97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3228

 

Introduced 2/24/2011, by Rep. Dan Brady

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-141.1
30 ILCS 805/8.35 new

    Amends the IMRF Article of the Illinois Pension Code. Provides that the restriction on return to service after accepting early retirement benefits applies only to (A) employment for which the person is required (or is allowed and has elected) to participate in the Fund and (B) contractual personal services which, if performed as an employee, would require the employee to participate in the Fund. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB097 06320 JDS 46398 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

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1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by
5changing Section 7-141.1 as follows:
 
6    (40 ILCS 5/7-141.1)
7    Sec. 7-141.1. Early retirement incentive.
8    (a) The General Assembly finds and declares that:
9        (1) Units of local government across the State have
10    been functioning under a financial crisis.
11        (2) This financial crisis is expected to continue.
12        (3) Units of local government must depend on additional
13    sources of revenue and, when those sources are not
14    forthcoming, must establish cost-saving programs.
15        (4) An early retirement incentive designed
16    specifically to target highly-paid senior employees could
17    result in significant annual cost savings.
18        (5) The early retirement incentive should be made
19    available only to those units of local government that
20    determine that an early retirement incentive is in their
21    best interest.
22        (6) A unit of local government adopting a program of
23    early retirement incentives under this Section is

 

 

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1    encouraged to implement personnel procedures to prohibit,
2    for at least 5 years, the rehiring (whether on payroll or
3    by independent contract) of employees who receive early
4    retirement incentives.
5        (7) A unit of local government adopting a program of
6    early retirement incentives under this Section is also
7    encouraged to replace as few of the participating employees
8    as possible and to hire replacement employees for salaries
9    totaling no more than 80% of the total salaries formerly
10    paid to the employees who participate in the early
11    retirement program.
12    It is the primary purpose of this Section to encourage
13units of local government that can realize true cost savings,
14or have determined that an early retirement program is in their
15best interest, to implement an early retirement program.
16    (b) Until the effective date of this amendatory Act of
171997, this Section does not apply to any employer that is a
18city, village, or incorporated town, nor to the employees of
19any such employer. Beginning on the effective date of this
20amendatory Act of 1997, any employer under this Article,
21including an employer that is a city, village, or incorporated
22town, may establish an early retirement incentive program for
23its employees under this Section. The decision of a city,
24village, or incorporated town to consider or establish an early
25retirement program is at the sole discretion of that city,
26village, or incorporated town, and nothing in this amendatory

 

 

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1Act of 1997 limits or otherwise diminishes this discretion.
2Nothing contained in this Section shall be construed to require
3a city, village, or incorporated town to establish an early
4retirement program and no city, village, or incorporated town
5may be compelled to implement such a program.
6    The benefits provided in this Section are available only to
7members employed by a participating employer that has filed
8with the Board of the Fund a resolution or ordinance expressly
9providing for the creation of an early retirement incentive
10program under this Section for its employees and specifying the
11effective date of the early retirement incentive program.
12Subject to the limitation in subsection (h), an employer may
13adopt a resolution or ordinance providing a program of early
14retirement incentives under this Section at any time.
15    The resolution or ordinance shall be in substantially the
16following form:
 
17
RESOLUTION (ORDINANCE) NO. ....
18
A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
19
RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
20
IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
21    WHEREAS, Section 7-141.1 of the Illinois Pension Code
22provides that a participating employer may elect to adopt an
23early retirement incentive program offered by the Illinois
24Municipal Retirement Fund by adopting a resolution or
25ordinance; and

 

 

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1    WHEREAS, The goal of adopting an early retirement program
2is to realize a substantial savings in personnel costs by
3offering early retirement incentives to employees who have
4accumulated many years of service credit; and
5    WHEREAS, Implementation of the early retirement program
6will provide a budgeting tool to aid in controlling payroll
7costs; and
8    WHEREAS, The (name of governing body) has determined that
9the adoption of an early retirement incentive program is in the
10best interests of the (name of participating employer);
11therefore be it
12    RESOLVED (ORDAINED) by the (name of governing body) of
13(name of participating employer) that:
14    (1) The (name of participating employer) does hereby adopt
15the Illinois Municipal Retirement Fund early retirement
16incentive program as provided in Section 7-141.1 of the
17Illinois Pension Code. The early retirement incentive program
18shall take effect on (date).
19    (2) In order to help achieve a true cost savings, a person
20who retires under the early retirement incentive program shall
21lose those incentives if he or she later accepts employment
22with any IMRF employer in a position for which participation in
23IMRF is required or is elected by the employee.
24    (3) In order to utilize an early retirement incentive as a
25budgeting tool, the (name of participating employer) will use
26its best efforts either to limit the number of employees who

 

 

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1replace the employees who retire under the early retirement
2program or to limit the salaries paid to the employees who
3replace the employees who retire under the early retirement
4program.
5    (4) The effective date of each employee's retirement under
6this early retirement program shall be set by (name of
7employer) and shall be no earlier than the effective date of
8the program and no later than one year after that effective
9date; except that the employee may require that the retirement
10date set by the employer be no later than the June 30 next
11occurring after the effective date of the program and no
12earlier than the date upon which the employee qualifies for
13retirement.
14    (5) To be eligible for the early retirement incentive under
15this Section, the employee must have attained age 50 and have
16at least 20 years of creditable service by his or her
17retirement date.
18    (6) The (clerk or secretary) shall promptly file a
19certified copy of this resolution (ordinance) with the Board of
20Trustees of the Illinois Municipal Retirement Fund.
21CERTIFICATION
22    I, (name), the (clerk or secretary) of the (name of
23participating employer) of the County of (name), State of
24Illinois, do hereby certify that I am the keeper of the books
25and records of the (name of employer) and that the foregoing is
26a true and correct copy of a resolution (ordinance) duly

 

 

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1adopted by the (governing body) at a meeting duly convened and
2held on (date).
3SEAL
4(Signature of clerk or secretary)
 
5    (c) To be eligible for the benefits provided under an early
6retirement incentive program adopted under this Section, a
7member must:
8        (1) be a participating employee of this Fund who, on
9    the effective date of the program, (i) is in active payroll
10    status as an employee of a participating employer that has
11    filed the required ordinance or resolution with the Board,
12    (ii) is on layoff status from such a position with a right
13    of re-employment or recall to service, (iii) is on a leave
14    of absence from such a position, or (iv) is on disability
15    but has not been receiving benefits under Section 7-146 or
16    7-150 for a period of more than 2 years from the date of
17    application;
18        (2) have never previously received a retirement
19    annuity under this Article or under the Retirement Systems
20    Reciprocal Act using service credit established under this
21    Article;
22        (3) (blank);
23        (4) have at least 20 years of creditable service in the
24    Fund by the date of retirement, without the use of any
25    creditable service established under this Section;

 

 

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1        (5) have attained age 50 by the date of retirement,
2    without the use of any age enhancement received under this
3    Section; and
4        (6) be eligible to receive a retirement annuity under
5    this Article by the date of retirement, for which purpose
6    the age enhancement and creditable service established
7    under this Section may be considered.
8    (d) The employer shall determine the retirement date for
9each employee participating in the early retirement program
10adopted under this Section. The retirement date shall be no
11earlier than the effective date of the program and no later
12than one year after that effective date, except that the
13employee may require that the retirement date set by the
14employer be no later than the June 30 next occurring after the
15effective date of the program and no earlier than the date upon
16which the employee qualifies for retirement. The employer shall
17give each employee participating in the early retirement
18program at least 30 days written notice of the employee's
19designated retirement date, unless the employee waives this
20notice requirement.
21    (e) An eligible person may establish up to 5 years of
22creditable service under this Section. In addition, for each
23period of creditable service established under this Section, a
24person shall have his or her age at retirement deemed enhanced
25by an equivalent period.
26    The creditable service established under this Section may

 

 

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1be used for all purposes under this Article and the Retirement
2Systems Reciprocal Act, except for the computation of final
3rate of earnings and the determination of earnings, salary, or
4compensation under this or any other Article of the Code.
5    The age enhancement established under this Section may be
6used for all purposes under this Article (including calculation
7of the reduction imposed under subdivision (a)1b(iv) of Section
87-142), except for purposes of a reversionary annuity under
9Section 7-145 and any distributions required because of age.
10The age enhancement established under this Section may be used
11in calculating a proportionate annuity payable by this Fund
12under the Retirement Systems Reciprocal Act, but shall not be
13used in determining benefits payable under other Articles of
14this Code under the Retirement Systems Reciprocal Act.
15    (f) For all creditable service established under this
16Section, the member must pay to the Fund an employee
17contribution consisting of 4.5% of the member's highest annual
18salary rate used in the determination of the final rate of
19earnings for retirement annuity purposes for each year of
20creditable service granted under this Section. For creditable
21service established under this Section by a person who is a
22sheriff's law enforcement employee to be deemed service as a
23sheriff's law enforcement employee, the employee contribution
24shall be at the rate of 6.5% of highest annual salary per year
25of creditable service granted. Contributions for fractions of a
26year of service shall be prorated. Any amounts that are

 

 

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1disregarded in determining the final rate of earnings under
2subdivision (d)(5) of Section 7-116 (the 125% rule) shall also
3be disregarded in determining the required contribution under
4this subsection (f).
5    The employee contribution shall be paid to the Fund as
6follows: If the member is entitled to a lump sum payment for
7accumulated vacation, sick leave, or personal leave upon
8withdrawal from service, the employer shall deduct the employee
9contribution from that lump sum and pay the deducted amount
10directly to the Fund. If there is no such lump sum payment or
11the required employee contribution exceeds the net amount of
12the lump sum payment, then the remaining amount due, at the
13option of the employee, may either be paid to the Fund before
14the annuity commences or deducted from the retirement annuity
15in 24 equal monthly installments.
16    (g) An annuitant who has received any age enhancement or
17creditable service under this Section and thereafter accepts
18employment with or enters into a personal services contract
19with an employer under this Article thereby forfeits that age
20enhancement and creditable service; except that this
21restriction does not apply to (1) service in an elective
22office, so long as the annuitant does not participate in this
23Fund with respect to that office and (2) a person appointed as
24an officer under subsection (f) of Section 3-109 of this Code
25and except that beginning on the effective date of this
26amendatory Act of the 97th General Assembly, this restriction

 

 

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1applies only to (A) employment for which the person is required
2(or is allowed and has elected) to participate in this Fund and
3(B) contractual personal services that, if performed as an
4employee, would require the employee to participate in this
5Fund.
6    A person forfeiting early retirement incentives under this
7subsection (i) must repay to the Fund that portion of the
8retirement annuity already received which is attributable to
9the early retirement incentives that are being forfeited, (ii)
10shall not be eligible to participate in any future early
11retirement program adopted under this Section, and (iii) is
12entitled to a refund of the employee contribution paid under
13subsection (f). The Board shall deduct the required repayment
14from the refund and may impose a reasonable payment schedule
15for repaying the amount, if any, by which the required
16repayment exceeds the refund amount.
17    The change made to this subsection by this amendatory Act
18of the 97th General Assembly is not limited to persons in
19service on or after its effective date, but it does not restore
20eligibility for early retirement benefits to any person who has
21previously forfeited those benefits due to employment accepted
22(or a contract entered into) before that effective date.
23    (h) The additional unfunded liability accruing as a result
24of the adoption of a program of early retirement incentives
25under this Section by an employer shall be amortized over a
26period of 10 years beginning on January 1 of the second

 

 

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1calendar year following the calendar year in which the latest
2date for beginning to receive a retirement annuity under the
3program (as determined by the employer under subsection (d) of
4this Section) occurs; except that the employer may provide for
5a shorter amortization period (of no less than 5 years) by
6adopting an ordinance or resolution specifying the length of
7the amortization period and submitting a certified copy of the
8ordinance or resolution to the Fund no later than 6 months
9after the effective date of the program. An employer, at its
10discretion, may accelerate payments to the Fund.
11    An employer may provide more than one early retirement
12incentive program for its employees under this Section.
13However, an employer that has provided an early retirement
14incentive program for its employees under this Section may not
15provide another early retirement incentive program under this
16Section until the liability arising from the earlier program
17has been fully paid to the Fund.
18(Source: P.A. 96-775, eff. 8-28-09.)
 
19    Section 90. The State Mandates Act is amended by adding
20Section 8.35 as follows:
 
21    (30 ILCS 805/8.35 new)
22    Sec. 8.35. Exempt mandate. Notwithstanding Sections 6 and 8
23of this Act, no reimbursement by the State is required for the
24implementation of any mandate created by this amendatory Act of

 

 

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1the 97th General Assembly.
 
2    Section 99. Effective date. This Act takes effect upon
3becoming law.