SB2914sam001 96TH GENERAL ASSEMBLY

Sen. Chris Lauzen

Filed: 3/11/2010

09600SB2914sam001 LRB096 16968 AMC 38762 a

AMENDMENT TO SENATE BILL 2914

AMENDMENT NO. ______. Amend Senate Bill 2914 by replacing everything after the enacting clause with the following:

"ARTICLE 1.

Section 1-5. The Illinois Pension Code is amended by changing Sections 2-126, 14-133, 15-157, 16-152, and 18-133 as follows:

(40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)

Sec. 2-126. Contributions by participants.

(a) Each participant shall contribute toward the cost of his or her retirement annuity a percentage of each payment of salary received by him or her for service as a member as follows: for service between October 31, 1947 and January 1, 1959, 5%; for service between January 1, 1959 and June 30, 1969, 6%; for service between July 1, 1969 and January 10, 1973, 6 1/2%; for service after January 10, 1973, 7%; for service after December 31, 1981, 8 1/2%.

(b) Beginning August 2, 1949, each male participant, and from July 1, 1971, each female participant shall contribute towards the cost of the survivor's annuity 2% of salary.

A participant who has no eligible survivor's annuity beneficiary may elect to cease making contributions for survivor's annuity under this subsection. A survivor's annuity shall not be payable upon the death of a person who has made this election, unless prior to that death the election has been revoked and the amount of the contributions that would have been paid under this subsection in the absence of the election is paid to the System, together with interest at the rate of 4% per year from the date the contributions would have been made to the date of payment.

(c) Beginning July 1, 1967, each participant shall contribute 1% of salary towards the cost of automatic increase in annuity provided in Section 2-119.1. These contributions shall be made concurrently with contributions for retirement annuity purposes.

(d) In addition, each participant serving as an officer of the General Assembly shall contribute, for the same purposes and at the same rates as are required of a regular participant, on each additional payment received as an officer. If the participant serves as an officer for at least 2 but less than 4 years, he or she shall contribute an amount equal to the amount that would have been contributed had the participant served as an officer for 4 years. Persons who serve as officers in the 87th General Assembly but cannot receive the additional payment to officers because of the ban on increases in salary during their terms may nonetheless make contributions based on those additional payments for the purpose of having the additional payments included in their highest salary for annuity purposes; however, persons electing to make these additional contributions must also pay an amount representing the corresponding employer contributions, as calculated by the System.

(e) Notwithstanding anything in this Section to the contrary, effective July 1, 2011, all participants shall be required to contribute 7% of salary, and no prior contribution increases or other additional contributions specified by this Section shall apply to any participant for service on or after July 1, 2011. With respect to participants who are not later entrants, the 7% contribution rate specified in this paragraph shall be replaced with the contribution rates in effect under Sections 2-126(a)-(c) if the benefit provisions added under Sections 2-400, 2-405, 2-410, 2-415, or 2-420 are invalidated.

(Source: P.A. 90-766, eff. 8-14-98.)

(40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)

Sec. 14-133. Contributions on behalf of members.

(a) Each participating employee shall make contributions to the System, based on the employee's compensation, as follows:

(1) Covered employees, except as indicated below, 3.5% for retirement annuity, and 0.5% for a widow or survivors annuity;

(2) Noncovered employees, except as indicated below, 7% for retirement annuity and 1% for a widow or survivors annuity;

(3) Noncovered employees serving in a position in which "eligible creditable service" as defined in Section 14-110 may be earned, 1% for a widow or survivors annuity plus the following amount for retirement annuity: 8.5% through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5% in 2004 and thereafter;

(4) Covered employees serving in a position in which "eligible creditable service" as defined in Section 14-110 may be earned, 0.5% for a widow or survivors annuity plus the following amount for retirement annuity: 5% through December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004 and thereafter;

(5) Each security employee of the Department of Corrections or of the Department of Human Services who is a covered employee, 0.5% for a widow or survivors annuity plus the following amount for retirement annuity: 5% through December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004 and thereafter;

(6) Each security employee of the Department of Corrections or of the Department of Human Services who is not a covered employee, 1% for a widow or survivors annuity plus the following amount for retirement annuity: 8.5% through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5% in 2004 and thereafter.

(7) Notwithstanding anything in this Section to the contrary, effective July 1, 2011, all covered employees shall be required to contribute 5.25% of compensation, all noncovered employees shall be required to contribute 7% of compensation, and no prior contribution increases or other additional contributions specified by this Section shall apply to any employee for service on or after July 1, 2011. With respect to participants who are not later entrants, the contribution rates specified in this paragraph shall be replaced with the contribution rates in effect under Sections 14-133(a)(1) through (a)(6) if the benefit provisions added under Sections 14-400, 14-405, 14-410, 14-415, or 14-420 are invalidated.

(b) Contributions shall be in the form of a deduction from compensation and shall be made notwithstanding that the compensation paid in cash to the employee shall be reduced thereby below the minimum prescribed by law or regulation. Each member is deemed to consent and agree to the deductions from compensation provided for in this Article, and shall receipt in full for salary or compensation.

(Source: P.A. 92-14, eff. 6-28-01.)

(40 ILCS 5/15-157) (from Ch. 108 1/2, par. 15-157)

Sec. 15-157. Employee Contributions.

(a) Each participating employee shall make contributions towards the retirement benefits payable under the retirement program applicable to the employee from each payment of earnings applicable to employment under this system on and after the date of becoming a participant as follows: Prior to September 1, 1949, 3 1/2% of earnings; from September 1, 1949 to August 31, 1955, 5%; from September 1, 1955 to August 31, 1969, 6%; from September 1, 1969, 6 1/2%. These contributions are to be considered as normal contributions for purposes of this Article.

Each participant who is a police officer or firefighter shall make normal contributions of 8% of each payment of earnings applicable to employment as a police officer or firefighter under this system on or after September 1, 1981, unless he or she files with the board within 60 days after the effective date of this amendatory Act of 1991 or 60 days after the board receives notice that he or she is employed as a police officer or firefighter, whichever is later, a written notice waiving the retirement formula provided by Rule 4 of Section 15-136. This waiver shall be irrevocable. If a participant had met the conditions set forth in Section 15-132.1 prior to the effective date of this amendatory Act of 1991 but failed to make the additional normal contributions required by this paragraph, he or she may elect to pay the additional contributions plus compound interest at the effective rate. If such payment is received by the board, the service shall be considered as police officer service in calculating the retirement annuity under Rule 4 of Section 15-136. While performing service described in clause (i) or (ii) of Rule 4 of Section 15-136, a participating employee shall be deemed to be employed as a firefighter for the purpose of determining the rate of employee contributions under this Section.

(b) Starting September 1, 1969, each participating employee shall make additional contributions of 1/2 of 1% of earnings to finance a portion of the cost of the annual increases in retirement annuity provided under Section 15-136, except that with respect to participants in the self-managed plan this additional contribution shall be used to finance the benefits obtained under that retirement program.

(c) In addition to the amounts described in subsections (a) and (b) of this Section, each participating employee shall make contributions of 1% of earnings applicable under this system on and after August 1, 1959. The contributions made under this subsection (c) shall be considered as survivor's insurance contributions for purposes of this Article if the employee is covered under the traditional benefit package, and such contributions shall be considered as additional contributions for purposes of this Article if the employee is participating in the self-managed plan or has elected to participate in the portable benefit package and has completed the applicable one-year waiting period. Contributions in excess of $80 during any fiscal year beginning before August 31, 1969 and in excess of $120 during any fiscal year thereafter until September 1, 1971 shall be considered as additional contributions for purposes of this Article.

(d) If the board by board rule so permits and subject to such conditions and limitations as may be specified in its rules, a participant may make other additional contributions of such percentage of earnings or amounts as the participant shall elect in a written notice thereof received by the board.

(e) That fraction of a participant's total accumulated normal contributions, the numerator of which is equal to the number of years of service in excess of that which is required to qualify for the maximum retirement annuity, and the denominator of which is equal to the total service of the participant, shall be considered as accumulated additional contributions. The determination of the applicable maximum annuity and the adjustment in contributions required by this provision shall be made as of the date of the participant's retirement.

(f) Notwithstanding the foregoing, a participating employee shall not be required to make contributions under this Section after the date upon which continuance of such contributions would otherwise cause his or her retirement annuity to exceed the maximum retirement annuity as specified in clause (1) of subsection (c) of Section 15-136.

(g) A participating employee may make contributions for the purchase of service credit under this Article.

(h) Notwithstanding anything in this Section to the contrary, effective July 1, 2011, all participating employees shall be required to contribute 7% of earnings, and no prior contribution increases or other additional contributions specified by this Section shall apply to any participating employee for service on or after July 1, 2011. With respect to participants who are not later entrants, the contribution rates specified in this paragraph shall be replaced with the contribution rates in effect under Sections 15-157(a) through (g) if the benefit provisions added under Sections 15-400, 15-405, 15-410, 15-415, or 15-420 are invalidated.

(Source: P.A. 90-32, eff. 6-27-97; 90-65, eff. 7-7-97; 90-448, eff. 8-16-97; 90-511, eff. 8-22-97; 90-576, eff. 3-31-98; 90-655, eff. 7-30-98; 90-766, eff. 8-14-98.)

(40 ILCS 5/16-152) (from Ch. 108 1/2, par. 16-152)

Sec. 16-152. Contributions by members.

(a) Each member shall make contributions for membership service to this System as follows:

(1) Effective July 1, 1998, contributions of 7.50% of salary towards the cost of the retirement annuity. Such contributions shall be deemed "normal contributions".

(2) Effective July 1, 1969, contributions of 1/2 of 1% of salary toward the cost of the automatic annual increase in retirement annuity provided under Section 16-133.1.

(3) Effective July 24, 1959, contributions of 1% of salary towards the cost of survivor benefits. Such contributions shall not be credited to the individual account of the member and shall not be subject to refund except as provided under Section 16-143.2.

(4) Effective July 1, 2005, contributions of 0.40% of salary toward the cost of the early retirement without discount option provided under Section 16-133.2. This contribution shall cease upon termination of the early retirement without discount option as provided in Section 16-176.

(5) Notwithstanding anything in this Section to the contrary, effective July 1, 2011, all members shall be required to contribute 7% of salary, and no prior contribution increases or other additional contributions specified by this Section shall apply to any member for service on or after July 1, 2011. With respect to participants who are not later entrants, the contribution rates specified in this paragraph shall be replaced with the contribution rates in effect under Sections 16-152(a)(1) through (a)(4) if the benefit provisions added under Sections 16-400, 16-405, 16-410, 16-415, or 16-420 are invalidated.

(b) The minimum required contribution for any year of full-time teaching service shall be $192.

(c) Contributions shall not be required of any annuitant receiving a retirement annuity who is given employment as permitted under Section 16-118 or 16-150.1.

(d) A person who (i) was a member before July 1, 1998, (ii) retires with more than 34 years of creditable service, and (iii) does not elect to qualify for the augmented rate under Section 16-129.1 shall be entitled, at the time of retirement, to receive a partial refund of contributions made under this Section for service occurring after the later of June 30, 1998 or attainment of 34 years of creditable service, in an amount equal to 1.00% of the salary upon which those contributions were based.

(e) A member's contributions toward the cost of early retirement without discount made under item (a)(4) of this Section shall not be refunded if the member has elected early retirement without discount under Section 16-133.2 and has begun to receive a retirement annuity under this Article calculated in accordance with that election. Otherwise, a member's contributions toward the cost of early retirement without discount made under item (a)(4) of this Section shall be refunded according to whichever one of the following circumstances occurs first:

(1) The contributions shall be refunded to the member, without interest, within 120 days after the member's retirement annuity commences, if the member does not elect early retirement without discount under Section 16-133.2.

(2) The contributions shall be included, without interest, in any refund claimed by the member under Section 16-151.

(3) The contributions shall be refunded to the member's designated beneficiary (or if there is no beneficiary, to the member's estate), without interest, if the member dies without having begun to receive a retirement annuity under this Article.

(4) The contributions shall be refunded to the member, without interest, within 120 days after the early retirement without discount option provided under Section 16-133.2 is terminated under Section 16-176.

(Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)

(40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)

Sec. 18-133. Financing; employee contributions.

(a) Effective July 1, 1967, each participant is required to contribute 7 1/2% of each payment of salary toward the retirement annuity. Such contributions shall continue during the entire time the participant is in service, with the following exceptions:

(1) Contributions for the retirement annuity are not required on salary received after 18 years of service by persons who were participants before January 2, 1954.

(2) A participant who continues to serve as a judge after becoming eligible to receive the maximum rate of annuity may elect, through a written direction filed with the Board, to discontinue contributing to the System. Any such option elected by a judge shall be irrevocable unless prior to January 1, 2000, and while continuing to serve as judge, the judge (A) files with the Board a letter cancelling the direction to discontinue contributing to the System and requesting that such contributing resume, and (B) pays into the System an amount equal to the total of the discontinued contributions plus interest thereon at 5% per annum. Service credits earned in any other "participating system" as defined in Article 20 of this Code shall be considered for purposes of determining a judge's eligibility to discontinue contributions under this subdivision (a)(2).

(3) A participant who (i) has attained age 60, (ii) continues to serve as a judge after becoming eligible to receive the maximum rate of annuity, and (iii) has not elected to discontinue contributing to the System under subdivision (a)(2) of this Section (or has revoked any such election) may elect, through a written direction filed with the Board, to make contributions to the System based only on the amount of the increases in salary received by the judge on or after the date of the election, rather than the total salary received. If a judge who is making contributions to the System on the effective date of this amendatory Act of the 91st General Assembly makes an election to limit contributions under this subdivision (a)(3) within 90 days after that effective date, the election shall be deemed to become effective on that effective date and the judge shall be entitled to receive a refund of any excess contributions paid to the System during that 90-day period; any other election under this subdivision (a)(3) becomes effective on the first of the month following the date of the election. An election to limit contributions under this subdivision (a)(3) is irrevocable. Service credits earned in any other participating system as defined in Article 20 of this Code shall be considered for purposes of determining a judge's eligibility to make an election under this subdivision (a)(3).

(b) Beginning July 1, 1969, each participant is required to contribute 1% of each payment of salary towards the automatic increase in annuity provided in Section 18-125.1. However, such contributions need not be made by any participant who has elected prior to September 15, 1969, not to be subject to the automatic increase in annuity provisions.

(c) Effective July 13, 1953, each married participant subject to the survivor's annuity provisions is required to contribute 2 1/2% of each payment of salary, whether or not he or she is required to make any other contributions under this Section. Such contributions shall be made concurrently with the contributions made for annuity purposes.

(d) Notwithstanding anything in this Section to the contrary, effective July 1, 2011, all participants shall be required to contribute 7% of salary, and no prior contribution increases or other additional contributions specified by this Section shall apply to any participant for service on or after July 1, 2011. With respect to participants who are not later entrants, the contribution rates specified in this paragraph shall be replaced with the contribution rates in effect under Sections 18-133(a) through (c) if the benefit provisions added under Sections 18-400, 18-405, 18-410, 18-415, or 18-420 are invalidated.

(Source: P.A. 91-653, eff. 12-10-99.)

ARTICLE 2.

Section 2-5. The Illinois Pension Code is amended by adding Sections 2-300, 2-305, 2-310, 2-315, 2-320, 2-325, 2-330, 14-300, 14-305, 14-310, 14-315, 14-320, 14-325, 14-330, 15-300, 15-305, 15-310, 15-315, 15-320, 15-325, 15-330, 16-300, 16-305, 16-310, 16-315, 16-320, 16-325, 16-330, 18-300, 18-305, 18-310, 18-315, 18-320, 18-325, and 18-330 as follows:

(40 ILCS 5/2-300 new)

Sec. 2-300. Provisions applicable to later entrants. The provisions of Sections 2-300, 2-305, 2-310, 2-315, 2-320, 2-325, and 2-330 apply only to members who first become members on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 2-300, 2-305, 2-310, 2-315, 2-320, 2-325, and 2-330 shall control for later entrants.

(40 ILCS 5/2-305 new)

Sec. 2-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A member may only establish creditable service for his or her service as a member under this Article.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/2-310 new)

Sec. 2-310. Retirement annuity; conditions for eligibility; later entrants. Later entrants under this Article shall be eligible to claim a retirement annuity under the following conditions:

(a) A member may claim a retirement annuity upon attainment of the full (normal) retirement age as provided in the federal Social Security Act with at least 8 years of service credit.

(b) A member may claim a reduced retirement annuity under subsection (c) of Section 2-315 if he or she has reached an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, and has at least 8 years of service.

(40 ILCS 5/2-315 new)

Sec. 2-315. Retirement life annuity; amount; later entrants. Retirement annuities for later entrants shall be subject to the following conditions:

(a) With respect to later entrants, the following limitations shall apply when calculating an annuity under this Article:

(1) "Final average salary" means the monthly salary obtained by dividing the total salary of a participant during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12-month period. In no event shall the monthly salary used to determine final average salary exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(2) "Salary" means base salary paid to a member.

(b) The retirement life annuity shall be 2% of final average salary for each year of service.

(c) For a member retiring after attaining an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, the retirement life annuity shall be reduced by one-half of 1% for each month that the member's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) In no event shall a retirement life annuity exceed the base salary of the Governor of the State of Illinois.

(40 ILCS 5/2-320 new)

Sec. 2-320. Alternative forms of annuities for later entrants. A participant who is a later entrant may choose any of the following types of annuities in lieu of receiving the full annuity provided in Section 2-315:

(1) Joint and 50% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 50% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(2) Joint and 75% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 75% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(3) Joint and 100% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 100% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(4) Single life annuity with 60, 120, or 180 months of guaranteed payments. Under this option, the participant receives a reduced monthly payment for his or her lifetime. If the participant dies before receiving at least the number of guaranteed monthly payments, then the participant's beneficiary or estate receives the remaining guaranteed number of monthly payments.

The Board must determine the participant's optional form of annuity provided under this Section by taking into account the appropriate actuarial assumptions, including without limitation the participant's and beneficiary's age; applicable mortality tables; and any other factors that the Board determines to be relevant. For this purpose, the participant's joint and survivor annuity should result in no significant increase to the System's unfunded actuarial accrued liability determined as of the most recent actuarial valuation, based on the same assumptions and methods used to develop and report the System's actuarial accrued liability and actuarial value of assets under Statement No. 25 of Governmental Accounting Standards Board or any subsequent applicable Statement.

(40 ILCS 5/2-325 new)

Sec. 2-325. Automatic annual increases for later entrants. Notwithstanding any other provision of this Article, a person receiving a retirement or survivor annuity under Sections 2-315 or 2-320 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have his or her annuity increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/2-330 new)

Sec. 2-330. Refunds; later entrants. A participant who is a later entrant and who ceases to be a member, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as a member, a former member who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at the actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

(40 ILCS 5/14-300 new)

Sec. 14-300. Provisions applicable to later entrants. The provisions of Sections 14-300, 14-305, 14-310, 14-315, 14-320, 14-325, and 14-330 apply only to employees who first become employees on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 14-300, 14-305, 14-310, 14-315, 14-320, 14-325, and 14-330 shall control for later entrants.

(40 ILCS 5/14-305 new)

Sec. 14-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A member may only establish creditable service for his or her membership service, as defined in Section 14-103.13.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/14-310 new)

Sec. 14-310. Retirement annuity; conditions for eligibility; later entrants. Later entrants under this Article shall be eligible to claim a retirement annuity under the following conditions:

(a) A member may claim a retirement annuity upon attainment of the full (normal) retirement age as provided in the federal Social Security Act with at least 8 years of service credit.

(b) A member may claim a reduced retirement annuity under subsection (c) of Section 14-315 if he or she has reached an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, and has at least 8 years of service.

(40 ILCS 5/14-315 new)

Sec. 14-315. Retirement life annuity; amount; later entrants.

(a) With respect to later entrants, the following limitations shall apply when calculating an annuity under this Article:

(1) "Final average compensation" means the monthly compensation obtained by dividing the total compensation of an employee during the period of: (A) the 96 consecutive months of service in which the total compensation was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly compensation to be considered in each of the last 12 months of the final average compensation period shall not exceed 125% of the highest compensation in any other month in the final average compensation period that precedes such final 12-month period. In no event shall the monthly compensation used to determine final average compensation exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(2) "Compensation" means a member's base compensation.

(b) The retirement life annuity shall be (1) 1.5% of final average compensation for each year of service for covered employees or (2) 2% of final average compensation for each year of service for noncovered employees.

(c) For a member retiring after attaining an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, the retirement life annuity shall be reduced by one-half of 1% for each month that the member's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) In no event shall a retirement life annuity exceed the base salary of the Governor of the State of Illinois.

(40 ILCS 5/14-320 new)

Sec. 14-320. Alternative forms of annuities for later entrants. A member who is a later entrant may choose any of the following types of annuities in lieu of receiving the full annuity provided in Section 14-315:

(1) Joint and 50% survivor annuity. Under this form of payment, the member receives a reduced monthly payment for his or her lifetime with a payment equal to 50% of the reduced amount payable to the member paid to the member's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the member.

(2) Joint and 75% survivor annuity. Under this form of payment, the member receives a reduced monthly payment for his or her lifetime with a payment equal to 75% of the reduced amount payable to the member paid to the member's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the member.

(3) Joint and 100% survivor annuity. Under this form of payment, the member receives a reduced monthly payment for his or her lifetime with a payment equal to 100% of the reduced amount payable to the member paid to the member's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the member.

(4) Single life annuity with 60, 120, or 180 months of guaranteed payments. Under this option, the member receives a reduced monthly payment for his or her lifetime. If the member dies before receiving at least the number of guaranteed monthly payments, then the member's beneficiary or estate receives the remaining guaranteed number of monthly payments.

The Board must determine the participant's optional form of annuity provided under this Section by taking into account the appropriate actuarial assumptions, including without limitation the participant's and beneficiary's age; applicable mortality tables; and any other factors that the Board determines to be relevant. For this purpose, the participant's joint and survivor annuity should result in no significant increase to the System's unfunded actuarial accrued liability determined as of the most recent actuarial valuation, based on the same assumptions and methods used to develop and report the System's actuarial accrued liability and actuarial value of assets under Statement No. 25 of Governmental Accounting Standards Board or any subsequent applicable Statement.

(40 ILCS 5/14-325 new)

Sec. 14-325. Automatic annual increases for later entrants. Notwithstanding any other provision of this Article, a person receiving a retirement or survivor annuity under Sections 14-315 or 14-320 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have his or her annuity increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/14-330 new)

Sec. 14-330. Refunds; later entrants. An employee who is a later entrant and who ceases to be a member, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as a member, a former member who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

(40 ILCS 5/15-300 new)

Sec. 15-300. Provisions applicable to later entrants. The provisions of Sections 15-300, 15-305, 15-310, 15-315, 15-320, 15-325, and 15-330 apply only to employees who first become employees on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 15-300, 15-305, 15-310, 15-315, 15-320, 15-325, and 15-330 shall control for later entrants.

(40 ILCS 5/15-305 new)

Sec. 15-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A member may only establish creditable service for his or her service for employment with an employer, as defined in Section 15-106.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/15-310 new)

Sec. 15-310. Retirement annuity; conditions for eligibility; later entrants. Later entrants under this Article shall be eligible to claim a retirement annuity under the following conditions:

(a) A participant may claim a retirement annuity upon attainment of the full (normal) retirement age as provided in the federal Social Security Act with at least 8 years of service credit.

(b) A participant may claim a reduced retirement annuity under subsection (c) of Section 15-315 if he or she has reached an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, and has at least 8 years of service.

(40 ILCS 5/15-315 new)

Sec. 15-315. Retirement life annuity; amount; later entrants.

(a) With respect to later entrants, the following limitations shall apply when calculating an annuity under this Article:

(1) "Final rate of earnings" means the monthly earnings obtained by dividing the total earnings of an employee during the period of: (A) the 96 consecutive months of service in which the total earnings was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly earnings to be considered in each of the last 12 months of the final rate of earnings period shall not exceed 125% of the highest earnings in any other month in the final rate of earnings period that precedes such final 12-month period. In no event shall the monthly compensation used to determine final rate of earnings exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(2) "Compensation" means an employee's base compensation.

(b) The retirement life annuity shall be 2% of the final rate of earnings for each year of service.

(c) For an employee retiring after attaining an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, the retirement life annuity shall be reduced by one-half of 1% for each month that the employee's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) In no event shall a retirement life annuity exceed the base salary of the Governor of the State of Illinois.

(40 ILCS 5/15-320 new)

Sec. 15-320. Alternative forms of annuities for later entrants.

(a) A participant who is a later entrant may choose any of the following types of annuities in lieu of receiving the full annuity provided in Section 15-315:

(1) Joint and 50% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 50% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(2) Joint and 75% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 75% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(3) Joint and 100% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 100% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(4) Single life annuity with 60, 120, or 180 months of guaranteed payments. Under this option, the participant receives a reduced monthly payment for his or her lifetime.

If the participant dies before receiving at least the number of guaranteed monthly payments, then the participant's beneficiary or estate receives the remaining guaranteed number of monthly payments.

(b) In lieu of the annuities under Section 15-315 and subsection (a) of this Section, a participant may choose the portable benefit package under Section 15-136.4 or the self-managed plan under Section 15-158.2.

(c) The Board must determine the participant's optional form of annuity provided under this Section by taking into account the appropriate actuarial assumptions, including without limitation the participant's and beneficiary's age; applicable mortality tables; and any other factors that the Board determines to be relevant. For this purpose, the participant's joint and survivor annuity should result in no significant increase to the System's unfunded actuarial accrued liability determined as of the most recent actuarial valuation, based on the same assumptions and methods used to develop and report the System's actuarial accrued liability and actuarial value of assets under Statement No. 25 of Governmental Accounting Standards Board or any subsequent applicable Statement.

(40 ILCS 5/15-325 new)

Sec. 15-325. Automatic annual increases for later entrants. Notwithstanding any other provision of this Article, a person receiving a retirement or survivor annuity under Sections 15-315 or 15-320 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have his or her annuity increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/15-330 new)

Sec. 15-330. Refunds; later entrants. An employee who is a later entrant and who ceases to be a participant, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as an employee, a former participant who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at the actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

(40 ILCS 5/16-300 new)

Sec. 16-300. Provisions applicable to later entrants. The provisions of Sections 16-300, 16-305, 16-310, 16-315, 16-320, 16-325, and 16-330 apply only to teachers who first become teachers on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 16-300, 16-305, 16-310, 16-315, 16-320, 16-325, and 16-330 shall control for later entrants.

(40 ILCS 5/16-305 new)

Sec. 16-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A member may only establish creditable service for his or her service for employment as a teacher, as defined in Section 16-106.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/16-310 new)

Sec. 16-310. Later entrants under this Article shall be eligible to claim a retirement annuity under the following conditions:

(a) A participant may claim a retirement annuity upon attainment of the full (normal) retirement age as provided in the federal Social Security Act with at least 8 years of service credit.

(b) A participant may claim a reduced retirement annuity under subsection (c) of Section 16-315 if he or she has reached an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, and has at least 8 years of service.

(40 ILCS 5/16-315 new)

Sec. 16-315. Retirement life annuity; amount; later entrants. Retirement annuities for later entrants shall be subject to the following conditions:

(a) With respect to later entrants, the following limitations shall apply when calculating an annuity under this Article:

(1) "Final average salary" means the monthly salary obtained by dividing the total salary of a member during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12-month period. In no event shall the monthly salary used to determine final average salary exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(2) "Salary" means base salary paid to a member.

(b) The retirement life annuity shall be 2% of final average salary for each year of service.

(c) For a member retiring after attaining an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, the retirement life annuity shall be reduced by one-half of 1% for each month that the member's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) In no event shall a retirement life annuity exceed the base salary of the Governor of the State of Illinois.

(40 ILCS 5/16-320 new)

Sec. 16-320. Alternative forms of annuities for later entrants.A member who is a later entrant may choose any of the following types of annuities in lieu of receiving the full annuity provided in Section 16-315:

(1) Joint and 50% survivor annuity. Under this form of payment, the member receives a reduced monthly payment for his or her lifetime with a payment equal to 50% of the reduced amount payable to the member paid to the member's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the member.

(2) Joint and 75% survivor annuity. Under this form of payment, the member receives a reduced monthly payment for his or her lifetime with a payment equal to 75% of the reduced amount payable to the member paid to the member's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the member.

(3) Joint and 100% survivor annuity. Under this form of payment, the member receives a reduced monthly payment for his or her lifetime with a payment equal to 100% of the reduced amount payable to the member paid to the member's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the member.

(4) Single life annuity with 60, 120, or 180 months of guaranteed payments. Under this option, the member receives a reduced monthly payment for his or her lifetime.

If the member dies before receiving at least the number of guaranteed monthly payments, then the member's beneficiary or estate receives the remaining guaranteed number of monthly payments.

The Board must determine the participant's optional form of annuity provided under this Section by taking into account the appropriate actuarial assumptions, including without limitation the participant's and beneficiary's age; applicable mortality tables; and any other factors that the Board determines to be relevant. For this purpose, the participant's joint and survivor annuity should result in no significant increase to the System's unfunded actuarial accrued liability determined as of the most recent actuarial valuation, based on the same assumptions and methods used to develop and report the System's actuarial accrued liability and actuarial value of assets under Statement No. 25 of Governmental Accounting Standards Board or any subsequent applicable Statement.

(40 ILCS 5/16-325 new)

Sec. 16-325. Automatic annual increases for later entrants. Notwithstanding any other provision of this Article, a person receiving a retirement or survivor annuity under Sections 16-315 or 16-320 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have his or her annuity increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/16-330 new)

Sec. 16-330. Refunds; later entrants. A teacher who is a later entrant and who ceases to be a member, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as a teacher, a former member who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at the actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

(40 ILCS 5/18-300 new)

Sec. 18-300. Provisions applicable to later entrants. The provisions of Sections 18-300, 18-305, 18-310, 18-315, 18-320, 18-325, and 18-330 apply only to judges who first become judges on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 18-300, 18-305, 18-310, 18-315, 18-320, 18-325, and 18-330 shall control for later entrants.

(40 ILCS 5/18-305 new)

Sec. 18-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A participant may only establish creditable service for his or her service for employment as a judge, as defined in Section 18-112.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/18-310 new)

Sec. 18-310. Retirement annuity; conditions for eligibility; later entrants. Later entrants under this Article shall be eligible to claim a retirement annuity under the following conditions:

(a) A participant may claim a retirement annuity upon attainment of the full (normal) retirement age as provided in the federal Social Security Act with at least 8 years of service credit.

(b) A participant may claim a reduced retirement annuity under subsection (c) of Section 18-315 if he or she has reached an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, and has at least 8 years of service.

(40 ILCS 5/18-315 new)

Sec. 18-315. Retirement life annuity; amount; later entrants. Retirement annuities for later entrants shall be subject to the following conditions:

(a) With respect to later entrants, the following limitations shall apply when calculating an annuity under this Article:

(1) "Final average salary" means the monthly salary obtained by dividing the total salary of a participant during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12-month period. In no event shall the monthly salary used to determine final average salary exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(2) "Salary" means base salary paid to a participant.

(b) The retirement life annuity shall be 2% of final average salary for each year of service.

(c) For a participant retiring after attaining an age that is 5 years preceding the full (normal) retirement age as provided in the federal Social Security Act, the retirement life annuity shall be reduced by one-half of 1% for each month that the participant's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) In no event shall a retirement life annuity exceed the base salary of the Governor of the State of Illinois.

(40 ILCS 5/18-320 new)

Sec. 18-320. Alternative forms of annuities for later entrants.

A participant who is a later entrant may choose any of the following types of annuities in lieu of receiving the full annuity provided in Section 18-315:

(1) Joint and 50% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 50% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(2) Joint and 75% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 75% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(3) Joint and 100% survivor annuity. Under this form of payment, the participant receives a reduced monthly payment for his or her lifetime with a payment equal to 100% of the reduced amount payable to the participant paid to the participant's designated beneficiary for the beneficiary's lifetime if the beneficiary survives the participant.

(4) Single life annuity with 60, 120, or 180 months of guaranteed payments. Under this option, the participant receives a reduced monthly payment for his or her lifetime.

If the participant dies before receiving at least the number of guaranteed monthly payments, then the participant's beneficiary or estate receives the remaining guaranteed number of monthly payments.

The Board must determine the participant's optional form of annuity provided under this Section by taking into account the appropriate actuarial assumptions, including without limitation the participant's and beneficiary's age; applicable mortality tables; and any other factors that the Board determines to be relevant. For this purpose, the participant's joint and survivor annuity should result in no significant increase to the System's unfunded actuarial accrued liability determined as of the most recent actuarial valuation, based on the same assumptions and methods used to develop and report the System's actuarial accrued liability and actuarial value of assets under Statement No. 25 of Governmental Accounting Standards Board or any subsequent applicable Statement.

(40 ILCS 5/18-325 new)

Sec. 18-325. Automatic annual increases for later entrants. Notwithstanding any other provision of this Article, a person receiving a retirement or survivor annuity under Sections 18-315 or 18-320 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have his or her annuity increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/18-330 new)

Sec. 18-330. Refunds; later entrants. A judge who was a later entrant and who ceases to be a participant, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as a judge, a former participant who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at the actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

ARTICLE 3.

Section 3-1. Legislative intent. Article XIII, Section 5 of the 1970 Illinois State Constitution provides public employees a right to retain their contractual rights to pension benefits that they have already earned. The goal and intent of the following provisions is to preserve the accrued benefits of members in the five State pension systems, while making changes on a prospective basis to protect the funded status of each State pension system, thereby preserving each system's ability to provide benefits for all members.

Section 3-5. The Illinois Pension Code is amended by adding Sections 2-400, 2-405, 2-410, 2-415, 2-420, 14-400, 14-405, 14-410, 14-415, 14-420, 15-400, 15-405, 15-410, 15-415, 15-420, 16-400, 16-405, 16-410, 16-415, 16-420, 18-400, 18-405, 18-410, 18-415, and 18-420 as follows:

(40 ILCS 5/2-400 new)

Sec. 2-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 2-405, 2-410, 2-415, and 2-420 shall control for any annuity calculations and benefit accruals by members besides later entrants on or after July 1, 2011.

(40 ILCS 5/2-405 new)

Sec. 2-405. Rate of accrual on or after July 1, 2011. For all service by a member on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final average salary for each year of service.

(40 ILCS 5/2-410 new)

Sec. 2-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final average salary" means the monthly salary obtained by dividing the total salary of a participant during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12-month period. In no event shall the monthly salary used to determine final average salary for benefit accruals on or after July 1, 2011 exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(b) "Salary" means base salary paid to a member.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the member's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service a member may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/2-415 new)

Sec. 2-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/2-420 new)

Sec. 2-420. Calculation of annuity. When calculating an annuity for a participant who has service before and after July 1, 2011, the participant's total accrued benefit shall be the sum of (A) the participant's benefit accruals prior to July 1, 2011 as if the participant had retired on that date, and (B) the participant's benefit accruals on or after July 1, 2011, as modified by the rules in sections 2-405, 2-410, and 2-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the participant's total accrued benefit be less, at his retirement, than if the participant's entire period of service had been as a later entrant.

(40 ILCS 5/14-400 new)

Sec. 14-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 14-405, 14-410, 14-415, and 14-420 shall control for any annuity calculations and benefit accruals by employees besides later entrants on or after July 1, 2011.

(40 ILCS 5/14-405 new)

Sec. 14-405. Rate of accrual on or after July 1, 2011. For all service by an employee on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final average compensation for each year of service for noncovered employees and 1.5% of final average compensation for each year of service for covered employees.

(40 ILCS 5/14-410 new)

Sec. 14-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final average compensation" means the monthly compensation obtained by dividing the total compensation of an employee during the period of: (A) the 96 consecutive months of service in which the total compensation was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly compensation to be considered in each of the last 12 months of the final average compensation period shall not exceed 125% of the highest compensation in any other month in the final average compensation period that precedes such final 12-month period. In no event shall the monthly compensation used to determine final average compensation for benefit accruals on or after July 1, 2011 exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(b) "Compensation" means base compensation paid to an employee.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the employee's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service an employee may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/14-415 new)

Sec. 14-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/14-420 new)

Sec. 14-420. Calculation of annuity. When calculating an annuity for an employee who has service before and after July 1, 2011, the employee's total accrued benefit shall be the sum of (A) the employee's benefit accruals prior to July 1, 2011 as if the employee had retired on that date, and (B) the employee's benefit accruals on or after July 1, 2011, as modified by the rules in sections 14-405, 14-410, and 14-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the employee's total accrued benefit be less, at his retirement, than if the employee's entire period of service had been as a later entrant.

(40 ILCS 5/15-400 new)

Sec. 15-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 15-405, 15-410, 15-415, and 15-420 shall control for any annuity calculations and benefit accruals by employees besides later entrants on or after July 1, 2011.

(40 ILCS 5/15-405 new)

Sec. 15-405. Rate of accrual on or after July 1, 2011. For all service by an employee on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final rate of earnings for each year of service.

(40 ILCS 5/15-410 new)

Sec. 15-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final rate of earnings" means the monthly earnings obtained by dividing the total earnings of an employee during the period of: (A) the 96 consecutive months of service in which the total earnings was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly earnings to be considered in each of the last 12 months of the final rate of earnings period shall not exceed 125% of the highest earnings in any other month in the final rate of earnings period that precedes such final 12-month period. In no event shall the monthly earnings used to determine final rate of earnings for benefit accruals on or after July 1, 2011 exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(b) "Earnings" means base salary paid to an employee.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the employee's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service an employee may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/15-415 new)

Sec. 15-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/15-420 new)

Sec. 15-420. Calculation of annuity. When calculating an annuity for a participant who has service before and after July 1, 2011, the participant's total accrued benefit shall be the sum of (A) the participant's benefit accruals prior to July 1, 2011 as if the participant had retired on that date, and (B) the participant's benefit accruals on or after July 1, 2011, as modified by the rules in sections 15-405, 15-410, and 15-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the participant's total accrued benefit be less, at his retirement, than if the participant's entire period of service had been as a later entrant.

(40 ILCS 5/16-400 new)

Sec. 16-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 16-405, 16-410, 16-415, and 16-420 shall control for any annuity calculations and benefit accruals by teachers besides later entrants on or after July 1, 2011.

(40 ILCS 5/16-405 new)

Sec. 16-405. Rate of accrual on or after July 1, 2011. For all service by a teacher on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final average salary for each year of service.

(40 ILCS 5/16-410 new)

Sec. 16-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final average salary" means the monthly salary obtained by dividing the total salary of an teacher during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12 month period. In no event shall the monthly salary used to determine final average salary for benefit accruals on or after July 1, 2011 exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(b) "Salary" means base salary paid to a teacher.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the teacher's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service a teacher may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/16-415 new)

Sec. 16-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/16-420 new)

Sec. 16-420. Calculation of annuity. When calculating an annuity for a teacher who has service before and after July 1, 2011, the teacher's total accrued benefit shall be the sum of (A) the teacher's benefit accruals prior to July 1, 2011 as if the teacher had retired on that date, and (B) the teacher's benefit accruals on or after July 1, 2011, as modified by the rules in sections 16-405, 16-410, and 16-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the teacher's total accrued benefit be less, at his retirement, than if the teacher's entire period of service had been as a later entrant.

(40 ILCS 5/18-400 new)

Sec. 18-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 18-405, 18-410, 18-415, and 18-420 shall control for any annuity calculations and benefit accruals by judges besides later entrants on or after July 1, 2011.

(40 ILCS 5/18-405 new)

Sec. 18-405. Rate of accrual on or after July 1, 2011. For all service by a judge on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final average salary for each year of service.

(40 ILCS 5/18-410 new)

Sec. 18-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final average salary" means the monthly salary obtained by dividing the total salary of an judge during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12 month period. In no event shall the monthly salary used to determine final average salary for benefit accruals on or after July 1, 2011 exceed the Social Security Contribution and Benefit Base for the given month of service, or $10,000 indexed for inflation by rules established by the system, whichever is less.

(b) "Salary" means base salary paid to a judge.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the judge's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service a judge may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/18-415 new)

Sec. 18-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/18-420 new)

Sec. 18-420. Calculation of annuity. When calculating an annuity for a participant who has service before and after July 1, 2011, the participant's total accrued benefit shall be the sum of (A) the participant's benefit accruals prior to July 1, 2011 as if the participant had retired on that date, and (B) the participant's benefit accruals on or after July 1, 2011, as modified by the rules in sections 18-405, 18-410, and 18-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the participant's total accrued benefit be less, at his retirement, than if the participant's entire period of service had been as a later entrant.

ARTICLE 99.

Section 99-99. Effective date. This Act takes effect upon becoming law.".