97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB1635

 

Introduced 2/9/2011, by Sen. Michael W. Frerichs

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/15-136  from Ch. 108 1/2, par. 15-136

    Amends the State Universities Article of the Illinois Pension Code. Provides that, on January 1, 2012, the monthly pension of an annuitant who retired before January 1, 1980 shall be recalculated and increased to reflect the amount the annuitant would have received in January 2012 had the annuitant been receiving a 3% increase for each year he or she received a monthly annuity under Rule 1, Rule 2, Rule 3, Rule 4, or Rule 5. Provides for an additional increase of 3% of the amount of the retirement annuity then being received each January thereafter. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning 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
5Section 15-136 as follows:
 
6    (40 ILCS 5/15-136)  (from Ch. 108 1/2, par. 15-136)
7    Sec. 15-136. Retirement annuities - Amount. The provisions
8of this Section 15-136 apply only to those participants who are
9participating in the traditional benefit package or the
10portable benefit package and do not apply to participants who
11are participating in the self-managed plan.
12    (a) The amount of a participant's retirement annuity,
13expressed in the form of a single-life annuity, shall be
14determined by whichever of the following rules is applicable
15and provides the largest annuity:
16    Rule 1: The retirement annuity shall be 1.67% of final rate
17of earnings for each of the first 10 years of service, 1.90%
18for each of the next 10 years of service, 2.10% for each year
19of service in excess of 20 but not exceeding 30, and 2.30% for
20each year in excess of 30; or for persons who retire on or
21after January 1, 1998, 2.2% of the final rate of earnings for
22each year of service.
23    Rule 2: The retirement annuity shall be the sum of the

 

 

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1following, determined from amounts credited to the participant
2in accordance with the actuarial tables and the prescribed rate
3of interest in effect at the time the retirement annuity
4begins:
5        (i) the normal annuity which can be provided on an
6    actuarially equivalent basis, by the accumulated normal
7    contributions as of the date the annuity begins;
8        (ii) an annuity from employer contributions of an
9    amount equal to that which can be provided on an
10    actuarially equivalent basis from the accumulated normal
11    contributions made by the participant under Section
12    15-113.6 and Section 15-113.7 plus 1.4 times all other
13    accumulated normal contributions made by the participant;
14    and
15        (iii) the annuity that can be provided on an
16    actuarially equivalent basis from the entire contribution
17    made by the participant under Section 15-113.3.
18    With respect to a police officer or firefighter who retires
19on or after August 14, 1998, the accumulated normal
20contributions taken into account under clauses (i) and (ii) of
21this Rule 2 shall include the additional normal contributions
22made by the police officer or firefighter under Section
2315-157(a).
24    The amount of a retirement annuity calculated under this
25Rule 2 shall be computed solely on the basis of the
26participant's accumulated normal contributions, as specified

 

 

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1in this Rule and defined in Section 15-116. Neither an employee
2or employer contribution for early retirement under Section
315-136.2 nor any other employer contribution shall be used in
4the calculation of the amount of a retirement annuity under
5this Rule 2.
6    This amendatory Act of the 91st General Assembly is a
7clarification of existing law and applies to every participant
8and annuitant without regard to whether status as an employee
9terminates before the effective date of this amendatory Act.
10    This Rule 2 does not apply to a person who first becomes an
11employee under this Article on or after July 1, 2005.
12    Rule 3: The retirement annuity of a participant who is
13employed at least one-half time during the period on which his
14or her final rate of earnings is based, shall be equal to the
15participant's years of service not to exceed 30, multiplied by
16(1) $96 if the participant's final rate of earnings is less
17than $3,500, (2) $108 if the final rate of earnings is at least
18$3,500 but less than $4,500, (3) $120 if the final rate of
19earnings is at least $4,500 but less than $5,500, (4) $132 if
20the final rate of earnings is at least $5,500 but less than
21$6,500, (5) $144 if the final rate of earnings is at least
22$6,500 but less than $7,500, (6) $156 if the final rate of
23earnings is at least $7,500 but less than $8,500, (7) $168 if
24the final rate of earnings is at least $8,500 but less than
25$9,500, and (8) $180 if the final rate of earnings is $9,500 or
26more, except that the annuity for those persons having made an

 

 

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1election under Section 15-154(a-1) shall be calculated and
2payable under the portable retirement benefit program pursuant
3to the provisions of Section 15-136.4.
4    Rule 4: A participant who is at least age 50 and has 25 or
5more years of service as a police officer or firefighter, and a
6participant who is age 55 or over and has at least 20 but less
7than 25 years of service as a police officer or firefighter,
8shall be entitled to a retirement annuity of 2 1/4% of the
9final rate of earnings for each of the first 10 years of
10service as a police officer or firefighter, 2 1/2% for each of
11the next 10 years of service as a police officer or
12firefighter, and 2 3/4% for each year of service as a police
13officer or firefighter in excess of 20. The retirement annuity
14for all other service shall be computed under Rule 1.
15    For purposes of this Rule 4, a participant's service as a
16firefighter shall also include the following:
17        (i) service that is performed while the person is an
18    employee under subsection (h) of Section 15-107; and
19        (ii) in the case of an individual who was a
20    participating employee employed in the fire department of
21    the University of Illinois's Champaign-Urbana campus
22    immediately prior to the elimination of that fire
23    department and who immediately after the elimination of
24    that fire department transferred to another job with the
25    University of Illinois, service performed as an employee of
26    the University of Illinois in a position other than police

 

 

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1    officer or firefighter, from the date of that transfer
2    until the employee's next termination of service with the
3    University of Illinois.
4    Rule 5: The retirement annuity of a participant who elected
5early retirement under the provisions of Section 15-136.2 and
6who, on or before February 16, 1995, brought administrative
7proceedings pursuant to the administrative rules adopted by the
8System to challenge the calculation of his or her retirement
9annuity shall be the sum of the following, determined from
10amounts credited to the participant in accordance with the
11actuarial tables and the prescribed rate of interest in effect
12at the time the retirement annuity begins:
13        (i) the normal annuity which can be provided on an
14    actuarially equivalent basis, by the accumulated normal
15    contributions as of the date the annuity begins; and
16        (ii) an annuity from employer contributions of an
17    amount equal to that which can be provided on an
18    actuarially equivalent basis from the accumulated normal
19    contributions made by the participant under Section
20    15-113.6 and Section 15-113.7 plus 1.4 times all other
21    accumulated normal contributions made by the participant;
22    and
23        (iii) an annuity which can be provided on an
24    actuarially equivalent basis from the employee
25    contribution for early retirement under Section 15-136.2,
26    and an annuity from employer contributions of an amount

 

 

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1    equal to that which can be provided on an actuarially
2    equivalent basis from the employee contribution for early
3    retirement under Section 15-136.2.
4    In no event shall a retirement annuity under this Rule 5 be
5lower than the amount obtained by adding (1) the monthly amount
6obtained by dividing the combined employee and employer
7contributions made under Section 15-136.2 by the System's
8annuity factor for the age of the participant at the beginning
9of the annuity payment period and (2) the amount equal to the
10participant's annuity if calculated under Rule 1, reduced under
11Section 15-136(b) as if no contributions had been made under
12Section 15-136.2.
13    With respect to a participant who is qualified for a
14retirement annuity under this Rule 5 whose retirement annuity
15began before the effective date of this amendatory Act of the
1691st General Assembly, and for whom an employee contribution
17was made under Section 15-136.2, the System shall recalculate
18the retirement annuity under this Rule 5 and shall pay any
19additional amounts due in the manner provided in Section
2015-186.1 for benefits mistakenly set too low.
21    The amount of a retirement annuity calculated under this
22Rule 5 shall be computed solely on the basis of those
23contributions specifically set forth in this Rule 5. Except as
24provided in clause (iii) of this Rule 5, neither an employee
25nor employer contribution for early retirement under Section
2615-136.2, nor any other employer contribution, shall be used in

 

 

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1the calculation of the amount of a retirement annuity under
2this Rule 5.
3    The General Assembly has adopted the changes set forth in
4Section 25 of this amendatory Act of the 91st General Assembly
5in recognition that the decision of the Appellate Court for the
6Fourth District in Mattis v. State Universities Retirement
7System et al. might be deemed to give some right to the
8plaintiff in that case. The changes made by Section 25 of this
9amendatory Act of the 91st General Assembly are a legislative
10implementation of the decision of the Appellate Court for the
11Fourth District in Mattis v. State Universities Retirement
12System et al. with respect to that plaintiff.
13    The changes made by Section 25 of this amendatory Act of
14the 91st General Assembly apply without regard to whether the
15person is in service as an employee on or after its effective
16date.
17    (b) The retirement annuity provided under Rules 1 and 3
18above shall be reduced by 1/2 of 1% for each month the
19participant is under age 60 at the time of retirement. However,
20this reduction shall not apply in the following cases:
21        (1) For a disabled participant whose disability
22    benefits have been discontinued because he or she has
23    exhausted eligibility for disability benefits under clause
24    (6) of Section 15-152;
25        (2) For a participant who has at least the number of
26    years of service required to retire at any age under

 

 

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1    subsection (a) of Section 15-135; or
2        (3) For that portion of a retirement annuity which has
3    been provided on account of service of the participant
4    during periods when he or she performed the duties of a
5    police officer or firefighter, if these duties were
6    performed for at least 5 years immediately preceding the
7    date the retirement annuity is to begin.
8    (c) The maximum retirement annuity provided under Rules 1,
92, 4, and 5 shall be the lesser of (1) the annual limit of
10benefits as specified in Section 415 of the Internal Revenue
11Code of 1986, as such Section may be amended from time to time
12and as such benefit limits shall be adjusted by the
13Commissioner of Internal Revenue, and (2) 80% of final rate of
14earnings.
15    (d) An annuitant whose status as an employee terminates
16after August 14, 1969 shall receive automatic increases in his
17or her retirement annuity as follows:
18    Effective January 1 immediately following the date the
19retirement annuity begins, the annuitant shall receive an
20increase in his or her monthly retirement annuity of 0.125% of
21the monthly retirement annuity provided under Rule 1, Rule 2,
22Rule 3, Rule 4, or Rule 5, contained in this Section,
23multiplied by the number of full months which elapsed from the
24date the retirement annuity payments began to January 1, 1972,
25plus 0.1667% of such annuity, multiplied by the number of full
26months which elapsed from January 1, 1972, or the date the

 

 

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1retirement annuity payments began, whichever is later, to
2January 1, 1978, plus 0.25% of such annuity multiplied by the
3number of full months which elapsed from January 1, 1978, or
4the date the retirement annuity payments began, whichever is
5later, to the effective date of the increase.
6    The annuitant shall receive an increase in his or her
7monthly retirement annuity on each January 1 thereafter during
8the annuitant's life of 3% of the monthly annuity provided
9under Rule 1, Rule 2, Rule 3, Rule 4, or Rule 5 contained in
10this Section. The change made under this subsection by P.A.
1181-970 is effective January 1, 1980 and applies to each
12annuitant whose status as an employee terminates before or
13after that date.
14    Beginning January 1, 1990, all automatic annual increases
15payable under this Section shall be calculated as a percentage
16of the total annuity payable at the time of the increase,
17including all increases previously granted under this Article.
18    The change made in this subsection by P.A. 85-1008 is
19effective January 26, 1988, and is applicable without regard to
20whether status as an employee terminated before that date.
21    On January 1, 2012, the monthly pension of an annuitant who
22retired before January 1, 1980 shall be recalculated and
23increased to reflect the amount the annuitant would have
24received in January 2012 had the annuitant been receiving a 3%
25increase for each year he or she received a monthly annuity
26under Rule 1, Rule 2, Rule 3, Rule 4, or Rule 5 contained in

 

 

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1this Section. Each January thereafter, he or she shall receive
2an additional increase of 3% of the amount of the retirement
3annuity then being received.
4    (e) If, on January 1, 1987, or the date the retirement
5annuity payment period begins, whichever is later, the sum of
6the retirement annuity provided under Rule 1 or Rule 2 of this
7Section and the automatic annual increases provided under the
8preceding subsection or Section 15-136.1, amounts to less than
9the retirement annuity which would be provided by Rule 3, the
10retirement annuity shall be increased as of January 1, 1987, or
11the date the retirement annuity payment period begins,
12whichever is later, to the amount which would be provided by
13Rule 3 of this Section. Such increased amount shall be
14considered as the retirement annuity in determining benefits
15provided under other Sections of this Article. This paragraph
16applies without regard to whether status as an employee
17terminated before the effective date of this amendatory Act of
181987, provided that the annuitant was employed at least
19one-half time during the period on which the final rate of
20earnings was based.
21    (f) A participant is entitled to such additional annuity as
22may be provided on an actuarially equivalent basis, by any
23accumulated additional contributions to his or her credit.
24However, the additional contributions made by the participant
25toward the automatic increases in annuity provided under this
26Section shall not be taken into account in determining the

 

 

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1amount of such additional annuity.
2    (g) If, (1) by law, a function of a governmental unit, as
3defined by Section 20-107 of this Code, is transferred in whole
4or in part to an employer, and (2) a participant transfers
5employment from such governmental unit to such employer within
66 months after the transfer of the function, and (3) the sum of
7(A) the annuity payable to the participant under Rule 1, 2, or
83 of this Section (B) all proportional annuities payable to the
9participant by all other retirement systems covered by Article
1020, and (C) the initial primary insurance amount to which the
11participant is entitled under the Social Security Act, is less
12than the retirement annuity which would have been payable if
13all of the participant's pension credits validated under
14Section 20-109 had been validated under this system, a
15supplemental annuity equal to the difference in such amounts
16shall be payable to the participant.
17    (h) On January 1, 1981, an annuitant who was receiving a
18retirement annuity on or before January 1, 1971 shall have his
19or her retirement annuity then being paid increased $1 per
20month for each year of creditable service. On January 1, 1982,
21an annuitant whose retirement annuity began on or before
22January 1, 1977, shall have his or her retirement annuity then
23being paid increased $1 per month for each year of creditable
24service.
25    (i) On January 1, 1987, any annuitant whose retirement
26annuity began on or before January 1, 1977, shall have the

 

 

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1monthly retirement annuity increased by an amount equal to 8¢
2per year of creditable service times the number of years that
3have elapsed since the annuity began.
4(Source: P.A. 93-347, eff. 7-24-03; 94-4, eff. 6-1-05.)
 
5    Section 99. Effective date. This Act takes effect upon
6becoming law.