State of Illinois
90th General Assembly
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90_SB0273

      40 ILCS 5/7-141.1
          Amends the Illinois Municipal Retirement Fund Article  of
      the  Pension  Code  to  make  the  early  retirement  program
      available to employees of municipalities.  Specifies that the
      decision  to provide a program of early retirement incentives
      is within the sole discretion  of  the  employer.   Effective
      immediately.
                                                     LRB9002487EGfg
                                               LRB9002487EGfg
 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
                            -2-                LRB9002487EGfg
 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 decision to consider or establish an early retirement
27    program is at the  sole  and  unilateral  discretion  of  the
28    employer, and no other statutory provision shall act to limit
29    or  otherwise diminish this discretion.  Nothing contained in
30    this provision shall be construed to require an  employer  to
31    establish  an early retirement program and no employer may be
32    compelled, by this or any other statute, to implement such  a
33    program.
34        The resolution or ordinance shall be in substantially the
                            -3-                LRB9002487EGfg
 1    following form:
 2                   RESOLUTION (ORDINANCE) NO. ....
 3             A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
 4             RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
 5              IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
 6        WHEREAS,  Section  7-141.1  of  the Illinois Pension Code
 7    provides that a participating employer may elect to adopt  an
 8    early  retirement  incentive  program offered by the Illinois
 9    Municipal  Retirement  Fund  by  adopting  a  resolution   or
10    ordinance; and
11        WHEREAS, The goal of adopting an early retirement program
12    is  to  realize  a  substantial savings in personnel costs by
13    offering early retirement incentives to  employees  who  have
14    accumulated many years of service credit; and
15        WHEREAS,  Implementation  of the early retirement program
16    will provide a budgeting tool to aid in  controlling  payroll
17    costs; and
18        WHEREAS, The (name of governing body) has determined that
19    the  adoption  of an early retirement incentive program is in
20    the best interests of the (name of  participating  employer);
21    therefore be it
22        RESOLVED  (ORDAINED)  by  the (name of governing body) of
23    (name of participating employer) that:
24        (1)  The (name of  participating  employer)  does  hereby
25    adopt the Illinois Municipal Retirement Fund early retirement
26    incentive  program  as  provided  in  Section  7-141.1 of the
27    Illinois  Pension  Code.   The  early  retirement   incentive
28    program shall take effect on (date).
29        (2)  In  order  to  help  achieve  a true cost savings, a
30    person who  retires  under  the  early  retirement  incentive
31    program  shall  lose  those  incentives  if  he  or she later
32    accepts employment with any IMRF employer in a  position  for
33    which  participation in IMRF is required or is elected by the
34    employee.
                            -4-                LRB9002487EGfg
 1        (3)  In order to utilize an early retirement incentive as
 2    a budgeting tool, the (name of participating  employer)  will
 3    use  its best efforts either to limit the number of employees
 4    who  replace  the  employees  who  retire  under  the   early
 5    retirement  program  or  to  limit  the  salaries paid to the
 6    employees who replace the  employees  who  retire  under  the
 7    early retirement program.
 8        (4)  The  effective  date  of  each employee's retirement
 9    under this early retirement program shall be set by (name  of
10    employer)  and shall be no earlier than the effective date of
11    the program and no later than one year after  that  effective
12    date;   except   that  the  employee  may  require  that  the
13    retirement date set by the employer be no later than the June
14    30 next occurring after the effective date of the program and
15    no earlier than the date upon which  the  employee  qualifies
16    for retirement.
17        (5)  To  be  eligible  for the early retirement incentive
18    under this Section, the employee must have  attained  age  50
19    and  have  at  least 20 years of creditable service by his or
20    her retirement date.
21        (6)  The (clerk  or  secretary)  shall  promptly  file  a
22    certified  copy of this resolution (ordinance) with the Board
23    of Trustees of the Illinois Municipal Retirement Fund.
24    CERTIFICATION
25        I, (name), the (clerk  or  secretary)  of  the  (name  of
26    participating  employer)  of  the  County of (name), State of
27    Illinois, do hereby certify that I am the keeper of the books
28    and records of the (name of employer) and that the  foregoing
29    is  a  true and correct copy of a resolution (ordinance) duly
30    adopted by the (governing body) at a  meeting  duly  convened
31    and held on (date).
32    SEAL
33    (Signature of clerk or secretary)
34        (c)  To  be  eligible  for the benefits provided under an
                            -5-                LRB9002487EGfg
 1    early  retirement  incentive  program  adopted   under   this
 2    Section, a member must:
 3             (1)  be  a  participating employee of this Fund who,
 4        on the effective date of the program, (i)  is  in  active
 5        payroll status as an employee of a participating employer
 6        that  has filed the required ordinance or resolution with
 7        the Board, (ii) is on layoff status from such a  position
 8        with a right of re-employment or recall to service, (iii)
 9        is on a leave of absence from such a position, or (iv) is
10        on  disability  but has not been receiving benefits under
11        Section 7-146 or 7-150 for a period of more than 2  years
12        from the date of application;
13             (2)  have  never  previously  received  a retirement
14        annuity  under  this  Article  or  under  the  Retirement
15        Systems Reciprocal Act using service  credit  established
16        under this Article;
17             (3)  file  with  the  Board  within  60  days of the
18        effective date of the program an  application  requesting
19        the benefits provided in this Section;
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-                LRB9002487EGfg
 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-                LRB9002487EGfg
 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)  An annuitant who has received any age enhancement or
25    creditable  service under this Section and thereafter accepts
26    employment with or enters into a personal  services  contract
27    with an employer under this Article thereby forfeits that age
28    enhancement  and  creditable  service.   A  person forfeiting
29    early retirement incentives under this  subsection  (i)  must
30    repay  to  the  Fund  that  portion of the retirement annuity
31    already  received  which  is  attributable   to   the   early
32    retirement  incentives  that  are being forfeited, (ii) shall
33    not be eligible to participate in any future early retirement
34    program adopted under this Section, and (iii) is entitled  to
                            -8-                LRB9002487EGfg
 1    a  refund  of the employee contribution paid under subsection
 2    (f).  The Board shall deduct the required repayment from  the
 3    refund  and  may  impose  a  reasonable  payment schedule for
 4    repaying the amount, if any, by which the required  repayment
 5    exceeds the refund amount.
 6        (h)  The  additional  unfunded  liability  accruing  as a
 7    result of the adoption  of  a  program  of  early  retirement
 8    incentives  under  this  Section  by  an  employer  shall  be
 9    amortized over a period of 10 years beginning on January 1 of
10    the second calendar year following the calendar year in which
11    the latest date for beginning to receive a retirement annuity
12    under  the  program  (as  determined  by  the  employer under
13    subsection (d) of  this  Section)  occurs;  except  that  the
14    employer may provide for a shorter amortization period (of no
15    less  than  5  years)  by adopting an ordinance or resolution
16    specifying  the  length  of  the  amortization   period   and
17    submitting a certified copy of the ordinance or resolution to
18    the  Fund  no later than 6 months after the effective date of
19    the program.  An employer, at its discretion, may  accelerate
20    payments to the Fund.
21        An  employer  may  provide more than one early retirement
22    incentive program  for  its  employees  under  this  Section.
23    However,  an  employer  that has provided an early retirement
24    incentive program for its employees under  this  Section  may
25    not  provide another early retirement incentive program under
26    this Section until (1) the liability arising from the earlier
27    program has been fully paid to the Fund and (2)  at  least  6
28    years  have  elapsed  from the effective date of the previous
29    program.
30    (Source: P.A. 89-329, eff. 8-17-95.)
31        Section 99.  Effective date.  This Act takes effect  upon
32    becoming law.

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