contribution under this subsection (f).
16 The employee contribution shall be paid to the Fund as
17 follows: If the member is entitled to a lump sum payment for
18 accumulated vacation, sick leave, or personal leave upon
19 withdrawal from service, the employer shall deduct the
20 employee contribution from that lump sum and pay the deducted
21 amount directly to the Fund. If there is no such lump sum
22 payment or the required employee contribution exceeds the net
23 amount of the lump sum payment, then the remaining amount
24 due, at the option of the employee, may either be paid to the
25 Fund before the annuity commences or deducted from the
26 retirement annuity in 24 equal monthly installments.
27 (g) An annuitant who has received any age enhancement or
28 creditable service under this Section and thereafter accepts
29 employment with or enters into a personal services contract
30 with an employer under this Article thereby forfeits that age
31 enhancement and creditable service; except that this
32 restriction does not apply to service in an elective office,
33 so long as the annuitant does not participate in this Fund
34 with respect to that office. A person forfeiting early
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1 retirement incentives under this subsection (i) must repay to
2 the Fund that portion of the retirement annuity already
3 received which is attributable to the early retirement
4 incentives that are being forfeited, (ii) shall not be
5 eligible to participate in any future early retirement
6 program adopted under this Section, and (iii) is entitled to
7 a refund of the employee contribution paid under subsection
8 (f). The Board shall deduct the required repayment from the
9 refund and may impose a reasonable payment schedule for
10 repaying the amount, if any, by which the required repayment
11 exceeds the refund amount.
12 (h) The additional unfunded liability accruing as a
13 result of the adoption of a program of early retirement
14 incentives under this Section by an employer shall be
15 amortized over a period of 10 years beginning on January 1 of
16 the second calendar year following the calendar year in which
17 the latest date for beginning to receive a retirement annuity
18 under the program (as determined by the employer under
19 subsection (d) of this Section) occurs; except that the
20 employer may provide for a shorter amortization period (of no
21 less than 5 years) by adopting an ordinance or resolution
22 specifying the length of the amortization period and
23 submitting a certified copy of the ordinance or resolution to
24 the Fund no later than 6 months after the effective date of
25 the program. An employer, at its discretion, may accelerate
26 payments to the Fund.
27 An employer may provide more than one early retirement
28 incentive program for its employees under this Section.
29 However, an employer that has provided an early retirement
30 incentive program for its employees under this Section may
31 not provide another early retirement incentive program under
32 this Section until the liability arising from the earlier
33 program has been fully paid to the Fund.
34 (Source: P.A. 89-329, eff. 8-17-95; 90-32, eff. 6-27-97.)
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.
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