Full Text of HB4991 095th General Assembly
HB4991 95TH GENERAL ASSEMBLY
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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 HB4991
Introduced , by Rep. Gary Hannig SYNOPSIS AS INTRODUCED: |
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40 ILCS 5/4-105e new |
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40 ILCS 5/4-109 |
from Ch. 108 1/2, par. 4-109 |
40 ILCS 5/4-109.4 new |
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Amends the Downstate Firefighter Article of the Illinois Pension Code. Allows a firefighter to elect to receive either a lump sum payment or an actuarially equivalent annuity for up to 5 years of service as part of a deferred retirement option plan. Amends the State Mandates Act to require implementation without reimbursement. Effective July 1, 2008.
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FISCAL NOTE ACT MAY APPLY |
PENSION IMPACT NOTE ACT MAY APPLY |
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT |
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A BILL FOR
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| AN ACT concerning employee benefits.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Pension Code is amended by changing | 5 |
| Section 4-109 and by adding Sections 4-105e and 4-109.4 and by | 6 |
| changing Section 4-109 as follows: | 7 |
| (40 ILCS 5/4-105e new) | 8 |
| Sec. 4-105e. Deferred Retirement Option Plan. "Deferred
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| Retirement Option Plan" or "DROP plan" means the Deferred
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| Retirement Option Plan established under Section 4-109.3.
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| (40 ILCS 5/4-109) (from Ch. 108 1/2, par. 4-109)
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| Sec. 4-109. Pension.
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| (a) A firefighter age 50 or more with 20 or more years of | 14 |
| creditable
service, who is no longer in service as a | 15 |
| firefighter, shall receive a monthly
pension of 1/2 the monthly | 16 |
| salary attached to the rank held by him or her in
the fire | 17 |
| service at the date of retirement.
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| The monthly pension shall be increased by 1/12 of 2.5% of | 19 |
| such
monthly salary for each additional month over 20 years of | 20 |
| service through 30
years of service, to a maximum of 75% of | 21 |
| such monthly salary.
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| For a firefighter who retires at the conclusion of
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| participation in the DROP plan, calculation of the amount of
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| the retirement pension shall be based on the firefighter's
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| salary and accumulated service on the date he or she began
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| participation in the DROP plan, but the monthly retirement
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| pension shall not be less than the last monthly amount
payable | 6 |
| to the DROP account under subdivision (g)(1) of
Section | 7 |
| 4-109.4. | 8 |
| The changes made to this subsection (a) by this amendatory | 9 |
| Act of the
91st General Assembly apply to all pensions that | 10 |
| become payable under this
subsection on or after January 1, | 11 |
| 1999. All pensions payable under this
subsection that began on | 12 |
| or after January 1, 1999 and before the effective date
of this | 13 |
| amendatory Act shall be recalculated, and the amount of the | 14 |
| increase
accruing for that period shall be payable to the | 15 |
| pensioner in a lump sum.
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| (b) A firefighter who retires or is separated from service | 17 |
| having at
least 10 but less than 20 years of creditable | 18 |
| service, who is not entitled
to receive a disability pension, | 19 |
| and who did not apply for a refund of
contributions at his or | 20 |
| her last separation from service shall receive a
monthly | 21 |
| pension upon attainment of age 60 based on the monthly salary | 22 |
| attached
to his or her rank in the fire service on the date of | 23 |
| retirement or separation
from service according to the | 24 |
| following schedule:
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| For 10 years of service, 15% of salary;
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| For 11 years of service, 17.6% of salary;
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| For 12 years of service, 20.4% of salary;
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| For 13 years of service, 23.4% of salary;
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| For 14 years of service, 26.6% of salary;
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| For 15 years of service, 30% of salary;
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| For 16 years of service, 33.6% of salary;
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| For 17 years of service, 37.4% of salary;
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| For 18 years of service, 41.4% of salary;
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| For 19 years of service, 45.6% of salary.
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| (Source: P.A. 91-466, eff. 8-6-99.)
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| (40 ILCS 5/4-109.4 new) | 11 |
| Sec. 4-109.4. Deferred Retirement Option Plan (DROP). | 12 |
| (a) To be eligible to participate in the DROP plan, a
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| firefighter must (i) be in active service, (ii) have attained
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| age 50, and (iii) have at least 20 years of creditable
service | 15 |
| in the Fund. A firefighter may participate in the
DROP plan | 16 |
| only once and for a maximum period of 5 years. | 17 |
| (b) An election to participate in the DROP plan must be
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| made within 3 years after becoming eligible under subsection
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| (a) The election, once made, is irrevocable.
The election to | 20 |
| participate in the DROP plan shall be
made in writing on forms | 21 |
| provided for that purpose by the
Board and shall be filed with | 22 |
| the Board. The application
must indicate the date upon which | 23 |
| participation in the DROP
plan is to begin, which shall be the | 24 |
| first day of a calendar
month and not less than 30 days nor | 25 |
| more than 90 days after
the date of filing the application.
As |
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| a part of the application, the firefighter must file
with the | 2 |
| Board and with his or her employer an irrevocable
letter of | 3 |
| resignation from employment, effective on the date
of | 4 |
| termination of the firefighter's participation in the DROP
plan | 5 |
| (unless that termination results from acceptance of a
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| disability benefit). | 7 |
| (c) A firefighter's participation in the DROP plan shall
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| commence on the date specified in the application and shall
end | 9 |
| upon (i) termination of service, (ii) death of the
firefighter, | 10 |
| (iii) disability for which the firefighter
receives a benefit | 11 |
| under Section 4-110, 4-110.1, or 4-111, or
(iv) completion of | 12 |
| the maximum 5 years of participation in the
DROP plan, | 13 |
| whichever occurs first. | 14 |
| (d) A firefighter who is participating in the DROP plan
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| shall be considered an active firefighter for the purposes of
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| this Article, including Section 4-121, but shall be subject
to | 17 |
| the special conditions of the DROP plan.
A firefighter shall | 18 |
| continue to make the contributions
that are required for active | 19 |
| firefighters during his or her
participation in the DROP plan. | 20 |
| These contributions shall be
accumulated in the firefighter's | 21 |
| DROP account and shall be
treated as being "picked up" within | 22 |
| the meaning of Section
4-118.2 of this Code and Section | 23 |
| 414(h)(2) of the Internal
Revenue Code of 1986, as amended.
A | 24 |
| firefighter who is participating in the DROP plan shall
not | 25 |
| receive service credit for the period of that
participation, | 26 |
| and the salary earned during that period shall
be disregarded |
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| in calculating the firefighter's benefit
under this Article. | 2 |
| (e) A firefighter who participates in the DROP plan may
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| terminate service at any time during participation in the
DROP | 4 |
| plan. A firefighter who participates in the DROP plan
must | 5 |
| terminate service on the last day of participation in
the DROP | 6 |
| plan, unless participation in the DROP plan is ended
due to | 7 |
| acceptance of a disability benefit. | 8 |
| (f) A firefighter who is participating in the DROP plan
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| remains eligible to apply for a disability benefit under
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| Section 4-110, 4-110.1, or 4-111, but participation in the
DROP | 11 |
| plan ceases upon acceptance of the disability benefit.
If | 12 |
| participation in the DROP plan is ended due to acceptance
of a | 13 |
| disability benefit, (1) the disabled firefighter shall
be | 14 |
| credited with employee contributions and creditable
service | 15 |
| for the period of participation in the DROP plan, (2)
the | 16 |
| firefighter's letter of resignation from service that is
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| required to be filed at the time of application to
participate | 18 |
| in the DROP plan is void, and (3) the amounts in
the disabled | 19 |
| firefighter's DROP account are forfeited to the
Fund. | 20 |
| (g) The Fund shall maintain a separate DROP account for
the | 21 |
| benefit of each firefighter who becomes a participant in
the | 22 |
| DROP plan. The Fund shall pay into the firefighter's
DROP | 23 |
| account: | 24 |
| (1) for each month of the firefighter's
participation | 25 |
| in the DROP plan, an amount equal to the
monthly retirement | 26 |
| pension that the firefighter would
have been eligible to |
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| receive if the firefighter had
terminated service and begun | 2 |
| receiving a retirement
pension on the date his or her | 3 |
| participation in the DROP
plan began, but calculating the | 4 |
| amount of any increase
that would accrue under Section | 5 |
| 4-109.1(d) to exclude the
period before attainment of age | 6 |
| 55; | 7 |
| (2) the employee contributions paid by the
firefighter | 8 |
| during the period of participation in the
DROP plan; and | 9 |
| (3) interest on the balance in the DROP account, at
the | 10 |
| rate of 6% per annum, paid and compounded monthly,
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| throughout the period of participation in the DROP plan.
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| The DROP account shall cease earning interest when the
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| firefighter's participation in the DROP plan ends.
DROP | 14 |
| accounts shall be treated as separate accounts for
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| accounting purposes, but the actual assets shall be
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| commingled with the other assets of the pension fund for
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| investment purposes, rather than kept in separate | 18 |
| investment
accounts. | 19 |
| (h) In addition to the retirement pension under Section
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| 4-109, a firefighter who terminates service and retires at
the | 21 |
| conclusion of his or her participation in the DROP plan
shall | 22 |
| receive, upon retirement, a DROP benefit equal to the
balance | 23 |
| in the firefighter's DROP account at the time of
retirement. | 24 |
| At the time of application for a retirement pension, the
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| firefighter shall elect to receive the DROP benefit in the
form | 26 |
| of either a lump sum or an actuarially equivalent
annuity for |
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| life. If a lump sum payment is elected, it may
be taken in the | 2 |
| form of cash or a cash equivalent or be
rolled over into an | 3 |
| individual retirement account (IRA) or a
qualified retirement | 4 |
| plan. A DROP benefit payable in the
form of an annuity shall be | 5 |
| in a fixed amount not subject to
annual or other increases; the | 6 |
| amount of the annuity shall be
calculated in the manner | 7 |
| prescribed by the Public Pension
Division of the Department of | 8 |
| Financial and Professional
Regulation. A DROP benefit shall be | 9 |
| treated as a retirement
benefit for the purposes of Section | 10 |
| 1-119 (QILDROs). | 11 |
| (i) If a firefighter receiving a DROP benefit in the
form | 12 |
| of an annuity re-enters service, the DROP benefit
annuity | 13 |
| payments shall be suspended until the firefighter's
subsequent | 14 |
| retirement. | 15 |
| (j) If a firefighter dies while participating in the
DROP | 16 |
| plan, the DROP benefit shall be paid as a lump sum to
the | 17 |
| surviving spouse or other survivor of the firefighter
entitled | 18 |
| to a pension under Section 4-114 or, if there is no
such | 19 |
| survivor, then to the deceased firefighter's estate. | 20 |
| (k) If a retired firefighter dies while receiving a DROP
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| benefit in the form of an annuity, and the DROP account
balance | 22 |
| at the time of retirement exceeds the total amount of
DROP | 23 |
| benefit annuity payments received, the excess shall be
refunded | 24 |
| to the surviving spouse or other survivor of the
firefighter | 25 |
| entitled to a pension under Section 4-114 or, if
there is no | 26 |
| such survivor, then to the deceased firefighter's
estate.
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LRB095 18343 AMC 44428 b |
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| Section 99. Effective date. This Act takes effect July 1, | 2 |
| 2008.
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