94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB3032

 

Introduced 1/20/2006, by Sen. Pamela J. Althoff

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-139   from Ch. 108 1/2, par. 7-139

    Amends the Illinois Municipal Retirement Fund Article of the Illinois Pension Code. Makes a technical change in a Section concerning credits and creditable service.


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PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3032 LRB094 17524 AMC 52820 b

1     AN ACT concerning 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 changing
5 Section 7-139 as follows:
 
6     (40 ILCS 5/7-139)  (from Ch. 108 1/2, par. 7-139)
7     Sec. 7-139. Credits and creditable service to employees.
8     (a) Each participating employee shall be granted credits
9 and and creditable service, for purposes of determining the
10 amount of any annuity or benefit to which he or a beneficiary
11 is entitled, as follows:
12         1. For prior service: Each participating employee who
13     is an employee of a participating municipality or
14     participating instrumentality on the effective date shall
15     be granted creditable service, but no credits under
16     paragraph 2 of this subsection (a), for periods of prior
17     service for which credit has not been received under any
18     other pension fund or retirement system established under
19     this Code, as follows:
20         If the effective date of participation for the
21     participating municipality or participating
22     instrumentality is on or before January 1, 1998, creditable
23     service shall be granted for the entire period of prior
24     service with that employer without any employee
25     contribution.
26         If the effective date of participation for the
27     participating municipality or participating
28     instrumentality is after January 1, 1998, creditable
29     service shall be granted for the last 20% of the period of
30     prior service with that employer, but no more than 5 years,
31     without any employee contribution. A participating
32     employee may establish creditable service for the

 

 

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1     remainder of the period of prior service with that employer
2     by making an application in writing, accompanied by payment
3     of an employee contribution in an amount determined by the
4     Fund, based on the employee contribution rates in effect at
5     the time of application for the creditable service and the
6     employee's salary rate on the effective date of
7     participation for that employer, plus interest at the
8     effective rate from the date of the prior service to the
9     date of payment. Application for this creditable service
10     may be made at any time while the employee is still in
11     service.
12         A municipality that (i) has at least 35 employees; (ii)
13     is located in a county with at least 2,000,000 inhabitants;
14     and (iii) maintains an independent defined benefit pension
15     plan for the benefit of its eligible employees may restrict
16     creditable service in whole or in part for periods of prior
17     service with the employer if the governing body of the
18     municipality adopts an irrevocable resolution to restrict
19     that creditable service and files the resolution with the
20     board before the municipality's effective date of
21     participation.
22         Any person who has withdrawn from the service of a
23     participating municipality or participating
24     instrumentality prior to the effective date, who reenters
25     the service of the same municipality or participating
26     instrumentality after the effective date and becomes a
27     participating employee is entitled to creditable service
28     for prior service as otherwise provided in this subdivision
29     (a)(1) only if he or she renders 2 years of service as a
30     participating employee after the effective date.
31     Application for such service must be made while in a
32     participating status. The salary rate to be used in the
33     calculation of the required employee contribution, if any,
34     shall be the employee's salary rate at the time of first
35     reentering service with the employer after the employer's
36     effective date of participation.

 

 

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1         2. For current service, each participating employee
2     shall be credited with:
3             a. Additional credits of amounts equal to each
4         payment of additional contributions received from him
5         under Section 7-173, as of the date the corresponding
6         payment of earnings is payable to him.
7             b. Normal credits of amounts equal to each payment
8         of normal contributions received from him, as of the
9         date the corresponding payment of earnings is payable
10         to him, and normal contributions made for the purpose
11         of establishing out-of-state service credits as
12         permitted under the conditions set forth in paragraph 6
13         of this subsection (a).
14             c. Municipality credits in an amount equal to 1.4
15         times the normal credits, except those established by
16         out-of-state service credits, as of the date of
17         computation of any benefit if these credits would
18         increase the benefit.
19             d. Survivor credits equal to each payment of
20         survivor contributions received from the participating
21         employee as of the date the corresponding payment of
22         earnings is payable, and survivor contributions made
23         for the purpose of establishing out-of-state service
24         credits.
25         3. For periods of temporary and total and permanent
26     disability benefits, each employee receiving disability
27     benefits shall be granted creditable service for the period
28     during which disability benefits are payable. Normal and
29     survivor credits, based upon the rate of earnings applied
30     for disability benefits, shall also be granted if such
31     credits would result in a higher benefit to any such
32     employee or his beneficiary.
33         4. For authorized leave of absence without pay: A
34     participating employee shall be granted credits and
35     creditable service for periods of authorized leave of
36     absence without pay under the following conditions:

 

 

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1             a. An application for credits and creditable
2         service is submitted to the board while the employee is
3         in a status of active employment, and within 2 years
4         after termination of the leave of absence period for
5         which credits and creditable service are sought.
6             b. Not more than 12 complete months of creditable
7         service for authorized leave of absence without pay
8         shall be counted for purposes of determining any
9         benefits payable under this Article.
10             c. Credits and creditable service shall be granted
11         for leave of absence only if such leave is approved by
12         the governing body of the municipality, including
13         approval of the estimated cost thereof to the
14         municipality as determined by the fund, and employee
15         contributions, plus interest at the effective rate
16         applicable for each year from the end of the period of
17         leave to date of payment, have been paid to the fund in
18         accordance with Section 7-173. The contributions shall
19         be computed upon the assumption earnings continued
20         during the period of leave at the rate in effect when
21         the leave began.
22             d. Benefits under the provisions of Sections
23         7-141, 7-146, 7-150 and 7-163 shall become payable to
24         employees on authorized leave of absence, or their
25         designated beneficiary, only if such leave of absence
26         is creditable hereunder, and if the employee has at
27         least one year of creditable service other than the
28         service granted for leave of absence. Any employee
29         contributions due may be deducted from any benefits
30         payable.
31             e. No credits or creditable service shall be
32         allowed for leave of absence without pay during any
33         period of prior service.
34         5. For military service: The governing body of a
35     municipality or participating instrumentality may elect to
36     allow creditable service to participating employees who

 

 

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1     leave their employment to serve in the armed forces of the
2     United States for all periods of such service, provided
3     that the person returns to active employment within 90 days
4     after completion of full time active duty, but no
5     creditable service shall be allowed such person for any
6     period that can be used in the computation of a pension or
7     any other pay or benefit, other than pay for active duty,
8     for service in any branch of the armed forces of the United
9     States. If necessary to the computation of any benefit, the
10     board shall establish municipality credits for
11     participating employees under this paragraph on the
12     assumption that the employee received earnings at the rate
13     received at the time he left the employment to enter the
14     armed forces. A participating employee in the armed forces
15     shall not be considered an employee during such period of
16     service and no additional death and no disability benefits
17     are payable for death or disability during such period.
18         Any participating employee who left his employment
19     with a municipality or participating instrumentality to
20     serve in the armed forces of the United States and who
21     again became a participating employee within 90 days after
22     completion of full time active duty by entering the service
23     of a different municipality or participating
24     instrumentality, which has elected to allow creditable
25     service for periods of military service under the preceding
26     paragraph, shall also be allowed creditable service for his
27     period of military service on the same terms that would
28     apply if he had been employed, before entering military
29     service, by the municipality or instrumentality which
30     employed him after he left the military service and the
31     employer costs arising in relation to such grant of
32     creditable service shall be charged to and paid by that
33     municipality or instrumentality.
34         Notwithstanding the foregoing, any participating
35     employee shall be entitled to creditable service as
36     required by any federal law relating to re-employment

 

 

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1     rights of persons who served in the United States Armed
2     Services. Such creditable service shall be granted upon
3     payment by the member of an amount equal to the employee
4     contributions which would have been required had the
5     employee continued in service at the same rate of earnings
6     during the military leave period, plus interest at the
7     effective rate.
8         5.1. In addition to any creditable service established
9     under paragraph 5 of this subsection (a), creditable
10     service may be granted for up to 24 months of service in
11     the armed forces of the United States.
12         In order to receive creditable service for military
13     service under this paragraph 5.1, a participating employee
14     must (1) apply to the Fund in writing and provide evidence
15     of the military service that is satisfactory to the Board;
16     (2) obtain the written approval of the current employer;
17     and (3) make contributions to the Fund equal to (i) the
18     employee contributions that would have been required had
19     the service been rendered as a member, plus (ii) an amount
20     determined by the board to be equal to the employer's
21     normal cost of the benefits accrued for that military
22     service, plus (iii) interest on items (i) and (ii) from the
23     date of first membership in the Fund to the date of
24     payment. If payment is made during the 6-month period that
25     begins 3 months after the effective date of this amendatory
26     Act of 1997, the required interest shall be at the rate of
27     2.5% per year, compounded annually; otherwise, the
28     required interest shall be calculated at the regular
29     interest rate.
30         6. For out-of-state service: Creditable service shall
31     be granted for service rendered to an out-of-state local
32     governmental body under the following conditions: The
33     employee had participated and has irrevocably forfeited
34     all rights to benefits in the out-of-state public employees
35     pension system; the governing body of his participating
36     municipality or instrumentality authorizes the employee to

 

 

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1     establish such service; the employee has 2 years current
2     service with this municipality or participating
3     instrumentality; the employee makes a payment of
4     contributions, which shall be computed at 8% (normal) plus
5     2% (survivor) times length of service purchased times the
6     average rate of earnings for the first 2 years of service
7     with the municipality or participating instrumentality
8     whose governing body authorizes the service established
9     plus interest at the effective rate on the date such
10     credits are established, payable from the date the employee
11     completes the required 2 years of current service to date
12     of payment. In no case shall more than 120 months of
13     creditable service be granted under this provision.
14         7. For retroactive service: Any employee who could have
15     but did not elect to become a participating employee, or
16     who should have been a participant in the Municipal Public
17     Utilities Annuity and Benefit Fund before that fund was
18     superseded, may receive creditable service for the period
19     of service not to exceed 50 months; however, a current or
20     former elected or appointed official of a participating
21     municipality may establish credit under this paragraph 7
22     for more than 50 months of service as an official of that
23     municipality, if the excess over 50 months is approved by
24     resolution of the governing body of the affected
25     municipality filed with the Fund before January 1, 2002.
26         Any employee who is a participating employee on or
27     after September 24, 1981 and who was excluded from
28     participation by the age restrictions removed by Public Act
29     82-596 may receive creditable service for the period, on or
30     after January 1, 1979, excluded by the age restriction and,
31     in addition, if the governing body of the participating
32     municipality or participating instrumentality elects to
33     allow creditable service for all employees excluded by the
34     age restriction prior to January 1, 1979, for service
35     during the period prior to that date excluded by the age
36     restriction. Any employee who was excluded from

 

 

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1     participation by the age restriction removed by Public Act
2     82-596 and who is not a participating employee on or after
3     September 24, 1981 may receive creditable service for
4     service after January 1, 1979. Creditable service under
5     this paragraph shall be granted upon payment of the
6     employee contributions which would have been required had
7     he participated, with interest at the effective rate for
8     each year from the end of the period of service established
9     to date of payment.
10         8. For accumulated unused sick leave: A participating
11     employee who is applying for a retirement annuity shall be
12     entitled to creditable service for that portion of the
13     employee's accumulated unused sick leave for which payment
14     is not received, as follows:
15             a. Sick leave days shall be limited to those
16         accumulated under a sick leave plan established by a
17         participating municipality or participating
18         instrumentality which is available to all employees or
19         a class of employees.
20             b. Only sick leave days accumulated with a
21         participating municipality or participating
22         instrumentality with which the employee was in service
23         within 60 days of the effective date of his retirement
24         annuity shall be credited; If the employee was in
25         service with more than one employer during this period
26         only the sick leave days with the employer with which
27         the employee has the greatest number of unpaid sick
28         leave days shall be considered.
29             c. The creditable service granted shall be
30         considered solely for the purpose of computing the
31         amount of the retirement annuity and shall not be used
32         to establish any minimum service period required by any
33         provision of the Illinois Pension Code, the effective
34         date of the retirement annuity, or the final rate of
35         earnings.
36             d. The creditable service shall be at the rate of

 

 

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1         1/20 of a month for each full sick day, provided that
2         no more than 12 months may be credited under this
3         subdivision 8.
4             e. Employee contributions shall not be required
5         for creditable service under this subdivision 8.
6             f. Each participating municipality and
7         participating instrumentality with which an employee
8         has service within 60 days of the effective date of his
9         retirement annuity shall certify to the board the
10         number of accumulated unpaid sick leave days credited
11         to the employee at the time of termination of service.
12         9. For service transferred from another system:
13     Credits and creditable service shall be granted for service
14     under Article 3, 4, 5, 14 or 16 of this Act, to any active
15     member of this Fund, and to any inactive member who has
16     been a county sheriff, upon transfer of such credits
17     pursuant to Section 3-110.3, 4-108.3, 5-235, 14-105.6 or
18     16-131.4, and payment by the member of the amount by which
19     (1) the employer and employee contributions that would have
20     been required if he had participated in this Fund as a
21     sheriff's law enforcement employee during the period for
22     which credit is being transferred, plus interest thereon at
23     the effective rate for each year, compounded annually, from
24     the date of termination of the service for which credit is
25     being transferred to the date of payment, exceeds (2) the
26     amount actually transferred to the Fund. Such transferred
27     service shall be deemed to be service as a sheriff's law
28     enforcement employee for the purposes of Section 7-142.1.
29         10. For service transferred from an Article 3 system
30     under Section 3-110.8: Credits and creditable service
31     shall be granted for service under Article 3 of this Act as
32     provided in Section 3-110.8, to any active member of this
33     Fund upon transfer of such credits pursuant to Section
34     3-110.8. If the amount by which (1) the employer and
35     employee contributions that would have been required if he
36     had participated in this Fund during the period for which

 

 

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1     credit is being transferred, plus interest thereon at the
2     effective rate for each year, compounded annually, from the
3     date of termination of the service for which credit is
4     being transferred to the date of payment, exceeds (2) the
5     amount actually transferred to the Fund, then the amount of
6     creditable service established under this paragraph 10
7     shall be reduced by a corresponding amount in accordance
8     with the rules and procedures established under this
9     paragraph 10.
10         The board shall establish by rule the manner of making
11     the calculation required under this paragraph 10, taking
12     into account the appropriate actuarial assumptions; the
13     member's service, age, and salary history; the level of
14     funding of the employer; and any other factors that the
15     board determines to be relevant.
16     (b) Creditable service - amount:
17         1. One month of creditable service shall be allowed for
18     each month for which a participating employee made
19     contributions as required under Section 7-173, or for which
20     creditable service is otherwise granted hereunder. Not
21     more than 1 month of service shall be credited and counted
22     for 1 calendar month, and not more than 1 year of service
23     shall be credited and counted for any calendar year. A
24     calendar month means a nominal month beginning on the first
25     day thereof, and a calendar year means a year beginning
26     January 1 and ending December 31.
27         2. A seasonal employee shall be given 12 months of
28     creditable service if he renders the number of months of
29     service normally required by the position in a 12-month
30     period and he remains in service for the entire 12-month
31     period. Otherwise a fractional year of service in the
32     number of months of service rendered shall be credited.
33         3. An intermittent employee shall be given creditable
34     service for only those months in which a contribution is
35     made under Section 7-173.
36     (c) No application for correction of credits or creditable

 

 

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1 service shall be considered unless the board receives an
2 application for correction while (1) the applicant is a
3 participating employee and in active employment with a
4 participating municipality or instrumentality, or (2) while
5 the applicant is actively participating in a pension fund or
6 retirement system which is a participating system under the
7 Retirement Systems Reciprocal Act. A participating employee or
8 other applicant shall not be entitled to credits or creditable
9 service unless the required employee contributions are made in
10 a lump sum or in installments made in accordance with board
11 rule.
12     (d) Upon the granting of a retirement, surviving spouse or
13 child annuity, a death benefit or a separation benefit, on
14 account of any employee, all individual accumulated credits
15 shall thereupon terminate. Upon the withdrawal of additional
16 contributions, the credits applicable thereto shall thereupon
17 terminate. Terminated credits shall not be applied to increase
18 the benefits any remaining employee would otherwise receive
19 under this Article.
20 (Source: P.A. 93-933, eff. 8-13-04; 94-356, eff. 7-29-05.)