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90_SB0195
40 ILCS 5/7-141.1
Amends the Illinois Municipal Retirement Fund (IMRF)
Article of the Pension Code to allow an annuitant to provide
up to 600 hours of personal services per year to an IMRF
educational employer without loss of early retirement
incentives. Effective immediately.
LRB9001626EGfg
LRB9001626EGfg
1 AN ACT to amend the Illinois Pension Code by changing
2 Section 7-141.1.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Pension Code is amended by
6 changing Section 7-141.1 as follows:
7 (40 ILCS 5/7-141.1)
8 Sec. 7-141.1. Early retirement incentive.
9 (a) The General Assembly finds and declares that:
10 (1) Units of local government across the State have
11 been functioning under a financial crisis.
12 (2) This financial crisis is expected to continue.
13 (3) Units of local government must depend on
14 additional sources of revenue and, when those sources are
15 not forthcoming, must establish cost-saving programs.
16 (4) An early retirement incentive designed
17 specifically to target highly-paid senior employees could
18 result in significant annual cost savings.
19 (5) The early retirement incentive should be made
20 available only to those units of local government that
21 determine that an early retirement incentive is in their
22 best interest.
23 (6) A unit of local government adopting a program
24 of early retirement incentives under this Section is
25 encouraged to implement personnel procedures to prohibit,
26 for at least 5 years, the rehiring (whether on payroll or
27 by independent contract) of employees who receive early
28 retirement incentives.
29 (7) A unit of local government adopting a program
30 of early retirement incentives under this Section is also
31 encouraged to replace as few of the participating
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1 employees as possible and to hire replacement employees
2 for salaries totaling no more than 80% of the total
3 salaries formerly paid to the employees who participate
4 in the early retirement program.
5 It is the primary purpose of this Section to encourage
6 units of local government that can realize true cost savings,
7 or have determined that an early retirement program is in
8 their best interest, to implement an early retirement
9 program.
10 (b) This Section does not apply to any employer that is
11 a city, village, or incorporated town, nor to the employees
12 of any such employer. All references in this Section to an
13 "employer" or "unit of local government" are specifically
14 intended to exclude every employer that is a city, village,
15 or incorporated town.
16 The benefits provided in this Section are available only
17 to members employed by a participating employer that has
18 filed with the Board of the Fund a resolution or ordinance
19 expressly providing for the creation of an early retirement
20 incentive program under this Section for its employees and
21 specifying the effective date of the early retirement
22 incentive program. Subject to the limitation in subsection
23 (h), an employer may adopt a resolution or ordinance
24 providing a program of early retirement incentives under this
25 Section at any time, but no more often than once in 5 years.
26 The resolution or ordinance shall be in substantially the
27 following form:
28 RESOLUTION (ORDINANCE) NO. ....
29 A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
30 RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
31 IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
32 WHEREAS, Section 7-141.1 of the Illinois Pension Code
33 provides that a participating employer may elect to adopt an
34 early retirement incentive program offered by the Illinois
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1 Municipal Retirement Fund by adopting a resolution or
2 ordinance; and
3 WHEREAS, The goal of adopting an early retirement program
4 is to realize a substantial savings in personnel costs by
5 offering early retirement incentives to employees who have
6 accumulated many years of service credit; and
7 WHEREAS, Implementation of the early retirement program
8 will provide a budgeting tool to aid in controlling payroll
9 costs; and
10 WHEREAS, The (name of governing body) has determined that
11 the adoption of an early retirement incentive program is in
12 the best interests of the (name of participating employer);
13 therefore be it
14 RESOLVED (ORDAINED) by the (name of governing body) of
15 (name of participating employer) that:
16 (1) The (name of participating employer) does hereby
17 adopt the Illinois Municipal Retirement Fund early retirement
18 incentive program as provided in Section 7-141.1 of the
19 Illinois Pension Code. The early retirement incentive
20 program shall take effect on (date).
21 (2) In order to help achieve a true cost savings, a
22 person who retires under the early retirement incentive
23 program shall lose those incentives if he or she later
24 accepts employment with any IMRF employer in a position for
25 which participation in IMRF is required or is elected by the
26 employee.
27 (3) In order to utilize an early retirement incentive as
28 a budgeting tool, the (name of participating employer) will
29 use its best efforts either to limit the number of employees
30 who replace the employees who retire under the early
31 retirement program or to limit the salaries paid to the
32 employees who replace the employees who retire under the
33 early retirement program.
34 (4) The effective date of each employee's retirement
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1 under this early retirement program shall be set by (name of
2 employer) and shall be no earlier than the effective date of
3 the program and no later than one year after that effective
4 date; except that the employee may require that the
5 retirement date set by the employer be no later than the June
6 30 next occurring after the effective date of the program and
7 no earlier than the date upon which the employee qualifies
8 for retirement.
9 (5) To be eligible for the early retirement incentive
10 under this Section, the employee must have attained age 50
11 and have at least 20 years of creditable service by his or
12 her retirement date.
13 (6) The (clerk or secretary) shall promptly file a
14 certified copy of this resolution (ordinance) with the Board
15 of Trustees of the Illinois Municipal Retirement Fund.
16 CERTIFICATION
17 I, (name), the (clerk or secretary) of the (name of
18 participating employer) of the County of (name), State of
19 Illinois, do hereby certify that I am the keeper of the books
20 and records of the (name of employer) and that the foregoing
21 is a true and correct copy of a resolution (ordinance) duly
22 adopted by the (governing body) at a meeting duly convened
23 and held on (date).
24 SEAL
25 (Signature of clerk or secretary)
26 (c) To be eligible for the benefits provided under an
27 early retirement incentive program adopted under this
28 Section, a member must:
29 (1) be a participating employee of this Fund who,
30 on the effective date of the program, (i) is in active
31 payroll status as an employee of a participating employer
32 that has filed the required ordinance or resolution with
33 the Board, (ii) is on layoff status from such a position
34 with a right of re-employment or recall to service, (iii)
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1 is on a leave of absence from such a position, or (iv) is
2 on disability but has not been receiving benefits under
3 Section 7-146 or 7-150 for a period of more than 2 years
4 from the date of application;
5 (2) have never previously received a retirement
6 annuity under this Article or under the Retirement
7 Systems Reciprocal Act using service credit established
8 under this Article;
9 (3) file with the Board within 60 days of the
10 effective date of the program an application requesting
11 the benefits provided in this Section;
12 (4) have at least 20 years of creditable service in
13 the Fund by the date of retirement, without the use of
14 any creditable service established under this Section;
15 (5) have attained age 50 by the date of retirement,
16 without the use of any age enhancement received under
17 this Section; and
18 (6) be eligible to receive a retirement annuity
19 under this Article by the date of retirement, for which
20 purpose the age enhancement and creditable service
21 established under this Section may be considered.
22 (d) The employer shall determine the retirement date for
23 each employee participating in the early retirement program
24 adopted under this Section. The retirement date shall be no
25 earlier than the effective date of the program and no later
26 than one year after that effective date, except that the
27 employee may require that the retirement date set by the
28 employer be no later than the June 30 next occurring after
29 the effective date of the program and no earlier than the
30 date upon which the employee qualifies for retirement. The
31 employer shall give each employee participating in the early
32 retirement program at least 30 days written notice of the
33 employee's designated retirement date, unless the employee
34 waives this notice requirement.
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1 (e) An eligible person may establish up to 5 years of
2 creditable service under this Section. In addition, for each
3 period of creditable service established under this Section,
4 a person shall have his or her age at retirement deemed
5 enhanced by an equivalent period.
6 The creditable service established under this Section may
7 be used for all purposes under this Article and the
8 Retirement Systems Reciprocal Act, except for the computation
9 of final rate of earnings and the determination of earnings,
10 salary, or compensation under this or any other Article of
11 the Code.
12 The age enhancement established under this Section may be
13 used for all purposes under this Article (including
14 calculation of the reduction imposed under subdivision
15 (a)1b(iv) of Section 7-142), except for purposes of a
16 reversionary annuity under Section 7-145 and any
17 distributions required because of age. The age enhancement
18 established under this Section may be used in calculating a
19 proportionate annuity payable by this Fund under the
20 Retirement Systems Reciprocal Act, but shall not be used in
21 determining benefits payable under other Articles of this
22 Code under the Retirement Systems Reciprocal Act.
23 (f) For all creditable service established under this
24 Section, the member must pay to the Fund an employee
25 contribution consisting of 4.5% of the member's highest
26 annual salary rate used in the determination of the final
27 rate of earnings for retirement annuity purposes for each
28 year of creditable service granted under this Section. For
29 creditable service established under this Section by a person
30 who is a sheriff's law enforcement employee to be deemed
31 service as a sheriff's law enforcement employee, the employee
32 contribution shall be at the rate of 6.5% of highest annual
33 salary per year of creditable service granted. Contributions
34 for fractions of a year of service shall be prorated. Any
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1 amounts that are disregarded in determining the final rate of
2 earnings under subdivision (d)(5) of Section 7-116 (the 125%
3 rule) shall also be disregarded in determining the required
4 contribution under this subsection (f).
5 The employee contribution shall be paid to the Fund as
6 follows: If the member is entitled to a lump sum payment for
7 accumulated vacation, sick leave, or personal leave upon
8 withdrawal from service, the employer shall deduct the
9 employee contribution from that lump sum and pay the deducted
10 amount directly to the Fund. If there is no such lump sum
11 payment or the required employee contribution exceeds the net
12 amount of the lump sum payment, then the remaining amount
13 due, at the option of the employee, may either be paid to the
14 Fund before the annuity commences or deducted from the
15 retirement annuity in 24 equal monthly installments.
16 (g) An annuitant who has received any age enhancement or
17 creditable service under this Section and thereafter accepts
18 employment with or enters into a personal services contract
19 with a noneducational an employer under this Article thereby
20 forfeits that age enhancement and creditable service.
21 An annuitant who has received any age enhancement or
22 creditable service under this Section may provide to one or
23 more educational employers under this Article a total of up
24 to 600 hours of personal services in any 12-month period
25 without loss of the benefits provided under this Section. If
26 an annuitant who has received any age enhancement or
27 creditable service under this Section accepts employment with
28 or enters into a personal services contract with one or more
29 educational employers under this Article, under which the
30 annuitant agrees to provide or actually does provide, in the
31 aggregate for all such employers, more than 600 hours of
32 personal services in any 12-month period, the annuitant
33 thereby forfeits the age enhancement and creditable service
34 provided under this Section.
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1 A person forfeiting early retirement incentives under
2 this subsection (i) must repay to the Fund that portion of
3 the retirement annuity already received which is attributable
4 to the early retirement incentives that are being forfeited,
5 (ii) shall not be eligible to participate in any future early
6 retirement program adopted under this Section, and (iii) is
7 entitled to a refund of the employee contribution paid under
8 subsection (f). The Board shall deduct the required
9 repayment from the refund and may impose a reasonable payment
10 schedule for repaying the amount, if any, by which the
11 required repayment exceeds the refund amount.
12 The changes made to this subsection (g) by this
13 amendatory Act of 1997 are not limited to persons in active
14 service on or after the effective date of this amendatory Act
15 of 1997.
16 (h) The additional unfunded liability accruing as a
17 result of the adoption of a program of early retirement
18 incentives under this Section by an employer shall be
19 amortized over a period of 10 years beginning on January 1 of
20 the second calendar year following the calendar year in which
21 the latest date for beginning to receive a retirement annuity
22 under the program (as determined by the employer under
23 subsection (d) of this Section) occurs; except that the
24 employer may provide for a shorter amortization period (of no
25 less than 5 years) by adopting an ordinance or resolution
26 specifying the length of the amortization period and
27 submitting a certified copy of the ordinance or resolution to
28 the Fund no later than 6 months after the effective date of
29 the program. An employer, at its discretion, may accelerate
30 payments to the Fund.
31 An employer may provide more than one early retirement
32 incentive program for its employees under this Section.
33 However, an employer that has provided an early retirement
34 incentive program for its employees under this Section may
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1 not provide another early retirement incentive program under
2 this Section until (1) the liability arising from the earlier
3 program has been fully paid to the Fund and (2) at least 6
4 years have elapsed from the effective date of the previous
5 program.
6 (Source: P.A. 89-329, eff. 8-17-95.)
7 Section 99. Effective date. This Act takes effect upon
8 becoming law.