Bill Text: IL HB1271 | 2013-2014 | 98th General Assembly | Introduced
Bill Title: Amends the Illinois Pension Code. Creates a Tier III benefit package applicable to persons who first begin participating in one of the State-funded retirement systems on or after July 1, 2014. Provides for retirement benefits and certain employee contribution changes that supersede the corresponding provisions of the applicable retirement system. Provides that those retirement benefits may be annually increased or decreased in response to the retirement system's investment earnings. Changes the amount of the required State contributions and, in the State Universities and Downstate Teacher Articles, requires the actual employers to make contributions to amortize any unfunded liabilities arising out of their employees who are Tier III participants. Provides that, when the State's total debt service obligation for certain pension bonds has ended, any funds remaining available for the payment of that debt service shall be distributed to the 5 State-funded retirement systems, to be used to reduce their unfunded actuarial liabilities. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2014-12-03 - Session Sine Die [HB1271 Detail]
Download: Illinois-2013-HB1271-Introduced.html
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1 | AN ACT concerning public employee benefits.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Pension Code is amended by changing | ||||||||||||||||||||||||||||||||||||||||||
5 | Sections 1-160, 7-173, 20-121, 20-123, and 20-124 and adding | ||||||||||||||||||||||||||||||||||||||||||
6 | Sections 7-130.1, 7-130.2, 7-140.5, and 7-173.3 as follows:
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7 | (40 ILCS 5/1-160) | ||||||||||||||||||||||||||||||||||||||||||
8 | Sec. 1-160. Provisions applicable to new hires. | ||||||||||||||||||||||||||||||||||||||||||
9 | (a) The provisions of this Section apply to a person who, | ||||||||||||||||||||||||||||||||||||||||||
10 | on or after January 1, 2011, first becomes a member or a | ||||||||||||||||||||||||||||||||||||||||||
11 | participant under any reciprocal retirement system or pension | ||||||||||||||||||||||||||||||||||||||||||
12 | fund established under this Code, other than a retirement | ||||||||||||||||||||||||||||||||||||||||||
13 | system or pension fund established under Article 2, 3, 4, 5, 6, | ||||||||||||||||||||||||||||||||||||||||||
14 | or 18 of this Code, notwithstanding any other provision of this | ||||||||||||||||||||||||||||||||||||||||||
15 | Code to the contrary, but do not apply to any self-managed plan | ||||||||||||||||||||||||||||||||||||||||||
16 | established under this Code, to any person with respect to | ||||||||||||||||||||||||||||||||||||||||||
17 | service as a sheriff's law enforcement employee under Article | ||||||||||||||||||||||||||||||||||||||||||
18 | 7, or to any participant of the retirement plan established | ||||||||||||||||||||||||||||||||||||||||||
19 | under Section 22-101. | ||||||||||||||||||||||||||||||||||||||||||
20 | (b) "Final average salary" means the average monthly (or | ||||||||||||||||||||||||||||||||||||||||||
21 | annual) salary obtained by dividing the total salary or | ||||||||||||||||||||||||||||||||||||||||||
22 | earnings calculated under the Article applicable to the member | ||||||||||||||||||||||||||||||||||||||||||
23 | or participant during the 96 consecutive months (or 8 |
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1 | consecutive years) of service within the last 120 months (or 10 | ||||||
2 | years) of service in which the total salary or earnings | ||||||
3 | calculated under the applicable Article was the highest by the | ||||||
4 | number of months (or years) of service in that period. For the | ||||||
5 | purposes of a person who first becomes a member or participant | ||||||
6 | of any retirement system or pension fund to which this Section | ||||||
7 | applies on or after January 1, 2011, in this Code, "final | ||||||
8 | average salary" shall be substituted for the following: | ||||||
9 | (1) In Articles 7 (except for service as sheriff's law | ||||||
10 | enforcement employees) and 15, "final rate of earnings". | ||||||
11 | (2) In Articles 8, 9, 10, 11, and 12, "highest average | ||||||
12 | annual salary for any 4 consecutive years within the last | ||||||
13 | 10 years of service immediately preceding the date of | ||||||
14 | withdrawal". | ||||||
15 | (3) In Article 13, "average final salary". | ||||||
16 | (4) In Article 14, "final average compensation". | ||||||
17 | (5) In Article 17, "average salary". | ||||||
18 | (6) In Section 22-207, "wages or salary received by him | ||||||
19 | at the date of retirement or discharge". | ||||||
20 | (b-5) Beginning on January 1, 2011, for all purposes under | ||||||
21 | this Code (including without limitation the calculation of | ||||||
22 | benefits and employee contributions), the annual earnings, | ||||||
23 | salary, or wages (based on the plan year) of a member or | ||||||
24 | participant to whom this Section applies shall not exceed | ||||||
25 | $106,800; however, that amount shall annually thereafter be | ||||||
26 | increased by the lesser of (i) 3% of that amount, including all |
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1 | previous adjustments, or (ii) one-half the annual unadjusted | ||||||
2 | percentage increase (but not less than zero) in the consumer | ||||||
3 | price index-u
for the 12 months ending with the September | ||||||
4 | preceding each November 1, including all previous adjustments. | ||||||
5 | For the purposes of this Section, "consumer price index-u" | ||||||
6 | means
the index published by the Bureau of Labor Statistics of | ||||||
7 | the United States
Department of Labor that measures the average | ||||||
8 | change in prices of goods and
services purchased by all urban | ||||||
9 | consumers, United States city average, all
items, 1982-84 = | ||||||
10 | 100. The new amount resulting from each annual adjustment
shall | ||||||
11 | be determined by the Public Pension Division of the Department | ||||||
12 | of Insurance and made available to the boards of the retirement | ||||||
13 | systems and pension funds by November 1 of each year. | ||||||
14 | (c) A member or participant is entitled to a retirement
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15 | annuity upon written application if he or she has attained age | ||||||
16 | 67 and has at least 10 years of service credit and is otherwise | ||||||
17 | eligible under the requirements of the applicable Article. | ||||||
18 | A member or participant who has attained age 62 and has at | ||||||
19 | least 10 years of service credit and is otherwise eligible | ||||||
20 | under the requirements of the applicable Article may elect to | ||||||
21 | receive the lower retirement annuity provided
in subsection (d) | ||||||
22 | of this Section. | ||||||
23 | (d) The retirement annuity of a member or participant who | ||||||
24 | is retiring after attaining age 62 with at least 10 years of | ||||||
25 | service credit shall be reduced by one-half
of 1% for each full | ||||||
26 | month that the member's age is under age 67. |
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1 | (e) Any retirement annuity or supplemental annuity shall be | ||||||
2 | subject to annual increases on the January 1 occurring either | ||||||
3 | on or after the attainment of age 67 or the first anniversary | ||||||
4 | of the annuity start date, whichever is later. Each annual | ||||||
5 | increase shall be calculated at 3% or one-half the annual | ||||||
6 | unadjusted percentage increase (but not less than zero) in the | ||||||
7 | consumer price index-u for the 12 months ending with the | ||||||
8 | September preceding each November 1, whichever is less, of the | ||||||
9 | originally granted retirement annuity. If the annual | ||||||
10 | unadjusted percentage change in the consumer price index-u for | ||||||
11 | the 12 months ending with the September preceding each November | ||||||
12 | 1 is zero or there is a decrease, then the annuity shall not be | ||||||
13 | increased. | ||||||
14 | (f) The initial survivor's or widow's annuity of an | ||||||
15 | otherwise eligible survivor or widow of a retired member or | ||||||
16 | participant who first became a member or participant on or | ||||||
17 | after January 1, 2011 shall be in the amount of 66 2/3% of the | ||||||
18 | retired member's or participant's retirement annuity at the | ||||||
19 | date of death. In the case of the death of a member or | ||||||
20 | participant who has not retired and who first became a member | ||||||
21 | or participant on or after January 1, 2011, eligibility for a | ||||||
22 | survivor's or widow's annuity shall be determined by the | ||||||
23 | applicable Article of this Code. The initial benefit shall be | ||||||
24 | 66 2/3% of the earned annuity without a reduction due to age. A | ||||||
25 | child's annuity of an otherwise eligible child shall be in the | ||||||
26 | amount prescribed under each Article if applicable. Any |
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1 | survivor's or widow's annuity shall be increased (1) on each | ||||||
2 | January 1 occurring on or after the commencement of the annuity | ||||||
3 | if
the deceased member died while receiving a retirement | ||||||
4 | annuity or (2) in
other cases, on each January 1 occurring | ||||||
5 | after the first anniversary
of the commencement of the annuity. | ||||||
6 | Each annual increase shall be calculated at 3% or one-half the | ||||||
7 | annual unadjusted percentage increase (but not less than zero) | ||||||
8 | in the consumer price index-u for the 12 months ending with the | ||||||
9 | September preceding each November 1, whichever is less, of the | ||||||
10 | originally granted survivor's annuity. If the annual | ||||||
11 | unadjusted percentage change in the consumer price index-u for | ||||||
12 | the 12 months ending with the September preceding each November | ||||||
13 | 1 is zero or there is a decrease, then the annuity shall not be | ||||||
14 | increased. | ||||||
15 | (g) The benefits in Section 14-110 apply only if the person | ||||||
16 | is a State policeman, a fire fighter in the fire protection | ||||||
17 | service of a department, or a security employee of the | ||||||
18 | Department of Corrections or the Department of Juvenile | ||||||
19 | Justice, as those terms are defined in subsection (b) of | ||||||
20 | Section 14-110. A person who meets the requirements of this | ||||||
21 | Section is entitled to an annuity calculated under the | ||||||
22 | provisions of Section 14-110, in lieu of the regular or minimum | ||||||
23 | retirement annuity, only if the person has withdrawn from | ||||||
24 | service with not less than 20
years of eligible creditable | ||||||
25 | service and has attained age 60, regardless of whether
the | ||||||
26 | attainment of age 60 occurs while the person is
still in |
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1 | service. | ||||||
2 | (h) If a person who first becomes a member or a participant | ||||||
3 | of a retirement system or pension fund subject to this Section | ||||||
4 | on or after January 1, 2011 is receiving a retirement annuity | ||||||
5 | or retirement pension under that system or fund and becomes a | ||||||
6 | member or participant under any other system or fund created by | ||||||
7 | this Code and is employed on a full-time basis, except for | ||||||
8 | those members or participants exempted from the provisions of | ||||||
9 | this Section under subsection (a) of this Section, then the | ||||||
10 | person's retirement annuity or retirement pension under that | ||||||
11 | system or fund shall be suspended during that employment. Upon | ||||||
12 | termination of that employment, the person's retirement | ||||||
13 | annuity or retirement pension payments shall resume and be | ||||||
14 | recalculated if recalculation is provided for under the | ||||||
15 | applicable Article of this Code. | ||||||
16 | If a person who first becomes a member of a retirement | ||||||
17 | system or pension fund subject to this Section on or after | ||||||
18 | January 1, 2012 and is receiving a retirement annuity or | ||||||
19 | retirement pension under that system or fund and accepts on a | ||||||
20 | contractual basis a position to provide services to a | ||||||
21 | governmental entity from which he or she has retired, then that | ||||||
22 | person's annuity or retirement pension earned as an active | ||||||
23 | employee of the employer shall be suspended during that | ||||||
24 | contractual service. A person receiving an annuity or | ||||||
25 | retirement pension under this Code shall notify the pension | ||||||
26 | fund or retirement system from which he or she is receiving an |
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1 | annuity or retirement pension, as well as his or her | ||||||
2 | contractual employer, of his or her retirement status before | ||||||
3 | accepting contractual employment. A person who fails to submit | ||||||
4 | such notification shall be guilty of a Class A misdemeanor and | ||||||
5 | required to pay a fine of $1,000. Upon termination of that | ||||||
6 | contractual employment, the person's retirement annuity or | ||||||
7 | retirement pension payments shall resume and, if appropriate, | ||||||
8 | be recalculated under the applicable provisions of this Code. | ||||||
9 | (i) Notwithstanding any other provision of this Section, a | ||||||
10 | person who first becomes a participant of the retirement system | ||||||
11 | established under Article 15 on or after January 1, 2011 shall | ||||||
12 | have the option to enroll in the self-managed plan created | ||||||
13 | under Section 15-158.2 of this Code. | ||||||
14 | Notwithstanding any other provision of this Section, a | ||||||
15 | person who first becomes a participant of the retirement fund | ||||||
16 | established under Article 7 on or after January 1, 2011 shall | ||||||
17 | have the option to enroll in the self-managed plan created | ||||||
18 | under Section 7-173.3 of this Code. | ||||||
19 | (j) In the case of a conflict between the provisions of | ||||||
20 | this Section and any other provision of this Code, the | ||||||
21 | provisions of this Section shall control.
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22 | (Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11; | ||||||
23 | 97-609, eff. 1-1-12.)
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24 | (40 ILCS 5/7-130.1 new)
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25 | Sec. 7-130.1. Regular benefit package. |
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1 | "Regular benefit package" means either the traditional | ||||||
2 | benefit package or the reformed benefit package, whichever | ||||||
3 | would apply to an employee if he or she does not participate in | ||||||
4 | the self-managed plan. | ||||||
5 | "Traditional benefit
package" means the benefits provided | ||||||
6 | under this Article, other than the self-managed plan, without | ||||||
7 | modification by Section 1-160 of this Code. It
includes, but is | ||||||
8 | not limited to: retirement annuities payable directly from the | ||||||
9 | Fund; surviving spouse annuities payable directly from the | ||||||
10 | Fund; child annuities payable directly from the Fund; | ||||||
11 | contribution refunds; and separation benefits. | ||||||
12 | "Reformed benefit
package" means the traditional benefit | ||||||
13 | package as modified by Section 1-160 of this Code for certain | ||||||
14 | persons who first become participants of the Fund on or after | ||||||
15 | January 1, 2011.
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16 | (40 ILCS 5/7-130.2 new)
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17 | Sec. 7-130.2. Self-managed plan. "Self-managed plan" means | ||||||
18 | the defined
contribution retirement program maintained by the | ||||||
19 | Fund, created under
Section 7-173.3. The self-managed plan does | ||||||
20 | not
include retirement, surviving spouse, or child annuities
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21 | payable directly from the Fund, contribution refunds, or | ||||||
22 | separation benefits.
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23 | (40 ILCS 5/7-140.5 new)
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24 | Sec. 7-140.5. Retirement program elections. |
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1 | (a) For the purposes of this Article: | ||||||
2 | "Currently eligible participant"
means a person who is a | ||||||
3 | participant under this Article before the day on which the Fund | ||||||
4 | first offers the
self-managed plan as an alternative to the | ||||||
5 | regular benefit package. | ||||||
6 | "Eligible participant" means either a currently eligible | ||||||
7 | participant or a newly eligible
participant of the Fund | ||||||
8 | "Newly
eligible participant" means a person who first | ||||||
9 | becomes a participant
under this Article on or after the date | ||||||
10 | on which the Fund first offers the self-managed plan as an | ||||||
11 | alternative to the regular benefit package.
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12 | (b) When the Fund offers to participants under this Article | ||||||
13 | a
self-managed plan as an alternative to the regular benefit | ||||||
14 | package, each eligible participant shall be
given the choice to | ||||||
15 | elect which retirement program he or she wishes to
participate | ||||||
16 | in with respect to all periods of covered employment occurring | ||||||
17 | on,
before, and after the effective date of the participant's | ||||||
18 | election. The retirement
program election made by an eligible | ||||||
19 | participant must be made in writing, in the
manner prescribed | ||||||
20 | by the Fund, and within the time period described in
this | ||||||
21 | Section. | ||||||
22 | If an eligible participant elects the self-managed plan, | ||||||
23 | then that election is irrevocable. If an eligible participant | ||||||
24 | who elected to participate or participated by default in the | ||||||
25 | regular benefit package terminates employment under this | ||||||
26 | Article, then the participant, upon his or her subsequent
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1 | re-employment under this Article, may make an election under | ||||||
2 | this Section. | ||||||
3 | An eligible participant who fails to make an election under | ||||||
4 | this Section shall, by default,
participate in the regular | ||||||
5 | benefit package.
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6 | (c) An eligible participant may elect to
participate in the | ||||||
7 | regular benefit package
or the self-managed plan. An eligible | ||||||
8 | participant must make this election within one year
after the | ||||||
9 | effective date of the adoption of the self-managed plan under | ||||||
10 | Section 7-173.3 or 60 days after first becoming a participant | ||||||
11 | under this Article, whichever is later, or, in the case of a | ||||||
12 | currently eligible participant who terminates employment under | ||||||
13 | this Article, within one year after his or her re-employment | ||||||
14 | under this Article.
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15 | (d) If the eligible participant elects to participate in | ||||||
16 | the self-managed plan, the Fund shall fund his or her account | ||||||
17 | as stated in subsection (f) of Section 7-173.3.
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18 | (e) An eligible participant shall be provided with written | ||||||
19 | information prepared
or prescribed by the Fund that describes | ||||||
20 | the participant's retirement program
choices. The eligible | ||||||
21 | participant shall be offered an opportunity to
receive | ||||||
22 | counseling from the Fund before making his or her election. | ||||||
23 | This
counseling may consist of videotaped materials, group | ||||||
24 | presentations, individual
consultation with an employee or | ||||||
25 | authorized representative of the Fund in
person or by telephone | ||||||
26 | or other electronic means, or any combination of these
methods.
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1 | (40 ILCS 5/7-173) (from Ch. 108 1/2, par. 7-173)
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2 | Sec. 7-173. Contributions by employees.
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3 | (a) Each participating employee shall make contributions | ||||||
4 | to the fund as
follows:
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5 | 1. For retirement annuity purposes, normal | ||||||
6 | contributions of 3 3/4%
of earnings.
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7 | 2. Additional contributions of such percentages of | ||||||
8 | each payment of
earnings, as shall be elected by the | ||||||
9 | employee for retirement annuity
purposes, but not in excess | ||||||
10 | of 10%. The selected rate shall be
applicable to all | ||||||
11 | earnings paid following receipt by the Board of written | ||||||
12 | notice of election to
make such contributions. Additional | ||||||
13 | contributions at the selected rate
shall be made | ||||||
14 | concurrently with normal contributions.
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15 | 3. Survivor contributions, by each participating | ||||||
16 | employee, of 3/4%
of each payment of earnings ; except that | ||||||
17 | in the case of an employee who participates in the | ||||||
18 | self-managed plan under Section 7-173.3, these survivor | ||||||
19 | contributions shall instead be used to finance the benefits | ||||||
20 | available under Section 7-173.3 .
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21 | (b) Each employee shall make contributions for Federal
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22 | Social Security taxes, for periods during which he is a covered
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23 | employee, as required by the Social Security Enabling Act and | ||||||
24 | State and federal law. For
participating employees, such | ||||||
25 | contributions shall be in addition to
those required under |
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1 | paragraph (a) of this Section.
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2 | (c) Contributions shall be deducted from each | ||||||
3 | corresponding payment
of earnings paid to each employee and | ||||||
4 | shall be remitted to the board by
the participating | ||||||
5 | municipality or participating instrumentality making
such | ||||||
6 | payment. The remittance, together with a report of the earnings
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7 | and contributions shall be made as directed by the board. For | ||||||
8 | township
treasurers and employees of township treasurers | ||||||
9 | qualifying as employees
hereunder, the contributions herein | ||||||
10 | required as deductions from salary
shall be withheld by the | ||||||
11 | school township trustees from funds available
for the payment | ||||||
12 | of the compensation of such treasurers and employees as
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13 | provided in the School Code and remitted to the board.
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14 | (d) An employee who has made additional contributions under
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15 | paragraph (a)2 of this Section may upon retirement or at any | ||||||
16 | time prior
thereto, elect to withdraw the total of such | ||||||
17 | additional contributions
including interest credited thereon | ||||||
18 | to the end of the preceding calendar
year.
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19 | (e) Failure to make the deductions for employee | ||||||
20 | contributions
provided in paragraph (c) of this Section shall | ||||||
21 | not relieve the employee
from liability for such contributions. | ||||||
22 | The amount of such liability may
be deducted, with interest | ||||||
23 | charged under Section 7-209, from any
annuities or benefits | ||||||
24 | payable hereunder to the employee or any other
person receiving | ||||||
25 | an annuity or benefit by reason of such employee's
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26 | participation.
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1 | (f) A participating employee who has at least 40 years of | ||||||
2 | creditable
service in the Fund may elect to cease making the | ||||||
3 | contributions required
under this Section. The status of the | ||||||
4 | employee under this Article shall be
unaffected by this | ||||||
5 | election, except that the employee shall not receive any
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6 | additional creditable service for the periods of employment | ||||||
7 | following the
election. An election under this subsection | ||||||
8 | relieves the employer from
making additional employer | ||||||
9 | contributions in relation to that employee.
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10 | (Source: P.A. 96-1084, eff. 7-16-10; 96-1258, eff. 7-23-10; | ||||||
11 | 97-333, eff. 8-12-11.)
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12 | (40 ILCS 5/7-173.3 new)
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13 | Sec. 7-173.3. Self-managed plan. | ||||||
14 | (a) The General Assembly finds that the Illinois Municipal | ||||||
15 | Retirement Fund should provide a defined contribution
| ||||||
16 | (self-managed) plan for eligible participants.
Accordingly, | ||||||
17 | the Illinois Municipal Retirement Fund is hereby directed to
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18 | establish and administer a self-managed plan, which shall offer | ||||||
19 | participants the opportunity to accumulate assets for | ||||||
20 | retirement through a
combination of participant and employer | ||||||
21 | contributions that may be invested in
mutual funds, collective | ||||||
22 | investment funds, or other investment products and
used to | ||||||
23 | purchase annuity contracts that are fixed, variable, or a | ||||||
24 | combination of fixed and variable. The plan must be qualified | ||||||
25 | under the Internal Revenue Code of 1986. |
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1 | (b) The Board shall
make the self-managed plan established | ||||||
2 | under this Section available to eligible participants under | ||||||
3 | this Article within 6 months after the effective date of this | ||||||
4 | amendatory Act of the 98th General Assembly. The adoption of | ||||||
5 | the self-managed
plan makes available to the eligible | ||||||
6 | participants under this Article the elections
described in | ||||||
7 | Section 7-140.5.
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8 | The Illinois Municipal Retirement Fund shall be the plan | ||||||
9 | sponsor for the
self-managed plan and shall prepare a plan | ||||||
10 | document and adopt any rules
and procedures that are considered | ||||||
11 | necessary or desirable for the administration
of the | ||||||
12 | self-managed plan. Consistent with its fiduciary duty to the
| ||||||
13 | participants and beneficiaries of the self-managed plan, the | ||||||
14 | Board of Trustees
of the Fund may delegate aspects of plan | ||||||
15 | administration as it sees fit to
companies authorized to do | ||||||
16 | business in this State.
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17 | (c) The Fund shall solicit proposals to provide
| ||||||
18 | administrative services and funding vehicles for the | ||||||
19 | self-managed plan from
insurance and annuity companies and | ||||||
20 | mutual fund companies, banks, trust
companies, or other | ||||||
21 | financial institutions authorized to do business in this
State. | ||||||
22 | In reviewing the proposals received and approving and | ||||||
23 | contracting with
no fewer than 2 and no more than 7 companies, | ||||||
24 | the Board of Trustees of the Fund shall
consider, among other | ||||||
25 | things, the following criteria:
| ||||||
26 | (1) the nature and extent of the benefits that would be |
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1 | provided
to the participants;
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2 | (2) the reasonableness of the benefits in relation to | ||||||
3 | the premium
charged;
| ||||||
4 | (3) the suitability of the benefits to the needs and
| ||||||
5 | interests of the participants and the employers; and | ||||||
6 | (4) the ability of the company to provide benefits | ||||||
7 | under the contract and
the financial stability of the | ||||||
8 | company.
| ||||||
9 | The Fund shall periodically review
each approved company. A | ||||||
10 | company may continue to provide administrative
services and | ||||||
11 | funding vehicles for the self-managed plan only so long as
it | ||||||
12 | continues to be an approved company under contract with the | ||||||
13 | Board.
| ||||||
14 | In addition to the companies approved by the Fund under | ||||||
15 | this subsection (c), the Fund may offer its participants an | ||||||
16 | investment fund managed by the Illinois State Board of | ||||||
17 | Investment.
| ||||||
18 | (d) Participants in the program
must be allowed to direct | ||||||
19 | the transfer of their account balances among the
various | ||||||
20 | investment options offered, subject to applicable contractual
| ||||||
21 | provisions.
The participant shall not be deemed a fiduciary by | ||||||
22 | reason of providing such
investment direction. A person who is | ||||||
23 | a fiduciary shall not be liable for any
loss resulting from | ||||||
24 | that investment direction and shall not be deemed to have
| ||||||
25 | breached any fiduciary duty by acting in accordance with that | ||||||
26 | direction.
Neither the Fund nor the employer shall guarantee |
| |||||||
| |||||||
1 | any of the investments in the
participant's account balances.
| ||||||
2 | (e) In order to participate in the
self-managed plan, an | ||||||
3 | eligible participant, as defined in Section 7-140.5, must make | ||||||
4 | a written election in accordance with the
provisions of that | ||||||
5 | Section and the procedures established by the Fund.
| ||||||
6 | Participation in the self-managed plan shall begin
on the first | ||||||
7 | day of the month immediately following the month in which the
| ||||||
8 | participant's election is filed with the Fund, but not sooner | ||||||
9 | than the effective date of
the self-managed
plan. A person's | ||||||
10 | participation in the regular benefit package under this Article | ||||||
11 | shall terminate on the date that
participation in the | ||||||
12 | self-managed plan begins.
| ||||||
13 | A person who has elected to participate in the self-managed | ||||||
14 | plan under
this Section must continue participation while he or | ||||||
15 | she remains a participant under this Article, and may not | ||||||
16 | participate in the regular benefit package.
| ||||||
17 | Participation in the self-managed plan under this Section | ||||||
18 | shall constitute
participation in the Illinois Municipal | ||||||
19 | Retirement Fund.
| ||||||
20 | A participant under this Section shall be entitled to the | ||||||
21 | benefits of
Article 20 of this Code.
| ||||||
22 | (f) If, at the time a participant
elects to participate in | ||||||
23 | the self-managed plan, the participant has rights and credits
| ||||||
24 | in the Fund due to previous participation in the regular | ||||||
25 | benefit package,
the Fund shall establish for the participant | ||||||
26 | an opening account balance in the
self-managed plan, equal to |
| |||||||
| |||||||
1 | (1) the amount of the separation benefit that the participant
| ||||||
2 | would be eligible to receive if the participant terminated
| ||||||
3 | employment on that date and elected a separation benefit and | ||||||
4 | (2) an amount, representing employer contributions, equal to | ||||||
5 | the amount of employee contributions, plus interest. The | ||||||
6 | interest used in this subsection (f) shall be calculated using | ||||||
7 | the actual annual rates of return that the Fund has earned | ||||||
8 | during the time period corresponding to the actual investment | ||||||
9 | of the contributions being transferred. The Fund shall transfer | ||||||
10 | assets from the regular benefit
package to the self-managed | ||||||
11 | plan as a tax-free transfer in
accordance with Internal Revenue | ||||||
12 | Service guidelines, for purposes of funding
the participant's | ||||||
13 | opening account balance.
| ||||||
14 | (g) Notwithstanding any other provision
of this Article, a | ||||||
15 | participant may not purchase or receive service
credit | ||||||
16 | applicable to the regular benefit package
under this Article | ||||||
17 | for any period during which the employee was a participant
in | ||||||
18 | the self-managed plan established under this Section.
| ||||||
19 | (h) The self-managed plan shall be funded by contributions
| ||||||
20 | from participants in the self-managed plan and employer
| ||||||
21 | contributions as provided in this Section.
| ||||||
22 | The contribution rate for participants in the self-managed | ||||||
23 | plan
under this Section shall be equal to the member | ||||||
24 | contribution rate for other
participants in the Fund, as | ||||||
25 | provided in Section 7-173. This required
contribution shall be | ||||||
26 | made as an employer pick-up under Section 414(h) of the
|
| |||||||
| |||||||
1 | Internal Revenue Code of 1986 or any successor Section thereof. | ||||||
2 | Any participant in the Fund's regular benefit package before | ||||||
3 | his or her
election to participate in the self-managed plan | ||||||
4 | shall continue to have the
employer pick up the contributions | ||||||
5 | required under Section 7-173. However, the
amounts picked up | ||||||
6 | after the election of the self-managed plan shall be remitted
| ||||||
7 | to and treated as assets of the self-managed plan. In no event | ||||||
8 | shall a participant have the option of receiving these amounts | ||||||
9 | in cash. Participants may make
additional contributions to the
| ||||||
10 | self-managed plan in accordance with procedures prescribed by | ||||||
11 | the Fund, to
the extent permitted under rules adopted by the | ||||||
12 | Fund.
| ||||||
13 | The program shall provide for employer contributions to be | ||||||
14 | credited to each self-managed plan participant
in an amount | ||||||
15 | equal to the employee contributions, notwithstanding Section | ||||||
16 | 7-172.
| ||||||
17 | Each employer shall make contributions by appropriations | ||||||
18 | to the
Fund for participants in
the self-managed plan under | ||||||
19 | this Section.
The amount required shall
be certified by the | ||||||
20 | Board of Trustees of the Fund and paid by the employer in
| ||||||
21 | accordance with Section 7-172. The Fund shall not be obligated | ||||||
22 | to remit the
required employer contributions to any of the | ||||||
23 | insurance and annuity
companies, mutual fund
companies, banks, | ||||||
24 | trust companies, financial institutions, or other sponsors
of | ||||||
25 | any of the funding vehicles offered under the self-managed plan
| ||||||
26 | until it has received the required employer contributions from |
| |||||||
| |||||||
1 | the employer.
| ||||||
2 | (i) A participant in the
self-managed plan becomes vested | ||||||
3 | in the employer contributions credited to his
or her accounts | ||||||
4 | in the self-managed plan on the earliest to occur of the
| ||||||
5 | following: (1) attainment of 5 years of service credit; (2) the | ||||||
6 | death of the participating member while employed under this | ||||||
7 | Article, if the member has completed at
least 1.5 years of | ||||||
8 | service; or (3) the member's election to retire and
apply the | ||||||
9 | reciprocal provisions of Article 20 of this Code.
| ||||||
10 | A participant in the self-managed plan who receives a | ||||||
11 | distribution of his or
her vested amounts from the self-managed | ||||||
12 | plan
while not yet eligible for retirement under this Article
| ||||||
13 | (and Article 20, if applicable) shall forfeit all service | ||||||
14 | credit
and accrued rights in the Fund; if he or she | ||||||
15 | subsequently becomes a participant under this Article again, he | ||||||
16 | or she
shall be considered a new
participant. If a former | ||||||
17 | participant again becomes a participant (or
becomes employed by | ||||||
18 | a participating system under Article 20 of this Code) and
| ||||||
19 | continues as such for at least 2 years, all rights, service | ||||||
20 | credits, and
previous status as a participant shall be restored | ||||||
21 | upon repayment of the amount
of the distribution, with interest | ||||||
22 | at the actuarially assumed rate from the date of distribution | ||||||
23 | to the date of payment.
| ||||||
24 | (j) If a participant in the self-managed plan who is vested | ||||||
25 | in employer
contributions terminates employment, the | ||||||
26 | participant shall be entitled to a
benefit that is based on the
|
| |||||||
| |||||||
1 | account values attributable to both employer and
employee | ||||||
2 | contributions and any
investment return thereon.
| ||||||
3 | If a participant in the self-managed plan who is not vested | ||||||
4 | in employer contributions terminates
employment, the | ||||||
5 | participant shall be entitled to a benefit based solely on the
| ||||||
6 | account values attributable to the participant's contributions | ||||||
7 | and any investment
return thereon, and the employer | ||||||
8 | contributions and any investment return
thereon shall be | ||||||
9 | forfeited. Any employer contributions that are forfeited
shall | ||||||
10 | be held in escrow by the
company investing those contributions | ||||||
11 | and shall be used, as directed by the
Fund, for future | ||||||
12 | allocations of employer contributions or for the restoration
of | ||||||
13 | amounts previously forfeited by former participants who again | ||||||
14 | become
participating members.
| ||||||
15 | (40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)
| ||||||
16 | Sec. 20-121. Calculation of proportional retirement | ||||||
17 | annuities. Upon
retirement of the employee, a proportional | ||||||
18 | retirement annuity shall be computed
by each participating | ||||||
19 | system in which pension credit has been established on
the | ||||||
20 | basis of pension credits under each system. The computation | ||||||
21 | shall be in
accordance with the formula or method prescribed by | ||||||
22 | each participating system
which is in effect at the date of the | ||||||
23 | employee's latest withdrawal from service
covered by any of the | ||||||
24 | systems in which he has pension credits which he elects
to have | ||||||
25 | considered under this Article. However, the amount of any |
| |||||||
| |||||||
1 | retirement
annuity payable under the self-managed plan | ||||||
2 | established under Section 7-173.3 or 15-158.2
of this Code | ||||||
3 | depends solely on the value of the participant's vested account
| ||||||
4 | balances and is not subject to any proportional adjustment | ||||||
5 | under this
Section.
| ||||||
6 | Combined pension credit under all retirement systems | ||||||
7 | subject to this
Article shall be considered in determining | ||||||
8 | whether the minimum qualification
has been met and the formula | ||||||
9 | or method of computation which shall be applied.
If a system | ||||||
10 | has a step-rate formula for calculation of the retirement | ||||||
11 | annuity,
pension credits covering previous service which have | ||||||
12 | been established under
another system shall be considered in | ||||||
13 | determining which range or ranges of
the step-rate formula are | ||||||
14 | to be applicable to the employee.
| ||||||
15 | Interest on pension credit shall continue to accumulate in | ||||||
16 | accordance with
the provisions of the law governing the | ||||||
17 | retirement system in which the same
has been established during | ||||||
18 | the time an employee is in the service of another
employer, on | ||||||
19 | the assumption such employee, for interest purposes for pension
| ||||||
20 | credit, is continuing in the service covered by such retirement | ||||||
21 | system.
| ||||||
22 | (Source: P.A. 91-887, eff. 7-6-00.)
| ||||||
23 | (40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)
| ||||||
24 | Sec. 20-123. Survivor's annuity. The provisions governing | ||||||
25 | a retirement
annuity shall be applicable to a survivor's |
| |||||||
| |||||||
1 | annuity. Appropriate credits shall
be established for | ||||||
2 | survivor's annuity purposes in those participating systems
| ||||||
3 | which provide survivor's annuities, according to the same | ||||||
4 | conditions and
subject to the same limitations and restrictions | ||||||
5 | herein prescribed for a
retirement annuity. If a participating | ||||||
6 | system has no survivor's annuity
benefit, or if the survivor's | ||||||
7 | annuity benefit under that system is waived,
pension credit | ||||||
8 | established in that system shall not be considered
in | ||||||
9 | determining eligibility for or the amount of the survivor's | ||||||
10 | annuity which
may be payable by any other participating system.
| ||||||
11 | For persons who participate in the self-managed plan | ||||||
12 | established under
Section 7-173.3, pension credit established | ||||||
13 | under Article 7 may be considered in
determining eligibility | ||||||
14 | for or the amount of the survivor's annuity that is
payable by | ||||||
15 | any other participating system, but pension credit established | ||||||
16 | in
any other system shall not result in any right to a | ||||||
17 | survivor's annuity under
the Article 7 system. | ||||||
18 | For persons who participate in the self-managed plan | ||||||
19 | established under
Section 15-158.2 or the portable benefit | ||||||
20 | package established under Section
15-136.4, pension credit | ||||||
21 | established under Article 15 may be considered in
determining | ||||||
22 | eligibility for or the amount of the survivor's annuity that is
| ||||||
23 | payable by any other participating system, but pension credit | ||||||
24 | established in
any other system shall not result in any right | ||||||
25 | to a survivor's annuity under
the Article 15 system.
| ||||||
26 | (Source: P.A. 91-887, eff. 7-6-00.)
|
| |||||||
| |||||||
1 | (40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)
| ||||||
2 | Sec. 20-124. Maximum benefits. | ||||||
3 | (a) In no event shall the combined retirement
or survivors | ||||||
4 | annuities exceed the highest annuity which would have been | ||||||
5 | payable
by any participating system in which the employee has | ||||||
6 | pension credits, if all
of his pension credits had been | ||||||
7 | validated in that system.
| ||||||
8 | If the combined annuities should exceed the highest maximum | ||||||
9 | as determined
in accordance with this Section, the respective | ||||||
10 | annuities shall be reduced
proportionately according to the | ||||||
11 | ratio which the amount of each proportional
annuity bears to | ||||||
12 | the aggregate of all such annuities.
| ||||||
13 | (b) In the case of a participant in the self-managed plan | ||||||
14 | established under
Section 7-173.3 of this Code to whom the | ||||||
15 | provisions of this Article apply: | ||||||
16 | (i) For purposes of calculating the combined | ||||||
17 | retirement annuity and
the proportionate reduction, if | ||||||
18 | any, in a retirement annuity other than one
payable under a | ||||||
19 | self-managed plan, the amount of the Article 7 retirement
| ||||||
20 | annuity shall be deemed to be the highest annuity to which | ||||||
21 | the annuitant would
have been entitled if he or she had | ||||||
22 | participated in the regular benefit package as defined in | ||||||
23 | Article 7 instead of in the self-managed plan. | ||||||
24 | (ii) For purposes of calculating the combined | ||||||
25 | survivor's annuity and
the proportionate reduction, if |
| |||||||
| |||||||
1 | any, in a survivor's annuity other than one
payable under a | ||||||
2 | self-managed plan, the amount of the Article 7 survivor's
| ||||||
3 | annuity shall be deemed to be the highest survivor's | ||||||
4 | annuity to which the
survivor would have been entitled if | ||||||
5 | the deceased person had participated in the regular benefit | ||||||
6 | package as defined in Article 7 instead of in the | ||||||
7 | self-managed plan. | ||||||
8 | (iii) Benefits payable under the self-managed plan are | ||||||
9 | not subject to
proportionate reduction under this Section. | ||||||
10 | (c) In the case of a participant in the self-managed plan | ||||||
11 | established under
Section 15-158.2 of this Code to whom the | ||||||
12 | provisions of this Article apply:
| ||||||
13 | (i) For purposes of calculating the combined | ||||||
14 | retirement annuity and
the proportionate reduction, if | ||||||
15 | any, in a retirement annuity other than one
payable under | ||||||
16 | the self-managed plan, the amount of the Article 15 | ||||||
17 | retirement
annuity shall be deemed to be the highest | ||||||
18 | annuity to which the annuitant would
have been entitled if | ||||||
19 | he or she had participated in the traditional benefit
| ||||||
20 | package as defined in Section 15-103.1 rather than the | ||||||
21 | self-managed plan.
| ||||||
22 | (ii) For purposes of calculating the combined | ||||||
23 | survivor's annuity and
the proportionate reduction, if | ||||||
24 | any, in a survivor's annuity other than one
payable under | ||||||
25 | the self-managed plan, the amount of the Article 15 | ||||||
26 | survivor's
annuity shall be deemed to be the highest |
| |||||||
| |||||||
1 | survivor's annuity to which the
survivor would have been | ||||||
2 | entitled if the deceased employee had participated in
the | ||||||
3 | traditional benefit package as defined in Section 15-103.1 | ||||||
4 | rather than the
self-managed plan.
| ||||||
5 | (iii) Benefits payable under the self-managed plan are | ||||||
6 | not subject to
proportionate reduction under this Section.
| ||||||
7 | (Source: P.A. 91-887, eff. 7-6-00.)
| ||||||
8 | Section 90. The State Mandates Act is amended by adding | ||||||
9 | Section 8.37 as follows:
| ||||||
10 | (30 ILCS 805/8.37 new) | ||||||
11 | Sec. 8.37. Exempt mandate. Notwithstanding Sections 6 and 8 | ||||||
12 | of this Act, no reimbursement by the State is required for the | ||||||
13 | implementation of any mandate created by this amendatory Act of | ||||||
14 | the 98th General Assembly.
| ||||||
15 | Section 99. Effective date. This Act takes effect upon | ||||||
16 | becoming law.
|