(40 ILCS 5/16-133.1) (from Ch. 108 1/2, par. 16-133.1)

(Text of Section WITH the changes made by P.A. 98-599, which has been held unconstitutional)

Sec. 16-133.1. Automatic annual increase in annuity.

(a) This subsection (a) is subject to subsections (a-1) and (a-2). Each member with creditable service and retiring on or after August 26,
1969 is entitled to the automatic annual increases in annuity provided under
this Section while receiving a retirement annuity or disability retirement
annuity from the system.

An annuitant shall first be entitled to an initial increase under this
Section on the January 1 next following the first anniversary of retirement,
or January 1 of the year next following attainment of age 61, whichever is
later.  At such time, the system shall pay an initial increase determined as
follows:

(1) 1.5% of the originally granted retirement annuity or disability retirement annuity

multiplied by the number of years elapsed, if any, from the date of retirement until January 1, 1972, plus

(2) 2% of the originally granted annuity multiplied by the number of years elapsed, if

any, from the date of retirement or January 1, 1972, whichever is later, until January 1, 1978, plus

(3) 3% of the originally granted annuity multiplied by the number of years elapsed from

the date of retirement or January 1, 1978, whichever is later, until the effective date of the initial increase.

However, the initial annual increase calculated under this Section for the
recipient of a disability retirement annuity granted under Section 16-149.2
shall be reduced by an amount equal to the total of all increases in that
annuity received under Section 16-149.5 (but not exceeding 100% of the amount
of the initial increase otherwise provided under this Section).

Following the initial increase, automatic annual increases in annuity shall
be payable on each January 1 thereafter during the lifetime of the annuitant,
determined as a percentage of the originally granted retirement annuity
or disability retirement annuity for increases granted prior to January
1, 1990, and calculated as a percentage of the total amount of annuity,
including previous increases under this Section, for increases granted on
or after January 1, 1990, as follows:  1.5% for periods prior to January 1,
1972, 2% for periods after December 31, 1971 and prior to January 1, 1978,
and 3% for periods after December 31, 1977.

(a-1) Notwithstanding subsection (a), but subject to the provisions of subsection (a-2), all automatic increases payable under subsection (a) on or after the effective date of this amendatory Act of the 98th General Assembly shall be calculated as 3% of the lesser of (1) the total annuity
payable at the time of the increase, including previous
increases granted, or (2) $1,000 multiplied by the number of years of creditable service upon which the annuity is based; however, in the case of an initial increase under subsection (a)  that is subject to this subsection:

(i) if more than one year has elapsed from the date of retirement to the effective date

of the initial increase under this Section, the applicable percentage shall be the sum of the percentages for each such elapsed year; and

(ii) in the case of a disability retirement annuity granted under Section 16-149.2, the

initial increase shall be   subject to the reduction provided in subsection (a) for increases previously received   under Section 16-149.5.

Beginning January 1, 2016, the $1,000 referred to in item (2) of this subsection (a-1) shall be increased on each January 1 by the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12 months ending with the preceding September; these adjustments shall be cumulative and compounded.
For the purposes of this subsection (a-1), "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new dollar amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the System by November 1 of each year.

This subsection (a-1) is applicable without regard to whether the person is in service on or after the effective date of  this amendatory Act of the 98th General Assembly.

(a-2) Notwithstanding subsections (a) and (a-1), for an active or inactive Tier 1 member who has not begun to receive a retirement annuity under this Article before July 1, 2014:

(1) the second automatic annual increase payable under subsection (a) shall be at the

rate of 0% of the total annuity payable at the time of the increase if he or she is at least age 50 on the effective date of this amendatory Act;

(2) the second, fourth, and sixth automatic annual increases payable under subsection

(a) shall be at the rate of 0% of the total annuity payable at the time of the increase if he or she is at least age 47 but less than age 50 on the effective date of this amendatory Act;

(3) the second, fourth, sixth, and eighth automatic annual increases payable under

subsection (a) shall be at the rate of 0% of the total annuity payable at the time of the increase if he or she is at least age 44 but less than age 47 on the effective date of this amendatory Act; and

(4) the second, fourth, sixth, eighth, and tenth automatic annual increases payable

under subsection (a) shall be at the rate of 0% of the total annuity payable at the time of the increase if he or she is less than age 44 on the effective date of this amendatory Act.

For the purposes of Section 1-103.1, this subsection (a-2) is applicable without regard to whether the person is in service on or after the effective date of  this amendatory Act of the 98th General Assembly.

(b) The automatic annual increases in annuity provided under this Section
shall not be applicable unless a member has made contributions toward such
increases for a period equivalent to one full year of creditable service.
If a member contributes for service performed after August 26, 1969 but
the member becomes an annuitant before such contributions amount to one
full year's contributions based on the salary at the date of retirement,
he or she may pay the necessary balance of the contributions to the system
and be eligible for the automatic annual increases in annuity provided under
this Section.

(c) Each member shall make contributions toward the cost of the automatic
annual increases in annuity as provided under Section 16-152.

(d) An annuitant receiving a retirement annuity or disability retirement
annuity on July 1, 1969, who subsequently re-enters service as a teacher
is eligible for the automatic annual increases in annuity provided under
this Section if he or she renders at least one year of creditable service
following the latest re-entry.

(e) In addition to the automatic annual increases in annuity provided
under this Section, an annuitant who meets the service requirements of this
Section and whose retirement annuity or disability retirement annuity began
on or before January 1, 1971 shall receive, on January 1, 1981, an increase
in the annuity then being paid of one dollar per month for each year of
creditable service.  On January 1, 1982, an annuitant whose retirement
annuity or disability retirement annuity began on or before January 1, 1977
shall receive an increase in the annuity then being paid of one dollar per
month for each year of creditable service.

On January 1, 1987, any annuitant whose retirement annuity began
on or before January 1, 1977, shall receive an increase in the monthly
retirement annuity equal to 8¢ per year of creditable service times the
number of years that have elapsed since the annuity began.

(Source: P.A. 98-599, eff. 6-1-14.)

(Text of Section WITHOUT the changes made by P.A. 98-599, which has been held unconstitutional)

Sec. 16-133.1.

Automatic annual increase in annuity.

(a) Each member with creditable service and retiring on or after August 26,
1969 is entitled to the automatic annual increases in annuity provided under
this Section while receiving a retirement annuity or disability retirement
annuity from the system.

An annuitant shall first be entitled to an initial increase under this
Section on the January 1 next following the first anniversary of retirement,
or January 1 of the year next following attainment of age 61, whichever is
later.  At such time, the system shall pay an initial increase determined as
follows: