97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3396

 

Introduced 2/24/2011, by Rep. Robert Rita

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/17-119  from Ch. 108 1/2, par. 17-119
40 ILCS 5/17-119.2 new
40 ILCS 5/17-122  from Ch. 108 1/2, par. 17-122
30 ILCS 805/8.35 new

    Amends the Chicago Teacher Article of the Illinois Pension Code. Provides for a one-time increase in certain retirement and survivor's annuities. Declares it to be the public policy of this State and the intention of the General Assembly to protect annuitants against significant decreases in the purchasing power of retirement and survivor's annuities. Directs the retirement system to review and report on significant changes in purchasing power. 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,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Sections 17-119 and 17-122 and adding Section 17-119.2 as
6follows:
 
7    (40 ILCS 5/17-119)  (from Ch. 108 1/2, par. 17-119)
8    Sec. 17-119. Automatic annual increase in pension.
9    (a) Each teacher retiring on or after September 1, 1959, is
10entitled to the annual increase in pension, defined herein,
11while he is receiving a pension from the Fund.
12        1. The term "base pension" means a service retirement
13    or disability retirement pension in the amount fixed and
14    payable at the date of retirement of a teacher.
15        2. The annual increase in pension shall be at the rate
16    of 1 1/2% of base pension. This increase shall first occur
17    in January of the year next following the first anniversary
18    of retirement. At such time the Fund shall pay the pro rata
19    part of the increase for the period from the first
20    anniversary date to the date of the first increase in
21    pension. Beginning January 1, 1972, the rate of annual
22    increase in pension shall be 2% of the base pension.
23    Beginning January 1, 1979, the rate of annual increase in

 

 

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1    pension shall be 3% of the base pension. Beginning January
2    1, 1990, all automatic annual increases payable under this
3    Section shall be calculated as a percentage of the total
4    pension payable at the time of the increase, including all
5    increases previously granted under this Article,
6    notwithstanding Section 17-157.
7        3. An increase in pension shall be granted only if the
8    retired teacher is age 60 or over. If the teacher attains
9    age 60 after retirement, the increase in pension shall
10    begin in January of the year following the 61st birthday.
11    At such time the Fund also shall pay the pro rata part of
12    the increase from the 61st birthday to the date of first
13    increase in pension.
14    (b) In addition to other increases which may be provided by
15this Section, on January 1, 1981 any teacher who was receiving
16a retirement pension on or before January 1, 1971 shall have
17his retirement pension then being paid increased $1 per month
18for each year of creditable service. On January 1, 1982, any
19teacher whose retirement pension began on or before January 1,
201977, shall have his retirement pension then being paid
21increased $1 per month for each year of creditable service.
22    On January 1, 1987, any teacher whose retirement pension
23began on or before January 1, 1977, shall have the monthly
24retirement pension increased by an amount equal to 8¢ per year
25of creditable service times the number of years that have
26elapsed since the retirement pension began.

 

 

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1    (c) On July 1, 2011, every pensioner who began receiving a
2retirement pension before January 1, 1980 shall have the
3monthly retirement pension increased by whichever of the
4following percentages is applicable:
5    5% if the annuity began in 1979;
6    10% if the annuity began in 1978;
7    14% if the annuity began in 1977;
8    14% if the annuity began in 1976;
9    18% if the annuity began in 1975;
10    23% if the annuity began in 1974;
11    32% if the annuity began in 1973 or before.
12    The increase under this subsection shall be calculated as a
13percentage of the amount of the retirement pension payable on
14June 30, 2011, including any increases previously received
15under this Article, and shall be included in the calculation of
16increases granted thereafter under subsection (a). Section
1717-157 does not apply to the increase provided under this
18subsection.
19(Source: P.A. 90-566, eff. 1-2-98.)
 
20    (40 ILCS 5/17-119.2 new)
21    Sec. 17-119.2. Reduction of purchasing power; policy;
22report; increase.
23    (a) The General Assembly finds and declares that:
24        (1) The purchasing power of a fixed annuity can be
25    eroded over time by the effects of inflation and increases

 

 

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1    in the general cost of living.
2        (2) For a person whose income consists primarily of a
3    fixed annuity, the reduction in purchasing power resulting
4    from increases in the cost of living can become
5    catastrophic over time, transforming a once-comfortable
6    retirement into a time of poverty and need.
7        (3) The State of Illinois is concerned about the
8    effects that a significant reduction in purchasing power
9    can have on the quality of life of retired employees and
10    their survivors.
11        (4) The General Assembly has previously addressed this
12    concern by providing for automatic annual increases in
13    retirement and survivor's pensions under this Article.
14    Recognizing that these automatic annual increases, by
15    themselves, are not a complete answer in times of high
16    inflation, the General Assembly has also, from time to
17    time, provided specific one-time increases in pensions for
18    certain categories of pensioners.
19    (b) It is the public policy of this State and the intention
20of the General Assembly to protect pensioners against
21significant decreases in the purchasing power of the retirement
22and survivor's pensions granted under this Article.
23    (c) The Fund shall regularly review the changes that have
24occurred in the purchasing power of the retirement and
25survivor's pensions being paid under this Article, and it shall
26report to the General Assembly, the Governor, and the Economic

 

 

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1and Fiscal Commission whenever it determines that the original
2purchasing power of those pensions has been reduced by 20% or
3more for any category or group of pensioners. The Fund may
4include in the report its recommendations, if any, for
5legislative action to address its findings.
6    (d) As used in this Section, the term "retirement and
7survivor's pensions" means all service retirement pensions,
8disability retirement pensions, survivor's pensions, and
9children's pensions.
 
10    (40 ILCS 5/17-122)  (from Ch. 108 1/2, par. 17-122)
11    Sec. 17-122. Survivor's and children's pensions - Amount.
12    (a) Upon the death of a teacher who has completed at least
131 1/2 years of contributing service with either this Fund or
14the State Universities Retirement System or the Teachers'
15Retirement System of the State of Illinois, provided his death
16occurred while (a) in active service covered by the Fund or
17during his first 18 months of continuous employment without a
18break in service under any other participating system as
19defined in the Illinois Retirement Systems Reciprocal Act
20except the State Universities Retirement System and the
21Teachers' Retirement System of the State of Illinois, (b) on a
22creditable leave of absence, (c) on a noncreditable leave of
23absence of no more than one year, or (d) a pension was deferred
24or pending provided the teacher had at least 10 years of
25validated service credit, or upon the death of a pensioner

 

 

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1otherwise qualified for such benefit, the surviving spouse and
2unmarried minor children of the deceased teacher under age 18
3shall be entitled to pensions, under the conditions stated
4hereinafter. Such survivor's and children's pensions shall be
5based on the average of the 4 highest consecutive years of
6salary in the last 10 years of service or on the average salary
7for total service, if total service has been less than 4 years,
8according to the following percentages:
9        30% of average salary or 50% of the retirement pension
10    earned by the teacher, whichever is larger, subject to the
11    prescribed maximum monthly payment, for a surviving spouse
12    alone on attainment of age 50;
13        60% of average salary for a surviving spouse and
14    eligible minor children of the deceased teacher.
15    If no eligible spouse survives, or the surviving spouse
16remarries, or the parent of the children of the deceased member
17is otherwise ineligible for a survivor's pension, a children's
18pension for eligible minor children under age 18 shall be paid
19to their parent or legal guardian for their benefit according
20to the following percentages:
21        30% of average salary for one child;
22        60% of average salary for 2 or more children.
23    (b) On January 1, 1981, any survivor or child who was
24receiving a survivor's or children's pension on or before
25January 1, 1971, shall have his survivor's or children's
26pension then being paid increased by 1% for each full year

 

 

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1which has elapsed from the date the pension began. On January
21, 1982, any survivor or child whose pension began after
3January 1, 1971, but before January 1, 1981, shall have his
4survivor's or children's pension then being paid increased 1%
5for each full year which has elapsed from the date the pension
6began. On January 1, 1987, any survivor or child whose pension
7began on or before January 1, 1977, shall have the monthly
8survivor's or children's pension increased by $1 for each full
9year which has elapsed since the pension began.
10    (c) On July 1, 2011, every survivor or child who began
11receiving a survivor's or children's pension before January 1,
121980 shall have the monthly pension increased by whichever of
13the following percentages is applicable:
14    5% if the annuity began in 1979;
15    10% if the annuity began in 1978;
16    14% if the annuity began in 1977;
17    14% if the annuity began in 1976;
18    18% if the annuity began in 1975;
19    23% if the annuity began in 1974;
20    32% if the annuity began in 1973 or before.
21    In the case of the survivor of a deceased annuitant who
22died while receiving a retirement annuity, "original annuity"
23means the deceased annuitant's retirement pension; in all other
24cases, "original annuity" means the survivor's or children's
25pension.
26    The increase under this subsection shall be calculated as a

 

 

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1percentage of the amount of the survivor's or children's
2pension payable on June 30, 2011, including any increases
3previously received under this Article, and shall be included
4in the calculation of increases granted thereafter under
5subsection (d). Section 17-157 does not apply to the increase
6provided under this subsection.
7    (d) Beginning January 1, 1990, every survivor's and
8children's pension shall be increased (1) on each January 1
9occurring on or after the commencement of the pension if the
10deceased teacher died while receiving a retirement pension, or
11(2) in other cases, on each January 1 occurring on or after the
12first anniversary of the commencement of the pension, by an
13amount equal to 3% of the current amount of the pension,
14including all increases previously granted under this Article,
15notwithstanding Section 17-157. Such increases shall apply
16without regard to whether the deceased teacher was in service
17on or after the effective date of this amendatory Act of 1991,
18but shall not accrue for any period prior to January 1, 1990.
19    (e) Subject to the minimum established below, the maximum
20amount of pension for a surviving spouse alone or one minor
21child shall be $400 per month, and the maximum combined
22pensions for a surviving spouse and children of the deceased
23teacher shall be $600 per month, with individual pensions
24adjusted for all beneficiaries pro rata to conform with this
25limitation. If proration is unnecessary the minimum survivor's
26and children's pensions shall be $40 per month. The minimum

 

 

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1total survivor's and children's pension payable upon the death
2of a contributor or annuitant which occurs after December 31,
31986, shall be 50% of the earned retirement pension of such
4contributor or annuitant, calculated without early retirement
5discount in the case of death in service.
6    On death after retirement, the total survivor's and
7children's pensions shall not exceed the monthly retirement or
8disability pension paid to the deceased retirant. Survivor's
9and children's benefits described in this Section shall apply
10to all service and disability pensioners eligible for a pension
11as of July 1, 1981.
12(Source: P.A. 90-32, eff. 6-27-97; 90-566, eff. 1-2-98.)
 
13    Section 90. The State Mandates Act is amended by adding
14Section 8.35 as follows:
 
15    (30 ILCS 805/8.35 new)
16    Sec. 8.35. Exempt mandate. Notwithstanding Sections 6 and 8
17of this Act, no reimbursement by the State is required for the
18implementation of any mandate created by this amendatory Act of
19the 97th General Assembly.
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.