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1 | AN ACT in relation to public employee benefits.
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2 | Be it enacted by the People of the State of Illinois, | ||||||
3 | represented in the General Assembly:
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4 | Section 5. The Illinois Pension Code is amended by changing | ||||||
5 | Section
7-141.1 as follows:
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6 | (40 ILCS 5/7-141.1)
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7 | Sec. 7-141.1. Early retirement incentive.
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8 | (a) The General Assembly finds and declares that:
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9 | (1) Units of local government across the State have | ||||||
10 | been functioning
under a financial crisis.
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11 | (2) This financial crisis is expected to continue.
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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.
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15 | (4) An early retirement incentive designed | ||||||
16 | specifically to target
highly-paid senior employees could | ||||||
17 | result in significant annual cost
savings.
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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.
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22 | (6) A unit of local government adopting a program of | ||||||
23 | early retirement
incentives under this Section is | ||||||
24 | encouraged to implement personnel procedures
to prohibit, | ||||||
25 | for at least 5 years, the rehiring (whether on payroll or | ||||||
26 | by
independent contract) of employees who receive early | ||||||
27 | retirement incentives.
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28 | (7) A unit of local government adopting a program of | ||||||
29 | early retirement
incentives under this Section is also | ||||||
30 | encouraged to replace as few of the
participating employees | ||||||
31 | as possible and to hire replacement employees for
salaries | ||||||
32 | totaling no more than 80% of the total salaries formerly |
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1 | paid to the
employees who participate in the early | ||||||
2 | retirement program.
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3 | It is the primary purpose of this Section to encourage | ||||||
4 | units of local
government that can realize true cost savings, | ||||||
5 | or have determined that an early
retirement program is in their | ||||||
6 | best interest, to implement an early retirement
program.
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7 | (b) Until the effective date of this amendatory Act of | ||||||
8 | 1997, this
Section does not apply to any employer that is a | ||||||
9 | city, village, or incorporated
town, nor to the employees of | ||||||
10 | any such employer. Beginning on the effective
date of this | ||||||
11 | amendatory Act of 1997, any employer under this Article, | ||||||
12 | including
an employer that is a city, village, or incorporated | ||||||
13 | town, may establish an
early retirement incentive program for | ||||||
14 | its employees under this Section. The
decision of a city, | ||||||
15 | village, or incorporated town to consider or establish an
early | ||||||
16 | retirement program is at the sole discretion of that city, | ||||||
17 | village, or
incorporated town, and nothing in this amendatory | ||||||
18 | Act of 1997 limits or
otherwise diminishes this discretion. | ||||||
19 | Nothing contained in this Section shall
be construed to require | ||||||
20 | a city, village, or incorporated town to establish an
early | ||||||
21 | retirement program and no city, village, or incorporated town | ||||||
22 | may be
compelled to implement such a program.
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23 | The benefits provided in this Section are available only to | ||||||
24 | members
employed by a participating employer that has filed | ||||||
25 | with the Board of the
Fund a resolution or ordinance expressly | ||||||
26 | providing for the creation of an
early retirement incentive | ||||||
27 | program under this Section for its employees and
specifying the | ||||||
28 | effective date of the early retirement incentive program.
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29 | Subject to the limitation in subsection (h), an employer may | ||||||
30 | adopt a resolution
or ordinance providing a program of early | ||||||
31 | retirement incentives under this
Section at any time.
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32 | The resolution or ordinance shall be in substantially the | ||||||
33 | following form:
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34 | RESOLUTION (ORDINANCE) NO. ....
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35 | A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
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1 | RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
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2 | IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
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3 | WHEREAS, Section 7-141.1 of the Illinois Pension Code | ||||||
4 | provides that a
participating employer may elect to adopt an | ||||||
5 | early retirement
incentive program offered by the Illinois | ||||||
6 | Municipal Retirement Fund by
adopting a resolution or | ||||||
7 | ordinance; and
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8 | WHEREAS, The goal of adopting an early retirement program | ||||||
9 | is
to realize a substantial savings in personnel costs by | ||||||
10 | offering early
retirement incentives to employees who have | ||||||
11 | accumulated many years of
service credit; and
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12 | WHEREAS, Implementation of the early retirement program | ||||||
13 | will provide a
budgeting tool to aid in controlling payroll | ||||||
14 | costs; and
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15 | WHEREAS, The (name of governing body) has determined that | ||||||
16 | the adoption of an
early retirement incentive program is in the | ||||||
17 | best interests of the (name of
participating employer); | ||||||
18 | therefore be it
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19 | RESOLVED (ORDAINED) by the (name of governing body) of | ||||||
20 | (name of
participating employer) that:
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21 | (1) The (name of participating employer) does hereby adopt | ||||||
22 | the Illinois
Municipal Retirement Fund early retirement | ||||||
23 | incentive program as provided in
Section 7-141.1 of the | ||||||
24 | Illinois Pension Code. The early retirement incentive
program | ||||||
25 | shall take effect on (date).
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26 | (2) In order to help achieve a true cost savings, a person | ||||||
27 | who retires under
the early retirement incentive program shall | ||||||
28 | lose those incentives if he or she
later accepts employment | ||||||
29 | with any IMRF employer in a position for which
participation in | ||||||
30 | IMRF is required or is elected by the employee.
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31 | (3) In order to utilize an early retirement incentive as a | ||||||
32 | budgeting
tool, the (name of participating employer) will use | ||||||
33 | its best efforts either
to limit the number of employees who | ||||||
34 | replace the employees who retire under
the early retirement | ||||||
35 | program or to limit the salaries paid to the employees who
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36 | replace the employees who retire under the early retirement |
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1 | program.
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2 | (4) The effective date of each employee's retirement under | ||||||
3 | this early
retirement program shall be set by (name of | ||||||
4 | employer) and shall be no
earlier than the effective date of | ||||||
5 | the program and no later than one year after
that effective | ||||||
6 | date; except that the employee may require that the retirement
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7 | date set by the employer be no later than the June 30 next | ||||||
8 | occurring after the
effective date of the program and no | ||||||
9 | earlier than the date upon which the
employee qualifies for | ||||||
10 | retirement.
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11 | (5) To be eligible for the early retirement incentive under | ||||||
12 | this Section,
the employee must have attained age 50 and have | ||||||
13 | at least 20 years of creditable
service by his or her | ||||||
14 | retirement date.
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15 | (6) The (clerk or secretary) shall promptly file a | ||||||
16 | certified copy of
this resolution (ordinance) with the Board of | ||||||
17 | Trustees of the Illinois
Municipal Retirement Fund.
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18 | CERTIFICATION
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19 | I, (name), the (clerk or secretary) of the (name of | ||||||
20 | participating
employer) of the County of (name), State of | ||||||
21 | Illinois, do hereby certify
that I am the keeper of the books | ||||||
22 | and records of the (name of employer)
and that the foregoing is | ||||||
23 | a true and correct copy of a resolution
(ordinance) duly | ||||||
24 | adopted by the (governing body) at a meeting duly convened
and | ||||||
25 | held on (date).
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26 | SEAL
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27 | (Signature of clerk or secretary)
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28 | (c) To be eligible for the benefits provided under an early | ||||||
29 | retirement
incentive program adopted under this Section, a | ||||||
30 | member must:
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31 | (1) be a participating employee of this Fund who, on | ||||||
32 | the effective date of
the program, (i) is in active payroll | ||||||
33 | status as an employee of a participating
employer that has | ||||||
34 | filed the required ordinance or resolution with the Board,
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35 | (ii) is on layoff status from such a position with a right |
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1 | of re-employment or
recall to service, (iii) is on a leave | ||||||
2 | of absence from such a position, or (iv)
is on disability | ||||||
3 | but has not been receiving benefits under Section 7-146 or
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4 | 7-150 for a period of more than 2 years from the date of | ||||||
5 | application;
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6 | (2) have never previously received a retirement | ||||||
7 | annuity under
this Article or under the Retirement Systems | ||||||
8 | Reciprocal Act using service
credit established under this | ||||||
9 | Article;
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10 | (3) (blank);
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11 | (4) have at least 20 years of creditable service in the | ||||||
12 | Fund by the date
of retirement, without the use of any | ||||||
13 | creditable service established under this
Section;
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14 | (5) have attained age 50 by the date of retirement, | ||||||
15 | without the use of any
age enhancement received under this | ||||||
16 | Section; and
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17 | (6) be eligible to receive a retirement annuity under | ||||||
18 | this Article by the
date of retirement, for which purpose | ||||||
19 | the age enhancement and creditable
service established | ||||||
20 | under this Section may be considered.
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21 | (d) The employer shall determine the retirement date for | ||||||
22 | each employee
participating in the early retirement program | ||||||
23 | adopted under this Section. The
retirement date shall be no | ||||||
24 | earlier than the effective date of the program and
no later | ||||||
25 | than one year after that effective date, except that the | ||||||
26 | employee may
require that the retirement date set by the | ||||||
27 | employer be no later than the June
30 next occurring after the | ||||||
28 | effective date of the program and no earlier than
the date upon | ||||||
29 | which the employee qualifies for retirement. The employer shall
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30 | give each employee participating in the early retirement | ||||||
31 | program at least 30
days written notice of the employee's | ||||||
32 | designated retirement date, unless the
employee waives this | ||||||
33 | notice requirement.
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34 | (e) An eligible person may establish up to 5 years of | ||||||
35 | creditable service
under this Section. In addition, for each | ||||||
36 | period of creditable service
established under this Section, a |
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1 | person shall have his or her age at
retirement deemed enhanced | ||||||
2 | by an equivalent period.
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3 | The creditable service established under this Section may | ||||||
4 | be used for all
purposes under this Article and the Retirement | ||||||
5 | Systems Reciprocal Act,
except for the computation of final | ||||||
6 | rate of earnings and the determination
of earnings, salary, or | ||||||
7 | compensation under this or any other Article of the
Code.
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8 | The age enhancement established under this Section may be | ||||||
9 | used for all
purposes under this Article (including calculation | ||||||
10 | of the reduction imposed
under subdivision (a)1b(iv) of Section | ||||||
11 | 7-142), except for purposes of a
reversionary annuity under | ||||||
12 | Section 7-145 and any distributions required because
of age. | ||||||
13 | The age enhancement established under this Section may be used | ||||||
14 | in
calculating a proportionate annuity payable by this Fund | ||||||
15 | under the Retirement
Systems Reciprocal Act, but shall not be | ||||||
16 | used in determining benefits payable
under other Articles of | ||||||
17 | this Code under the Retirement Systems Reciprocal Act.
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18 | (f) For all creditable service established under this | ||||||
19 | Section, the
member must pay to the Fund an employee | ||||||
20 | contribution consisting of 4.5%
of the member's highest annual | ||||||
21 | salary rate used in the determination of the
final rate of | ||||||
22 | earnings for retirement annuity purposes for each year of
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23 | creditable service granted under this Section. For creditable | ||||||
24 | service
established under this Section by a person who is a | ||||||
25 | sheriff's law
enforcement employee to be deemed service as a | ||||||
26 | sheriff's law enforcement
employee, the employee contribution | ||||||
27 | shall be at the rate of 6.5%
of highest annual salary per year | ||||||
28 | of creditable service granted.
Contributions for fractions of a | ||||||
29 | year of service shall be prorated.
Any amounts that are | ||||||
30 | disregarded in determining the final rate of earnings
under | ||||||
31 | subdivision (d)(5) of Section 7-116 (the 125% rule) shall also | ||||||
32 | be
disregarded in determining the required contribution under | ||||||
33 | this subsection (f).
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34 | The employee contribution shall be paid to the Fund as | ||||||
35 | follows: If the
member is entitled to a lump sum payment for | ||||||
36 | accumulated vacation, sick leave,
or personal leave upon |
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1 | withdrawal from service, the employer shall deduct the
employee | ||||||
2 | contribution from that lump sum and pay the deducted amount | ||||||
3 | directly
to the Fund. If there is no such lump sum payment or | ||||||
4 | the required employee
contribution exceeds the net amount of | ||||||
5 | the lump sum payment, then the remaining
amount due, at the | ||||||
6 | option of the employee, may either be paid to the Fund
before | ||||||
7 | the annuity commences or deducted from the retirement annuity | ||||||
8 | in 24
equal monthly installments.
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9 | (g) An annuitant who has received any age enhancement or | ||||||
10 | creditable service
under this Section and thereafter accepts | ||||||
11 | employment with or enters into a
personal services contract | ||||||
12 | with an employer under this Article thereby forfeits
that age | ||||||
13 | enhancement and creditable service ; except that this | ||||||
14 | restriction
does not apply to service in an elective office, so | ||||||
15 | long as the annuitant
does not participate in this Fund with | ||||||
16 | respect to that office . A person
forfeiting early retirement | ||||||
17 | incentives under this subsection (i) must repay to
the Fund | ||||||
18 | that portion of the retirement annuity already received which | ||||||
19 | is
attributable to the early retirement incentives that are | ||||||
20 | being forfeited, (ii)
shall not be eligible to participate in | ||||||
21 | any future early retirement program
adopted under this Section, | ||||||
22 | and (iii) is entitled to a refund of the employee
contribution | ||||||
23 | paid under subsection (f). The Board shall deduct the required
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24 | repayment from the refund and may impose a reasonable payment | ||||||
25 | schedule for
repaying the amount, if any, by which the required | ||||||
26 | repayment exceeds the refund
amount.
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27 | (h) The additional unfunded liability accruing as a result | ||||||
28 | of the adoption
of a program of early retirement incentives | ||||||
29 | under this Section by an employer
shall be amortized over a | ||||||
30 | period of 10 years beginning on January 1 of the
second | ||||||
31 | calendar year following the calendar year in which the latest | ||||||
32 | date for
beginning to receive a retirement annuity under the | ||||||
33 | program (as determined by
the employer under subsection (d) of | ||||||
34 | this Section) occurs; except that the
employer may provide for | ||||||
35 | a shorter amortization period (of no less than 5
years) by | ||||||
36 | adopting an ordinance or resolution specifying the length of |
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1 | the
amortization period and submitting a certified copy of the | ||||||
2 | ordinance or
resolution to the Fund no later than 6 months | ||||||
3 | after the effective date of the
program. An employer, at its | ||||||
4 | discretion, may accelerate payments to the Fund.
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5 | An employer may provide more than one early retirement | ||||||
6 | incentive program
for its employees under this Section. | ||||||
7 | However, an employer that has provided
an early retirement | ||||||
8 | incentive program for its employees under this Section may
not | ||||||
9 | provide another early retirement incentive program under this | ||||||
10 | Section until the liability arising from the earlier program | ||||||
11 | has been fully paid to
the Fund.
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12 | (Source: P.A. 90-32, eff. 6-27-97; 91-887, eff. 7-6-00.)
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13 | Section 99. Effective date. This Act takes effect upon | ||||||
14 | becoming law.
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