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91_HB2048
LRB9102888EGfg
1 AN ACT to amend the Illinois Pension Code by changing
2 Sections 7-137.1 and 7-141.1 and to amend the State Mandates
3 Act.
4 Be it enacted by the People of the State of Illinois,
5 represented in the General Assembly:
6 Section 5. The Illinois Pension Code is amended by
7 changing Sections 7-137.1 and 7-141.1 as follows:
8 (40 ILCS 5/7-137.1) (from Ch. 108 1/2, par. 7-137.1)
9 Sec. 7-137.1. Elected officials.
10 (a) A person holding an elective office who has elected
11 to participate in the Fund while in that office may revoke
12 that election and cease participating in the Fund by
13 notifying the Board in writing before January 1, 1992.
14 Upon such revocation, the person shall forfeit all
15 creditable service earned while holding that office, and the
16 Board shall refund to the person, without interest, all
17 employee contributions paid for the forfeited creditable
18 service. The Board shall also refund or credit to the
19 employing municipality, without interest, the employer
20 contributions relating to the forfeited service, except those
21 for death and disability.
22 (b) Notwithstanding the provisions of Sections 7-141 and
23 7-144, beginning January 1, 1992, a person who holds an
24 elective office and has not elected to participate in the
25 Fund with respect to that office (or has revoked his election
26 to participate with respect to that office under subsection
27 (a) of this Section) shall not be disqualified from receiving
28 a retirement annuity by reason of holding such office,
29 provided that the annuity is not based on any credits
30 received for participating while holding that office.
31 (Source: P.A. 87-740.)
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1 (40 ILCS 5/7-141.1)
2 Sec. 7-141.1. Early retirement incentive.
3 (a) The General Assembly finds and declares that:
4 (1) Units of local government across the State have
5 been functioning under a financial crisis.
6 (2) This financial crisis is expected to continue.
7 (3) Units of local government must depend on
8 additional sources of revenue and, when those sources are
9 not forthcoming, must establish cost-saving programs.
10 (4) An early retirement incentive designed
11 specifically to target highly-paid senior employees could
12 result in significant annual cost savings.
13 (5) The early retirement incentive should be made
14 available only to those units of local government that
15 determine that an early retirement incentive is in their
16 best interest.
17 (6) A unit of local government adopting a program
18 of early retirement incentives under this Section is
19 encouraged to implement personnel procedures to prohibit,
20 for at least 5 years, the rehiring (whether on payroll or
21 by independent contract) of employees who receive early
22 retirement incentives.
23 (7) A unit of local government adopting a program
24 of early retirement incentives under this Section is also
25 encouraged to replace as few of the participating
26 employees as possible and to hire replacement employees
27 for salaries totaling no more than 80% of the total
28 salaries formerly paid to the employees who participate
29 in the early retirement program.
30 It is the primary purpose of this Section to encourage
31 units of local government that can realize true cost savings,
32 or have determined that an early retirement program is in
33 their best interest, to implement an early retirement
34 program.
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1 (b) Until the effective date of this amendatory Act of
2 1997, this Section does not apply to any employer that is a
3 city, village, or incorporated town, nor to the employees of
4 any such employer. Beginning on the effective date of this
5 amendatory Act of 1997, any employer under this Article,
6 including an employer that is a city, village, or
7 incorporated town, may establish an early retirement
8 incentive program for its employees under this Section. The
9 decision of a city, village, or incorporated town to consider
10 or establish an early retirement program is at the sole
11 discretion of that city, village, or incorporated town, and
12 nothing in this amendatory Act of 1997 limits or otherwise
13 diminishes this discretion. Nothing contained in this
14 Section shall be construed to require a city, village, or
15 incorporated town to establish an early retirement program
16 and no city, village, or incorporated town may be compelled
17 to implement such a program.
18 The benefits provided in this Section are available only
19 to members employed by a participating employer that has
20 filed with the Board of the Fund a resolution or ordinance
21 expressly providing for the creation of an early retirement
22 incentive program under this Section for its employees and
23 specifying the effective date of the early retirement
24 incentive program. Subject to the limitation in subsection
25 (h), an employer may adopt a resolution or ordinance
26 providing a program of early retirement incentives under this
27 Section at any time.
28 The resolution or ordinance shall be in substantially the
29 following form:
30 RESOLUTION (ORDINANCE) NO. ....
31 A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
32 RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
33 IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
34 WHEREAS, Section 7-141.1 of the Illinois Pension Code
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1 provides that a participating employer may elect to adopt an
2 early retirement incentive program offered by the Illinois
3 Municipal Retirement Fund by adopting a resolution or
4 ordinance; and
5 WHEREAS, The goal of adopting an early retirement program
6 is to realize a substantial savings in personnel costs by
7 offering early retirement incentives to employees who have
8 accumulated many years of service credit; and
9 WHEREAS, Implementation of the early retirement program
10 will provide a budgeting tool to aid in controlling payroll
11 costs; and
12 WHEREAS, The (name of governing body) has determined that
13 the adoption of an early retirement incentive program is in
14 the best interests of the (name of participating employer);
15 therefore be it
16 RESOLVED (ORDAINED) by the (name of governing body) of
17 (name of participating employer) that:
18 (1) The (name of participating employer) does hereby
19 adopt the Illinois Municipal Retirement Fund early retirement
20 incentive program as provided in Section 7-141.1 of the
21 Illinois Pension Code. The early retirement incentive
22 program shall take effect on (date).
23 (2) In order to help achieve a true cost savings, a
24 person who retires under the early retirement incentive
25 program shall lose those incentives if he or she later
26 accepts employment with any IMRF employer in a position for
27 which participation in IMRF is required or is elected by the
28 employee.
29 (3) In order to utilize an early retirement incentive as
30 a budgeting tool, the (name of participating employer) will
31 use its best efforts either to limit the number of employees
32 who replace the employees who retire under the early
33 retirement program or to limit the salaries paid to the
34 employees who replace the employees who retire under the
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1 early retirement program.
2 (4) The effective date of each employee's retirement
3 under this early retirement program shall be set by (name of
4 employer) and shall be no earlier than the effective date of
5 the program and no later than one year after that effective
6 date; except that the employee may require that the
7 retirement date set by the employer be no later than the June
8 30 next occurring after the effective date of the program and
9 no earlier than the date upon which the employee qualifies
10 for retirement.
11 (5) To be eligible for the early retirement incentive
12 under this Section, the employee must have attained age 50
13 and have at least 20 years of creditable service by his or
14 her retirement date.
15 (6) The (clerk or secretary) shall promptly file a
16 certified copy of this resolution (ordinance) with the Board
17 of Trustees of the Illinois Municipal Retirement Fund.
18 CERTIFICATION
19 I, (name), the (clerk or secretary) of the (name of
20 participating employer) of the County of (name), State of
21 Illinois, do hereby certify that I am the keeper of the books
22 and records of the (name of employer) and that the foregoing
23 is a true and correct copy of a resolution (ordinance) duly
24 adopted by the (governing body) at a meeting duly convened
25 and held on (date).
26 SEAL
27 (Signature of clerk or secretary)
28 (c) To be eligible for the benefits provided under an
29 early retirement incentive program adopted under this
30 Section, a member must:
31 (1) be a participating employee of this Fund who,
32 on the effective date of the program, (i) is in active
33 payroll status as an employee of a participating employer
34 that has filed the required ordinance or resolution with
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1 the Board, (ii) is on layoff status from such a position
2 with a right of re-employment or recall to service, (iii)
3 is on a leave of absence from such a position, or (iv) is
4 on disability but has not been receiving benefits under
5 Section 7-146 or 7-150 for a period of more than 2 years
6 from the date of application;
7 (2) have never previously received a retirement
8 annuity under this Article or under the Retirement
9 Systems Reciprocal Act using service credit established
10 under this Article;
11 (3) file with the Board within 60 days of the
12 effective date of the program an application requesting
13 the benefits provided in this Section;
14 (4) have at least 20 years of creditable service in
15 the Fund by the date of retirement, without the use of
16 any creditable service established under this Section;
17 (5) have attained age 50 by the date of retirement,
18 without the use of any age enhancement received under
19 this Section; and
20 (6) be eligible to receive a retirement annuity
21 under this Article by the date of retirement, for which
22 purpose the age enhancement and creditable service
23 established under this Section may be considered.
24 (d) The employer shall determine the retirement date for
25 each employee participating in the early retirement program
26 adopted under this Section. The retirement date shall be no
27 earlier than the effective date of the program and no later
28 than one year after that effective date, except that the
29 employee may require that the retirement date set by the
30 employer be no later than the June 30 next occurring after
31 the effective date of the program and no earlier than the
32 date upon which the employee qualifies for retirement. The
33 employer shall give each employee participating in the early
34 retirement program at least 30 days written notice of the
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1 employee's designated retirement date, unless the employee
2 waives this notice requirement.
3 (e) An eligible person may establish up to 5 years of
4 creditable service under this Section. In addition, for each
5 period of creditable service established under this Section,
6 a person shall have his or her age at retirement deemed
7 enhanced by an equivalent period.
8 The creditable service established under this Section may
9 be used for all purposes under this Article and the
10 Retirement Systems Reciprocal Act, except for the computation
11 of final rate of earnings and the determination of earnings,
12 salary, or compensation under this or any other Article of
13 the Code.
14 The age enhancement established under this Section may be
15 used for all purposes under this Article (including
16 calculation of the reduction imposed under subdivision
17 (a)1b(iv) of Section 7-142), except for purposes of a
18 reversionary annuity under Section 7-145 and any
19 distributions required because of age. The age enhancement
20 established under this Section may be used in calculating a
21 proportionate annuity payable by this Fund under the
22 Retirement Systems Reciprocal Act, but shall not be used in
23 determining benefits payable under other Articles of this
24 Code under the Retirement Systems Reciprocal Act.
25 (f) For all creditable service established under this
26 Section, the member must pay to the Fund an employee
27 contribution consisting of 4.5% of the member's highest
28 annual salary rate used in the determination of the final
29 rate of earnings for retirement annuity purposes for each
30 year of creditable service granted under this Section. For
31 creditable service established under this Section by a person
32 who is a sheriff's law enforcement employee to be deemed
33 service as a sheriff's law enforcement employee, the employee
34 contribution shall be at the rate of 6.5% of highest annual
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1 salary per year of creditable service granted. Contributions
2 for fractions of a year of service shall be prorated. Any
3 amounts that are disregarded in determining the final rate of
4 earnings under subdivision (d)(5) of Section 7-116 (the 125%
5 rule) shall also be disregarded in determining the required
6 contribution under this subsection (f).
7 The employee contribution shall be paid to the Fund as
8 follows: If the member is entitled to a lump sum payment for
9 accumulated vacation, sick leave, or personal leave upon
10 withdrawal from service, the employer shall deduct the
11 employee contribution from that lump sum and pay the deducted
12 amount directly to the Fund. If there is no such lump sum
13 payment or the required employee contribution exceeds the net
14 amount of the lump sum payment, then the remaining amount
15 due, at the option of the employee, may either be paid to the
16 Fund before the annuity commences or deducted from the
17 retirement annuity in 24 equal monthly installments.
18 (g) An annuitant who has received any age enhancement or
19 creditable service under this Section and thereafter accepts
20 employment with or enters into a personal services contract
21 with an employer under this Article thereby forfeits that age
22 enhancement and creditable service; except that this
23 restriction does not apply to service in an elective office,
24 so long as the annuitant does not participate in this Fund
25 with respect to that office. A person forfeiting early
26 retirement incentives under this subsection (i) must repay to
27 the Fund that portion of the retirement annuity already
28 received which is attributable to the early retirement
29 incentives that are being forfeited, (ii) shall not be
30 eligible to participate in any future early retirement
31 program adopted under this Section, and (iii) is entitled to
32 a refund of the employee contribution paid under subsection
33 (f). The Board shall deduct the required repayment from the
34 refund and may impose a reasonable payment schedule for
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1 repaying the amount, if any, by which the required repayment
2 exceeds the refund amount.
3 (h) The additional unfunded liability accruing as a
4 result of the adoption of a program of early retirement
5 incentives under this Section by an employer shall be
6 amortized over a period of 10 years beginning on January 1 of
7 the second calendar year following the calendar year in which
8 the latest date for beginning to receive a retirement annuity
9 under the program (as determined by the employer under
10 subsection (d) of this Section) occurs; except that the
11 employer may provide for a shorter amortization period (of no
12 less than 5 years) by adopting an ordinance or resolution
13 specifying the length of the amortization period and
14 submitting a certified copy of the ordinance or resolution to
15 the Fund no later than 6 months after the effective date of
16 the program. An employer, at its discretion, may accelerate
17 payments to the Fund.
18 An employer may provide more than one early retirement
19 incentive program for its employees under this Section.
20 However, an employer that has provided an early retirement
21 incentive program for its employees under this Section may
22 not provide another early retirement incentive program under
23 this Section until the liability arising from the earlier
24 program has been fully paid to the Fund.
25 (Source: P.A. 89-329, eff. 8-17-95; 90-32, eff. 6-27-97.)
26 Section 90. The State Mandates Act is amended by adding
27 Section 8.23 as follows:
28 (30 ILCS 805/8.23 new)
29 Sec. 8.23. Exempt mandate. Notwithstanding Sections 6
30 and 8 of this Act, no reimbursement by the State is required
31 for the implementation of any mandate created by this
32 amendatory Act of the 91st General Assembly.
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.