Bill Text: IL SB3487 | 2017-2018 | 100th General Assembly | Introduced

---

Bill Title: Amends the Illinois Pension Code. Merges all Article 3 police pension funds into a single Downstate Police Pension Fund on January 1, 2020. Creates a Transition Board, which is responsible for planning, overseeing, and administering the consolidation. Authorizes the Transition Board to undertake numerous activities necessary for the consolidation, including making arrangements for staff, investments, transfer of assets and liabilities, acquisition of property, establishment of municipality accounts, and adopting rules and procedures. Authorizes the Transition Board to enter into contracts and to obligate and expend the assets of the Fund. Creates a new Board of Trustees for the Fund, and provides for administration of the Fund by the Transition Board until the new Board assumes its duties on January 1, 2021. Provides for investment of the Fund's assets by a custodian chosen by the Board of Trustees. Makes conforming and other changes. Provides that beginning January 1, 2020, the employee contribution for Tier 1 participants is 35% (rather than 9.91%) of a Tier 1 participant's salary. Provides that notwithstanding any other provision of law, a Tier 1 participant may voluntarily make an irrevocable election to instead become a Tier 2 participant with respect to service performed or established on and after the effective date of the election. Defines "Tier 1 participant" and "Tier 2 participant" and makes corresponding changes. Amends the State Mandates Act to require implementation without reimbursement. Makes other changes. Effective immediately, except that certain changes to the Illinois Pension Code take effect January 1, 2020.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-09 - Session Sine Die [SB3487 Detail]

Download: Illinois-2017-SB3487-Introduced.html

---

100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 SB3487 Introduced 2/16/2018, by Sen. Pamela J. Althoff SYNOPSIS AS INTRODUCED:
See Index
Amends the Illinois Pension Code. Merges all Article 3 police pension funds into a single Downstate Police Pension Fund on January 1, 2020. Creates a Transition Board, which is responsible for planning, overseeing, and administering the consolidation. Authorizes the Transition Board to undertake numerous activities necessary for the consolidation, including making arrangements for staff, investments, transfer of assets and liabilities, acquisition of property, establishment of municipality accounts, and adopting rules and procedures. Authorizes the Transition Board to enter into contracts and to obligate and expend the assets of the Fund. Creates a new Board of Trustees for the Fund, and provides for administration of the Fund by the Transition Board until the new Board assumes its duties on January 1, 2021. Provides for investment of the Fund's assets by a custodian chosen by the Board of Trustees. Makes conforming and other changes. Provides that beginning January 1, 2020, the employee contribution for Tier 1 participants is 35% (rather than 9.91%) of a Tier 1 participant's salary. Provides that notwithstanding any other provision of law, a Tier 1 participant may voluntarily make an irrevocable election to instead become a Tier 2 participant with respect to service performed or established on and after the effective date of the election. Defines "Tier 1 participant" and "Tier 2 participant" and makes corresponding changes. Amends the State Mandates Act to require implementation without reimbursement. Makes other changes. Effective immediately, except that certain changes to the Illinois Pension Code take effect January 1, 2020.
LRB100 20044 MJP 35326 b
FISCAL NOTE ACT MAY APPLY PENSION IMPACT NOTE ACT MAY APPLY STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT
A BILL FOR
SB3487 LRB100 20044 MJP 35326 b
AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Pension Code is amended by changing
Section 3-101, 3-111, 3-111.1, and 3-112 and by adding Sections
3-101.1, 3-101.2, 3-108.2a, 3-109.5, and 7-199.5 as follows:
(40 ILCS 5/3-101) (from Ch. 108 1/2, par. 3-101)
Sec. 3-101. Creation of Fund fund.
(a) Until January 1, 2020, in In each municipality, as
defined in Section 3-103, the city council or the board of
trustees, as the case may be, shall establish and administer a
police pension fund, as prescribed in this Article, for the
benefit of its police officers and of their surviving spouses,
children, and certain other dependents. The duty of the
corporate authorities of a municipality to establish and
administer a police pension fund shall be suspended during any
period during which the fund is dissolved under Section 3-144.6
of this Code.
(b) On January 1, 2020, all of the individual police
pension funds then existing under this Article are merged and
consolidated into a single pension fund, to be known as the
Downstate Police Pension Fund, which shall be established and
administered as prescribed in this Article.

SB3487 - 2 - LRB100 20044 MJP 35326 b
(c) Beginning January 1, 2020, each municipality, as
defined in Section 3-103, shall participate in the Downstate
Police Pension Fund for the benefit of its police officers and
of their surviving spouses, children, and certain other
dependents.
(d) It is the purpose of this consolidation to provide the
advantages of (i) centralized custody and investment of pension
fund assets, (ii) consistent interpretation and application of
this Article in accordance with a single set of rules and
procedures adopted by the consolidated pension fund, and (iii)
securing the future funding of pension benefits through an
independent determination of each municipality's required
annual contribution rate.
(Source: P.A. 97-99, eff. 1-1-12.)
(40 ILCS 5/3-101.1 new)
Sec. 3-101.1. Transition Board.
(a) There is hereby created a Downstate Police Pension Fund
Transition Board, which may be referred to as the "Transition
Board". The Transition Board shall consist of 11 members as
follows:
(1) The Director of the Illinois Department of
Insurance, or his or her designee.
(2) Two persons with experience in managing or
administering an Illinois public employee pension fund or
retirement system, appointed by the Governor.

SB3487 - 3 - LRB100 20044 MJP 35326 b
(3) One person with experience in providing actuarial
services to an Illinois public employee pension fund or
retirement system, appointed by the Governor.
(4) One person with experience in auditing Illinois
public employee pension funds or retirement systems,
appointed by the Auditor General.
(5) Two members of the labor organization representing
the largest number of police officers participating in
Article 3 pension funds, with one member being an active
participant and the other being a retired participant,
appointed by the Governor from recommendations of the
President of that organization.
(6) Two persons who are mayors or chief elected
officers of municipalities that maintain an Article 3
pension fund, appointed by the Governor from
recommendations of the Executive Director of the
organization representing the largest number of
municipalities in the State.
(7) One person familiar with the operation and
administration of the Illinois Municipal Retirement Fund,
appointed by the Executive Director of that Fund.
(8) One person familiar with the investment authority
and practices of the Illinois State Board of Investment,
appointed by the Executive Director of the Illinois State
Board of Investment.
All such appointments and designations shall be made by

SB3487 - 4 - LRB100 20044 MJP 35326 b
filing a written notice thereof with the Secretary of State no
later than 30 days after the effective date of this amendatory
Act of the 100th General Assembly.
(b) The Transition Board shall be responsible for planning,
overseeing, and administering the consolidation and merger of
all existing Article 3 pension funds into a single Downstate
Police Pension Fund.
Members of the Transition Board shall act at all times in a
manner appropriate for fiduciaries of the Fund and fiduciaries
of the pension funds being consolidated.
The Transition Board's powers and duties include, but are
not limited to, the following:
(1) Providing for the establishment of offices,
infrastructure, and personnel necessary for the operation
of the Downstate Police Pension Fund.
(2) Providing for the preservation and consolidation
of membership, beneficiary, financial, and other records
relating to the Article 3 pension funds to be merged.
(3) Obtaining all necessary Internal Revenue Service
and any other necessary approval or review.
(4) Providing for the final auditing of existing
Article 3 pension funds, including a final accounting of
their respective assets and liabilities, paid for by the
applicable pension fund.
(5) Providing for the custody and transfer of the
assets and liabilities of the existing Article 3 pension

SB3487 - 5 - LRB100 20044 MJP 35326 b
funds to the Downstate Police Pension Fund, on a schedule
to be determined by the Transition Board.
(6) Providing for the long-term investment of the
assets of the Downstate Police Pension Fund that are not
required for the short-term payment of benefits.
(7) Providing an appropriate system of accounting for
the assets and liabilities attributable to the existing
Article 3 pension funds and establishing separate reserves
and accounts for each municipality participating in the
Downstate Police Pension Fund in accordance with this
Article. In so doing, the Transition Board shall be guided
by the methods and experience of the Illinois Municipal
Retirement Fund.
(8) Providing an appropriate system of determining,
administering, receiving, and enforcing the required
municipal contributions to the Fund. In so doing, the
Transition Board shall be guided by the methods and
experience of the Illinois Municipal Retirement Fund. The
municipal contribution rate shall be determined separately
for each municipality on an annual basis in accordance with
the requirements of this Article, based on the
municipality's separate reserves and accounts within the
Fund. The Transition Board shall endeavor to determine the
required municipal contributions to the Fund and to notify
and provide reasonable guidance to municipalities in a
manner that ensures uninterrupted contributions during the

SB3487 - 6 - LRB100 20044 MJP 35326 b
transition period.
(9) Ensuring the uninterrupted payment and
administration of benefits.
(10) Adopting any rules or procedures necessary for the
efficient consolidation of the existing Article 3 pension
funds and the efficient operation and administration of the
Downstate Police Pension Fund.
(11) Considering the consequences of the consolidation
on any QILDROs filed with the pension funds being
consolidated and giving appropriate notice and advice to
persons who may be affected by those QILDROs concerning the
possible effects of consolidation.
(12) Administering the Downstate Police Pension Fund
and exercising and performing all of the powers and duties
of its Board of Trustees from the time of the Fund's
inception until the Board of Trustees under subsection (d)
of Section 3-128 has been elected and assumes its duties.
(13) Making recommendations to the Governor and the
General Assembly with respect to legislation necessary or
useful for the implementation of this consolidation or for
the successful operation of the Downstate Police Pension
Fund.
(c) The Public Pension Division of the Department of
Insurance shall provide all reasonably necessary and available
temporary office space, technical and clerical support, and
monetary or other assistance at the request of the Transition

SB3487 - 7 - LRB100 20044 MJP 35326 b
Board.
For the purpose of implementing the consolidation, the
Transition Board may direct the Public Pension Division to
accelerate, expand, or enhance its examination under Section
1A-104 of all or specific Article 3 pension funds, or to
conduct a particular study or investigation thereof. The
expenses of such examinations and investigations, to the extent
not paid by the Division, shall be charged to the applicable
pension fund.
(d) The Illinois Municipal Retirement Fund is authorized to
provide any reasonable managerial, professional, clerical, and
other assistance to the Transition Board that is consistent
with its fiduciary and other obligations.
The Transition Board is authorized to enter into reasonable
contracts or other agreements with the Illinois Municipal
Retirement Fund, without public bidding or procurement
procedures but not exceeding 3 years in duration, to provide
administrative, investment, professional, technical, or other
services or facilities for the Downstate Police Pension Fund.
(e) In preparation for the inception of the Downstate
Police Pension Fund on January 1, 2020 and during the period of
its administration of that Fund, the Transition Board is
authorized to expend or obligate the assets of the Fund for any
of the reasonable expenses of the Fund, including the payment
of benefits and reasonable administrative expenses. As used in
this Section, "reasonable administrative expenses" includes,

SB3487 - 8 - LRB100 20044 MJP 35326 b
but is not limited to, the cost of hiring personnel and
obtaining professional services, the cost of leases or
purchases of property or services for the Fund, the cost of
insurance, and the cost of indemnifying members of the
Transition Board and its employees, advisors, and agents.
(f) In preparation for the inception of the Downstate
Police Pension Fund on January 1, 2020, the Transition Board is
specifically authorized to retain for the Fund, during the
period before its inception, an executive director and an
actuary with the powers and duties described in Sections 3-141c
and 3-141d.
(g) Members of the Transition Board, other than State
officials and employees, may be compensated for their service,
and all members may be reimbursed for their reasonable expenses
out of any moneys available for that purpose.
(h) Sixty days after the Board of Trustees under subsection
(d) of Section 3-128 assumes its duties, the Transition Board
is abolished.
(40 ILCS 5/3-101.2 new)
Sec. 3-101.2. Consolidation of pension funds.
(a) On January 1, 2020, all of the individual police
pension funds then established under this Article are merged
and consolidated into a single pension fund, to be known as the
Downstate Police Pension Fund, which shall be established and
administered as prescribed in this Article.

SB3487 - 9 - LRB100 20044 MJP 35326 b
In preparation for that consolidation, all pension funds
established under this Article, and the municipalities that
established them, shall cooperate with the Transition Board.
(b) The Downstate Police Pension Fund shall be the legal
successor to each of the pension funds that are consolidated
within it, and it may exercise any of the rights and powers and
perform any of the duties of those pension funds.
At the time of consolidation, or as otherwise directed by
the Transition Board, all assets and liabilities belonging to
or arising from the trust of an existing pension fund shall
become the assets and liabilities of the Downstate Police
Pension Fund.
As and when directed by the Transition Board, the trustees
of the pension funds established under Article 3 of this Code
shall transfer to the Downstate Police Pension Fund, for
management and investment as assets of the Downstate Police
Pension Fund, all of their securities and other investments not
needed for immediate use.
(c) At the time of consolidation or as otherwise directed
by the Transition Board, assets not belonging to or arising
from the trust that are incidentally owned by a pension fund,
and any incidental liabilities of a pension fund not relating
to or arising from the trust, shall become the assets and
liabilities of the municipality.
Assets not belonging to or arising from the trust that are
owned by a municipality and incidentally used by a pension

SB3487 - 10 - LRB100 20044 MJP 35326 b
fund, and any associated liabilities, are not affected by the
consolidation and shall continue to be managed as assets and
liabilities of that municipality.
As necessary or useful to effectuate the consolidation, the
board of trustees of a pension fund to be consolidated and the
applicable municipality may each, in its discretion, continue
or renegotiate any employment or service contract, lease, or
other contract to which it is a party that relates to the
operation of the consolidated pension fund, and it may take
appropriate action to terminate any such contract as necessary
to terminate or avoid unnecessary or duplicative personnel,
facilities, or services.
(d) Beginning on January 1, 2020, all benefits payable
under this Article shall be payable from the Downstate Police
Pension Fund.
(e) The consolidation of pension funds under this Article
shall not diminish or impair the benefits of any current or
former police officer who participated in one of those pension
funds, or of any such police officer's surviving spouse,
children, or other dependents.
The consolidation of pension funds under this Article does
not entitle any person to a recalculation or combination of any
benefit or benefits previously granted or to a refund of any
contribution previously paid.
The consolidation of pension funds under this Article is
not intended to increase the benefits provided under this

SB3487 - 11 - LRB100 20044 MJP 35326 b
Article, except insofar as the consolidation of pension funds
into a single Fund will allow police officers in active service
on or after the consolidation date to have their benefit
calculations (and those of their qualifying survivors) include
consideration of all of the police officer's service, salary,
and credits in the Fund as though arising under that single
Fund, rather than as arising under more than one participating
municipality or more than one Article 3 pension fund.
(40 ILCS 5/3-108.2a new)
Sec. 3-108.2a. Tier 1 participant; Tier 2 participant.
"Tier 1 participant": A participant who first became a
participant before January 1, 2011. In the case of a Tier 1
participant who elects to become a Tier 2 participant under
Section 3-109.5 of this Code, that participant shall be deemed
a Tier 1 participant only with respect to service performed or
established before the effective date of that election.
"Tier 2 participant": A participant who first became a
participant on or after January 1, 2011 or a Tier 1 participant
who elected to become a Tier 2 participant under Section
3-109.5 of this Code with respect to service performed or
established on or after the effective date of that election.
(40 ILCS 5/3-109.5 new)
Sec. 3-109.5. Voluntary Tier 2 election. Notwithstanding
any other provision of law, a Tier 1 participant may

SB3487 - 12 - LRB100 20044 MJP 35326 b
voluntarily elect to instead become a Tier 2 participant with
respect to service performed or established on and after the
date of the election. An election made under this Section is
irrevocable and must be made in writing with the Board. An
election made under this Section does not affect a person's
participation under any other Article of this Code.
(40 ILCS 5/3-111) (from Ch. 108 1/2, par. 3-111)
Sec. 3-111. Pension.
(a) A police officer age 50 or more with 20 or more years
of creditable service, who is not a participant in the
self-managed plan under Section 3-109.3 and who is no longer in
service as a police officer, shall receive a pension of 1/2 of
the salary attached to the rank held by the officer on the
police force for one year immediately prior to retirement or,
beginning July 1, 1987 for persons terminating service on or
after that date, the salary attached to the rank held on the
last day of service or for one year prior to the last day,
whichever is greater. The pension shall be increased by 2.5% of
such salary for each additional year of service over 20 years
of service through 30 years of service, to a maximum of 75% of
such salary.
The changes made to this subsection (a) by this amendatory
Act of the 91st General Assembly apply to all pensions that
become payable under this subsection on or after January 1,
1999. All pensions payable under this subsection that began on

SB3487 - 13 - LRB100 20044 MJP 35326 b
or after January 1, 1999 and before the effective date of this
amendatory Act shall be recalculated, and the amount of the
increase accruing for that period shall be payable to the
pensioner in a lump sum.
(a-5) No pension in effect on or granted after June 30,
1973 shall be less than $200 per month. Beginning July 1, 1987,
the minimum retirement pension for a police officer having at
least 20 years of creditable service shall be $400 per month,
without regard to whether or not retirement occurred prior to
that date. If the minimum pension established in Section
3-113.1 is greater than the minimum provided in this
subsection, the Section 3-113.1 minimum controls.
(b) A police officer mandatorily retired from service due
to age by operation of law, having at least 8 but less than 20
years of creditable service, shall receive a pension equal to 2
1/2% of the salary attached to the rank he or she held on the
police force for one year immediately prior to retirement or,
beginning July 1, 1987 for persons terminating service on or
after that date, the salary attached to the rank held on the
last day of service or for one year prior to the last day,
whichever is greater, for each year of creditable service.
A police officer who retires or is separated from service
having at least 8 years but less than 20 years of creditable
service, who is not mandatorily retired due to age by operation
of law, and who does not apply for a refund of contributions at
his or her last separation from police service, shall receive a

SB3487 - 14 - LRB100 20044 MJP 35326 b
pension upon attaining age 60 equal to 2.5% of the salary
attached to the rank held by the police officer on the police
force for one year immediately prior to retirement or,
beginning July 1, 1987 for persons terminating service on or
after that date, the salary attached to the rank held on the
last day of service or for one year prior to the last day,
whichever is greater, for each year of creditable service.
(c) A police officer no longer in service who has at least
one but less than 8 years of creditable service in a police
pension fund but meets the requirements of this subsection (c)
shall be eligible to receive a pension from that fund equal to
2.5% of the salary attached to the rank held on the last day of
service under that fund or for one year prior to that last day,
whichever is greater, for each year of creditable service in
that fund. The pension shall begin no earlier than upon
attainment of age 60 (or upon mandatory retirement from the
fund by operation of law due to age, if that occurs before age
60) and in no event before the effective date of this
amendatory Act of 1997.
In order to be eligible for a pension under this subsection
(c), the police officer must have at least 8 years of
creditable service in a second police pension fund under this
Article and be receiving a pension under subsection (a) or (b)
of this Section from that second fund. The police officer need
not be in service on or after the effective date of this
amendatory Act of 1997.

SB3487 - 15 - LRB100 20044 MJP 35326 b
(d) Notwithstanding any other provision of this Article,
the provisions of this subsection (d) apply to a person who is
not a participant in the self-managed plan under Section
3-109.3 and who is a Tier 2 participant first becomes a police
officer under this Article on or after January 1, 2011.
A police officer age 55 or more who has 10 or more years of
service in that capacity shall be entitled at his option to
receive a monthly pension for his service as a police officer
computed by multiplying 2.5% for each year of such service by
his or her final average salary.
The pension of a police officer who is retiring after
attaining age 50 with 10 or more years of creditable service
shall be reduced by one-half of 1% for each month that the
police officer's age is under age 55.
The maximum pension under this subsection (d) shall be 75%
of final average salary.
For the purposes of this subsection (d), "final average
salary" means the average monthly salary obtained by dividing
the total salary of the police officer during the 96
consecutive months of service within the last 120 months of
service in which the total salary was the highest by the number
of months of service in that period.
Beginning on January 1, 2011, for all purposes under this
Code (including without limitation the calculation of benefits
and employee contributions), the annual salary based on the
plan year of a member or participant to whom this Section

SB3487 - 16 - LRB100 20044 MJP 35326 b
applies shall not exceed $106,800; however, that amount shall
annually thereafter be increased by the lesser of (i) 3% of
that amount, including all previous adjustments, or (ii)
one-half the annual unadjusted percentage increase (but not
less than zero) in the consumer price index-u for the 12 months
ending with the September preceding each November 1, including
all previous adjustments.
(Source: P.A. 96-1495, eff. 1-1-11.)
(40 ILCS 5/3-111.1) (from Ch. 108 1/2, par. 3-111.1)
Sec. 3-111.1. Increase in pension.
(a) Except as provided in subsection (e), the monthly
pension of a police officer who retires after July 1, 1971, and
prior to January 1, 1986, shall be increased, upon either the
first of the month following the first anniversary of the date
of retirement if the officer is 60 years of age or over at
retirement date, or upon the first day of the month following
attainment of age 60 if it occurs after the first anniversary
of retirement, by 3% of the originally granted pension and by
an additional 3% of the originally granted pension in January
of each year thereafter.
(b) The monthly pension of a police officer who retired
from service with 20 or more years of service, on or before
July 1, 1971, shall be increased in January of the year
following the year of attaining age 65 or in January of 1972,
if then over age 65, by 3% of the originally granted pension

SB3487 - 17 - LRB100 20044 MJP 35326 b
for each year the police officer received pension payments. In
each January thereafter, he or she shall receive an additional
increase of 3% of the original pension.
(c) The monthly pension of a police officer who retires on
disability or is retired for disability shall be increased in
January of the year following the year of attaining age 60, by
3% of the original grant of pension for each year he or she
received pension payments. In each January thereafter, the
police officer shall receive an additional increase of 3% of
the original pension.
(d) The monthly pension of a police officer who retires
after January 1, 1986, shall be increased, upon either the
first of the month following the first anniversary of the date
of retirement if the officer is 55 years of age or over, or
upon the first day of the month following attainment of age 55
if it occurs after the first anniversary of retirement, by 1/12
of 3% of the originally granted pension for each full month
that has elapsed since the pension began, and by an additional
3% of the originally granted pension in January of each year
thereafter.
The changes made to this subsection (d) by this amendatory
Act of the 91st General Assembly apply to all initial increases
that become payable under this subsection on or after January
1, 1999. All initial increases that became payable under this
subsection on or after January 1, 1999 and before the effective
date of this amendatory Act shall be recalculated and the

SB3487 - 18 - LRB100 20044 MJP 35326 b
additional amount accruing for that period, if any, shall be
payable to the pensioner in a lump sum.
(e) Notwithstanding the provisions of subsection (a), upon
the first day of the month following (1) the first anniversary
of the date of retirement, or (2) the attainment of age 55, or
(3) July 1, 1987, whichever occurs latest, the monthly pension
of a police officer who retired on or after January 1, 1977 and
on or before January 1, 1986, and did not receive an increase
under subsection (a) before July 1, 1987, shall be increased by
3% of the originally granted monthly pension for each full year
that has elapsed since the pension began, and by an additional
3% of the originally granted pension in each January
thereafter. The increases provided under this subsection are in
lieu of the increases provided in subsection (a).
(f) Notwithstanding the other provisions of this Section,
beginning with increases granted on or after July 1, 1993, the
second and all subsequent automatic annual increases granted
under subsection (a), (b), (d), or (e) of this Section shall be
calculated as 3% of the amount of pension payable at the time
of the increase, including any increases previously granted
under this Section, rather than 3% of the originally granted
pension amount. Section 1-103.1 does not apply to this
subsection (f).
(g) Notwithstanding any other provision of this Article,
the monthly pension of a Tier 2 participant person who first
becomes a police officer under this Article on or after January

SB3487 - 19 - LRB100 20044 MJP 35326 b
1, 2011 shall be increased on the January 1 occurring either on
or after the attainment of age 60 or the first anniversary of
the pension start date, whichever is later. Each annual
increase shall be calculated at 3% or one-half the annual
unadjusted percentage increase (but not less than zero) in the
consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less, of the
originally granted pension. If the annual unadjusted
percentage change in the consumer price index-u for a 12-month
period ending in September is zero or, when compared with the
preceding period, decreases, then the pension shall not be
increased.
For the purposes of this subsection (g), "consumer price
index-u" means the index published by the Bureau of Labor
Statistics of the United States Department of Labor that
measures the average change in prices of goods and services
purchased by all urban consumers, United States city average,
all items, 1982-84 = 100. The new amount resulting from each
annual adjustment shall be determined by the Public Pension
Division of the Department of Insurance and made available to
the boards of the pension funds.
(Source: P.A. 96-1495, eff. 1-1-11.)
(40 ILCS 5/3-112) (from Ch. 108 1/2, par. 3-112)
Sec. 3-112. Pension to survivors.
(a) Upon the death of a police officer entitled to a

SB3487 - 20 - LRB100 20044 MJP 35326 b
pension under Section 3-111, the surviving spouse shall be
entitled to the pension to which the police officer was then
entitled. Upon the death of the surviving spouse, or upon the
remarriage of the surviving spouse if that remarriage
terminates the surviving spouse's eligibility under Section
3-121, the police officer's unmarried children who are under
age 18 or who are dependent because of physical or mental
disability shall be entitled to equal shares of such pension.
If there is no eligible surviving spouse and no eligible child,
the dependent parent or parents of the officer shall be
entitled to receive or share such pension until their death or
marriage or remarriage after the death of the police officer.
Notwithstanding any other provision of this Article, for a
Tier 2 participant person who first becomes a police officer
under this Article on or after January 1, 2011, the pension to
which the surviving spouse, children, or parents are entitled
under this subsection (a) shall be in the amount of 66 2/3% of
the police officer's earned pension at the date of death.
Nothing in this subsection (a) shall act to diminish the
survivor's benefits described in subsection (e) of this
Section.
Notwithstanding any other provision of this Article, the
monthly pension of a survivor of a Tier 2 participant person
who first becomes a police officer under this Article on or
after January 1, 2011 shall be increased on the January 1 after
attainment of age 60 by the recipient of the survivor's pension

SB3487 - 21 - LRB100 20044 MJP 35326 b
and each January 1 thereafter by 3% or one-half the annual
unadjusted percentage increase (but not less than zero) in the
consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less, of the
originally granted survivor's pension. If the annual
unadjusted percentage change in the consumer price index-u for
a 12-month period ending in September is zero or, when compared
with the preceding period, decreases, then the survivor's
pension shall not be increased.
For the purposes of this subsection (a), "consumer price
index-u" means the index published by the Bureau of Labor
Statistics of the United States Department of Labor that
measures the average change in prices of goods and services
purchased by all urban consumers, United States city average,
all items, 1982-84 = 100. The new amount resulting from each
annual adjustment shall be determined by the Public Pension
Division of the Department of Insurance and made available to
the boards of the pension funds.
(b) Upon the death of a police officer while in service,
having at least 20 years of creditable service, or upon the
death of a police officer who retired from service with at
least 20 years of creditable service, whether death occurs
before or after attainment of age 50, the pension earned by the
police officer as of the date of death as provided in Section
3-111 shall be paid to the survivors in the sequence provided
in subsection (a) of this Section.

SB3487 - 22 - LRB100 20044 MJP 35326 b
(c) Upon the death of a police officer while in service,
having at least 10 but less than 20 years of service, a pension
of 1/2 of the salary attached to the rank or ranks held by the
officer for one year immediately prior to death shall be
payable to the survivors in the sequence provided in subsection
(a) of this Section. If death occurs as a result of the
performance of duty, the 10 year requirement shall not apply
and the pension to survivors shall be payable after any period
of service.
(d) Beginning July 1, 1987, a minimum pension of $400 per
month shall be paid to all surviving spouses, without regard to
the fact that the death of the police officer occurred prior to
that date. If the minimum pension established in Section
3-113.1 is greater than the minimum provided in this
subsection, the Section 3-113.1 minimum controls.
(e) The pension of the surviving spouse of a police officer
who dies (i) on or after January 1, 2001, (ii) without having
begun to receive either a retirement pension payable under
Section 3-111 or a disability pension payable under Section
3-114.1, 3-114.2, 3-114.3, or 3-114.6, and (iii) as a result of
sickness, accident, or injury incurred in or resulting from the
performance of an act of duty shall not be less than 100% of
the salary attached to the rank held by the deceased police
officer on the last day of service, notwithstanding any
provision in this Article to the contrary.
(Source: P.A. 96-1495, eff. 1-1-11.)

SB3487 - 23 - LRB100 20044 MJP 35326 b
(40 ILCS 5/7-199.5 new)
Sec. 7-199.5. To assist in the creation and administration
of the Downstate Police Pension Fund. To assist in the
creation and administration of the Downstate Police Pension
Fund under Article 3 of this Code, including assisting the
Downstate Police Pension Fund Transition Board, created under
Section 3-101.1 of this Code; and pursuant to any contract or
other agreement it may enter into with the Transition Board or
the Board of Trustees of the Downstate Police Pension Fund, to
provide for the administrative staff of one Fund to provide
assistance to or consolidate particular services or operations
with that of the other Fund, to the extent consistent with
their respective fiduciary and other responsibilities.
Section 10. The Illinois Pension Code is amended by
changing Sections 3-101, 3-103, 3-105, 3-108.2, 3-108.3,
3-110, 3-110.7, 3-125, 3-125.1, 3-128, 3-134, 3-135, and 3-141
and by adding Sections 3-102.1, 3-103.9, 3-104, 3-128.1,
3-128.2, 3-140.5, 3-141a, 3-141b, 3-141c, and 3-141d as
follows:
(40 ILCS 5/3-102.1 new)
Sec. 3-102.1. Fund. "Fund" or "pension fund": Until January
1, 2020, a police pension fund established by a municipality
under this Article.

SB3487 - 24 - LRB100 20044 MJP 35326 b
Beginning January 1, 2020, "Fund" or "pension fund" means
the Downstate Police Pension Fund created under this Article to
consolidate all of the individual pension funds previously
established under this Article; depending on the context, the
terms may include one or more of those previously established
pension funds.
(40 ILCS 5/3-103) (from Ch. 108 1/2, par. 3-103)
Sec. 3-103. Municipality; participating municipality;
governing body.
(a) "Municipality": (1) Any city, village or incorporated
town of 5,000 or more but less than 500,000 inhabitants, as
determined from the United States Government statistics or a
census taken at any time by the city, village or incorporated
town and (2) any city, village or incorporated town of less
than 5,000 inhabitants which, by referendum held under Section
3-145 adopts this Article.
(b) "Participating municipality" means a municipality, as
defined in subsection (a), that both is required (or has
elected) to and does in fact participate in the Downstate
Police Pension Fund under this Article.
(c) "Governing body" includes the board of town trustees or
other persons empowered to draft the tentative budget and
appropriation ordinance and the electors of such a township
acting at the annual or special meeting of town electors.
(Source: P.A. 83-1440.)

SB3487 - 25 - LRB100 20044 MJP 35326 b
(40 ILCS 5/3-103.9 new)
Sec. 3-103.9. Authorized agent of a participating
municipality.
(a) Each participating municipality shall appoint an
authorized agent who shall have the powers and duties set forth
in this Section. In the absence of such an appointment, the
duties of the authorized agent shall devolve upon the clerk or
secretary of the municipality.
(b) The authorized agent of the municipality shall have the
following powers and duties:
(1) To certify to the Fund whether or not a given
person is authorized to participate in the Fund.
(2) To certify to the Fund when a participating
employee is on a leave of absence authorized by the
municipality.
(3) To request the proper officer to cause employee
contributions to be withheld from salary and promptly
transmitted to the Fund.
(4) To request the proper officer to cause municipality
contributions to be promptly forwarded to the Fund.
(5) To forward promptly to all participating employees
any communications for such employees from the Fund or the
municipality.
(6) To forward promptly to the Board of the Fund all
applications, claims reports, and other communications

SB3487 - 26 - LRB100 20044 MJP 35326 b
delivered to the agent by participating employees.
(7) To perform all duties related to the administration
of the Fund as requested by the Fund or the governing body
of the municipality.
(c) The governing body of each participating municipality
may delegate either or both of the following powers to its
authorized agent:
(1) To file a petition for nomination of an executive
trustee of the Fund.
(2) To cast the ballot for election of an executive
trustee of the Fund.
If a governing body does not authorize its agent to perform
the powers set forth in this Section, they shall be performed
by the governing body itself, unless the governing body by
resolution duly certified to the Fund delegates them to some
other officer or employee.
(d) The delivery of any communication or document by an
employee or a municipality to the authorized agent of the
municipality does not constitute delivery to the Fund.
(40 ILCS 5/3-104 new)
Sec. 3-104. Prescribed rate of interest. "Prescribed rate
of interest": The rate of interest to be used for calculation
of the rates of municipality contributions and amounts of
annuities and benefits as determined by the Board on the basis
of the probable effective rate of interest on a long term

SB3487 - 27 - LRB100 20044 MJP 35326 b
basis.
(40 ILCS 5/3-105) (from Ch. 108 1/2, par. 3-105)
Sec. 3-105. Board. "Board": Until January 1, 2020, the The
board of trustees of the police pension fund of a municipality
as established in subsection (a) of Section 3-128.
Beginning January 1, 2020, the Board of Trustees of the
Downstate Police Pension Fund created under this Article to
consolidate all of the individual pension funds previously
established under this Article, as established in subsection
(d) of Section 3-128, or until that board is established and
has assumed its duties, the Transition Board created under
Section 3-101.1; depending on the context, the term may include
the former board of trustees of one or more of those previously
established pension funds.
(Source: P.A. 83-1440.)
(40 ILCS 5/3-108.2)
Sec. 3-108.2. Participant. "Participant": A police officer
or deferred pensioner of the Fund a pension fund, or a
beneficiary of the Fund pension fund.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/3-108.3)
Sec. 3-108.3. Beneficiary. "Beneficiary": A person
receiving benefits from the Fund a pension fund, including, but

SB3487 - 28 - LRB100 20044 MJP 35326 b
not limited to, retired pensioners, disabled pensioners, their
surviving spouses, minor children, disabled children, and
dependent parents. If a special needs trust as described in
Section 1396p(d)(4) of Title 42 of the United States Code, as
amended from time to time, has been established for a disabled
adult child, then the special needs trust may stand in lieu of
the disabled adult child as a beneficiary for the purposes of
this Article.
(Source: P.A. 96-1143, eff. 7-21-10.)
(40 ILCS 5/3-110) (from Ch. 108 1/2, par. 3-110)
Sec. 3-110. Creditable service.
(a) "Creditable service" is the time served by a police
officer as a member of a regularly constituted police force of
a municipality. In computing creditable service furloughs
without pay exceeding 30 days shall not be counted, but all
leaves of absence for illness or accident, regardless of
length, and all periods of disability retirement for which a
police officer has received no disability pension payments
under this Article shall be counted.
(a-3) Upon the consolidation of the police pension funds
under this Article into the Downstate Police Pension Fund on
January 1, 2020, creditable service under any such pension fund
shall be deemed to be creditable service in the Downstate
Police Pension Fund, subject to the following provisions:
(1) The consolidation of police pension funds into the

SB3487 - 29 - LRB100 20044 MJP 35326 b
Downstate Police Pension Fund shall not result in the
duplication of any service credit based on the same period
of service in this or any other pension fund or retirement
system subject to this Code.
(2) If this Section or any other provision of this
Article imposes a limit on the amount of creditable service
that may be established for a particular activity or
purpose and prior to consolidation a police officer has
established periods of creditable service for that
activity or purpose in more than one former police pension
fund under this Article, which periods are within that
limitation for each such fund but together exceed that
limitation, then upon consolidation all such credit
previously established by the police officer shall be
preserved under the Fund, but no additional creditable
service for that activity or purpose may be established by
that police officer in the Fund.
(3) The consolidation of police pension funds into the
Downstate Police Pension Fund shall not entitle any person
or pension fund to a refund of any contribution or payment
previously paid or transferred in order to establish or
transfer creditable service under this Article.
(a-5) Up to 3 years of time during which the police officer
receives a disability pension under Section 3-114.1, 3-114.2,
3-114.3, or 3-114.6 shall be counted as creditable service,
provided that (i) the police officer returns to active service

SB3487 - 30 - LRB100 20044 MJP 35326 b
after the disability for a period at least equal to the period
for which credit is to be established and (ii) the police
officer makes contributions to the Fund fund based on the rates
specified in Section 3-125.1 and the salary upon which the
disability pension is based. These contributions may be paid at
any time prior to the commencement of a retirement pension. The
police officer may, but need not, elect to have the
contributions deducted from the disability pension or to pay
them in installments on a schedule approved by the board. If
not deducted from the disability pension, the contributions
shall include interest at the rate of 6% per year, compounded
annually, from the date for which service credit is being
established to the date of payment. If contributions are paid
under this subsection (a-5) in excess of those needed to
establish the credit, the excess shall be refunded. This
subsection (a-5) applies to persons receiving a disability
pension under Section 3-114.1, 3-114.2, 3-114.3, or 3-114.6 on
the effective date of this amendatory Act of the 91st General
Assembly, as well as persons who begin to receive such a
disability pension after that date.
(b) Creditable service includes all periods of service in
the military, naval or air forces of the United States entered
upon while an active police officer of a municipality, provided
that upon applying for a permanent pension, and in accordance
with the rules of the board, the police officer pays into the
Fund fund the amount the officer would have contributed if he

SB3487 - 31 - LRB100 20044 MJP 35326 b
or she had been a regular contributor during such period, to
the extent that the municipality which the police officer
served has not made such contributions in the officer's behalf.
The total amount of such creditable service shall not exceed 5
years, except that any police officer who on July 1, 1973 had
more than 5 years of such creditable service shall receive the
total amount thereof.
(b-5) Creditable service includes all periods of service in
the military, naval, or air forces of the United States entered
upon before beginning service as an active police officer of a
municipality, provided that, in accordance with the rules of
the board, the police officer pays into the Fund fund the
amount the police officer would have contributed if he or she
had been a regular contributor during such period, plus an
amount determined by the Board to be equal to the
municipality's normal cost of the benefit, plus interest at the
actuarially assumed rate calculated from the date the employee
last became a police officer under this Article. The total
amount of such creditable service shall not exceed 2 years.
(c) Creditable service also includes service rendered by a
police officer while on leave of absence from a police
department to serve as an executive of an organization whose
membership consists of members of a police department, subject
to the following conditions: (i) the police officer is a
participant of the Fund a fund established under this Article
with at least 10 years of service as a police officer; (ii) the

SB3487 - 32 - LRB100 20044 MJP 35326 b
police officer received no credit for such service under any
other retirement system, pension fund, or annuity and benefit
fund included in this Code; (iii) pursuant to the rules of the
board the police officer pays to the Fund fund the amount he or
she would have contributed had the officer been an active
member of the police department; (iv) the organization pays a
contribution equal to the municipality's normal cost for that
period of service; and (v) for all leaves of absence under this
subsection (c), including those beginning before the effective
date of this amendatory Act of the 97th General Assembly, the
police officer continues to remain in sworn status, subject to
the professional standards of the public employer or those
terms established in statute.
(d)(1) Creditable service also includes periods of
service originally established in another police pension
fund under this Article or in the Fund established under
Article 7 of this Code for which (i) the contributions have
been transferred under Section 3-110.7 or Section 7-139.9
and (ii) any additional contribution required under
paragraph (2) of this subsection has been paid in full in
accordance with the requirements of this subsection (d).
(2) If the board of the pension fund to which
creditable service and related contributions are
transferred under Section 7-139.9 determines that the
amount transferred is less than the true cost to the
pension fund of allowing that creditable service to be

SB3487 - 33 - LRB100 20044 MJP 35326 b
established, then in order to establish that creditable
service the police officer must pay to the pension fund,
within the payment period specified in paragraph (3) of
this subsection, an additional contribution equal to the
difference, as determined by the board in accordance with
the rules and procedures adopted under paragraph (6) of
this subsection. If the board of the pension fund to which
creditable service and related contributions are
transferred under Section 3-110.7 determines that the
amount transferred is less than the true cost to the
pension fund of allowing that creditable service to be
established, then the police officer may elect (A) to
establish that creditable service by paying to the pension
fund, within the payment period specified in paragraph (3)
of this subsection (d), an additional contribution equal to
the difference, as determined by the board in accordance
with the rules and procedures adopted under paragraph (6)
of this subsection (d) or (B) to have his or her creditable
service reduced by an amount equal to the difference
between the amount transferred under Section 3-110.7 and
the true cost to the pension fund of allowing that
creditable service to be established, as determined by the
board in accordance with the rules and procedures adopted
under paragraph (6) of this subsection (d).
(3) Except as provided in paragraph (4), the additional
contribution that is required or elected under paragraph

SB3487 - 34 - LRB100 20044 MJP 35326 b
(2) of this subsection (d) must be paid to the board (i)
within 5 years from the date of the transfer of
contributions under Section 3-110.7 or 7-139.9 and (ii)
before the police officer terminates service with the fund.
The additional contribution may be paid in a lump sum or in
accordance with a schedule of installment payments
authorized by the board.
(4) If the police officer dies in service before
payment in full has been made and before the expiration of
the 5-year payment period, the surviving spouse of the
officer may elect to pay the unpaid amount on the officer's
behalf within 6 months after the date of death, in which
case the creditable service shall be granted as though the
deceased police officer had paid the remaining balance on
the day before the date of death.
(5) If the additional contribution that is required or
elected under paragraph (2) of this subsection (d) is not
paid in full within the required time, the creditable
service shall not be granted and the police officer (or the
officer's surviving spouse or estate) shall be entitled to
receive a refund of (i) any partial payment of the
additional contribution that has been made by the police
officer and (ii) those portions of the amounts transferred
under subdivision (a)(1) of Section 3-110.7 or
subdivisions (a)(1) and (a)(3) of Section 7-139.9 that
represent employee contributions paid by the police

SB3487 - 35 - LRB100 20044 MJP 35326 b
officer (but not the accumulated interest on those
contributions) and interest paid by the police officer to
the prior pension fund in order to reinstate service
terminated by acceptance of a refund.
At the time of paying a refund under this item (5), the
pension fund shall also repay to the pension fund from
which the contributions were transferred under Section
3-110.7 or 7-139.9 the amount originally transferred under
subdivision (a)(2) of that Section, plus interest at the
rate of 6% per year, compounded annually, from the date of
the original transfer to the date of repayment. Amounts
repaid to the Article 7 fund under this provision shall be
credited to the appropriate municipality.
Transferred credit that is not granted due to failure
to pay the additional contribution within the required time
is lost; it may not be transferred to another pension fund
and may not be reinstated in the pension fund from which it
was transferred.
(6) The Public Employee Pension Fund Division of the
Department of Insurance shall establish by rule the manner
of making the calculation required under paragraph (2) of
this subsection, taking into account the appropriate
actuarial assumptions; the police officer's service, age,
and salary history; the level of funding of the pension
fund to which the credits are being transferred; and any
other factors that the Division determines to be relevant.

SB3487 - 36 - LRB100 20044 MJP 35326 b
The rules may require that all calculations made under
paragraph (2) be reported to the Division by the board
performing the calculation, together with documentation of
the creditable service to be transferred, the amounts of
contributions and interest to be transferred, the manner in
which the calculation was performed, the numbers relied
upon in making the calculation, the results of the
calculation, and any other information the Division may
deem useful.
(e)(1) Creditable service also includes periods of
service originally established in the Fund established
under Article 7 of this Code for which the contributions
have been transferred under Section 7-139.11.
(2) If the board of the pension fund to which
creditable service and related contributions are
transferred under Section 7-139.11 determines that the
amount transferred is less than the true cost to the
pension fund of allowing that creditable service to be
established, then the amount of creditable service the
police officer may establish under this subsection (e)
shall be reduced by an amount equal to the difference, as
determined by the board in accordance with the rules and
procedures adopted under paragraph (3) of this subsection.
(3) The Public Pension Division of the Department of
Financial and Professional Regulation shall establish by
rule the manner of making the calculation required under

SB3487 - 37 - LRB100 20044 MJP 35326 b
paragraph (2) of this subsection, taking into account the
appropriate actuarial assumptions; the police officer's
service, age, and salary history; the level of funding of
the pension fund to which the credits are being
transferred; and any other factors that the Division
determines to be relevant. The rules may require that all
calculations made under paragraph (2) be reported to the
Division by the board performing the calculation, together
with documentation of the creditable service to be
transferred, the amounts of contributions and interest to
be transferred, the manner in which the calculation was
performed, the numbers relied upon in making the
calculation, the results of the calculation, and any other
information the Division may deem useful.
(4) Until January 1, 2010, a police officer who
transferred service from the Fund established under
Article 7 of this Code under the provisions of Public Act
94-356 may establish additional credit, but only for the
amount of the service credit reduction in that transfer, as
calculated under paragraph (3) of this subsection (e). This
credit may be established upon payment by the police
officer of an amount to be determined by the board, equal
to (1) the amount that would have been contributed as
employee and employer contributions had all of the service
been as an employee under this Article, plus interest
thereon at the rate of 6% per year, compounded annually

SB3487 - 38 - LRB100 20044 MJP 35326 b
from the date of service to the date of transfer, less (2)
the total amount transferred from the Article 7 Fund, plus
(3) interest on the difference at the rate of 6% per year,
compounded annually, from the date of the transfer to the
date of payment. The additional service credit is allowed
under this amendatory Act of the 95th General Assembly
notwithstanding the provisions of Article 7 terminating
all transferred credits on the date of transfer.
(Source: P.A. 96-297, eff. 8-11-09; 96-1260, eff. 7-23-10;
97-651, eff. 1-5-12.)
(40 ILCS 5/3-110.7)
Sec. 3-110.7. Transfer between Article 3 funds.
(a) Until January 1, 2020 (the consolidation date), an An
active member of a pension fund established under this Article
may apply for transfer to that fund of his or her creditable
service and related contributions accumulated in any other
police pension fund established under this Article, except that
a police officer may not transfer creditable service under this
Section from a pension fund unless (i) the police officer
actively served in the police department under that fund for at
least 2 years, (ii) the police officer actively served in the
police department under that fund for less than 2 years but was
laid off or otherwise involuntarily terminated for a reason
other than the fault of the officer, or (iii) the police
officer was not in service in the police department under that

SB3487 - 39 - LRB100 20044 MJP 35326 b
fund on or after the effective date of this Section. Upon
receiving the application, that other pension fund shall
transfer to the pension fund in which the applicant currently
participates an amount equal to:
(1) the amounts actually contributed by or on behalf of
the applicant to the fund as employee contributions
(including any interest paid by the applicant in order to
reinstate service), plus interest on those amounts at the
rate of 6% per year, compounded annually, from the date of
contribution to the date of transfer; plus
(2) an amount representing employer contributions,
equal to the total amount determined under subdivision (1).
Participation in that other pension fund shall terminate on the
date of transfer.
(b) An active member of the Fund a pension fund established
under this Article may reinstate in the Fund service in any
other pension fund established under this Article that was
terminated by receipt of a refund, by paying to the Fund that
other pension fund the amount of the refund plus interest
thereon at the rate of 6% per year, compounded annually, from
the date of refund to the date of payment.
(Source: P.A. 90-460, eff. 8-17-97.)
(40 ILCS 5/3-125) (from Ch. 108 1/2, par. 3-125)
Sec. 3-125. Financing; tax.
(a) The governing body city council or the board of

SB3487 - 40 - LRB100 20044 MJP 35326 b
trustees of a participating the municipality shall annually
levy a tax upon all the taxable property of the municipality at
the rate on the dollar which will produce an amount which, when
added to the deductions from the salaries or wages of police
officers, and revenues available from other sources, will equal
a sum sufficient to meet the annual requirements of the account
of the participating municipality police pension fund. The
annual requirements to be provided by such tax levy are equal
to (1) the normal cost of benefits attributable to the
participating municipality and its police officers, as
determined by an enrolled actuary employed by the Fund, the
pension fund for the year involved, plus (2) an amount
sufficient to bring the total assets of the account of the
participating municipality pension fund up to 90% of the total
actuarial liabilities of the account of the participating
municipality pension fund by the end of municipal fiscal year
2040, as annually updated and determined by an enrolled actuary
employed by the Fund Illinois Department of Insurance or by an
enrolled actuary retained by the pension fund or the
municipality. In making these determinations, the required
minimum employer contribution shall be calculated each year as
a level percentage of payroll over the years remaining up to
and including fiscal year 2040 and shall be determined under
the entry age normal projected unit credit actuarial cost
method. The tax shall be levied and collected in the same
manner as the general taxes of the municipality, and in

SB3487 - 41 - LRB100 20044 MJP 35326 b
addition to all other taxes now or hereafter authorized to be
levied upon all property within the municipality, and shall be
in addition to the amount authorized to be levied for general
purposes as provided by Section 8-3-1 of the Illinois Municipal
Code, approved May 29, 1961, as amended. The tax shall be
forwarded directly to the treasurer of the board within 30
business days after receipt by the county.
(b) For purposes of determining the required employer
contribution to the Fund a pension fund, the value of the
pension fund's assets shall be equal to the actuarial value of
the pension fund's assets, which shall be calculated as
follows:
(1) (Blank). On March 30, 2011, the actuarial value of
a pension fund's assets shall be equal to the market value
of the assets as of that date.
(2) In determining the actuarial value of the System's
assets of the account of the participating municipality for
fiscal years after March 30, 2011, any actuarial gains or
losses from investment return incurred in a fiscal year
shall be recognized in equal annual amounts over the 5-year
period following that fiscal year.
(c) If a participating municipality fails to transmit to
the Fund fund contributions required of it under this Article
for more than 90 days after the payment of those contributions
is due, the Fund fund may, after giving notice to the
municipality, certify to the State Comptroller the amounts of

SB3487 - 42 - LRB100 20044 MJP 35326 b
the delinquent payments in accordance with any applicable rules
of the Comptroller, and the Comptroller must, beginning in
fiscal year 2016, deduct and remit to the Fund, for credit to
the account of the participating municipality, fund the
certified amounts or a portion of those amounts from the
following proportions of payments of State funds to the
municipality:
(1) in fiscal year 2016, one-third of the total amount
of any payments of State funds to the municipality;
(2) in fiscal year 2017, two-thirds of the total amount
of any payments of State funds to the municipality; and
(3) in fiscal year 2018 and each fiscal year
thereafter, the total amount of any payments of State funds
to the municipality.
The State Comptroller may not deduct from any payments of
State funds to the municipality more than the amount of
delinquent payments certified to the State Comptroller by the
Fund fund.
(d) (Blank). The police pension fund shall consist of the
following moneys which shall be set apart by the treasurer of
the municipality:
(1) All moneys derived from the taxes levied hereunder;
(2) Contributions by police officers under Section
3-125.1;
(3) All moneys accumulated by the municipality under
any previous legislation establishing a fund for the

SB3487 - 43 - LRB100 20044 MJP 35326 b
benefit of disabled or retired police officers;
(4) Donations, gifts or other transfers authorized by
this Article.
(e) (Blank). The Commission on Government Forecasting and
Accountability shall conduct a study of all funds established
under this Article and shall report its findings to the General
Assembly on or before January 1, 2013. To the fullest extent
possible, the study shall include, but not be limited to, the
following:
(1) fund balances;
(2) historical employer contribution rates for each
fund;
(3) the actuarial formulas used as a basis for employer
contributions, including the actual assumed rate of return
for each year, for each fund;
(4) available contribution funding sources;
(5) the impact of any revenue limitations caused by
PTELL and employer home rule or non-home rule status; and
(6) existing statutory funding compliance procedures
and funding enforcement mechanisms for all municipal
pension funds.
(Source: P.A. 99-8, eff. 7-9-15.)
(40 ILCS 5/3-125.1) (from Ch. 108 1/2, par. 3-125.1)
Sec. 3-125.1. Contributions by police officers. Each
police officer shall contribute to the Fund pension fund the

SB3487 - 44 - LRB100 20044 MJP 35326 b
following percentages of salary for the periods stated:
Beginning July 1, 1909 and prior to July 23, 1943, 1% (except
that prior to July 1, 1921 not more than one dollar per month
shall be deducted, and except that beginning July 1, 1921 and
prior to July 1, 1927 not more than $2 per month shall be
deducted); beginning July 23, 1943 and prior to July 20, 1949,
3%; beginning July 20, 1949 and prior to July 17, 1959, 5%;
beginning July 17, 1959 and prior to July 1, 1971, 7%;
beginning July 1, 1971 and prior to July 1, 1975, 7 1/2%;
beginning July 1, 1975 and prior to January 1, 1987, 8 1/2%;
beginning January 1, 1987 and prior to January 1, 2001, 9%; and
beginning January 1, 2001, 9.91%, except that beginning January
1, 2020, each Tier 1 participant shall contribute 35% of his or
her salary. Such sums shall be paid or deducted monthly.
Contribution to the self-managed plan shall be no less than 10%
of salary.
"Salary" means the annual salary, including longevity,
attached to the police officer's rank, as established by the
municipality's appropriation ordinance, including any
compensation for overtime which is included in the salary so
established, but excluding any "overtime pay", "holiday pay",
"bonus pay", "merit pay", or any other cash benefit not
included in the salary so established.
(Source: P.A. 91-939, eff. 2-1-01.)
(40 ILCS 5/3-128) (from Ch. 108 1/2, par. 3-128)

SB3487 - 45 - LRB100 20044 MJP 35326 b
Sec. 3-128. Board created.
(a) This subsection (a) applies until January 1, 2020.
A board of 5 members shall constitute a board of trustees to
administer the pension fund and to designate the beneficiaries
thereof. The board shall be known as the "Board of Trustees of
the Police Pension Fund" of the municipality.
Two members of the board shall be appointed by the mayor or
president of the board of trustees of the municipality
involved. The 3rd and 4th members of the board shall be elected
from the active participants of the pension fund by such active
participants. The 5th member shall be elected by and from the
beneficiaries.
One of the members appointed by the mayor or president of
the board of trustees shall serve for one year beginning on the
2nd Tuesday in May after the municipality comes under this
Article. The other appointed member shall serve for 2 years
beginning on the same date. Their successors shall serve for 2
years each or until their successors are appointed and
qualified.
(b) The members of the boards of trustees serving on
December 31, 2019 may continue to exercise the powers of that
office until March 1, 2020 for the sole purpose of assisting in
the consolidation of their respective pension funds, but
subject to the supervision and requirements of the Transition
Board.
(c) Beginning January 1, 2020, and until the board

SB3487 - 46 - LRB100 20044 MJP 35326 b
established under subsection (d) has been elected and assumes
its duties, the Transition Board established under Section
3-101.1 shall operate as the Board of Trustees of the Fund.
(d) Beginning January 1, 2021, or as soon thereafter as it
is able to assume its duties, the Board of Trustees of the
Downstate Police Pension Fund shall consist of 11 members. The
Board shall consist of representatives of various groups as
follows:
(1) One trustee, appointed by the Governor, who shall
serve as the chairman and may vote only in the event of a
tie.
(2) Five trustees shall each be a mayor, chief elected
officer, chief executive officer, chief finance officer,
or other officer, executive, or department head of a
participating municipality, and each such trustee shall be
designated as an executive trustee.
(3) Three trustees shall each be a police officer
participating in the Fund, and each such trustee shall be
designated as a police officer trustee. No person shall be
eligible to become a police officer trustee who does not
have at least 8 years of creditable service in the Fund.
(4) Two trustees shall be retired police officers of
the Fund, who shall be designated the annuitant trustees.
No person shall be eligible to become an annuitant trustee
who does not have at least 8 years of creditable service in
the Fund. For the purposes of this Section and Section

SB3487 - 47 - LRB100 20044 MJP 35326 b
3-128.2, a police officer receiving a disability pension
shall be considered a retired police officer.
Beginning January 1, 2020, elections for executive
trustees shall be conducted in accordance with Section 3-128.1
and elections for police officer and annuitant trustees shall
be conducted in accordance with Section 3-128.2.
(e) The executive trustees shall elect one executive
trustee to serve as vice-chairman. The police officer trustees
and annuitant trustees shall elect one police officer trustee
or annuitant trustee to serve as vice-chairman.
(f) An executive or police officer trustee shall be
disqualified immediately upon any change in status which
removes the trustee from the required employment or office
within the group he or she represents. The annuitant trustee
shall be disqualified upon termination or suspension of his or
her retirement or disability pension.
The Board shall fill any vacancy by appointment of a person
with the appropriate employment status for the period until the
next election of trustees, or, if the remaining term is less
than 2 years, for the remainder of the term, and until a
successor has been elected and has qualified.
(g) The Board shall elect annually from its members a
president and secretary.
The election for board members shall be held biennially on
the 3rd Monday in April, at such place or places in the
municipality and under the Australian ballot system and such

SB3487 - 48 - LRB100 20044 MJP 35326 b
other regulations as shall be prescribed by the appointed
members of the board.
The active pension fund participants shall be entitled to
vote only for the active participant members of the board. All
beneficiaries of legal age may vote only for the member chosen
from among the beneficiaries. No person shall be entitled to
cast more than one ballot at such election. The term of elected
members shall be 2 years, beginning on the 2nd Tuesday of the
first May after the election.
Upon the death, resignation or inability to act of any
elected board member, his or her successor shall be elected for
the unexpired term at a special election, to be called by the
board and conducted in the same manner as the regular biennial
election.
(h) Members of the board shall neither receive nor have any
right to receive any salary from the Fund pension fund for
services performed as trustees in that office, but shall be
reimbursed for any reasonable expenses incurred in attending
meetings of the Board and in performing duties on behalf of the
Fund and for the amount of any earnings withheld by any
employing municipality because of attendance at any Board
meeting.
(i) Except for the chairman, who may vote only in the event
of a tie, each trustee shall be entitled to one vote on any and
all actions before the Board. At least 6 concurring votes shall
be necessary for every decision or action by the Board at any

SB3487 - 49 - LRB100 20044 MJP 35326 b
of its meetings. No decision or action shall become effective
unless presented and so approved at a regular or duly called
special meeting of the Board.
(Source: P.A. 83-1440.)
(40 ILCS 5/3-128.1 new)
Sec. 3-128.1. Election of executive trustees.
(a) Beginning January 1, 2020, the election of executive
trustees shall be conducted in accordance with this Section.
(b) During the period beginning on August 1 and ending on
September 15 of each year, the Board shall accept nominations
of candidates for election as executive trustees for terms
beginning on the next January 1, and for vacancies to be filled
by election.
All nominations for the position of executive trustee shall
be by petition, signed by a representative of the governing
body of at least 5 participating municipalities.
(c) The election shall be by ballot and may be conducted in
person, by mail, or electronically, pursuant to the rules and
procedures established by the Board.
All candidates properly nominated in petitions received by
the Board shall be placed in alphabetical order upon the proper
ballot. In the initial election, there shall be one election
for the 5 executive trusteeships, and the 5 candidates getting
the highest number of votes shall be declared elected.
(d) The governing body of each participating municipality

SB3487 - 50 - LRB100 20044 MJP 35326 b
participating in the Fund shall have one vote at any election
in which an executive trustee is to be elected, and may cast
that vote for any candidate on the executive trustee ballot.
A vote may be cast for a person not on the ballot by
writing in his or her name.
In case of a tie vote, the candidate employed by the
municipality having the greatest number of participating
police officers at the time of the election shall be declared
elected.
(e) The election shall be completed by December 1 of the
year. The results shall be entered in the minutes of the
meeting of the Board following the tally of votes.
(f) Each executive trustee so elected shall hold office for
a term of 4 years and until his or her successor has been duly
elected and qualified. However, for the initial executive
trustees, 2 of the initial executive trustees shall serve for a
term of one year, one initial executive trustee shall serve for
a term of 2 years, one initial executive trustee shall serve
for a term of 3 years, and one initial executive trustee shall
serve for a term of 4 years. The terms of the initial executive
trustees shall be determined by lot at the first meeting of the
Board.
(40 ILCS 5/3-128.2 new)
Sec. 3-128.2. Election of police officer and annuitant
trustees.

SB3487 - 51 - LRB100 20044 MJP 35326 b
(a) Beginning January 1, 2020, the election of police
officer and annuitant trustees shall be conducted in accordance
with this Section. The annuitant trustees shall be elected in
an election separate from the election for police officer
trustees.
(b) During the period beginning on August 1 and ending on
September 15 of each applicable year, the Board shall accept
nominations of candidates for election as police officer or
annuitant trustees for terms beginning on the next January 1,
and for vacancies to be filled by election.
All nominations for the position of police officer trustee
shall be by petition, signed by at least 50 active police
officers participating in the Fund. All nominations for the
position of annuitant trustee shall be by petition, signed by
at least 25 annuitants of the Fund.
(c) The election shall be by ballot and may be conducted in
person, by mail, or electronically, pursuant to the rules and
procedures established by the Board.
All candidates properly nominated in petitions received by
the Board shall be placed in alphabetical order on the proper
ballot. In the initial election, there shall be one election
for the 3 police officer trusteeships, and the 3 candidates
getting the highest number of votes shall be declared elected.
In the initial election there shall be one election for the 2
annuitant trusteeships, and the 2 candidates receiving the
highest number of votes shall be declared elected.

SB3487 - 52 - LRB100 20044 MJP 35326 b
(d) No person shall cast more than one vote for each
candidate for whom he or she is eligible to vote. In elections
for board members to be chosen from the active police officers,
all active police officers and no others may vote. In elections
for board members to be chosen from retired police officers,
all retired police officers and no others may vote.
In case of a tie vote, the candidate currently (or in the
case of an annuitant trustee, formerly) employed by the
municipality having the greatest number of participating
police officers at the time of the election shall be declared
elected.
(e) The election shall be completed by December 1 of the
year. The result shall be entered in the minutes of the meeting
of the Board following the tally of votes.
(f) Each trustee so elected shall hold office for a term of
4 years and until his or her successor has been duly elected
and qualified, except that the initial police officer trustees
shall serve for terms of one, 2, or 3 years, as determined by
lot at the first meeting of the Board. The initial annuitant
trustees shall serve terms of 3 or 4 years, as determined by
lot at the first meeting of the Board.
(40 ILCS 5/3-134) (from Ch. 108 1/2, par. 3-134)
Sec. 3-134. To submit annual list of Fund fund payments. To
submit annually to the governing body of each participating
municipality city council or board of trustees at the close of

SB3487 - 53 - LRB100 20044 MJP 35326 b
the municipality's fiscal year, a list of persons entitled to
payments from the Fund that are chargeable to the account of
the participating municipality fund, stating the amount of
payments, and their purpose, as ordered by the Board board. It
shall also include items of income accrued to the account of
the participating municipality fund during the fiscal year. The
list shall be signed by the secretary and president of the
Board board, and attested under oath. A resolution or order for
the payment of money shall not be valid unless approved by a
majority of the Board board members, and signed by the
president and secretary of the Board board.
(Source: P.A. 83-1440.)
(40 ILCS 5/3-135) (from Ch. 108 1/2, par. 3-135)
Sec. 3-135. To invest funds. To determine the limitations
on the amounts of cash to be invested in order to maintain such
cash balances as may be deemed advisable to meet current
annuity, benefit, and expense requirements, and to invest the
remaining available cash in securities, in accordance with the
prudent person investment rule and the other provisions of this
Article. Beginning on the consolidation date, the Article 1 and
1A restrictions on the investment of Article 3 Funds no longer
apply, except to the extent that they do not also apply to
Article 7 of this Code. Beginning January 1, 1998, the board
shall invest funds in accordance with Sections 1-113.1 through
1-113.10 of this Code.

SB3487 - 54 - LRB100 20044 MJP 35326 b
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/3-140.5 new)
Sec. 3-140.5. Custodian. The Board shall appoint one or
more custodians to receive and hold the assets of the Fund on
such terms as the Board may agree.
(40 ILCS 5/3-141) (from Ch. 108 1/2, par. 3-141)
Sec. 3-141. Annual report by treasurer. On the 2nd Tuesday
in May annually through 2020, the treasurer of the municipality
and all other officials of the municipality who had the custody
of any pension funds herein provided, shall make a sworn
statement to the pension board, and to the mayor and council or
president and board of trustees of the municipality, of all
moneys received and paid out by them on account of the pension
fund during the year, and of the amount of funds then on hand
and owing to the pension fund. The final report required under
this subsection shall be due in May of 2020 and shall include
the period up to and including the consolidation of the
municipality's pension fund into the Downstate Police Pension
Fund. All surplus then remaining with any official other than
the treasurer shall be paid to the treasurer of the
municipality or as directed by the Board. Upon demand of the
Board pension board, any official shall furnish a statement
relative to the official method of collection or handling of
the pension funds. All books and records of that official shall

SB3487 - 55 - LRB100 20044 MJP 35326 b
be produced at any time by him for examination and inspection
by the Board board.
(Source: P.A. 83-1440.)
(40 ILCS 5/3-141a new)
Sec. 3-141a. Deposit and disposition of funds; custodian.
(a) All money received by the Board shall immediately be
deposited with the custodian for the account of the Fund. All
payments from the accounts of the Fund shall be made by the
custodian only, and only by a check or draft signed by the
president of the board or the executive director, as the board
may direct. Such checks and drafts shall be drawn only upon
proper authorization by the board as properly recorded in the
official minute books of the meetings of the Board.
(b) The assets of the Pension Fund shall be invested as one
fund, and no particular person or municipality shall have any
right in any specific security or in any item of cash other
than an undivided interest in the whole.
(c) If a participating municipality terminates
participation because it fails to meet the requirements of
Section 3-103, it shall pay to the Fund the amount equal to any
net debit balance in its municipality account and any account
receivable. Its successors, assigns, and transferees of its
assets shall be obligated to make this payment to the extent of
the value of assets transferred to them. The Fund shall pay an
amount equal to any net credit balance to the participating

SB3487 - 56 - LRB100 20044 MJP 35326 b
municipality, its successors or assigns. Any remaining net
debit or credit balance not collectible or payable shall be
transferred to a terminated municipality reserve account. The
Fund shall pay to each police officer of the participating
municipality an amount equal to his or her credits in the
employee reserves. The employees shall have no further rights
to any benefits from the Fund, except that annuities awarded
prior to the date of termination shall continue to be paid.
(40 ILCS 5/3-141b new)
Sec. 3-141b. Authorizations.
(a) Each participating municipality shall:
(1) deduct all normal and additional contributions
from each payment of earnings payable to each participating
employee who is entitled to any earnings from the
municipality, and remit all normal and additional
contributions immediately to the Board; and
(2) pay to the Board contributions required by this
Article.
(b) Each participating employee shall, by virtue of the
payment of contributions to this Fund, receive a vested
interest in the annuities and benefits provided in this Article
and in consideration of such vested interest shall be deemed to
have agreed and authorized the deduction from earnings of all
contributions payable to this Fund in accordance with this
Article.

SB3487 - 57 - LRB100 20044 MJP 35326 b
(c) Payment of earnings less the amounts of contributions
provided in this Article shall be a full and complete discharge
of all claims for payment for services rendered by any employee
during the period covered by any such payment.
(40 ILCS 5/3-141c new)
Sec. 3-141c. Executive director. The executive director
shall be in charge of the general administration of the Fund
and shall have such special powers and duties as may be
properly delegated or assigned by the Board from time to time.
Such general administrative duties shall include: the
computation of the amounts of annuities, benefits, prior
service credits, and contributions required for reinstatement
of credits for Board consideration; the processing of approved
benefit claims and expenses of administration for payment; the
placing of any and all matters before the Board which require
action or are in the interest of the Board or the Fund; the
preparation and maintenance of necessary and proper records for
administrative and actuarial purposes; the conduct of any
necessary or desirable communications in the course of
operations of the Fund; and the carrying out of any actions of
the Board which are so delegated.
(40 ILCS 5/3-141d new)
Sec. 3-141d. Actuary.
(a) The actuary shall be the technical advisor of the

SB3487 - 58 - LRB100 20044 MJP 35326 b
Board. In addition to general advice, the actuary shall
specifically be responsible for and shall make a general
investigation, at least once every 3 years, of the experience
of the participating municipalities as to mortality,
disability, retirement, separation, marital status of
employees, marriage of surviving spouses, interest, and
employee earnings rates, and to make recommendations as a
result of any such investigation as to:
(1) the actuarial tables to be used for computing
annuities and benefits and for determining the premiums for
disability and death benefit purposes;
(2) the tables to be used in any regular actuarial
valuations; and
(3) the prescribed rate of interest.
(b) The actuary shall make the computations of municipality
obligations, contribution rates including annual valuations of
the liabilities and reserves for present and prospective
annuities and benefits, and certify to the correctness thereof.
(c) The actuary shall advise the Board on any matters of an
actuarial nature affecting the Fund.
Section 90. The State Mandates Act is amended by adding
Section 8.42 as follows:
(30 ILCS 805/8.42 new)
Sec. 8.42. Exempt mandate. Notwithstanding Sections 6 and 8

SB3487 - 59 - LRB100 20044 MJP 35326 b
of this Act, no reimbursement by the State is required for the
implementation of any mandate created by this amendatory Act of
the 100th General Assembly.
Section 99. Effective date. This Act takes effect upon
becoming law, except that Section 10 takes effect January 1,
2020.
SB3487 - 60 - LRB100 20044 MJP 35326 b
INDEX
Statutes amended in order of appearance
40 ILCS 5/3-101 from Ch. 108 1/2, par. 3-101
40 ILCS 5/3-101.1 new
40 ILCS 5/3-101.2 new
40 ILCS 5/3-108.2a new
40 ILCS 5/3-109.5 new
40 ILCS 5/3-111 from Ch. 108 1/2, par. 3-111
40 ILCS 5/3-111.1 from Ch. 108 1/2, par. 3-111.1
40 ILCS 5/3-112 from Ch. 108 1/2, par. 3-112
40 ILCS 5/7-199.5 new
40 ILCS 5/3-102.1 new
40 ILCS 5/3-103 from Ch. 108 1/2, par. 3-103
40 ILCS 5/3-103.9 new
40 ILCS 5/3-104 new
40 ILCS 5/3-105 from Ch. 108 1/2, par. 3-105
40 ILCS 5/3-108.2
40 ILCS 5/3-108.3
40 ILCS 5/3-110 from Ch. 108 1/2, par. 3-110
40 ILCS 5/3-110.7
40 ILCS 5/3-125 from Ch. 108 1/2, par. 3-125
40 ILCS 5/3-125.1 from Ch. 108 1/2, par. 3-125.1
40 ILCS 5/3-128 from Ch. 108 1/2, par. 3-128
40 ILCS 5/3-128.1 new
40 ILCS 5/3-128.2 new
SB3487 - 61 - LRB100 20044 MJP 35326 b