093_HB2646

 
                                     LRB093 08342 EFG 08561 b

 1        AN ACT in relation to public employee benefits.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.   The  Illinois  Pension  Code  is amended by
 5    adding Sections 3-105.3 and  3-111.2  and  changing  Sections
 6    3-111 and 3-111.1 as follows:

 7        (40 ILCS 5/3-105.3 new)
 8        Sec.   3-105.3.    Deferred   Retirement   Option   Plan.
 9    "Deferred  Retirement  Option  Plan" or "DROP plan" means the
10    Deferred Retirement Option  Plan  established  under  Section
11    3-111.2.

12        (40 ILCS 5/3-111) (from Ch. 108 1/2, par. 3-111)
13        Sec. 3-111.  Pension.
14        (a)  A  police  officer  age  50  or more with 20 or more
15    years of creditable service, who is not a participant in  the
16    self-managed  plan under Section 3-109.3 and who is no longer
17    in service as a police officer, shall receive  a  pension  of
18    1/2 of the salary attached to the rank held by the officer on
19    the police force for one year immediately prior to retirement
20    or, beginning July 1, 1987 for persons terminating service on
21    or  after  that date, the salary attached to the rank held on
22    the last day of service or for one year  prior  to  the  last
23    day, whichever is greater.  The pension shall be increased by
24    2.5%  of such salary for each additional year of service over
25    20 years of service through 30 years of service, to a maximum
26    of 75% of such salary.
27        The  changes  made  to  this  subsection  (a)   by   this
28    amendatory  Act  of  the  91st  General Assembly apply to all
29    pensions that become payable  under  this  subsection  on  or
30    after  January  1,  1999.   All  pensions  payable under this

 
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 1    subsection that began on or after January 1, 1999 and  before
 2    the   effective   date   of  this  amendatory  Act  shall  be
 3    recalculated, and the amount of  the  increase  accruing  for
 4    that period shall be payable to the pensioner in a lump sum.
 5        For  a  police  officer  who retires at the conclusion of
 6    participation in the DROP plan, calculation of the amount  of
 7    the retirement pension shall be based on the police officer's
 8    salary  and  accumulated  service on the date he or she began
 9    participation in the DROP plan and shall include  any  annual
10    increases  that  would  have accrued under Section 3-111.1 if
11    the police officer had retired on that date.
12        (a-5)  No pension in effect on or granted after June  30,
13    l973  shall  be  less than $200 per month.  Beginning July 1,
14    1987, the minimum retirement pension  for  a  police  officer
15    having  at least 20 years of creditable service shall be $400
16    per month,  without  regard  to  whether  or  not  retirement
17    occurred  prior  to  that  date.    If  the  minimum  pension
18    established  in  Section  3-113.1 is greater than the minimum
19    provided in this  subsection,  the  Section  3-113.1  minimum
20    controls.
21        (b)  A  police  officer  mandatorily retired from service
22    due to age by operation of law, having at least  8  but  less
23    than  20 years of creditable service, shall receive a pension
24    equal to 2 1/2% of the salary attached to the rank he or  she
25    held  on  the  police force for one year immediately prior to
26    retirement or, beginning July 1, 1987 for persons terminating
27    service on or after that date, the  salary  attached  to  the
28    rank held on the last day of service or for one year prior to
29    the  last  day,  whichever  is  greater,  for  each  year  of
30    creditable service.
31        A police officer who retires or is separated from service
32    having  at least 8 years but less than 20 years of creditable
33    service, who  is  not  mandatorily  retired  due  to  age  by
34    operation  of  law,  and  who  does not apply for a refund of
 
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 1    contributions at his  or  her  last  separation  from  police
 2    service,  shall receive a pension upon attaining age 60 equal
 3    to 2.5% of the salary attached to the rank held by the police
 4    officer on the police force for one year immediately prior to
 5    retirement or, beginning July 1, 1987 for persons terminating
 6    service on or after that date, the  salary  attached  to  the
 7    rank held on the last day of service or for one year prior to
 8    the  last  day,  whichever  is  greater,  for  each  year  of
 9    creditable service.
10        (c)  A  police  officer  no  longer in service who has at
11    least one but less than 8 years of creditable  service  in  a
12    police  pension  fund  but  meets  the  requirements  of this
13    subsection (c) shall be eligible to receive  a  pension  from
14    that  fund  equal  to 2.5% of the salary attached to the rank
15    held on the last day of service under that fund  or  for  one
16    year  prior  to that last day, whichever is greater, for each
17    year of creditable service in that fund.  The  pension  shall
18    begin  no  earlier  than  upon  attainment of age 60 (or upon
19    mandatory retirement from the fund by operation of law due to
20    age, if that occurs before age 60) and in no event before the
21    effective date of this amendatory Act of 1997.
22        In  order  to  be  eligible  for  a  pension  under  this
23    subsection (c), the police officer must have at least 8 years
24    of creditable service in a second police pension  fund  under
25    this  Article and be receiving a pension under subsection (a)
26    or (b) of this Section from that  second  fund.   The  police
27    officer need not be in service on or after the effective date
28    of this amendatory Act of 1997.
29    (Source: P.A. 90-460, eff. 8-17-97; 91-939, eff. 2-1-01.)

30        (40 ILCS 5/3-111.1) (from Ch. 108 1/2, par. 3-111.1)
31        Sec. 3-111.1.  Increase in pension.
32        (a)  Except  as  provided  in subsection (e), the monthly
33    pension of a police officer who retires after July  1,  1971,
 
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 1    and prior to January 1, 1986, shall be increased, upon either
 2    the first of the month following the first anniversary of the
 3    date  of retirement if the officer is 60 years of age or over
 4    at retirement date, or  upon  the  first  day  of  the  month
 5    following  attainment  of age 60 if it occurs after the first
 6    anniversary of retirement, by 3% of  the  originally  granted
 7    pension  and  by  an  additional 3% of the originally granted
 8    pension in January of each year thereafter.
 9        (b)  The monthly pension of a police officer who  retired
10    from  service  with 20 or more years of service, on or before
11    July 1, 1971, shall be  increased  in  January  of  the  year
12    following the year of attaining age 65 or in January of 1972,
13    if  then over age 65, by 3% of the originally granted pension
14    for each year the police officer received  pension  payments.
15    In  each  January  thereafter,  he  or  she  shall receive an
16    additional increase of 3% of the original pension.
17        (c)  The monthly pension of a police officer who  retires
18    on disability or is retired for disability shall be increased
19    in  January  of  the year following the year of attaining age
20    60, by 3% of the original grant of pension for each  year  he
21    or   she   received   pension   payments.   In  each  January
22    thereafter, the police officer shall  receive  an  additional
23    increase of 3% of the original pension.
24        (d)  The  monthly pension of a police officer who retires
25    after January 1, 1986, shall be increased,  upon  either  the
26    first  of  the  month  following the first anniversary of the
27    date of retirement if the officer is 55 years of age or over,
28    or upon the first day of the month  following  attainment  of
29    age   55   if  it  occurs  after  the  first  anniversary  of
30    retirement, by 1/12 of 3% of the originally  granted  pension
31    for each full month that has elapsed since the pension began,
32    and  by an additional 3% of the originally granted pension in
33    January of each year thereafter.
34        The  changes  made  to  this  subsection  (d)   by   this
 
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 1    amendatory  Act  of  the  91st  General Assembly apply to all
 2    initial increases that become payable under  this  subsection
 3    on  or  after  January  1,  1999.  All initial increases that
 4    became payable under this subsection on or after  January  1,
 5    1999  and  before  the  effective date of this amendatory Act
 6    shall be recalculated and the additional amount accruing  for
 7    that  period,  if any, shall be payable to the pensioner in a
 8    lump sum.
 9        For the purpose of calculating eligibility for  increases
10    under  this  Section,  the  date  of  retirement  of a police
11    officer who retires at the conclusion of participation in the
12    DROP plan shall be deemed to be the  date  he  or  she  began
13    participation in the DROP plan.
14        (e)  Notwithstanding  the  provisions  of subsection (a),
15    upon the first day of  the  month  following  (1)  the  first
16    anniversary  of the date of retirement, or (2) the attainment
17    of age 55, or (3) July 1, 1987, whichever occurs latest,  the
18    monthly  pension  of a police officer who retired on or after
19    January 1, 1977 and on or before January 1, 1986, and did not
20    receive an increase under subsection (a) before July 1, 1987,
21    shall be increased by 3% of the  originally  granted  monthly
22    pension for each full year that has elapsed since the pension
23    began,  and  by  an  additional  3% of the originally granted
24    pension in each January thereafter.  The  increases  provided
25    under  this  subsection are in lieu of the increases provided
26    in subsection (a).
27        (f)  Notwithstanding  the  other   provisions   of   this
28    Section, beginning with increases granted on or after July 1,
29    1993,   the   second  and  all  subsequent  automatic  annual
30    increases granted under subsection (a), (b), (d), or  (e)  of
31    this  Section  shall  be  calculated  as  3% of the amount of
32    pension payable at the time of the  increase,  including  any
33    increases  previously granted under this Section, rather than
34    3% of the originally granted pension amount.  Section 1-103.1
 
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 1    does not apply to this subsection (f).
 2    (Source: P.A. 91-939, eff. 2-1-01.)

 3        (40 ILCS 5/3-111.2 new)
 4        Sec. 3-111.2.  Deferred Retirement Option Plan.
 5        (a)  The Deferred Retirement Option Plan created by  this
 6    Section  shall  first  become  available  to  eligible police
 7    officers on January 1, 2004.
 8        (b)  To be eligible to participate in the  DROP  plan,  a
 9    police  officer  must  (i)  be  in  active service, (ii) have
10    attained age  50,  and  (iii)  have  at  least  20  years  of
11    creditable  service  in  the  Fund.   A  police  officer  may
12    participate in the DROP plan only once.
13        (c)  An  election to participate in the DROP plan must be
14    made within 3 years after becoming eligible under  subsection
15    (b) or by January 1, 2007, whichever is later.  The election,
16    once made, is irrevocable.
17        The  election  to  participate  in the DROP plan shall be
18    made in writing on forms provided for  that  purpose  by  the
19    Board  and  shall  be  filed with the Board.  The application
20    must indicate the date upon which participation in  the  DROP
21    plan  is to begin, which shall be the first day of a calendar
22    month and not less than 30 days nor more than 90  days  after
23    the date of filing the application.
24        As  a  part  of  the application, the police officer must
25    file  with  the  Board  and  with  his  or  her  employer  an
26    irrevocable letter of resignation from employment,  effective
27    on   the   date   of  termination  of  the  police  officer's
28    participation in  the  DROP  plan  (unless  that  termination
29    results from acceptance of a disability benefit).
30        (d)  A  police  officer's  participation in the DROP plan
31    shall commence on the date specified in the  application  and
32    shall  end upon (i) termination of service, (ii) death of the
33    police officer, (iii) disability for which the police officer
 
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 1    receives  a  benefit  under  Section  3-114.1,  3-114.2,   or
 2    3-114.3,  or  (iv)  expiration  of  5 years from the date the
 3    police  officer's  participation  in  the  DROP  plan  began,
 4    whichever occurs first.
 5        (e)  A police officer who is participating  in  the  DROP
 6    plan  shall  be  considered  an active police officer for the
 7    purposes of this Article, including Section 3-128, but  shall
 8    be subject to the special conditions of the DROP plan.
 9        A police officer shall continue to make the contributions
10    that  are  required  for active police officers during his or
11    her participation in the  DROP  plan.    These  contributions
12    shall be accumulated in the police officer's DROP account and
13    shall  be  treated as being "picked up" within the meaning of
14    Section 3-125.2 of this Code and  Section  414(h)(2)  of  the
15    Internal Revenue Code of 1986, as amended.
16        A  police  officer  who is participating in the DROP plan
17    shall not receive service  credit  for  the  period  of  that
18    participation, and the salary earned during that period shall
19    be  disregarded  in calculating the police officer's benefits
20    under this Article.
21        (f)  A police officer who participates in the  DROP  plan
22    may terminate service at any time during participation in the
23    DROP  plan.   A  police  officer who participates in the DROP
24    plan must terminate service on the last day of  participation
25    in  the  DROP  plan, unless participation in the DROP plan is
26    ended due to acceptance of a disability benefit.
27        (g)  A police officer who is participating  in  the  DROP
28    plan remains eligible to apply for a disability benefit under
29    Section  3-114.1,  3-114.2,  or 3-114.3, but participation in
30    the DROP  plan  ceases  upon  acceptance  of  the  disability
31    benefit.   If  participation in the DROP plan is ended due to
32    acceptance of a disability benefit, (1) the  disabled  police
33    officer  shall  be  credited  with employee contributions and
34    creditable service for the period  of  participation  in  the
 
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 1    DROP  plan,  (2)  the  police officer's letter of resignation
 2    from service that is required to be  filed  at  the  time  of
 3    application  to participate in the DROP plan is void, and (3)
 4    the amounts in the disabled police officer's DROP account are
 5    forfeited to the Fund.
 6        (h)  The Fund shall maintain a separate DROP account  for
 7    the  benefit of each police officer who becomes a participant
 8    in the DROP  plan.   The  Fund  shall  pay  into  the  police
 9    officer's DROP account:
10             (1)  for   each   month   of  the  police  officer's
11        participation in the DROP plan, an amount  equal  to  the
12        monthly  retirement pension that the police officer would
13        have been eligible to receive if the police  officer  had
14        terminated  service and taken a retirement pension on the
15        date his or her participation in  the  DROP  plan  began,
16        including  any  increases in pension for which the police
17        officer would have been eligible under Section 3-111.1;
18             (2)  the employee contributions paid by  the  police
19        officer  during  the  period of participation in the DROP
20        plan; and
21             (3)  interest on the balance in the DROP account, at
22        the rate of 7% per annum, paid  and  compounded  monthly,
23        throughout  the period of participation in the DROP plan.
24        The DROP account shall cease earning  interest  when  the
25        police officer's participation in the DROP plan ends.
26        (i)  In  addition to the retirement pension under Section
27    3-111, a police officer who terminates service and retires at
28    the conclusion of his or her participation in the  DROP  plan
29    shall  receive,  upon retirement, a DROP benefit equal to the
30    balance in the police officer's DROP account at the  time  of
31    retirement.
32        At  the time of application for a retirement pension, the
33    police officer shall elect to receive the DROP benefit in the
34    form of either  a  lump  sum  or  an  actuarially  equivalent
 
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 1    annuity  for  life.  If a lump sum payment is elected, it may
 2    be taken in the form of cash  or  a  cash  equivalent  or  be
 3    rolled  over into an individual retirement account (IRA) or a
 4    qualified retirement plan.  A DROP  benefit  payable  in  the
 5    form  of an annuity shall be in a fixed amount not subject to
 6    annual or other increases.  A DROP benefit shall  be  treated
 7    as  a  retirement  benefit  for the purposes of Section 1-119
 8    (QILDROs).
 9        (j)  If a police officer receiving a DROP benefit in  the
10    form  of  an  annuity  re-enters  service,  the  DROP benefit
11    annuity  payments  shall  be  suspended  until   the   police
12    officer's subsequent retirement.
13        (k)  If  a police officer dies while participating in the
14    DROP plan, the DROP benefit shall be paid as a  lump  sum  to
15    the  surviving spouse or other survivor of the police officer
16    entitled to a pension under Section 3-112 or, if there is  no
17    such survivor, then to the deceased police officer's estate.
18        (l)  If  a  retired police officer dies while receiving a
19    DROP benefit in the form of an annuity, and the DROP  account
20    balance at the time of retirement exceeds the total amount of
21    DROP  benefit  annuity payments received, the excess shall be
22    refunded to the surviving spouse or  other  survivor  of  the
23    police  officer entitled to a pension under Section 3-112 or,
24    if there is no such survivor, then  to  the  deceased  police
25    officer's estate.

26        Section  90.  The State Mandates Act is amended by adding
27    Section 8.27 as follows:

28        (30 ILCS 805/8.27 new)
29        Sec. 8.27. Exempt mandate.   Notwithstanding  Sections  6
30    and  8 of this Act, no reimbursement by the State is required
31    for  the  implementation  of  any  mandate  created  by  this
32    amendatory Act of the 93rd General Assembly.
 
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 1        Section 99. Effective date.  This Act takes  effect  upon
 2    becoming law.