98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB2656

 

Introduced 2/21/2013, by Rep. Darlene J. Senger

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-139  from Ch. 108 1/2, par. 7-139

    Amends the Illinois Municipal Retirement Fund (IMRF) Article of the Illinois Pension Code. Provides that, for service transferred from a downstate police pension fund under a specific provision, credits and creditable service shall be granted upon transfer of those credits to IMRF. Specifies that if the board determines that the amount transferred is less than the true cost to the Fund of allowing that creditable service to be established, then in order to establish that creditable service, the member must pay to the Fund an additional contribution equal to the difference, as determined by the board in accordance with the rules and procedures adopted by the Fund. Provides that if the member does not make the full additional payment prior to termination of his participation with that employer, then his or her creditable service shall be reduced by an amount equal to the difference between the amount transferred and the true cost to the Fund of allowing that creditable service to be established, as determined by the board in accordance with the rules and procedures that it adopts. Authorizes the board to establish, by rule, the manner of making these calculations. Effective immediately.


LRB098 03984 JDS 34004 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2656LRB098 03984 JDS 34004 b

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 7-139 as follows:
 
6    (40 ILCS 5/7-139)  (from Ch. 108 1/2, par. 7-139)
7    Sec. 7-139. Credits and creditable service to employees.
8    (a) Each participating employee shall be granted credits
9and creditable service, for purposes of determining the amount
10of any annuity or benefit to which he or a beneficiary is
11entitled, as follows:
12        1. For prior service: Each participating employee who
13    is an employee of a participating municipality or
14    participating instrumentality on the effective date shall
15    be granted creditable service, but no credits under
16    paragraph 2 of this subsection (a), for periods of prior
17    service for which credit has not been received under any
18    other pension fund or retirement system established under
19    this Code, as follows:
20        If the effective date of participation for the
21    participating municipality or participating
22    instrumentality is on or before January 1, 1998, creditable
23    service shall be granted for the entire period of prior

 

 

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1    service with that employer without any employee
2    contribution.
3        If the effective date of participation for the
4    participating municipality or participating
5    instrumentality is after January 1, 1998, creditable
6    service shall be granted for the last 20% of the period of
7    prior service with that employer, but no more than 5 years,
8    without any employee contribution. A participating
9    employee may establish creditable service for the
10    remainder of the period of prior service with that employer
11    by making an application in writing, accompanied by payment
12    of an employee contribution in an amount determined by the
13    Fund, based on the employee contribution rates in effect at
14    the time of application for the creditable service and the
15    employee's salary rate on the effective date of
16    participation for that employer, plus interest at the
17    effective rate from the date of the prior service to the
18    date of payment. Application for this creditable service
19    may be made at any time while the employee is still in
20    service.
21        A municipality that (i) has at least 35 employees; (ii)
22    is located in a county with at least 2,000,000 inhabitants;
23    and (iii) maintains an independent defined benefit pension
24    plan for the benefit of its eligible employees may restrict
25    creditable service in whole or in part for periods of prior
26    service with the employer if the governing body of the

 

 

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1    municipality adopts an irrevocable resolution to restrict
2    that creditable service and files the resolution with the
3    board before the municipality's effective date of
4    participation.
5        Any person who has withdrawn from the service of a
6    participating municipality or participating
7    instrumentality prior to the effective date, who reenters
8    the service of the same municipality or participating
9    instrumentality after the effective date and becomes a
10    participating employee is entitled to creditable service
11    for prior service as otherwise provided in this subdivision
12    (a)(1) only if he or she renders 2 years of service as a
13    participating employee after the effective date.
14    Application for such service must be made while in a
15    participating status. The salary rate to be used in the
16    calculation of the required employee contribution, if any,
17    shall be the employee's salary rate at the time of first
18    reentering service with the employer after the employer's
19    effective date of participation.
20        2. For current service, each participating employee
21    shall be credited with:
22            a. Additional credits of amounts equal to each
23        payment of additional contributions received from him
24        under Section 7-173, as of the date the corresponding
25        payment of earnings is payable to him.
26            b. Normal credits of amounts equal to each payment

 

 

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1        of normal contributions received from him, as of the
2        date the corresponding payment of earnings is payable
3        to him, and normal contributions made for the purpose
4        of establishing out-of-state service credits as
5        permitted under the conditions set forth in paragraph 6
6        of this subsection (a).
7            c. Municipality credits in an amount equal to 1.4
8        times the normal credits, except those established by
9        out-of-state service credits, as of the date of
10        computation of any benefit if these credits would
11        increase the benefit.
12            d. Survivor credits equal to each payment of
13        survivor contributions received from the participating
14        employee as of the date the corresponding payment of
15        earnings is payable, and survivor contributions made
16        for the purpose of establishing out-of-state service
17        credits.
18        3. For periods of temporary and total and permanent
19    disability benefits, each employee receiving disability
20    benefits shall be granted creditable service for the period
21    during which disability benefits are payable. Normal and
22    survivor credits, based upon the rate of earnings applied
23    for disability benefits, shall also be granted if such
24    credits would result in a higher benefit to any such
25    employee or his beneficiary.
26        4. For authorized leave of absence without pay: A

 

 

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1    participating employee shall be granted credits and
2    creditable service for periods of authorized leave of
3    absence without pay under the following conditions:
4            a. An application for credits and creditable
5        service is submitted to the board while the employee is
6        in a status of active employment.
7            b. Not more than 12 complete months of creditable
8        service for authorized leave of absence without pay
9        shall be counted for purposes of determining any
10        benefits payable under this Article.
11            c. Credits and creditable service shall be granted
12        for leave of absence only if such leave is approved by
13        the governing body of the municipality, including
14        approval of the estimated cost thereof to the
15        municipality as determined by the fund, and employee
16        contributions, plus interest at the effective rate
17        applicable for each year from the end of the period of
18        leave to date of payment, have been paid to the fund in
19        accordance with Section 7-173. The contributions shall
20        be computed upon the assumption earnings continued
21        during the period of leave at the rate in effect when
22        the leave began.
23            d. Benefits under the provisions of Sections
24        7-141, 7-146, 7-150 and 7-163 shall become payable to
25        employees on authorized leave of absence, or their
26        designated beneficiary, only if such leave of absence

 

 

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1        is creditable hereunder, and if the employee has at
2        least one year of creditable service other than the
3        service granted for leave of absence. Any employee
4        contributions due may be deducted from any benefits
5        payable.
6            e. No credits or creditable service shall be
7        allowed for leave of absence without pay during any
8        period of prior service.
9        5. For military service: The governing body of a
10    municipality or participating instrumentality may elect to
11    allow creditable service to participating employees who
12    leave their employment to serve in the armed forces of the
13    United States for all periods of such service, provided
14    that the person returns to active employment within 90 days
15    after completion of full time active duty, but no
16    creditable service shall be allowed such person for any
17    period that can be used in the computation of a pension or
18    any other pay or benefit, other than pay for active duty,
19    for service in any branch of the armed forces of the United
20    States. If necessary to the computation of any benefit, the
21    board shall establish municipality credits for
22    participating employees under this paragraph on the
23    assumption that the employee received earnings at the rate
24    received at the time he left the employment to enter the
25    armed forces. A participating employee in the armed forces
26    shall not be considered an employee during such period of

 

 

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1    service and no additional death and no disability benefits
2    are payable for death or disability during such period.
3        Any participating employee who left his employment
4    with a municipality or participating instrumentality to
5    serve in the armed forces of the United States and who
6    again became a participating employee within 90 days after
7    completion of full time active duty by entering the service
8    of a different municipality or participating
9    instrumentality, which has elected to allow creditable
10    service for periods of military service under the preceding
11    paragraph, shall also be allowed creditable service for his
12    period of military service on the same terms that would
13    apply if he had been employed, before entering military
14    service, by the municipality or instrumentality which
15    employed him after he left the military service and the
16    employer costs arising in relation to such grant of
17    creditable service shall be charged to and paid by that
18    municipality or instrumentality.
19        Notwithstanding the foregoing, any participating
20    employee shall be entitled to creditable service as
21    required by any federal law relating to re-employment
22    rights of persons who served in the United States Armed
23    Services. Such creditable service shall be granted upon
24    payment by the member of an amount equal to the employee
25    contributions which would have been required had the
26    employee continued in service at the same rate of earnings

 

 

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1    during the military leave period, plus interest at the
2    effective rate.
3        5.1. In addition to any creditable service established
4    under paragraph 5 of this subsection (a), creditable
5    service may be granted for up to 48 months of service in
6    the armed forces of the United States.
7        In order to receive creditable service for military
8    service under this paragraph 5.1, a participating employee
9    must (1) apply to the Fund in writing and provide evidence
10    of the military service that is satisfactory to the Board;
11    (2) obtain the written approval of the current employer;
12    and (3) make contributions to the Fund equal to (i) the
13    employee contributions that would have been required had
14    the service been rendered as a member, plus (ii) an amount
15    determined by the board to be equal to the employer's
16    normal cost of the benefits accrued for that military
17    service, plus (iii) interest on items (i) and (ii) from the
18    date of first membership in the Fund to the date of
19    payment. The required interest shall be calculated at the
20    regular interest rate.
21        The changes made to this paragraph 5.1 by Public Acts
22    95-483 and 95-486 apply only to participating employees in
23    service on or after August 28, 2007 (the effective date of
24    those Public Acts).
25        6. For out-of-state service: Creditable service shall
26    be granted for service rendered to an out-of-state local

 

 

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1    governmental body under the following conditions: The
2    employee had participated and has irrevocably forfeited
3    all rights to benefits in the out-of-state public employees
4    pension system; the governing body of his participating
5    municipality or instrumentality authorizes the employee to
6    establish such service; the employee has 2 years current
7    service with this municipality or participating
8    instrumentality; the employee makes a payment of
9    contributions, which shall be computed at 8% (normal) plus
10    2% (survivor) times length of service purchased times the
11    average rate of earnings for the first 2 years of service
12    with the municipality or participating instrumentality
13    whose governing body authorizes the service established
14    plus interest at the effective rate on the date such
15    credits are established, payable from the date the employee
16    completes the required 2 years of current service to date
17    of payment. In no case shall more than 120 months of
18    creditable service be granted under this provision.
19        7. For retroactive service: Any employee who could have
20    but did not elect to become a participating employee, or
21    who should have been a participant in the Municipal Public
22    Utilities Annuity and Benefit Fund before that fund was
23    superseded, may receive creditable service for the period
24    of service not to exceed 50 months; however, a current or
25    former elected or appointed official of a participating
26    municipality may establish credit under this paragraph 7

 

 

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1    for more than 50 months of service as an official of that
2    municipality, if the excess over 50 months is approved by
3    resolution of the governing body of the affected
4    municipality filed with the Fund before January 1, 2002.
5        Any employee who is a participating employee on or
6    after September 24, 1981 and who was excluded from
7    participation by the age restrictions removed by Public Act
8    82-596 may receive creditable service for the period, on or
9    after January 1, 1979, excluded by the age restriction and,
10    in addition, if the governing body of the participating
11    municipality or participating instrumentality elects to
12    allow creditable service for all employees excluded by the
13    age restriction prior to January 1, 1979, for service
14    during the period prior to that date excluded by the age
15    restriction. Any employee who was excluded from
16    participation by the age restriction removed by Public Act
17    82-596 and who is not a participating employee on or after
18    September 24, 1981 may receive creditable service for
19    service after January 1, 1979. Creditable service under
20    this paragraph shall be granted upon payment of the
21    employee contributions which would have been required had
22    he participated, with interest at the effective rate for
23    each year from the end of the period of service established
24    to date of payment.
25        8. For accumulated unused sick leave: A participating
26    employee who is applying for a retirement annuity shall be

 

 

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1    entitled to creditable service for that portion of the
2    employee's accumulated unused sick leave for which payment
3    is not received, as follows:
4            a. Sick leave days shall be limited to those
5        accumulated under a sick leave plan established by a
6        participating municipality or participating
7        instrumentality which is available to all employees or
8        a class of employees.
9            b. Except as provided in item b-1, only sick leave
10        days accumulated with a participating municipality or
11        participating instrumentality with which the employee
12        was in service within 60 days of the effective date of
13        his retirement annuity shall be credited; If the
14        employee was in service with more than one employer
15        during this period only the sick leave days with the
16        employer with which the employee has the greatest
17        number of unpaid sick leave days shall be considered.
18            b-1. If the employee was in the service of more
19        than one employer as defined in item (2) of paragraph
20        (a) of subsection (A) of Section 7-132, then the sick
21        leave days from all such employers shall be credited,
22        as long as the creditable service attributed to those
23        sick leave days does not exceed the limitation in item
24        f of this paragraph 8. In calculating the creditable
25        service under this item b-1, the sick leave days from
26        the last employer shall be considered first, then the

 

 

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1        remaining sick leave days shall be considered until
2        there are no more days or the maximum creditable sick
3        leave threshold under item f of this paragraph 8 has
4        been reached.
5            c. The creditable service granted shall be
6        considered solely for the purpose of computing the
7        amount of the retirement annuity and shall not be used
8        to establish any minimum service period required by any
9        provision of the Illinois Pension Code, the effective
10        date of the retirement annuity, or the final rate of
11        earnings.
12            d. The creditable service shall be at the rate of
13        1/20 of a month for each full sick day, provided that
14        no more than 12 months may be credited under this
15        subdivision 8.
16            e. Employee contributions shall not be required
17        for creditable service under this subdivision 8.
18            f. Each participating municipality and
19        participating instrumentality with which an employee
20        has service within 60 days of the effective date of his
21        retirement annuity shall certify to the board the
22        number of accumulated unpaid sick leave days credited
23        to the employee at the time of termination of service.
24        9. For service transferred from another system:
25    Credits and creditable service shall be granted for service
26    under Article 3, 4, 5, 8, 14, or 16 of this Act, to any

 

 

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1    active member of this Fund, and to any inactive member who
2    has been a county sheriff, upon transfer of such credits
3    pursuant to Section 3-110.3, 4-108.3, 5-235, 8-226.7,
4    14-105.6, or 16-131.4, and payment by the member of the
5    amount by which (1) the employer and employee contributions
6    that would have been required if he had participated in
7    this Fund as a sheriff's law enforcement employee during
8    the period for which credit is being transferred, plus
9    interest thereon at the effective rate for each year,
10    compounded annually, from the date of termination of the
11    service for which credit is being transferred to the date
12    of payment, exceeds (2) the amount actually transferred to
13    the Fund. Such transferred service shall be deemed to be
14    service as a sheriff's law enforcement employee for the
15    purposes of Section 7-142.1.
16        10. For service transferred from an Article 3 system
17    under Section 3-110.8: Credits and creditable service
18    shall be granted for service under Article 3 of this Act as
19    provided in Section 3-110.8, to any active member of this
20    Fund upon transfer of such credits pursuant to Section
21    3-110.8. If the amount by which (1) the employer and
22    employee contributions that would have been required if he
23    had participated in this Fund during the period for which
24    credit is being transferred, plus interest thereon at the
25    effective rate for each year, compounded annually, from the
26    date of termination of the service for which credit is

 

 

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1    being transferred to the date of payment, exceeds (2) the
2    amount actually transferred to the Fund, then the amount of
3    creditable service established under this paragraph 10
4    shall be reduced by a corresponding amount in accordance
5    with the rules and procedures established under this
6    paragraph 10.
7        The board shall establish by rule the manner of making
8    the calculation required under this paragraph 10, taking
9    into account the appropriate actuarial assumptions; the
10    member's service, age, and salary history; the level of
11    funding of the employer; and any other factors that the
12    board determines to be relevant.
13        Until January 1, 2010, members who transferred service
14    from an Article 3 system under the provisions of Public Act
15    94-356 may establish additional credit in this Fund, but
16    only up to the amount of the service credit reduction in
17    that transfer, as calculated under the actuarial
18    assumptions. This credit may be established upon payment by
19    the member of an amount to be determined by the board,
20    equal to (1) the amount that would have been contributed as
21    employee and employer contributions had all the service
22    been as an employee under this Article, plus interest
23    thereon compounded annually from the date of service to the
24    date of transfer, less (2) the total amount transferred
25    from the Article 3 system, plus (3) interest on the
26    difference at the effective rate for each year, compounded

 

 

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1    annually, from the date of the transfer to the date of
2    payment. The additional service credit is allowed under
3    this amendatory Act of the 95th General Assembly
4    notwithstanding the provisions of Article 3 terminating
5    all transferred credits on the date of transfer.
6        11. For service transferred from an Article 3 system
7    under Section 3-110.3: Credits and creditable service
8    shall be granted for service under Article 3 of this Act as
9    provided in Section 3-110.3, to any active member of this
10    Fund, upon transfer of such credits pursuant to Section
11    3-110.3. If the board determines that the amount
12    transferred is less than the true cost to the Fund of
13    allowing that creditable service to be established, then in
14    order to establish that creditable service, the member must
15    pay to the Fund an additional contribution equal to the
16    difference, as determined by the board in accordance with
17    the rules and procedures adopted under this paragraph. If
18    the member does not make the full additional payment as
19    required by this paragraph prior to termination of his
20    participation with that employer, then his or her
21    creditable service shall be reduced by an amount equal to
22    the difference between the amount transferred under
23    Section 3-110.3, including any payments made by the member
24    under this paragraph prior to termination, and the true
25    cost to the Fund of allowing that creditable service to be
26    established, as determined by the board in accordance with

 

 

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1    the rules and procedures adopted under this paragraph.
2        The board shall establish by rule the manner of making
3    the calculation required under this paragraph 11, taking
4    into account the appropriate actuarial assumptions; the
5    member's service, age, and salary history, and any other
6    factors that the board determines to be relevant.
7    (b) Creditable service - amount:
8        1. One month of creditable service shall be allowed for
9    each month for which a participating employee made
10    contributions as required under Section 7-173, or for which
11    creditable service is otherwise granted hereunder. Not
12    more than 1 month of service shall be credited and counted
13    for 1 calendar month, and not more than 1 year of service
14    shall be credited and counted for any calendar year. A
15    calendar month means a nominal month beginning on the first
16    day thereof, and a calendar year means a year beginning
17    January 1 and ending December 31.
18        2. A seasonal employee shall be given 12 months of
19    creditable service if he renders the number of months of
20    service normally required by the position in a 12-month
21    period and he remains in service for the entire 12-month
22    period. Otherwise a fractional year of service in the
23    number of months of service rendered shall be credited.
24        3. An intermittent employee shall be given creditable
25    service for only those months in which a contribution is
26    made under Section 7-173.

 

 

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1    (c) No application for correction of credits or creditable
2service shall be considered unless the board receives an
3application for correction while (1) the applicant is a
4participating employee and in active employment with a
5participating municipality or instrumentality, or (2) while
6the applicant is actively participating in a pension fund or
7retirement system which is a participating system under the
8Retirement Systems Reciprocal Act. A participating employee or
9other applicant shall not be entitled to credits or creditable
10service unless the required employee contributions are made in
11a lump sum or in installments made in accordance with board
12rule.
13    (d) Upon the granting of a retirement, surviving spouse or
14child annuity, a death benefit or a separation benefit, on
15account of any employee, all individual accumulated credits
16shall thereupon terminate. Upon the withdrawal of additional
17contributions, the credits applicable thereto shall thereupon
18terminate. Terminated credits shall not be applied to increase
19the benefits any remaining employee would otherwise receive
20under this Article.
21(Source: P.A. 96-299, eff. 8-11-09; 97-415, eff. 8-16-11.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.