Sen. John J. Cullerton

Filed: 5/9/2017

 

 


 

 


 
10000SB0016sam005LRB100 05169 RPS 25057 a

1
AMENDMENT TO SENATE BILL 16

2    AMENDMENT NO. ______. Amend Senate Bill 16, AS AMENDED, in
3Section 45, by replacing all of Sec. 1-162 with the following:
 
4    "(40 ILCS 5/1-162 new)
5    Sec. 1-162. Optional benefits for certain Tier 2 members of
6pension funds under Articles 8, 9, 10, 11, 12, and 17.
7    (a) As used in this Section:
8    "Affected pension fund" means a pension fund established
9under Article 8, 9, 10, 11, 12, or 17 that the governing body
10of the unit of local government has designated as an affected
11pension fund by adoption of a resolution or ordinance.
12    "Resolution or ordinance date" means the date on which the
13governing body of the unit of local government designates a
14pension fund under Article 8, 9, 10, 11, 12, or 17 as an
15affected pension fund by adoption of a resolution or ordinance.
16    (b) Notwithstanding any other provision of this Code to the
17contrary, the provisions of this Section apply to a person who

 

 

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1first becomes a member or a participant in an affected pension
2fund on or after 6 months after the resolution or ordinance
3date and who does not make the election under subsection (c).
4    (c) In lieu of the benefits provided under this Section, a
5member or participant may irrevocably elect the benefits under
6Section 1-160 and the benefits otherwise applicable to that
7member or participant. The election must be made within 30 days
8after becoming a member or participant. Each affected pension
9fund shall establish procedures for making this election.
10    (d) "Final average salary" means the average monthly (or
11annual) salary obtained by dividing the total salary or
12earnings calculated under the Article applicable to the member
13or participant during the last 120 months (or 10 years) of
14service in which the total salary or earnings calculated under
15the applicable Article was the highest by the number of months
16(or years) of service in that period. For the purposes of a
17person who first becomes a member or participant of an affected
18pension fund on or after 6 months after the ordinance or
19resolution date, in this Code, "final average salary" shall be
20substituted for the following:
21        (1) In Articles 8, 9, 10, 11, and 12, "highest average
22    annual salary for any 4 consecutive years within the last
23    10 years of service immediately preceding the date of
24    withdrawal".
25        (2) In Article 17, "average salary".
26    (e) Beginning 6 months after the resolution or ordinance

 

 

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1date, for all purposes under this Code (including without
2limitation the calculation of benefits and employee
3contributions), the annual earnings, salary, or wages (based on
4the plan year) of a member or participant to whom this Section
5applies shall not at any time exceed the federal Social
6Security Wage Base then in effect.
7    (f) A member or participant is entitled to a retirement
8annuity upon written application if he or she has attained the
9normal retirement age determined by the Social Security
10Administration for that member or participant's year of birth,
11but no earlier than 67 years of age, and has at least 10 years
12of service credit and is otherwise eligible under the
13requirements of the applicable Article.
14    (g) The amount of the retirement annuity to which a member
15or participant is entitled shall be computed by multiplying
161.25% for each year of service credit by his or her final
17average salary.
18    (h) Any retirement annuity or supplemental annuity shall be
19subject to annual increases on the first anniversary of the
20annuity start date. Each annual increase shall be one-half the
21annual unadjusted percentage increase (but not less than zero)
22in the consumer price index-w for the 12 months ending with the
23September preceding each November 1 of the originally granted
24retirement annuity. If the annual unadjusted percentage change
25in the consumer price index-w for the 12 months ending with the
26September preceding each November 1 is zero or there is a

 

 

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1decrease, then the annuity shall not be increased.
2    For the purposes of this Section, "consumer price index-w"
3means the index published by the Bureau of Labor Statistics of
4the United States Department of Labor that measures the average
5change in prices of goods and services purchased by Urban Wage
6Earners and Clerical Workers, United States city average, all
7items, 1982-84 = 100. The new amount resulting from each annual
8adjustment shall be determined by the Public Pension Division
9of the Department of Insurance and made available to the boards
10of the retirement systems and pension funds by November 1 of
11each year.
12    (i) The initial survivor's or widow's annuity of an
13otherwise eligible survivor or widow of a retired member or
14participant who first became a member or participant on or
15after 6 months after the resolution or ordinance date shall be
16in the amount of 66 2/3% of the retired member's or
17participant's retirement annuity at the date of death. In the
18case of the death of a member or participant who has not
19retired and who first became a member or participant on or
20after 6 months after the resolution or ordinance date,
21eligibility for a survivor's or widow's annuity shall be
22determined by the applicable Article of this Code. The benefit
23shall be 66 2/3% of the earned annuity without a reduction due
24to age. A child's annuity of an otherwise eligible child shall
25be in the amount prescribed under each Article if applicable.
26    (j) In lieu of any other employee contributions, except for

 

 

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1the contribution to the defined contribution plan under
2subsection (k) of this Section, each employee shall contribute
36.2% of his her or salary to the affected pension fund.
4However, the employee contribution under this subsection shall
5not exceed the amount of the normal cost of the benefits under
6this Section (except for the defined contribution plan under
7subsection (k) of this Section), expressed as a percentage of
8payroll and determined on or before November 1 of each year by
9the board of trustees of the affected pension fund. If the
10board of trustees of the affected pension fund determines that
11the 6.2% employee contribution rate exceeds the normal cost of
12the benefits under this Section (except for the defined
13contribution plan under subsection (k) of this Section), then
14on or before December 1 of that year, the board of trustees
15shall certify the amount of the normal cost of the benefits
16under this Section (except for the defined contribution plan
17under subsection (k) of this Section), expressed as a
18percentage of payroll, to the State Actuary and the Commission
19on Government Forecasting and Accountability, and the employee
20contribution under this subsection shall be reduced to that
21amount beginning January 1 of the following year. Thereafter,
22if the normal cost of the benefits under this Section (except
23for the defined contribution plan under subsection (k) of this
24Section), expressed as a percentage of payroll and determined
25on or before November 1 of each year by the board of trustees
26of the affected pension fund, exceeds 6.2% of salary, then on

 

 

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1or before December 1 of that year, the board of trustees shall
2certify the normal cost to the State Actuary and the Commission
3on Government Forecasting and Accountability, and the employee
4contributions shall revert back to 6.2% of salary beginning
5January 1 of the following year.
6    (k) No later than 5 months after the resolution or
7ordinance date, an affected pension fund shall prepare and
8implement a defined contribution plan for members or
9participants who are subject to this Section. The defined
10contribution plan developed under this subsection shall be a
11plan that aggregates employer and employee contributions in
12individual participant accounts which, after meeting any other
13requirements, are used for payouts after retirement in
14accordance with this subsection and any other applicable laws.
15        (1) Each member or participant shall contribute a
16    minimum of 4% of his or her salary to the defined
17    contribution plan.
18        (2) For each participant in the defined contribution
19    plan who has been employed with the same employer for at
20    least one year, employer contributions shall be paid into
21    that participant's accounts at a rate expressed as a
22    percentage of salary. This rate may be set for individual
23    employees, but shall be no higher than 6% of salary and
24    shall be no lower than 2% of salary.
25        (3) Employer contributions shall vest when those
26    contributions are paid into a member's or participant's

 

 

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1    account.
2        (4) The defined contribution plan shall provide a
3    variety of options for investments. These options shall
4    include investments handled by the Illinois State Board of
5    Investment as well as private sector investment options.
6        (5) The defined contribution plan shall provide a
7    variety of options for payouts to retirees and their
8    survivors.
9        (6) To the extent authorized under federal law and as
10    authorized by the affected pension fund, the defined
11    contribution plan shall allow former participants in the
12    plan to transfer or roll over employee and employer
13    contributions, and the earnings thereon, into other
14    qualified retirement plans.
15        (7) Each affected pension fund shall reduce the
16    employee contributions credited to the member's defined
17    contribution plan account by an amount determined by that
18    affected pension fund to cover the cost of offering the
19    benefits under this subsection and any applicable
20    administrative fees.
21        (8) No person shall begin participating in the defined
22    contribution plan until it has attained qualified plan
23    status and received all necessary approvals from the U.S.
24    Internal Revenue Service.
25    (l) By accepting the benefits under this Section, a member
26or participant acknowledges and consents that benefits once

 

 

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1earned may not be diminished, but that future benefits may be
2modified, including, but not limited to, changes in the
3retirement age at which a member or participant becomes
4eligible to receive future benefits, changes in the amount of
5the automatic annual increase for those future benefits, or the
6amount of the retirement annuity. Any increase in benefits
7under this Section does not apply unless it is approved by
8resolution or ordinance of the governing body of the unit of
9local government with regard to the members or participants
10under that unit of local government.
11    (m) In the case of a conflict between the provisions of
12this Section and any other provision of this Code, the
13provisions of this Section shall control.".