State of Illinois
92nd General Assembly
Legislation

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92_SB0802

 
                                               LRB9205186EGfg

 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  Sections  8-167,  8-174.1,  11-163, and 11-170.1 as
 6    follows:

 7        (40 ILCS 5/8-167) (from Ch. 108 1/2, par. 8-167)
 8        Sec. 8-167. Restoration of rights.  An employee  who  has
 9    withdrawn  as  a  refund  the  amounts  credited  for annuity
10    purposes, and who (i) re-enters service of the  employer  and
11    serves  for periods comprising at least 90 days 2 years after
12    the date of the last refund paid to him or (ii) has completed
13    at least 2 years of service under a participating system  (as
14    defined  in the Retirement Systems Reciprocal Act) other than
15    this Fund after the date of the last refund, shall  have  his
16    annuity  rights  restored  by  compliance  with the following
17    provisions:
18             (a)  After such 90 day or 2 year  period,  whichever
19        applies,  he  shall  repay  in full to the Fund, while in
20        service, in full  all  refunds  received,  together  with
21        interest  at  the effective rate from the dates of refund
22        to the date of repayment.; or
23             (b)  If payment is not made in  a  single  sum,  the
24        repayment  may be made in installments by deductions from
25        salary or otherwise in such amounts  and  manner  as  the
26        board,  by  rule,  may  prescribe,  with  interest at the
27        effective rate accruing on unpaid balances.; or
28             (c)  If the employee withdraws from service or  dies
29        in  service before full repayment is made, service credit
30        shall be restored in accordance with Section  8-230.3(b).
31        such  rights  shall  not  be  restored,  but  the amount,
 
                            -2-                LRB9205186EGfg
 1        including  interest,  repaid  by  him,  but  without  any
 2        further interest otherwise normally  credited,  shall  be
 3        refunded  to  him  or  to  his  widow,  or  in the manner
 4        provided by the refund provisions of this Article  if  no
 5        widow survives.
 6             (d)  If   the   employee  repays  the  refund  while
 7        participating in a participating system  (as  defined  in
 8        the  Retirement  Systems  Reciprocal Act) other than this
 9        Fund, the service credit restored  must  be  used  for  a
10        proportional  annuity  calculated  in accordance with the
11        Retirement Systems Reciprocal Act.  If not so  used,  the
12        restored service credit shall be forfeited and the amount
13        of the repayment shall be refunded, without interest.
14        This  Section  applies  also to any person who received a
15    refund from any annuity and  benefit  fund  or  pension  fund
16    which  was  merged  into  and  superseded  by the annuity and
17    benefit fund  provided  for  in  this  Article  on  or  after
18    December  31, 1959.  Upon repayment such person shall receive
19    credit for all annuity purposes in the  annuity  and  benefit
20    fund  provided  for in this Article for the period of service
21    covered by the repayment such refund.
22        The amount of refund repayment is  considered  as  salary
23    deductions  for  age  and service annuity and widow's annuity
24    purposes in the case of a male person.  In  the  latter  case
25    the amount of refund repayment is allocated in the applicable
26    proportion  for age and service and widow's annuity purposes.
27    Such person shall also be credited  with  city  contributions
28    for  age  and  service annuity, and widow's annuity if a male
29    employee, in the amount which would have  been  credited  and
30    accrued  if  such  person  had  been  a  participant  in  and
31    contributor  to  the annuity and benefit fund provided for in
32    this Article during the period of such service on  the  basis
33    of his salary during such period.
34    (Source: P.A. 81-1536.)
 
                            -3-                LRB9205186EGfg
 1        (40 ILCS 5/8-174.1) (from Ch. 108 1/2, par. 8-174.1)
 2        Sec.   8-174.1.   Employer  contributions  on  behalf  of
 3    employees.
 4        (a)  The employer may make and may incur an obligation to
 5    make contributions on behalf of its employees  in  an  amount
 6    not to exceed the employee contributions required by Sections
 7    8-137,  8-161, 8-174, 8-182 and 8-182.1 for all salary earned
 8    after December 31, 1981.  If such employee contributions  are
 9    not  made  or an obligation to make such contributions is not
10    incurred by the employer on  behalf  of  its  employees,  the
11    amount  that could have been contributed shall continue to be
12    deducted from salary.  If employee contributions are made  by
13    the  employer  on  behalf  of  its  employees,  they shall be
14    treated  as  employer  contributions   in   determining   tax
15    treatment  under  the  United  States  Internal Revenue Code;
16    however, each city shall continue  to  withhold  federal  and
17    State  income  taxes based upon these contributions until the
18    Internal Revenue Service or  the  Federal  courts  rule  that
19    pursuant  to  Section  414(h)  of  the United States Internal
20    Revenue Code, these contributions shall not  be  included  as
21    gross  income  of  the  employee  until such time as they are
22    distributed or made available.  The employer may  make  these
23    contributions  on  behalf  of its employees by a reduction in
24    the cash salary of the employee or by  an  offset  against  a
25    future  salary increase or by a combination of a reduction in
26    salary and offset  against  a  future  salary  increase.  The
27    employer shall pay these employee contributions from the same
28    source  of funds used in paying salary to the employee or, if
29    the employer  is  a  Board  of  Education,  it  may  also  or
30    alternatively pay such contributions in whole or in part from
31    the  proceeds  of  the  pension  contribution  liability  tax
32    authorized by Section 34-60.1 of the School Code, as amended.
33    If  such a tax is levied with respect to any fiscal year of a
34    Board of Education, that portion of the contributions  to  be
 
                            -4-                LRB9205186EGfg
 1    paid by the Board of Education on behalf of its employees for
 2    that fiscal year from the proceeds of such a tax shall not be
 3    due  and  payable  into the Fund until the collection, in the
 4    calendar year following the calendar year in which such  levy
 5    was  made,  of  the  actual  tax  bills  extending the second
 6    installment of real estate taxes for the Board  of  Education
 7    for  that  calendar  year,  pursuant  to Section 21-30 of the
 8    Property Tax Code, and such Board of Education shall  not  be
 9    required  to  pay  those  contributions  to  be paid from the
10    proceeds of such a tax into the Fund except as collected from
11    the  extension  of  the  actual  tax   bills.   If   employee
12    contributions  are  made  by  the  employer  on behalf of its
13    employees, they shall be treated for  all  purposes  of  this
14    Article 8, including Section 8-173, in the same manner and to
15    the  same  extent as employee contributions made by employees
16    and   deducted   from   salary;   provided,   however,   that
17    contributions which are made  by  a  Board  of  Education  on
18    behalf  of its employees shall not be treated as a pension or
19    retirement obligation of the Board of Education for  purposes
20    of Section 12 of "An Act in relation to State revenue sharing
21    with local governmental entities", approved July 31, 1969, as
22    amended.   For  purposes of Section 8-173, contributions made
23    by a Board of Education on behalf of its employees  shall  be
24    treated as contributions made by or on behalf of employees to
25    the Fund for the fiscal year for which the Board of Education
26    incurred the obligation to make such contributions.
27        (b)  Subject  to  the requirements of federal law and the
28    rules of the Board, the Fund may allow the employee to  elect
29    to  have the employer pick up the optional contributions that
30    the employee  has  elected  to  pay  to  the  Fund,  and  the
31    contributions  so  picked  up  shall  be  treated as employer
32    contributions for the  purpose  of  determining  federal  tax
33    treatment.  The employer shall pick up the contributions by a
34    reduction  in  the  cash salary of the employee and shall pay
 
                            -5-                LRB9205186EGfg
 1    contributions from the same source of funds that is  used  to
 2    pay  earnings  of  the  employee.   The  election to have the
 3    contributions picked  up  is  irrevocable  and  the  optional
 4    contributions  may  not  thereafter  be  prepaid,  by  direct
 5    payment or otherwise.
 6        If  the  provision  authorizing the optional contribution
 7    requires payment by a stated date (rather than  the  date  of
 8    withdrawal  or retirement), the requirement will be deemed to
 9    have been satisfied if (i) on or before the stated  date  the
10    employee  executes  a  valid irrevocable election to have the
11    contributions picked up under this subsection, and  (ii)  the
12    picked-up  contributions  are  in  fact  paid  to the Fund as
13    provided in the election.
14        If  employee  contributions  are  picked  up  under  this
15    subsection, they shall be treated for all  purposes  of  this
16    Article 8, including Section 8-173, in the same manner and to
17    the same extent as optional employee contributions made prior
18    to the date picked up.
19    (Source: P.A. 88-670, eff. 12-2-94.)

20        (40 ILCS 5/11-163) (from Ch. 108 1/2, par. 11-163)
21        Sec.  11-163. Restoration of rights.  An employee who has
22    withdrawn as  a  refund  the  amounts  credited  for  annuity
23    purposes,  and  who (i) re-enters service of the employer and
24    serves for periods comprising at least 90 days 2 years  after
25    the date of the last refund paid to him or (ii) has completed
26    at  least 2 years of service under a participating system (as
27    defined in the Retirement Systems Reciprocal Act) other  than
28    this  Fund  after the date of the last refund, shall have his
29    annuity rights restored by making application to the board in
30    writing for the privilege of re-instating such rights and  by
31    compliance with the following provisions:
32             (a)  After  such  90 day or 2 year period, whichever
33        applies, he shall repay in full to  the  fund,  while  in
 
                            -6-                LRB9205186EGfg
 1        service,  in  full  all  refunds  received, together with
 2        interest at the effective rate from the application dates
 3        of such refund or refunds to the date of repayment.;
 4             (b)  If  payment  is  not  made  in  a  single  sum,
 5        repayment may be made in installments by deductions  from
 6        salary  or  otherwise,  in such manner and amounts as the
 7        board, by rule,  may  prescribe,  with  interest  at  the
 8        effective  rate  accruing  on the unpaid balance employee
 9        may elect.  The employee shall be credited with  interest
10        at  the  effective rate from the date of each installment
11        until full repayment is made.
12             (c)  If the employee withdraws from service or  dies
13        in  service  before  full repayment is made or during the
14        required 90 day or 2 year period, service credit shall be
15        restored  in  accordance  with  Section  11-221.2(b)  any
16        repayments  made  shall  be  refunded,  without  interest
17        thereon and in accordance with the refund  provisions  of
18        this Article.
19             (d)  If   the   employee  repays  the  refund  while
20        participating in a participating system  (as  defined  in
21        the  Retirement  Systems  Reciprocal Act) other than this
22        Fund, the service credit restored  must  be  used  for  a
23        proportional  annuity  calculated  in accordance with the
24        Retirement Systems Reciprocal Act.  If not so  used,  the
25        restored service credit shall be forfeited and the amount
26        of the repayment shall be refunded, without interest.
27    (Source: Laws 1963, p. 161.)

28        (40 ILCS 5/11-170.1) (from Ch. 108 1/2, par. 11-170.1)
29        Sec. 11-170.1. Pickup of employee contributions.
30        (a)  The  employer may pick up the employee contributions
31    required by Sections 11-156, 11-170, 11-174 and 11-175.1  for
32    salary   earned   after   December  31,  1981.   If  employee
33    contributions are not picked up, the amount that  would  have
 
                            -7-                LRB9205186EGfg
 1    been  picked  up  under  this  amendatory  Act  of 1980 shall
 2    continue to be deducted from salary.   If  contributions  are
 3    picked  up they shall be treated as employer contributions in
 4    determining tax treatment under the  United  States  Internal
 5    Revenue   Code;  however,  the  employer  shall  continue  to
 6    withhold Federal and state  income  taxes  based  upon  these
 7    contributions  until  the  Internal  Revenue  Service  or the
 8    Federal courts rule that pursuant to Section  414(h)  of  the
 9    United  States  Internal  Revenue  Code,  these contributions
10    shall not be included as gross income of the  employee  until
11    such  time  as  they  are distributed or made available.  The
12    employer shall pay these employee contributions from the same
13    source of funds  which  is  used  in  paying  salary  to  the
14    employee.   The employer may pick up these contributions by a
15    reduction in the cash salary of the employee or by an  offset
16    against  a  future  salary  increase or by a combination of a
17    reduction in  salary  and  offset  against  a  future  salary
18    increase.  If employee contributions are picked up they shall
19    be  treated  for  all  purposes of this Article 11, including
20    Section 11-169, in the same manner and to the same extent  as
21    employee contributions made prior to the date picked up.
22        (b)  Subject  to  the requirements of federal law and the
23    rules of the Board, the Fund may allow the employee to  elect
24    to  have the employer pick up the optional contributions that
25    the employee  has  elected  to  pay  to  the  Fund,  and  the
26    contributions  so  picked  up  shall  be  treated as employer
27    contributions for the  purpose  of  determining  federal  tax
28    treatment.  The employer shall pick up the contributions by a
29    reduction  in  the  cash salary of the employee and shall pay
30    contributions from the same source of funds that is  used  to
31    pay  earnings  of  the  employee.   The  election to have the
32    contributions picked up  is  irrevocable,  and  the  optional
33    contributions  may  not  thereafter  be  prepaid,  by  direct
34    payment or otherwise.
 
                            -8-                LRB9205186EGfg
 1        If  the  provision  authorizing the optional contribution
 2    requires payment by a stated date (rather than  the  date  of
 3    withdrawal  or retirement), the requirement will be deemed to
 4    have been satisfied if (i) on or before the stated  date  the
 5    employee  executes  a  valid irrevocable election to have the
 6    contributions picked up under this subsection, and  (ii)  the
 7    picked-up  contributions  are  in  fact  paid  to the Fund as
 8    provided in the election.
 9        If  employee  contributions  are  picked  up  under  this
10    subsection, they shall be treated for all  purposes  of  this
11    Article  11, including Section 11-169, in the same manner and
12    to the same extent as optional  employee  contributions  made
13    prior to the date picked up.
14    (Source: P.A. 81-1536.)

15        Section  90.  The State Mandates Act is amended by adding
16    Section 8.25 as follows:

17        (30 ILCS 805/8.25 new)
18        Sec. 8.25. Exempt mandate.   Notwithstanding  Sections  6
19    and  8 of this Act, no reimbursement by the State is required
20    for  the  implementation  of  any  mandate  created  by  this
21    amendatory Act of the 92nd General Assembly.

22        Section 99. Effective date.  This Act takes  effect  upon
23    becoming law.

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