093_SB1120

 
                                     LRB093 05292 EFG 05382 b

 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
 5    changing Section 7-141.1 as follows:

 6        (40 ILCS 5/7-141.1)
 7        Sec. 7-141.1. Early retirement incentive.
 8        (a)  The General Assembly finds and declares that:
 9             (1)  Units of local government across the State have
10        been functioning under a financial crisis.
11             (2)  This financial crisis is expected to continue.
12             (3)  Units   of  local  government  must  depend  on
13        additional sources of revenue and, when those sources are
14        not forthcoming, must establish cost-saving programs.
15             (4)  An   early   retirement   incentive    designed
16        specifically to target highly-paid senior employees could
17        result in significant annual cost savings.
18             (5)  The  early  retirement incentive should be made
19        available only to those units of  local  government  that
20        determine  that an early retirement incentive is in their
21        best interest.
22             (6)  A unit of local government adopting  a  program
23        of  early  retirement  incentives  under  this Section is
24        encouraged to implement personnel procedures to prohibit,
25        for at least 5 years, the rehiring (whether on payroll or
26        by independent contract) of employees who  receive  early
27        retirement incentives.
28             (7)  A  unit  of local government adopting a program
29        of early retirement incentives under this Section is also
30        encouraged  to  replace  as  few  of  the   participating
31        employees  as  possible and to hire replacement employees
 
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 1        for salaries totaling no  more  than  80%  of  the  total
 2        salaries  formerly  paid to the employees who participate
 3        in the early retirement program.
 4        It is the primary purpose of this  Section  to  encourage
 5    units of local government that can realize true cost savings,
 6    or  have  determined  that  an early retirement program is in
 7    their  best  interest,  to  implement  an  early   retirement
 8    program.
 9        (b)  Until  the  effective date of this amendatory Act of
10    1997, this Section does not apply to any employer that  is  a
11    city,  village, or incorporated town, nor to the employees of
12    any such employer.  Beginning on the effective date  of  this
13    amendatory  Act  of  1997,  any  employer under this Article,
14    including  an  employer  that  is   a   city,   village,   or
15    incorporated   town,    may  establish  an  early  retirement
16    incentive program for its employees under this Section.   The
17    decision of a city, village, or incorporated town to consider
18    or  establish  an  early  retirement  program  is at the sole
19    discretion of that city, village, or incorporated  town,  and
20    nothing  in  this  amendatory Act of 1997 limits or otherwise
21    diminishes  this  discretion.   Nothing  contained  in   this
22    Section  shall  be  construed  to require a city, village, or
23    incorporated town to establish an  early  retirement  program
24    and  no  city, village, or incorporated town may be compelled
25    to implement such a program.
26        The benefits provided in this Section are available  only
27    to  members  employed  by  a  participating employer that has
28    filed with the Board of the Fund a  resolution  or  ordinance
29    expressly  providing  for the creation of an early retirement
30    incentive program under this Section for  its  employees  and
31    specifying   the  effective  date  of  the  early  retirement
32    incentive program.  Subject to the limitation  in  subsection
33    (h),   an  employer  may  adopt  a  resolution  or  ordinance
34    providing a program of early retirement incentives under this
 
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 1    Section at any time.
 2        The resolution or ordinance shall be in substantially the
 3    following form:

 4                   RESOLUTION (ORDINANCE) NO. ....
 5             A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
 6             RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
 7              IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
 8        WHEREAS, Section 7-141.1 of  the  Illinois  Pension  Code
 9    provides  that a participating employer may elect to adopt an
10    early retirement incentive program offered  by  the  Illinois
11    Municipal   Retirement  Fund  by  adopting  a  resolution  or
12    ordinance; and
13        WHEREAS, The goal of adopting an early retirement program
14    is to realize a substantial savings  in  personnel  costs  by
15    offering  early  retirement  incentives to employees who have
16    accumulated many years of service credit; and
17        WHEREAS, Implementation of the early  retirement  program
18    will  provide  a budgeting tool to aid in controlling payroll
19    costs; and
20        WHEREAS, The (name of governing body) has determined that
21    the adoption of an early retirement incentive program  is  in
22    the  best  interests of the (name of participating employer);
23    therefore be it
24        RESOLVED (ORDAINED) by the (name of  governing  body)  of
25    (name of participating employer) that:
26        (1)  The  (name  of  participating  employer) does hereby
27    adopt the Illinois Municipal Retirement Fund early retirement
28    incentive program as  provided  in  Section  7-141.1  of  the
29    Illinois   Pension  Code.   The  early  retirement  incentive
30    program shall take effect on (date).
31        (2)  In order to help achieve  a  true  cost  savings,  a
32    person  who  retires  under  the  early  retirement incentive
33    program shall lose  those  incentives  if  he  or  she  later
34    accepts  employment  with any IMRF employer in a position for
 
                            -4-      LRB093 05292 EFG 05382 b
 1    which participation in IMRF is required or is elected by  the
 2    employee.
 3        (3)  In order to utilize an early retirement incentive as
 4    a  budgeting  tool, the (name of participating employer) will
 5    use its best efforts either to limit the number of  employees
 6    who   replace  the  employees  who  retire  under  the  early
 7    retirement program or to  limit  the  salaries  paid  to  the
 8    employees  who  replace  the  employees  who retire under the
 9    early retirement program.
10        (4)  The effective date  of  each  employee's  retirement
11    under  this early retirement program shall be set by (name of
12    employer) and shall be no earlier than the effective date  of
13    the  program  and no later than one year after that effective
14    date;  except  that  the  employee  may  require   that   the
15    retirement date set by the employer be no later than the June
16    30 next occurring after the effective date of the program and
17    no  earlier  than  the date upon which the employee qualifies
18    for retirement.
19        (5)  To be eligible for the  early  retirement  incentive
20    under  this  Section,  the employee must have attained age 50
21    and have at least 20 years of creditable service  by  his  or
22    her retirement date.
23        (6)  The  (clerk  or  secretary)  shall  promptly  file a
24    certified copy of this resolution (ordinance) with the  Board
25    of Trustees of the Illinois Municipal Retirement Fund.
26    CERTIFICATION
27        I,  (name),  the  (clerk  or  secretary)  of the (name of
28    participating employer) of the County  of  (name),  State  of
29    Illinois, do hereby certify that I am the keeper of the books
30    and  records of the (name of employer) and that the foregoing
31    is a true and correct copy of a resolution  (ordinance)  duly
32    adopted  by  the  (governing body) at a meeting duly convened
33    and held on (date).
34    SEAL
 
                            -5-      LRB093 05292 EFG 05382 b
 1    (Signature of clerk or secretary)

 2        (c)  To be eligible for the benefits  provided  under  an
 3    early   retirement   incentive  program  adopted  under  this
 4    Section, a member must:
 5             (1)  be a participating employee of this  Fund  who,
 6        on  the  effective  date of the program, (i) is in active
 7        payroll status as an employee of a participating employer
 8        that has filed the required ordinance or resolution  with
 9        the  Board, (ii) is on layoff status from such a position
10        with a right of re-employment or recall to service, (iii)
11        is on a leave of absence from such a position, or (iv) is
12        on disability but has not been receiving  benefits  under
13        Section  7-146 or 7-150 for a period of more than 2 years
14        from the date of application;
15             (2)  have never  previously  received  a  retirement
16        annuity  under  this  Article  or  under  the  Retirement
17        Systems  Reciprocal  Act using service credit established
18        under this Article;
19             (3)  (blank);
20             (4)  have at least 20 years of creditable service in
21        the Fund by the date of retirement, without  the  use  of
22        any creditable service established under this Section;
23             (5)  have attained age 50 by the date of retirement,
24        without  the  use  of  any age enhancement received under
25        this Section; and
26             (6)  be eligible to  receive  a  retirement  annuity
27        under  this  Article by the date of retirement, for which
28        purpose  the  age  enhancement  and  creditable   service
29        established under this Section may be considered.
30        (d)  The employer shall determine the retirement date for
31    each  employee  participating in the early retirement program
32    adopted under this Section.  The retirement date shall be  no
33    earlier  than  the effective date of the program and no later
34    than one year after that  effective  date,  except  that  the
 
                            -6-      LRB093 05292 EFG 05382 b
 1    employee  may  require  that  the  retirement date set by the
 2    employer be no later than the June 30  next  occurring  after
 3    the  effective  date  of  the program and no earlier than the
 4    date upon which the employee qualifies for  retirement.   The
 5    employer  shall give each employee participating in the early
 6    retirement program at least 30 days  written  notice  of  the
 7    employee's  designated  retirement  date, unless the employee
 8    waives this notice requirement.
 9        (e)  An eligible person may establish up to  5  years  of
10    creditable service under this Section.  In addition, for each
11    period  of creditable service established under this Section,
12    a person shall have his  or  her  age  at  retirement  deemed
13    enhanced by an equivalent period.
14        The creditable service established under this Section may
15    be   used  for  all  purposes  under  this  Article  and  the
16    Retirement Systems Reciprocal Act, except for the computation
17    of final rate of earnings and the determination of  earnings,
18    salary,  or  compensation  under this or any other Article of
19    the Code.
20        The age enhancement established under this Section may be
21    used  for  all  purposes  under   this   Article   (including
22    calculation   of  the  reduction  imposed  under  subdivision
23    (a)1b(iv) of  Section  7-142),   except  for  purposes  of  a
24    reversionary    annuity   under   Section   7-145   and   any
25    distributions required because of age.  The  age  enhancement
26    established  under  this Section may be used in calculating a
27    proportionate  annuity  payable  by  this  Fund   under   the
28    Retirement  Systems  Reciprocal Act, but shall not be used in
29    determining benefits payable under  other  Articles  of  this
30    Code under the Retirement Systems Reciprocal Act.
31        (f)  For  all  creditable  service established under this
32    Section,  the  member  must  pay  to  the  Fund  an  employee
33    contribution consisting  of  4.5%  of  the  member's  highest
34    annual  salary  rate  used  in the determination of the final
 
                            -7-      LRB093 05292 EFG 05382 b
 1    rate of earnings for retirement  annuity  purposes  for  each
 2    year  of  creditable service granted under this Section.  For
 3    creditable service established under this Section by a person
 4    who is a sheriff's law  enforcement  employee  to  be  deemed
 5    service as a sheriff's law enforcement employee, the employee
 6    contribution  shall  be at the rate of 6.5% of highest annual
 7    salary per year of creditable service granted.  Contributions
 8    for fractions of a year of service shall be  prorated.    Any
 9    amounts that are disregarded in determining the final rate of
10    earnings  under subdivision (d)(5) of Section 7-116 (the 125%
11    rule) shall also be disregarded in determining  the  required
12    contribution under this subsection (f).
13        The  employee  contribution  shall be paid to the Fund as
14    follows:  If the member is entitled to a lump sum payment for
15    accumulated vacation, sick  leave,  or  personal  leave  upon
16    withdrawal  from  service,  the  employer  shall  deduct  the
17    employee contribution from that lump sum and pay the deducted
18    amount  directly  to  the Fund.  If there is no such lump sum
19    payment or the required employee contribution exceeds the net
20    amount of the lump sum payment,  then  the  remaining  amount
21    due, at the option of the employee, may either be paid to the
22    Fund  before  the  annuity  commences  or  deducted  from the
23    retirement annuity in 24 equal monthly installments.
24        (g)  Except as provided in subsection (g-1), an annuitant
25    who has received any age enhancement  or  creditable  service
26    under  this Section and thereafter accepts employment with or
27    enters into a personal services  contract  with  an  employer
28    under  this Article thereby forfeits that age enhancement and
29    creditable service.  A  person  forfeiting  early  retirement
30    incentives  under  this subsection (i) must repay to the Fund
31    that portion of the retirement annuity already received which
32    is attributable to the early retirement incentives  that  are
33    being forfeited, (ii) shall not be eligible to participate in
34    any  future  early  retirement  program  adopted  under  this
 
                            -8-      LRB093 05292 EFG 05382 b
 1    Section,  and  (iii)  is entitled to a refund of the employee
 2    contribution paid under  subsection  (f).   The  Board  shall
 3    deduct  the required repayment from the refund and may impose
 4    a reasonable payment schedule for  repaying  the  amount,  if
 5    any,  by  which  the  required  repayment  exceeds the refund
 6    amount.
 7        (g-1)  An annuitant who has received age  enhancement  or
 8    creditable  service  under this Section may thereafter accept
 9    employment with or enter into a  personal  services  contract
10    with  his  or  her  last  employer under this Article without
11    forfeiting  that  age  enhancement  and  creditable  service,
12    provided that (i) the employment is for a period of  no  more
13    than  2  years and (ii) the person's rate of compensation for
14    that employment does not exceed 75% of his or her final  rate
15    of  earnings  at  the  time of accepting the early retirement
16    incentive.
17        During the return to service under this  subsection,  the
18    person's retirement annuity shall be suspended as provided in
19    Section 7-144.  Upon the termination of employment under this
20    subsection,  the  retirement  annuity shall resume, including
21    the early retirement incentives under this  Section  and  any
22    annual  or  other  increases that may have accrued before the
23    return to employment, and the person may  be  entitled  to  a
24    supplemental annuity as provided in Section 7-144.
25        (h)  The  additional  unfunded  liability  accruing  as a
26    result of the adoption  of  a  program  of  early  retirement
27    incentives  under  this  Section  by  an  employer  shall  be
28    amortized over a period of 10 years beginning on January 1 of
29    the second calendar year following the calendar year in which
30    the latest date for beginning to receive a retirement annuity
31    under  the  program  (as  determined  by  the  employer under
32    subsection (d) of  this  Section)  occurs;  except  that  the
33    employer may provide for a shorter amortization period (of no
34    less  than  5  years)  by adopting an ordinance or resolution
 
                            -9-      LRB093 05292 EFG 05382 b
 1    specifying  the  length  of  the  amortization   period   and
 2    submitting a certified copy of the ordinance or resolution to
 3    the  Fund  no later than 6 months after the effective date of
 4    the program.  An employer, at its discretion, may  accelerate
 5    payments to the Fund.
 6        An  employer  may  provide more than one early retirement
 7    incentive program  for  its  employees  under  this  Section.
 8    However,  an  employer  that has provided an early retirement
 9    incentive program for its employees under  this  Section  may
10    not  provide another early retirement incentive program under
11    this Section until the liability  arising  from  the  earlier
12    program has been fully paid to the Fund.
13    (Source: P.A. 90-32, eff. 6-27-97; 91-887, eff. 7-6-00.)

14        Section  90.  The State Mandates Act is amended by adding
15    Section 8.27 as follows:

16        (30 ILCS 805/8.27 new)
17        Sec. 8.27. Exempt mandate.   Notwithstanding  Sections  6
18    and  8 of this Act, no reimbursement by the State is required
19    for  the  implementation  of  any  mandate  created  by  this
20    amendatory Act of the 93rd General Assembly.

21        Section 99. Effective date.  This Act takes  effect  upon
22    becoming law.