State of Illinois
92nd General Assembly
Legislation

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92_HB0287

 
                                               LRB9203787EGfg

 1        AN ACT in relation to public employee benefits.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.   The  Illinois  Pension  Code  is amended by
 5    changing Section 7-141.1 as follows:

 6        (40 ILCS 5/7-141.1)
 7        Sec. 7-141.1. Early retirement incentive.
 8        (a)  The General Assembly finds and declares that:
 9             (1)  Units of local government across the State have
10        been functioning under a financial crisis.
11             (2)  This financial crisis is expected to continue.
12             (3)  Units  of  local  government  must  depend   on
13        additional sources of revenue and, when those sources are
14        not forthcoming, must establish cost-saving programs.
15             (4)  An    early   retirement   incentive   designed
16        specifically to target highly-paid senior employees could
17        result in significant annual cost savings.
18             (5)  The early retirement incentive should  be  made
19        available  only  to  those units of local government that
20        determine that an early retirement incentive is in  their
21        best interest.
22             (6)  A  unit  of local government adopting a program
23        of early retirement  incentives  under  this  Section  is
24        encouraged to implement personnel procedures to prohibit,
25        for at least 5 years, the rehiring (whether on payroll or
26        by  independent  contract) of employees who receive early
27        retirement incentives.
28             (7)  A unit of local government adopting  a  program
29        of early retirement incentives under this Section is also
30        encouraged   to  replace  as  few  of  the  participating
31        employees as possible and to hire  replacement  employees
 
                            -2-                LRB9203787EGfg
 1        for  salaries  totaling  no  more  than  80% of the total
 2        salaries formerly paid to the employees  who  participate
 3        in the early retirement program.
 4        It  is  the  primary purpose of this Section to encourage
 5    units of local government that can realize true cost savings,
 6    or have determined that an early  retirement  program  is  in
 7    their   best  interest,  to  implement  an  early  retirement
 8    program.
 9        (b)  Until the effective date of this amendatory  Act  of
10    1997,  this  Section does not apply to any employer that is a
11    city, village, or incorporated town, nor to the employees  of
12    any  such  employer.  Beginning on the effective date of this
13    amendatory Act of 1997,  any  employer  under  this  Article,
14    including   an   employer   that   is  a  city,  village,  or
15    incorporated  town,   may  establish  an   early   retirement
16    incentive  program for its employees under this Section.  The
17    decision of a city, village, or incorporated town to consider
18    or establish an early  retirement  program  is  at  the  sole
19    discretion  of  that city, village, or incorporated town, and
20    nothing in this amendatory Act of 1997  limits  or  otherwise
21    diminishes   this  discretion.   Nothing  contained  in  this
22    Section shall be construed to require  a  city,  village,  or
23    incorporated  town  to  establish an early retirement program
24    and no city, village, or incorporated town may  be  compelled
25    to implement such a program.
26        The  benefits provided in this Section are available only
27    to members employed by  a  participating  employer  that  has
28    filed  with  the  Board of the Fund a resolution or ordinance
29    expressly providing for the creation of an  early  retirement
30    incentive  program  under  this Section for its employees and
31    specifying  the  effective  date  of  the  early   retirement
32    incentive  program.   Subject to the limitation in subsection
33    (h),  an  employer  may  adopt  a  resolution  or   ordinance
34    providing a program of early retirement incentives under this
 
                            -3-                LRB9203787EGfg
 1    Section at any time.
 2        The resolution or ordinance shall be in substantially the
 3    following form:

 4                   RESOLUTION (ORDINANCE) NO. ....
 5             A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
 6             RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
 7              IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
 8        WHEREAS,  Section  7-141.1  of  the Illinois Pension Code
 9    provides that a participating employer may elect to adopt  an
10    early  retirement  incentive  program offered by the Illinois
11    Municipal  Retirement  Fund  by  adopting  a  resolution   or
12    ordinance; and
13        WHEREAS, The goal of adopting an early retirement program
14    is  to  realize  a  substantial savings in personnel costs by
15    offering early retirement incentives to  employees  who  have
16    accumulated many years of service credit; and
17        WHEREAS,  Implementation  of the early retirement program
18    will provide a budgeting tool to aid in  controlling  payroll
19    costs; and
20        WHEREAS, The (name of governing body) has determined that
21    the  adoption  of an early retirement incentive program is in
22    the best interests of the (name of  participating  employer);
23    therefore be it
24        RESOLVED  (ORDAINED)  by  the (name of governing body) of
25    (name of participating employer) that:
26        (1)  The (name of  participating  employer)  does  hereby
27    adopt the Illinois Municipal Retirement Fund early retirement
28    incentive  program  as  provided  in  Section  7-141.1 of the
29    Illinois  Pension  Code.   The  early  retirement   incentive
30    program shall take effect on (date).
31        (2)  In  order  to  help  achieve  a true cost savings, a
32    person who  retires  under  the  early  retirement  incentive
33    program  shall  lose  those  incentives  if  he  or she later
34    accepts employment with any IMRF employer in a  position  for
 
                            -4-                LRB9203787EGfg
 1    which  participation in IMRF is required or is elected by the
 2    employee.
 3        (3)  In order to utilize an early retirement incentive as
 4    a budgeting tool, the (name of participating  employer)  will
 5    use  its best efforts either to limit the number of employees
 6    who  replace  the  employees  who  retire  under  the   early
 7    retirement  program  or  to  limit  the  salaries paid to the
 8    employees who replace the  employees  who  retire  under  the
 9    early retirement program.
10        (4)  The  effective  date  of  each employee's retirement
11    under this early retirement program shall be set by (name  of
12    employer)  and shall be no earlier than the effective date of
13    the program and no later than one year after  that  effective
14    date;   except   that  the  employee  may  require  that  the
15    retirement date set by the employer be no later than the June
16    30 next occurring after the effective date of the program and
17    no earlier than the date upon which  the  employee  qualifies
18    for retirement.
19        (5)  To  be  eligible  for the early retirement incentive
20    under this Section, the employee must have  attained  age  50
21    and  have  at  least 20 years of creditable service by his or
22    her retirement date.
23        (6)  The (clerk  or  secretary)  shall  promptly  file  a
24    certified  copy of this resolution (ordinance) with the Board
25    of Trustees of the Illinois Municipal Retirement Fund.
26    CERTIFICATION
27        I, (name), the (clerk  or  secretary)  of  the  (name  of
28    participating  employer)  of  the  County of (name), State of
29    Illinois, do hereby certify that I am the keeper of the books
30    and records of the (name of employer) and that the  foregoing
31    is  a  true and correct copy of a resolution (ordinance) duly
32    adopted by the (governing body) at a  meeting  duly  convened
33    and held on (date).
34    SEAL
 
                            -5-                LRB9203787EGfg
 1    (Signature of clerk or secretary)

 2        (c)  To  be  eligible  for the benefits provided under an
 3    early  retirement  incentive  program  adopted   under   this
 4    Section, a member must:
 5             (1)  be  a  participating employee of this Fund who,
 6        on the effective date of the program, (i)  is  in  active
 7        payroll status as an employee of a participating employer
 8        that  has filed the required ordinance or resolution with
 9        the Board, (ii) is on layoff status from such a  position
10        with a right of re-employment or recall to service, (iii)
11        is on a leave of absence from such a position, or (iv) is
12        on  disability  but has not been receiving benefits under
13        Section 7-146 or 7-150 for a period of more than 2  years
14        from the date of application;
15             (2)  have  never  previously  received  a retirement
16        annuity  under  this  Article  or  under  the  Retirement
17        Systems Reciprocal Act using service  credit  established
18        under this Article;
19             (3)  (blank);
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-                LRB9203787EGfg
 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-                LRB9203787EGfg
 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;  except  that  this
29    restriction does not apply to service in an elective  office,
30    so  long  as  the annuitant does not participate in this Fund
31    with respect to  that  office.   A  person  forfeiting  early
32    retirement incentives under this subsection (i) must repay to
33    the  Fund  that  portion  of  the  retirement annuity already
34    received  which  is  attributable  to  the  early  retirement
 
                            -8-                LRB9203787EGfg
 1    incentives that  are  being  forfeited,  (ii)  shall  not  be
 2    eligible  to  participate  in  any  future  early  retirement
 3    program  adopted under this Section, and (iii) is entitled to
 4    a refund of the employee contribution paid  under  subsection
 5    (f).   The Board shall deduct the required repayment from the
 6    refund and may  impose  a  reasonable  payment  schedule  for
 7    repaying  the amount, if any, by which the required repayment
 8    exceeds the refund amount.
 9        (h)  The additional  unfunded  liability  accruing  as  a
10    result  of  the  adoption  of  a  program of early retirement
11    incentives  under  this  Section  by  an  employer  shall  be
12    amortized over a period of 10 years beginning on January 1 of
13    the second calendar year following the calendar year in which
14    the latest date for beginning to receive a retirement annuity
15    under the  program  (as  determined  by  the  employer  under
16    subsection  (d)  of  this  Section)  occurs;  except that the
17    employer may provide for a shorter amortization period (of no
18    less than 5 years) by adopting  an  ordinance  or  resolution
19    specifying   the   length  of  the  amortization  period  and
20    submitting a certified copy of the ordinance or resolution to
21    the Fund no later than 6 months after the effective  date  of
22    the  program.  An employer, at its discretion, may accelerate
23    payments to the Fund.
24        An employer may provide more than  one  early  retirement
25    incentive  program  for  its  employees  under  this Section.
26    However, an employer that has provided  an  early  retirement
27    incentive  program  for  its employees under this Section may
28    not provide another early retirement incentive program  under
29    this  Section  until  the  liability arising from the earlier
30    program has been fully paid to the Fund.
31    (Source: P.A. 90-32, eff. 6-27-97; 91-887, eff. 7-6-00.)

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

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