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94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006 HB4837
Introduced 01/19/06, by Rep. Raymond Poe SYNOPSIS AS INTRODUCED: |
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40 ILCS 5/3-105.3 new |
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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 5/3-111.2 new |
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30 ILCS 805/8.30 new |
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Amends the Downstate Police Article
of the Pension Code. Provides for a Deferred
Retirement Option Plan, under which a police officer
who is at least age 50 with 20 years of service
may continue in active service for up to 5 years
while having his or her retirement pension paid
into a special account, to be distributed to the
police officer upon retirement. Bases the retirement
pension on the police officer's service and salary
at the time of joining the DROP plan. Requires
termination of service at the end of the DROP plan
participation period. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.
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FISCAL NOTE ACT MAY APPLY |
PENSION IMPACT NOTE ACT MAY APPLY |
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT |
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A BILL FOR
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HB4837 |
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LRB094 16762 AMC 52033 b |
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| AN ACT in relation to public employee benefits.
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| Be it enacted by the People of the State of Illinois, |
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| represented in the General Assembly:
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| Section 5. The Illinois Pension Code is amended by adding |
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| Sections
3-105.3 and 3-111.2 and changing Sections 3-111 and |
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| 3-111.1 as follows:
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| (40 ILCS 5/3-105.3 new)
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| Sec. 3-105.3. Deferred Retirement Option Plan. "Deferred |
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| Retirement
Option Plan" or "DROP plan" means the Deferred |
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| Retirement Option Plan
established under Section 3-111.2.
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| (40 ILCS 5/3-111) (from Ch. 108 1/2, par. 3-111)
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| Sec. 3-111. Pension.
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| (a) A police officer age 50 or more with 20 or
more years |
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| of creditable service, who is not a participant in the
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| self-managed plan under Section 3-109.3 and who is no longer in |
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| service
as a police officer, shall receive a pension of 1/2 of |
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| the salary
attached to the rank held by the officer on the |
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| police force for one year
immediately prior to retirement or, |
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| beginning July 1, 1987 for persons
terminating service on or |
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| after that date, the salary attached to the rank
held on the |
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| last day of service or for one year prior to the last day,
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| whichever is greater. The pension shall be increased by 2.5%
of |
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| such salary for each additional year of service over 20 years |
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| of service
through 30 years of service, to a maximum of 75% of |
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| such
salary.
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| The changes made to this subsection (a) by this amendatory |
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| Act of the
91st General Assembly apply to all pensions that |
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| become payable under this
subsection on or after January 1, |
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| 1999. All pensions payable under this
subsection that began on |
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| or after January 1, 1999 and before the effective date
of this |
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| amendatory Act shall be recalculated, and the amount of the |
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HB4837 |
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| increase
accruing for that period shall be payable to the |
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| pensioner in a lump sum.
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| For a police officer who retires at the conclusion of |
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| participation in the
DROP plan, calculation of the amount of |
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| the retirement pension shall be based
on the police officer's |
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| salary and accumulated service on the date he or she
began |
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| participation in the DROP plan and shall include any annual |
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| increases
that would have accrued under Section 3-111.1 if the |
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| police officer had retired
on that date.
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| (a-5) No pension in effect on or granted after June 30, |
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| l973 shall be
less than $200 per month. Beginning July 1, 1987, |
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| the minimum retirement
pension for a police officer having at |
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| least 20 years of creditable service
shall be $400 per month, |
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| without regard to whether or not retirement occurred
prior to |
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| that date.
If the minimum pension established in Section |
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| 3-113.1 is greater than the
minimum provided in this |
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| subsection, the Section 3-113.1 minimum controls.
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| (b) A police officer mandatorily retired from service
due |
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| to age by operation of law, having at least 8 but
less than 20 |
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| years of creditable service, shall receive a pension
equal to 2 |
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| 1/2% of the salary attached to the rank he or she held on
the |
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| police force for one year immediately prior to retirement or,
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| beginning July 1, 1987 for persons terminating service on or |
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| after that
date, the salary attached to the rank held on the |
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| last day of service or
for one year prior to the last day, |
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| whichever is greater, for each
year of creditable service.
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| A police officer who retires or is separated from service |
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| having at least 8
years but less than 20 years of creditable |
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| service, who is not mandatorily
retired due to age by operation |
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| of law, and who does not apply for a refund of
contributions at |
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| his or her last separation from police service, shall receive
a |
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| pension upon attaining age 60 equal to 2.5% of the salary |
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| attached to the
rank held by the police officer on the police |
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| force for one year immediately
prior to retirement or, |
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| beginning July 1, 1987 for persons terminating service
on or |
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| after that date, the salary attached to the rank held on the |
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LRB094 16762 AMC 52033 b |
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| last day of
service or for one year prior to the last day, |
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| whichever is greater, for each
year of creditable service.
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| (c) A police officer no longer in service who has at least |
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| one but less
than 8 years of creditable service in a police |
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| pension fund but meets the
requirements of this subsection (c) |
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| shall be eligible to receive a pension from
that fund equal to |
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| 2.5% of the salary attached to the rank held on the last day
of |
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| service under that fund or for one year prior to that last day, |
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| whichever is
greater, for each year of creditable service in |
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| that fund. The pension shall
begin no earlier than upon |
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| attainment of age 60 (or upon mandatory retirement
from the |
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| fund by operation of law due to age, if that occurs before age |
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| 60) and
in no event before the effective date of this |
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| amendatory Act of 1997.
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| In order to be eligible for a pension under this subsection |
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| (c), the police
officer must have at least 8 years of |
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| creditable service in a second police
pension fund under this |
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| Article and be receiving a pension under subsection (a)
or (b) |
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| of this Section from that second fund. The police officer need |
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| not be
in service on or after the effective date of this |
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| amendatory Act of 1997.
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| (Source: P.A. 90-460, eff. 8-17-97; 91-939, eff. 2-1-01.)
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| (40 ILCS 5/3-111.1) (from Ch. 108 1/2, par. 3-111.1)
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| Sec. 3-111.1. Increase in pension.
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| (a) Except as provided in subsection (e), the monthly |
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| pension of a
police officer who retires after July 1, 1971, and |
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| prior to January 1, 1986,
shall be increased, upon either the |
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| first of the month following the first
anniversary of the date |
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| of retirement if the officer is 60 years of age or over
at |
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| retirement date, or upon the first day of the month following |
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| attainment of
age 60 if it occurs after the first anniversary |
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| of retirement, by 3% of the
originally granted pension and by |
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| an additional 3% of the originally granted
pension in January |
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| of each year thereafter.
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| (b) The monthly pension of a police officer who retired |
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| from service
with 20 or more years of service, on or before |
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| July 1, 1971, shall be
increased in January of the year |
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| following the year of attaining age 65 or
in January of 1972, |
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| if then over age 65, by 3% of the originally granted
pension |
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| for each year the police officer received pension payments. In |
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| each
January thereafter, he or she shall receive an additional |
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| increase of 3% of
the original pension.
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| (c) The monthly pension of a police officer who retires on |
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| disability or
is retired for disability shall be increased in |
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| January of the year
following the year of attaining age 60, by |
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| 3% of the original grant of
pension for each year he or she |
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| received pension payments. In each January
thereafter, the |
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| police officer shall receive an additional increase of 3%
of |
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| the original pension.
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| (d) The monthly pension of a police officer who retires |
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| after January
1, 1986, shall be increased, upon either the |
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| first of the month following
the first anniversary of the date |
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| of retirement if the officer is 55 years
of age or over, or |
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| upon the first day of the month
following attainment of age 55 |
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| if it occurs after the first anniversary of
retirement, by 1/12 |
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| of 3% of the originally granted pension for each full
month |
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| that has elapsed since the pension began, and by an
additional |
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| 3% of the originally granted pension in January of each year
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| thereafter.
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| The changes made to this subsection (d) by this amendatory |
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| Act of the 91st
General Assembly apply to all initial increases |
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| that become payable under this
subsection on or after January |
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| 1, 1999. All initial increases that became
payable under this |
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| subsection on or after January 1, 1999 and before the
effective |
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| date of this amendatory Act shall be recalculated and the |
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| additional
amount accruing for that period, if any, shall be |
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| payable to the pensioner in a
lump sum.
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| For the purpose of calculating eligibility for increases |
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| under this
Section, the date of retirement of a police officer |
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| who retires at the
conclusion of participation in the DROP plan |
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| shall be deemed to be the
date he or she began participation in |
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HB4837 |
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LRB094 16762 AMC 52033 b |
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| the DROP plan.
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| (e) Notwithstanding the provisions of subsection (a), upon |
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| the first
day of the month following (1) the first anniversary |
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| of the date of
retirement, or (2) the attainment of age 55, or |
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| (3) July 1, 1987, whichever
occurs latest, the monthly pension |
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| of a police officer who retired on or after
January 1, 1977 and |
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| on or before January 1, 1986, and did not receive an
increase |
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| under subsection (a) before July 1, 1987, shall be increased by |
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| 3% of
the originally granted monthly pension for each full year |
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| that has elapsed
since the pension began, and by an additional |
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| 3% of the originally granted
pension in each January |
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| thereafter. The increases provided under this
subsection are in |
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| lieu of the increases provided in subsection (a).
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| (f) Notwithstanding the other provisions of this Section, |
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| beginning
with increases granted on or after July 1, 1993, the |
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| second and all
subsequent automatic annual increases granted |
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| under subsection (a), (b),
(d), or (e) of this Section shall be |
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| calculated as 3% of the amount of
pension payable at the time |
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| of the increase, including any increases
previously granted |
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| under this Section, rather than 3% of the originally
granted |
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| pension amount. Section 1-103.1 does not apply to this |
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| subsection
(f).
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| (Source: P.A. 91-939, eff. 2-1-01.)
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| (40 ILCS 5/3-111.2 new)
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| Sec. 3-111.2. Deferred Retirement Option Plan.
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| (a) The Deferred Retirement Option Plan created by this |
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| Section shall
first become available to eligible police |
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| officers on January 1, 2007.
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| (b) To be eligible to participate in the DROP plan, a |
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| police officer must
(i) be in active service, (ii) have |
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| attained age 50, and (iii) have at least
20 years of creditable |
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| service in the Fund. A police officer may participate
in the |
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| DROP plan only once.
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| (c) An election to participate in the DROP plan must be |
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| made within 3 years
after becoming eligible under subsection |
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HB4837 |
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LRB094 16762 AMC 52033 b |
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| (b) or by January 1, 2010, whichever
is later. The election, |
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| once made, is irrevocable.
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| The election to participate in the DROP plan shall be made |
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| in writing on
forms provided for that purpose by the Board and |
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| shall be filed with the
Board. The application must indicate |
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| the date upon which participation in
the DROP plan is to begin, |
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| which shall be the first day of a calendar month
and not less |
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| than 30 days nor more than 90 days after the date of filing the
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| application.
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| As a part of the application, the police officer must file |
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| with the Board and
with his or her employer an irrevocable |
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| letter of resignation from employment,
effective on the date of |
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| termination of the police officer's participation in
the DROP |
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| plan (unless that termination results from acceptance of a |
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| disability
benefit).
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| (d) A police officer's participation in the DROP plan shall |
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| commence on
the date specified in the application and shall end |
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| upon (i) termination
of service, (ii) death of the police |
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| officer, (iii) disability for which the
police officer receives |
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| a benefit under Section 3-114.1, 3-114.2, or 3-114.3,
or (iv) |
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| expiration of 5 years from the date the police officer's |
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| participation
in the DROP plan began, whichever occurs first.
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| (e) A police officer who is participating in the DROP plan |
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| shall be
considered an active police officer for the purposes |
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| of this Article, including
Section 3-128, but shall be subject |
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| to the special conditions of the DROP plan.
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| A police officer shall continue to make the contributions |
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| that are required
for active police officers during his or her |
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| participation in the DROP plan.
These contributions shall be |
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| accumulated in the police officer's DROP account
and shall be |
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| treated as being "picked up" within the meaning of Section |
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| 3-125.2
of this Code and Section 414(h)(2) of the Internal |
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| Revenue Code of 1986, as
amended.
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| A police officer who is participating in the DROP plan |
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| shall not receive
service credit for the period of that |
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| participation, and the salary earned
during that period shall |
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| be disregarded in calculating the police officer's
benefits |
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| under this Article.
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| (f) A police officer who participates in the DROP plan may |
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| terminate
service at any time during participation in the DROP |
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| plan. A police officer
who participates in the DROP plan must |
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| terminate service on the last day of
participation in the DROP |
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| plan, unless participation in the DROP plan is
ended due to |
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| acceptance of a disability benefit.
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| (g) A police officer who is participating in the DROP plan |
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| remains eligible
to apply for a disability benefit under |
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| Section 3-114.1, 3-114.2, or 3-114.3,
but participation in the |
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| DROP plan ceases upon acceptance of the disability
benefit. If |
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| participation in the DROP plan is ended due to acceptance of
a |
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| disability benefit, (1) the disabled police officer shall be |
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| credited with
employee contributions and creditable service |
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| for the period of participation
in the DROP plan, (2) the |
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| police officer's letter of resignation from service
that is |
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| required to be filed at the time of application to participate |
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| in the
DROP plan is void, and (3) the amounts in the disabled |
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| police officer's DROP
account are forfeited to the Fund.
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| (h) The Fund shall maintain a separate DROP account for the |
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| benefit of each
police officer who becomes a participant in the |
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| DROP plan. The Fund shall pay
into the police officer's DROP |
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| account:
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| (1) for each month of the police officer's |
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| participation in the DROP plan,
an amount equal to the |
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| monthly retirement pension that the police officer would
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| have been eligible to receive if the police officer had |
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| terminated service and
taken a retirement pension on the |
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| date his or her participation in the DROP
plan began, |
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| including any increases in pension for which the police |
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| officer
would have been eligible under Section 3-111.1;
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| (2) the employee contributions paid by the police |
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| officer during the
period of participation in the DROP |
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| plan; and
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| (3) interest on the balance in the DROP account, at the |
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| rate of one percent below the Fund's total rate of return |
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| for the previous calendar year, paid and compounded |
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| monthly, throughout the period of participation
in the DROP |
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| plan. The DROP account shall cease earning interest when |
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| the
police officer's participation in the DROP plan ends.
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| (i) In addition to the retirement pension under Section |
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| 3-111, a
police officer who terminates service and retires at |
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| the conclusion of his
or her participation in the DROP plan |
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| shall receive, upon retirement,
a DROP benefit equal to the |
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| balance in the police officer's DROP account at
the time of |
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| retirement.
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| At the time of application for a retirement pension, the |
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| police officer shall
elect to receive the DROP benefit in the |
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| form of either a lump sum or an
actuarially equivalent annuity |
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| for life. If a lump sum payment is elected, it
may be taken in |
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| the form of cash or a cash equivalent or be rolled over into an
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| individual retirement account (IRA) or a qualified retirement |
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| plan. A DROP
benefit payable in the form of an annuity shall be |
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| in a fixed amount not
subject to annual or other increases. A |
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| DROP benefit shall be treated as a
retirement benefit for the |
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| purposes of Section 1-119 (QILDROs).
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| (j) If a police officer receiving a DROP benefit in the |
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| form of an annuity
re-enters service, the DROP benefit annuity |
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| payments shall be suspended until
the police officer's |
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| subsequent retirement.
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| (k) If a police officer dies while participating in the |
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| DROP plan, the DROP
benefit shall be paid as a lump sum to the |
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| surviving spouse or other survivor
of the police officer |
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| entitled to a pension under Section 3-112 or, if there is
no |
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| such survivor, then to the deceased police officer's estate.
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| (l) If a retired police officer dies while receiving a DROP |
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| benefit in the
form of an annuity, and the DROP account balance |
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| at the time of retirement
exceeds the total amount of DROP |
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| benefit annuity payments received, the excess
shall be refunded |
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| to the surviving spouse or other survivor of the police
officer |
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| entitled to a pension under Section 3-112 or, if there is no |