94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB0035

 

Introduced 1/26/2005, by Sen. Iris Y. Martinez

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/17-116   from Ch. 108 1/2, par. 17-116
40 ILCS 5/17-119.1
30 ILCS 805/8.29 new

    Amends the Chicago Teacher Article of the Illinois Pension Code. Provides that the service retirement pension for a teacher who retires on or after the effective date of this amendatory Act shall be 2.4% (now 2.2%) of average salary for each year of creditable service. Eliminates the required contribution for converting past service to the augmented retirement formula, and provides for a refund of such contributions already paid. Also provides for recalculation of the pension and a lump sum payment of the difference between the augmented and unaugmented rates for certain pensioners. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

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1     AN ACT in relation to public employee benefits.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Pension Code is amended by changing
5 Sections 17-116 and 17-119.1 as follows:
 
6     (40 ILCS 5/17-116)  (from Ch. 108 1/2, par. 17-116)
7     Sec. 17-116. Service retirement pension.
8     (a) Each teacher having 20 years of service upon attainment
9 of age 55, or who thereafter attains age 55 shall be entitled
10 to a service retirement pension upon or after attainment of age
11 55; and each teacher in service on or after July 1, 1971, with
12 5 or more but less than 20 years of service shall be entitled
13 to receive a service retirement pension upon or after
14 attainment of age 62.
15     (b) The service retirement pension for a teacher who
16 retires on or after June 25, 1971, at age 60 or over, shall be
17 calculated as follows:
18         (1) For creditable service earned before July 1, 1998
19     that has not been augmented under Section 17-119.1: 1.67%
20     for each of the first 10 years of service; 1.90% for each
21     of the next 10 years of service; 2.10% for each year of
22     service in excess of 20 but not exceeding 30; and 2.30% for
23     each year of service in excess of 30, based upon average
24     salary as herein defined.
25         (2) For creditable service earned on or after July 1,
26     1998 by a member who has at least 30 years of creditable
27     service on July 1, 1998 and who does not elect to augment
28     service under Section 17-119.1: 2.3% of average salary for
29     each year of creditable service earned on or after July 1,
30     1998.
31         (3) For all other creditable service: for persons who
32     retire before the effective date of this amendatory Act of

 

 

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1     the 94th General Assembly, 2.2% of average salary for each
2     year of creditable service, for persons who retire on or
3     after the effective date of this amendatory Act of the 94th
4     General Assembly, 2.4% of average salary for each year of
5     creditable service.
6     (c) When computing such service retirement pensions, the
7 following conditions shall apply:
8         1. Average salary shall consist of the average annual
9     rate of salary for the 4 consecutive years of validated
10     service within the last 10 years of service when such
11     average annual rate was highest. In the determination of
12     average salary for retirement allowance purposes, for
13     members who commenced employment after August 31, 1979,
14     that part of the salary for any year shall be excluded
15     which exceeds the annual full-time salary rate for the
16     preceding year by more than 20%. In the case of a member
17     who commenced employment before August 31, 1979 and who
18     receives salary during any year after September 1, 1983
19     which exceeds the annual full time salary rate for the
20     preceding year by more than 20%, an Employer and other
21     employers of eligible contributors as defined in Section
22     17-106 shall pay to the Fund an amount equal to the present
23     value of the additional service retirement pension
24     resulting from such excess salary. The present value of the
25     additional service retirement pension shall be computed by
26     the Board on the basis of actuarial tables adopted by the
27     Board. If a member elects to receive a pension from this
28     Fund provided by Section 20-121, his salary under the State
29     Universities Retirement System and the Teachers'
30     Retirement System of the State of Illinois shall be
31     considered in determining such average salary. Amounts
32     paid after the effective date of this amendatory Act of
33     1991 for unused vacation time earned after that effective
34     date shall not under any circumstances be included in the
35     calculation of average salary or the annual rate of salary
36     for the purposes of this Article.

 

 

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1         2. Proportionate credit shall be given for validated
2     service of less than one year.
3         3. For retirement at age 60 or over the pension shall
4     be payable at the full rate.
5         4. For separation from service below age 60 to a
6     minimum age of 55, the pension shall be discounted at the
7     rate of 1/2 of one per cent for each month that the age of
8     the contributor is less than 60, but a teacher may elect to
9     defer the effective date of pension in order to eliminate
10     or reduce this discount. This discount shall not be
11     applicable to any participant who has at least 34 years of
12     service or a retirement pension of at least 74.6% of
13     average salary on the date the retirement annuity begins.
14         5. No additional pension shall be granted for service
15     exceeding 45 years. Beginning June 26, 1971 no pension
16     shall exceed the greater of $1,500 per month or 75% of
17     average salary as herein defined.
18         6. Service retirement pensions shall begin on the
19     effective date of resignation, retirement, the day
20     following the close of the payroll period for which service
21     credit was validated, or the time the person resigning or
22     retiring attains age 55, or on a date elected by the
23     teacher, whichever shall be latest.
24         7. A member who is eligible to receive a retirement
25     pension of at least 74.6% of average salary and will attain
26     age 55 on or before December 31 during the year which
27     commences on July 1 shall be deemed to attain age 55 on the
28     preceding June 1.
29         8. A member retiring after the effective date of this
30     amendatory Act of 1998 shall receive a pension equal to 75%
31     of average salary if the member is qualified to receive a
32     retirement pension equal to at least 74.6% of average
33     salary under this Article or as proportional annuities
34     under Article 20 of this Code.
35 (Source: P.A. 90-566, eff. 1-2-98; 90-582, eff. 5-27-98.)
 

 

 

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1     (40 ILCS 5/17-119.1)
2     Sec. 17-119.1. Optional increase in retirement annuity.
3     (a) Beginning on the effective date of this amendatory Act
4 of the 94th General Assembly, a member of the Fund shall may
5 qualify for the augmented rate under subdivision (b)(3) of
6 Section 17-116 for all years of creditable service without
7 earned before July 1, 1998 by making any the optional
8 contribution. Any such contribution already paid under this
9 Section shall be refunded by the Fund to the teacher or
10 pensioner (or, if deceased, to the teacher or pensioner's
11 survivor, beneficiary, or estate), together with interest at
12 the rate of 5%, compounded annually, from the date of payment
13 of the contribution to the date of refund; except that any such
14 contribution that has been paid by an employer under subsection
15 (e) shall be refunded to the employer. specified in subsection
16 (b); except that a member who retires on or after July 1, 1998
17 with at least 30 years of creditable service at retirement
18 qualifies for the augmented rate without making any
19 contribution under subsection (b).
20     Any member who retires on or after July 1, 1998 and before
21 the effective date of this amendatory Act of the 94th 92nd
22 General Assembly and whose pension was calculated using an
23 unaugmented rate may elect to have the pension recalculated
24 using the applicable augmented rate and to with at least 30
25 years of creditable service shall be paid a lump sum equal to
26 the amount he or she would have received under the augmented
27 rate minus the amount he or she actually received prior to the
28 effective date of the recalculation.
29     The changes to this Section made by this amendatory Act of
30 the 94th General Assembly apply without regard to whether the
31 member was in service on or after its effective date and
32 notwithstanding Section 17-157.
33     A member may not elect to qualify for the augmented rate
34 for only a portion of his or her creditable service earned
35 before July 1, 1998.
36     (b) (Blank). The contribution shall be an amount equal to

 

 

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1 1.0% of the member's highest salary rate in the 4 consecutive
2 school years immediately prior to but not including the school
3 year in which the application occurs, multiplied by the number
4 of years of creditable service earned by the member before July
5 1, 1998 or 20, whichever is less. This contribution shall be
6 reduced by 1.0% of that salary rate for every 3 full years of
7 creditable service earned by the member after June 30, 1998.
8 The contribution shall be further reduced at the rate of 25% of
9 the contribution (as reduced for service after June 30, 1998)
10 for each year of the member's total creditable service in
11 excess of 34 years. The contribution shall not in any event
12 exceed 20% of that salary rate.
13     The member shall pay to the Fund the amount of the
14 contribution as calculated at the time of application under
15 this Section. The amount of the contribution determined under
16 this subsection shall be recalculated at the time of
17 retirement, and if the Fund determines that the amount paid by
18 the member exceeds the recalculated amount, the Fund shall
19 refund the difference to the member with regular interest from
20 the date of payment to the date of refund.
21     The contribution required by this subsection shall be paid
22 in one of the following ways or in a combination of the
23 following ways that does not extend over more than 5 years:
24         (i) in a lump sum on or before the date of retirement;
25         (ii) in substantially equal installments over a period
26     of time not to exceed 5 years, as a deduction from salary
27     in accordance with Section 17-130.2;
28         (iii) in substantially equal monthly installments over
29     a 24-month period, by a deduction from the annuitant's
30     monthly benefit.
31     (c) (Blank). If the member fails to make the full
32 contribution under this Section in a timely fashion, the
33 payments made under this Section shall be refunded to the
34 member, without interest. If the member (including a member who
35 has become an annuitant) dies before making the full
36 contribution, the payments made under this Section shall be

 

 

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1 refunded to the member's designated beneficiary if there is no
2 survivor's or children's pension benefit payable. If there is a
3 survivor's or children's benefit payable, then all payments
4 made under this Section shall be retained by the Fund and all
5 such survivor's or children's benefits payable shall be
6 calculated as if all contributions required under this Section
7 have been paid in full.
8     (d) (Blank). For purposes of this Section and subsection
9 (b) of Section 17-116, optional creditable service established
10 by a member shall be deemed to have been earned at the time of
11 the employment or other qualifying event upon which the service
12 is based, rather than at the time the credit was established in
13 this Fund.
14     (e) (Blank). The contributions required under this Section
15 are the responsibility of the teacher and not the teacher's
16 employer. However, an employer of teachers may, after the
17 effective date of this amendatory Act of 1998, specifically
18 agree, through collective bargaining or otherwise, to make the
19 contributions required by this Section on behalf of those
20 teachers.
21 (Source: P.A. 91-17, eff. 6-4-99; 92-416, eff. 8-17-01; 92-599,
22 eff. 6-28-02; 92-651, eff. 7-11-02.)
 
23     Section 90. The State Mandates Act is amended by adding
24 Section 8.29 as follows:
 
25     (30 ILCS 805/8.29 new)
26     Sec. 8.29. Exempt mandate. Notwithstanding Sections 6 and 8
27 of this Act, no reimbursement by the State is required for the
28 implementation of any mandate created by this amendatory Act of
29 the 94th General Assembly.
 
30     Section 99. Effective date. This Act takes effect upon
31 becoming law.