HB1697ham002 95TH GENERAL ASSEMBLY

Rep. Robert S. Molaro

Filed: 5/16/2007

09500HB1697ham002 LRB095 07041 AMC 36267 a

AMENDMENT TO HOUSE BILL 1697

AMENDMENT NO. ______. Amend House Bill 1697 by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Pension Code is amended by changing Sections 14-119, 14-121, 14-130, and 14-133 and by adding Section 14-152.2 as follows:

(40 ILCS 5/14-119) (from Ch. 108 1/2, par. 14-119)

Sec. 14-119. Amount of widow's annuity.

(a) The widow's annuity shall be 50% of the amount of retirement annuity payable to the member on the date of death while on retirement if an annuitant, or on the date of his death while in service if an employee, regardless of his age on such date, or on the date of withdrawal if death occurred after termination of service under the conditions prescribed in the preceding Section.

(b) If an eligible widow, regardless of age, has in her care any unmarried child or children of the member under age 18 (under age 22 if a full-time student), the widow's annuity shall be increased in the amount of 5% of the retirement annuity for each such child, but the combined payments for a widow and children shall not exceed 66 2/3% of the member's earned retirement annuity.

The amount of retirement annuity from which the widow's annuity is derived shall be that earned by the member without regard to whether he attained age 60 prior to his withdrawal under the conditions stated or prior to his death.

(c) Adopted children shall be considered as children of the member only if the proceedings for adoption were commenced at least 1 year prior to the member's death.

Marriage of a child shall render the child ineligible for further consideration in the increase in the amount of the widow's annuity.

Attainment of age 18 (age 22 if a full-time student) shall render a child ineligible for further consideration in the increase of the widow's annuity, but the annuity to the widow shall be continued thereafter, without regard to her age at that time.

(d) Except as otherwise provided in this subsection (d) and Section 14-152.2, a widow's annuity payable on account of any covered employee who has shall have been a covered employee for at least 18 months shall be reduced by 1/2 of the amount of survivors benefits to which his beneficiaries are eligible under the provisions of the Federal Social Security Act, except that (1) the amount of any widow's annuity payable under this Article shall not be reduced by reason of any increase under that Act which occurs after the offset required by this subsection is first applied to that annuity, and (2) for benefits granted on or after January 1, 1992, the offset under this subsection (d) shall not exceed 50% of the amount of widow's annuity otherwise payable.

Beginning on July 1, 2008 (and except as otherwise provided in Section 14-152.2), the offset under this subsection (d) shall no longer be applied to a widow's annuity of any person receiving retirement benefits or a widow's annuity on the effective date of this amendatory Act of the 95th General Assembly.

Except as otherwise provided in Section 14-152.2, an active member of the System first employed before January 1, 2008 must file an election to have the offset under this subsection (d) applied to his or her widow's annuity with the System on or before March 1, 2008. If no election is made by the employee, then the employee must begin making the additional 0.6% contribution required under Section 14-133 and, if he or she elects to do so by September 1, 2008, may elect to make the contributions for any prior service. Once the member has made an election or failed to make the election to have the offset applied to his or her widow's annuity within the specified period, the member must maintain that status until a qualifying event occurs. Upon the occurrence of a qualifying event, (i) if the member's widow's annuity is subject to the offset, the member may elect to remove the offset and begin to make contributions for any service after that date and, within 60 days after that date, make contributions for any prior service without interest or (ii) if the member's widow's annuity is not subject to the offset, the member may elect to have the offset applied to his or her widow's annuity and cease making the contributions, but shall receive no refund for the contributions.

Except as otherwise provided in Section 14-152.2, unless an active member of the System first employed on or after January 1, 2008 files an election to have the offset under this subsection (d) applied to his or her widow's annuity with the System during his or her qualifying period, he or she shall begin making the 1.1% contribution required under 14-133. After the qualifying period, the member must maintain his or her offset status until a qualifying event occurs. Upon the occurrence of a qualifying event, (i) if the member's widow's annuity is subject to the offset, the member may elect to remove the offset and begin to make contributions for any service after that date and, within 60 days after that date, make contributions for any prior service without interest or (ii) if the member's widow's annuity is not subject to the offset, the member may elect to have the offset applied to his or her widow's annuity and cease making the contributions, but shall receive no refund for the contributions.

If a member has a qualifying spouse at the time of retirement and has made the additional contributions pursuant to Section 14-133 to remove the offset under this subsection (d) for all of his or her creditable service, then the offset under this subsection (d) does not apply to the member's widow's benefit. If a member has a qualifying spouse at the time of retirement and has made the additional contributions pursuant to Section 14-133 to remove the offset under this subsection (d) for a portion of his or her creditable service, then the member may either (A) receive a refund of the additional contributions made and have the offset under this subsection (d) apply to the member's widow's annuity or (B) make the required contributions for any period for which he or she has not contributed, plus interest. If a member does not have a qualifying spouse at the time of retirement, then the member may receive a refund of the additional contributions made pursuant to Section 14-133 to remove the offset under this subsection (d).

For the purposes of this subsection (d), "qualifying event" includes a change in marital status (including the death of a spouse) or the adoption or birth of a child.

(e) Upon the death of a recipient of a widow's annuity the excess, if any, of the member's accumulated contributions plus credited interest over all annuity payments to the member and widow, exclusive of the $500 lump sum payment, shall be paid to the named beneficiary of the widow, or if none has been named, to the estate of the widow, provided no reversionary annuity is payable.

(f) On January 1, 1981, any recipient of a widow's annuity who was receiving a widow's annuity on or before January 1, 1971, shall have her widow's annuity then being paid increased by 1% for each full year which has elapsed from the date the widow's annuity began. On January 1, 1982, any recipient of a widow's annuity who began receiving a widow's annuity after January 1, 1971, but before January 1, 1981, shall have her widow's annuity then being paid increased by 1% for each full year which has elapsed from the date the widow's annuity began. On January 1, 1987, any recipient of a widow's annuity who began receiving the widow's annuity on or before January 1, 1977, shall have the monthly widow's annuity increased by $1 for each full year which has elapsed since the date the annuity began.

(g) Beginning January 1, 1990, every widow's annuity shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity, or (2) in other cases, on each January 1 occurring on or after the first anniversary of the commencement of the annuity, by an amount equal to 3% of the current amount of the annuity, including any previous increases under this Article. Such increases shall apply without regard to whether the deceased member was in service on or after the effective date of Public Act 86-1488, but shall not accrue for any period prior to January 1, 1990.

(Source: P.A. 90-448, eff. 8-16-97.)

(40 ILCS 5/14-121) (from Ch. 108 1/2, par. 14-121)

Sec. 14-121. Amount of survivors annuity. A survivors annuity beneficiary shall be entitled upon death of the member to a single sum payment of $1,000, payable pro rata among all persons entitled thereto, together with a survivors annuity payable at the rates and under the conditions specified in this Article.

(a) If the survivors annuity beneficiary is a spouse, the survivors annuity shall be 30% of final average compensation subject to a maximum payment of $400 per month.

(b) If an eligible child or children under the care of a spouse also survives the member, such spouse as natural guardian of the child or children shall receive, in addition to the foregoing annuity, 20% of final average compensation on account of each such child and 10% of final average compensation divided pro rata among such children, subject to a maximum payment on account of all survivor annuity beneficiaries of $600 per month, or 80% of the member's final average compensation, whichever is the lesser.

(c) If the survivors annuity beneficiary or beneficiaries consists of an unmarried child or children, the amount of survivors annuity shall be 20% of final average compensation to each child, and 10% of final average compensation divided pro rata among all such children entitled to such annuity, subject to a maximum payment to all children combined of $600 per month or 80% of the member's final average compensation, whichever is the lesser.

(d) If the survivors annuity beneficiary is one or more dependent parents, the annuity shall be 20% of final average compensation to each parent and 10% of final average compensation divided pro rata among the parents who qualify for this annuity, subject to a maximum payment to both dependent parents of $400 per month.

(e) The survivors annuity to the spouse, children or dependent parents of a member whose death occurs after the date of last withdrawal, or after retirement, or while in service following reentry into service after retirement but before completing 1 1/2 years of additional creditable service, shall not exceed the lesser of 80% of the member's earned retirement annuity at the date of death or the maximum previously established in this Section.

(f) In applying the limitation prescribed on the combined payments to 2 or more survivors annuity beneficiaries, the annuity on account of each beneficiary shall be reduced pro rata until such time as the number of beneficiaries makes the reduction no longer applicable.

(g) Except as otherwise provided in this subsection (g) and Section 14-152.2, a survivors annuity payable on account of any covered employee who has shall have been a covered employee for at least 18 months at date of death or last withdrawal, whichever is the later, shall be reduced by 1/2 of the survivors benefits to which his beneficiaries are eligible under the federal Social Security Act, except that (1) the survivors annuity payable under this Article shall not be reduced by any increase under that Act which occurs after the offset required by this subsection is first applied to that annuity, (2) for benefits granted on or after January 1, 1992, the offset under this subsection (g) shall not exceed 50% of the amount of survivors annuity otherwise payable.

Beginning on July 1, 2008 (and except as otherwise provided in Section 14-152.2), the offset under this subsection (g) shall no longer be applied to a survivors annuity of any person receiving retirement benefits or a survivors annuity on the effective date of this amendatory Act of the 95th General Assembly.

Except as otherwise provided in Section 14-152.2, an active member of the System first employed before January 1, 2008 must file an election to have the offset under this subsection (g) applied to his or her survivors annuity with the System on or before March 1, 2008. If no election is made by the employee, then the employee must begin making the additional 0.6% contribution required pursuant to Section 14-133 and, if he or she elects to do so by September 1, 2008, may elect to make the contributions for any prior service. Once the member has made an election or failed to make the election to have the offset applied to his or her survivors annuity within the specified period, the member must maintain that status until a qualifying event occurs. Upon the occurrence of a qualifying event, (i) if the member's survivors annuity is subject to the offset, the member may elect to remove the offset and begin to make contributions for any service after that date and, within 60 days after that date, make contributions for any prior service without interest or (ii) if the member's survivors annuity is not subject to the offset, the member may elect to have the offset applied to his or her survivors annuity and cease making the contributions, but shall receive no refund for the contributions.

Except as otherwise provided in Section 14-152.2, unless an active member of the System first employed on or after January 1, 2008 files an election to have the offset under this subsection (g) applied to his or her survivors annuity with the System during his or her qualifying period, he or she shall begin making the 1.1% contribution required under 14-133. After the qualifying period, the member must maintain his or her offset status until a qualifying event occurs. Upon the occurrence of a qualifying event, (i) if the member's survivors annuity is subject to the offset, the member may elect to remove the offset and begin to make contributions for any service after that date and, within 60 days after that date, make contributions for any prior service without interest or (ii) if the member's survivors annuity is not subject to the offset, the member may elect to have the offset applied to his or her survivors annuity and cease making the contributions, but shall receive no refund for the contributions.

If a member has a qualifying survivor at the time of retirement and has made the additional contributions pursuant to Section 14-133 to remove the offset under this subsection (g) for all of his or her creditable service, then the offset under this subsection (d) does not apply to the member's survivors benefit. If a member has a qualifying survivor at the time of retirement and has made the additional contributions under Section 14-133 to remove the offset under this subsection (g) for a portion of his or her creditable service, then the member may either (A) receive a refund of the additional contributions made and have the offset under this subsection (g) apply to the member's survivors annuity or (B) make the required contributions for any period for which he or she has not contributed, plus interest. If a member does not have a qualifying survivor at the time of retirement, then the member may receive a refund of the additional contributions made pursuant to Section 14-133 to remove the offset under this subsection (g).

For the purposes of this subsection (g), "qualifying event" includes a change in marital status (including the death of a spouse) or the adoption or birth of a child.

(h) The minimum payment to a beneficiary hereunder shall be $60 per month, which shall be reduced in accordance with the limitation prescribed on the combined payments to all beneficiaries of a member.

(i) Subject to the conditions set forth in Section 14-120, the minimum total survivors annuity benefit payable to the survivors annuity beneficiaries of a deceased member or annuitant whose death occurs on or after January 1, 1984, shall be 50% of the amount of retirement annuity that was or would have been payable to the deceased on the date of death, regardless of the age of the deceased on such date. If the minimum total benefit provided by this subsection exceeds the maximum otherwise imposed by this Section, the minimum total benefit shall nevertheless be payable. Any increase in the total survivors annuity benefit resulting from the operation of this subsection shall be divided among the survivors annuity beneficiaries of the deceased in proportion to their shares of the total survivors annuity benefit otherwise payable under this Section.

(j) Any survivors annuity beneficiary whose annuity terminates due to any condition specified in this Article other than death shall be entitled to a refund of the excess, if any, of the accumulated contributions of the member plus credited interest over all payments to the member and beneficiary or beneficiaries, exclusive of the single sum payment of $1,000, provided no future survivors or reversionary annuity benefits are payable.

(k) Upon the death of the last eligible recipient of a survivors annuity the excess, if any, of the member's accumulated contributions plus credited interest over all annuity payments to the member and survivors exclusive of the single sum payment of $1000, shall be paid to the named beneficiary of the last eligible survivor, or if none has been named, to the estate of the last eligible survivor, provided no reversionary annuity is payable.

(l) On January 1, 1981, any survivor who was receiving a survivors annuity on or before January 1, 1971, shall have his survivors annuity then being paid increased by 1% for each full year which has elapsed from the date the annuity began. On January 1, 1982, any survivor who began receiving a survivor's annuity after January 1, 1971, but before January 1, 1981, shall have his survivor's annuity then being paid increased by 1% for each full year that has elapsed from the date the annuity began. On January 1, 1987, any survivor who began receiving a survivor's annuity on or before January 1, 1977, shall have the monthly survivor's annuity increased by $1 for each full year which has elapsed since the date the survivor's annuity began.

(m) Beginning January 1, 1990, every survivor's annuity shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity, or (2) in other cases, on each January 1 occurring on or after the first anniversary of the commencement of the annuity, by an amount equal to 3% of the current amount of the annuity, including any previous increases under this Article. Such increases shall apply without regard to whether the deceased member was in service on or after the effective date of Public Act 86-1488, but shall not accrue for any period prior to January 1, 1990.

(Source: P.A. 86-273; 86-1488; 87-794.)

(40 ILCS 5/14-130) (from Ch. 108 1/2, par. 14-130)

Sec. 14-130. Refunds; rules.

(a) Upon withdrawal a member is entitled to receive, upon written request, a refund of the member's contributions, including credits granted while in receipt of disability benefits, without credited interest. The board, in its discretion may withhold payment of the refund of a member's contributions for a period not to exceed 1 year after the member has ceased to be an employee.

For purposes of this Section, a member will be considered to have withdrawn from service if a change in, or transfer of, his position results in his becoming ineligible for continued membership in this System and eligible for membership in another public retirement system under this Act.

(b) A member receiving a refund forfeits and relinquishes all accrued rights in the System, including all accumulated creditable service. If the person again becomes a member of the System and establishes at least 2 years of creditable service, the member may repay all the moneys previously refunded or a portion of the moneys previously refunded representing contributions for one or more whole months of creditable service. If a member repays a portion of moneys previously refunded, he or she may later repay some or all of the remaining portion of those previously refunded moneys. However, a former member may restore credits previously forfeited by acceptance of a refund without returning to service by applying in writing and repaying to the System, by April 1, 1993, the amount of the refund plus regular interest calculated from the date of refund to the date of repayment.

The repayment of refunds issued prior to January 1, 1984 shall consist of the amount refunded plus 5% interest per annum compounded annually for the period from the date of the refund to the end of the month in which repayment is made. The repayment of refunds issued after January 1, 1984 shall consist of the amount refunded plus regular interest for the period from the date of refund to the end of the month in which repayment is made. The repayment of the refund of a person who accepts an alternative retirement cancellation payment under Section 14-108.5 shall consist of the entire amount paid to the person under subsection (c) of Section 14-108.5 plus regular interest for the period from the date of the refund to the end of the month in which repayment is made. However, in the case of a refund that is repaid in a lump sum between January 1, 1991 and July 1, 1991, repayment shall consist of the amount refunded plus interest at the rate of 2.5% per annum compounded annually from the date of the refund to the end of the month in which repayment is made.

Upon repayment, the member shall receive credit for the service for which the refund has been repaid, and the corresponding member contributions and regular interest that was forfeited by acceptance of the refund, as well as regular interest for the period of non-membership. Such repayment shall be made in full before retirement either in a lump sum or in installment payments in accordance with such rules as may be adopted by the board.

(b-5) The Board may adopt rules governing the repayment of refunds and establishment of credits in cases involving awards of back pay or reinstatement. The rules may authorize repayment of a refund in installment payments and may waive the payment of interest on refund amounts repaid in full within a specified period.

(c) A member no longer in service who is unmarried and does not have an eligible survivors annuity beneficiary on the date of application therefor is entitled to a refund of contributions for widow's annuity or survivors annuity purposes, or both, as the case may be, including the increased amounts paid pursuant to the increase in contribution rates for widow or survivors annuity purposes under Section 14-133 by this amendatory Act of the 95th General Assembly, without interest. A widow's annuity or survivors annuity shall not be payable upon the death of a person who has received this refund, unless prior to that death the amount of the refund has been repaid to the System, together with regular interest from the date of the refund to the date of repayment.

(d) Any member who has service credit in any position for which an alternative retirement annuity is provided and in relation to which an increase in the rate of employee contribution is required, shall be entitled to a refund, without interest, of that part of the member's employee contribution which results from that increase in the employee rate if the member does not qualify for that alternative retirement annuity at the time of retirement.

(Source: P.A. 93-839, eff. 7-30-04; 94-455, eff. 8-4-05.)

(40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)

Sec. 14-133. Contributions on behalf of members.

(a) Each participating employee shall make contributions to the System, based on the employee's compensation, as follows:

(1) Covered employees, except as indicated below, 3.5% for retirement annuity, and 0.5% for a widow or survivors annuity. After July 1, 2008, the retirement contribution for a covered employee is increased 0.6% if the Social Security offset is removed from his or her widow's or survivors annuity, thus making his or her total contribution for that purpose 1.1%. ;

(2) Noncovered employees, except as indicated below, 7% for retirement annuity and 1% for a widow or survivors annuity. ;

(3) Noncovered employees serving in a position in which "eligible creditable service" as defined in Section 14-110 may be earned, 1% for a widow or survivors annuity plus the following amount for retirement annuity: 8.5% through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5% in 2004 and thereafter. ;

(4) Covered employees serving in a position in which "eligible creditable service" as defined in Section 14-110 may be earned, 0.5% for a widow or survivors annuity, plus the following amount for retirement annuity: 5% through December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004 and thereafter. After July 1, 2008, the retirement contribution for a covered employee is increased 0.6% to remove the Social Security offset from his or her widow's or survivors annuity, thus making his or her total contribution for that purpose 1.1%. ;

(5) Each security employee of the Department of Corrections or of the Department of Human Services who is a covered employee, 0.5% for a widow or survivors annuity, plus the following amount for retirement annuity: 5% through December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004 and thereafter. After July 1, 2008, the retirement contribution for a covered employee is increased 0.6% to remove the Social Security offset from his or her widow's or survivors annuity, thus making his or her total contribution for that purpose 1.1%. ;

(6) Each security employee of the Department of Corrections or of the Department of Human Services who is not a covered employee, 1% for a widow or survivors annuity plus the following amount for retirement annuity: 8.5% through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5% in 2004 and thereafter.

(b) Contributions shall be in the form of a deduction from compensation and shall be made notwithstanding that the compensation paid in cash to the employee shall be reduced thereby below the minimum prescribed by law or regulation. Each member is deemed to consent and agree to the deductions from compensation provided for in this Article, and shall receipt in full for salary or compensation.

(c) The increase in contributions by covered members for widow or survivors annuity purposes provided by this amendatory Act of the 95th General Assembly does not apply to persons who first become members of the System on or after July 1, 2013, if the new benefit increase created by this amendatory Act expires in accordance with Section 14-152.1(d) and Section 14-152.2.

(Source: P.A. 92-14, eff. 6-28-01.)

(40 ILCS 5/14-152.2 new)

Sec. 14-152.2. New benefit increases. The General Assembly finds and declares that the amendment to Sections 14-119 and 14-121 made by this amendatory Act of the 95th General Assembly, which removes the social security offset from certain widow's and survivors annuities beginning July 1, 2008, constitutes a new benefit increase within the meaning of Section 14-152.1. Funding for this new benefit increase will be provided by the additional employee contributions made under Section 14-133 by this amendatory Act.

Unless this new benefit increase is extended by the General Assembly, it will expire on July 1, 2013. If this new benefit increase expires:

(i) for persons who first become members of the System on or after the July 1, 2013 expiration date (and their widows and survivors), the social security offsets under Section 14-119(d) and Section 14-121(g), as they existed immediately prior to the effective date of this amendatory Act, are reinstated, and the increase in contributions by covered members for widow or survivors annuity purposes under Section 14-133 does not apply; and

(ii) for persons who first become members of the System before July 1, 2013 and made the required elective contributions under Section 14-133 (and their widows and survivors), the social security offsets under Section 14-119(d) and Section 14-121(g) remain inapplicable after July 1, 2008 and the increase in contributions by covered members for widow or survivors annuity purposes under Section 14-133 remains in effect.

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