95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB0602

 

Introduced 2/5/2007, by Rep. Angelo Saviano

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/17-119   from Ch. 108 1/2, par. 17-119
40 ILCS 5/17-119.2 new
40 ILCS 5/17-122   from Ch. 108 1/2, par. 17-122
30 ILCS 805/8.31 new

    Amends the Chicago Teacher Article of the Illinois Pension Code. Provides for a one-time increase in certain retirement and survivor's annuities. Declares it to be the public policy of this State and the intention of the General Assembly to protect annuitants against significant decreases in the purchasing power of retirement and survivor's annuities. Directs the retirement system to review and report on significant changes in purchasing power. 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

 

 

A BILL FOR

 

HB0602 LRB095 04399 AMC 24444 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 changing
5 Sections 17-119 and 17-122 and adding Section 17-119.2 as
6 follows:
 
7     (40 ILCS 5/17-119)  (from Ch. 108 1/2, par. 17-119)
8     Sec. 17-119. Automatic annual increase in pension.
9     (a) Each teacher retiring on or after September 1, 1959, is
10 entitled to the annual increase in pension, defined herein,
11 while he is receiving a pension from the Fund.
12         1. The term "base pension" means a service retirement
13     or disability retirement pension in the amount fixed and
14     payable at the date of retirement of a teacher.
15         2. The annual increase in pension shall be at the rate
16     of 1 1/2% of base pension. This increase shall first occur
17     in January of the year next following the first anniversary
18     of retirement. At such time the Fund shall pay the pro rata
19     part of the increase for the period from the first
20     anniversary date to the date of the first increase in
21     pension. Beginning January 1, 1972, the rate of annual
22     increase in pension shall be 2% of the base pension.
23     Beginning January 1, 1979, the rate of annual increase in

 

 

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1     pension shall be 3% of the base pension. Beginning January
2     1, 1990, all automatic annual increases payable under this
3     Section shall be calculated as a percentage of the total
4     pension payable at the time of the increase, including all
5     increases previously granted under this Article,
6     notwithstanding Section 17-157.
7         3. An increase in pension shall be granted only if the
8     retired teacher is age 60 or over. If the teacher attains
9     age 60 after retirement, the increase in pension shall
10     begin in January of the year following the 61st birthday.
11     At such time the Fund also shall pay the pro rata part of
12     the increase from the 61st birthday to the date of first
13     increase in pension.
14     (b) In addition to other increases which may be provided by
15 this Section, on January 1, 1981 any teacher who was receiving
16 a retirement pension on or before January 1, 1971 shall have
17 his retirement pension then being paid increased $1 per month
18 for each year of creditable service. On January 1, 1982, any
19 teacher whose retirement pension began on or before January 1,
20 1977, shall have his retirement pension then being paid
21 increased $1 per month for each year of creditable service.
22     On January 1, 1987, any teacher whose retirement pension
23 began on or before January 1, 1977, shall have the monthly
24 retirement pension increased by an amount equal to 8¢ per year
25 of creditable service times the number of years that have
26 elapsed since the retirement pension began.

 

 

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1     (c) On July 1, 2007, every pensioner who began receiving a
2 retirement pension before January 1, 1980 shall have the
3 monthly retirement pension increased by whichever of the
4 following percentages is applicable:
5     5% if the annuity began in 1979;
6     10% if the annuity began in 1978;
7     14% if the annuity began in 1977;
8     14% if the annuity began in 1976;
9     18% if the annuity began in 1975;
10     23% if the annuity began in 1974;
11     32% if the annuity began in 1973 or before.
12     The increase under this subsection shall be calculated as a
13 percentage of the amount of the retirement pension payable on
14 June 30, 2007, including any increases previously received
15 under this Article, and shall be included in the calculation of
16 increases granted thereafter under subsection (a). Section
17 17-157 does not apply to the increase provided under this
18 subsection.
19 (Source: P.A. 90-566, eff. 1-2-98.)
 
20     (40 ILCS 5/17-119.2 new)
21     Sec. 17-119.2. Reduction of purchasing power; policy;
22 report; increase.
23     (a) The General Assembly finds and declares that:
24         (1) The purchasing power of a fixed annuity can be
25     eroded over time by the effects of inflation and increases

 

 

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1     in the general cost of living.
2         (2) For a person whose income consists primarily of a
3     fixed annuity, the reduction in purchasing power resulting
4     from increases in the cost of living can become
5     catastrophic over time, transforming a once-comfortable
6     retirement into a time of poverty and need.
7         (3) The State of Illinois is concerned about the
8     effects that a significant reduction in purchasing power
9     can have on the quality of life of retired employees and
10     their survivors.
11         (4) The General Assembly has previously addressed this
12     concern by providing for automatic annual increases in
13     retirement and survivor's pensions under this Article.
14     Recognizing that these automatic annual increases, by
15     themselves, are not a complete answer in times of high
16     inflation, the General Assembly has also, from time to
17     time, provided specific one-time increases in pensions for
18     certain categories of pensioners.
19     (b) It is the public policy of this State and the intention
20 of the General Assembly to protect pensioners against
21 significant decreases in the purchasing power of the retirement
22 and survivor's pensions granted under this Article.
23     (c) The Fund shall regularly review the changes that have
24 occurred in the purchasing power of the retirement and
25 survivor's pensions being paid under this Article, and it shall
26 report to the General Assembly, the Governor, and the Economic

 

 

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1 and Fiscal Commission whenever it determines that the original
2 purchasing power of those pensions has been reduced by 20% or
3 more for any category or group of pensioners. The Fund may
4 include in the report its recommendations, if any, for
5 legislative action to address its findings.
6     (d) As used in this Section, the term "retirement and
7 survivor's pensions" means all service retirement pensions,
8 disability retirement pensions, survivor's pensions, and
9 children's pensions.
 
10     (40 ILCS 5/17-122)  (from Ch. 108 1/2, par. 17-122)
11     Sec. 17-122. Survivor's and children's pensions - Amount.
12     (a) Upon the death of a teacher who has completed at least
13 1 1/2 years of contributing service with either this Fund or
14 the State Universities Retirement System or the Teachers'
15 Retirement System of the State of Illinois, provided his death
16 occurred while (a) in active service covered by the Fund or
17 during his first 18 months of continuous employment without a
18 break in service under any other participating system as
19 defined in the Illinois Retirement Systems Reciprocal Act
20 except the State Universities Retirement System and the
21 Teachers' Retirement System of the State of Illinois, (b) on a
22 creditable leave of absence, (c) on a noncreditable leave of
23 absence of no more than one year, or (d) a pension was deferred
24 or pending provided the teacher had at least 10 years of
25 validated service credit, or upon the death of a pensioner

 

 

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1 otherwise qualified for such benefit, the surviving spouse and
2 unmarried minor children of the deceased teacher under age 18
3 shall be entitled to pensions, under the conditions stated
4 hereinafter. Such survivor's and children's pensions shall be
5 based on the average of the 4 highest consecutive years of
6 salary in the last 10 years of service or on the average salary
7 for total service, if total service has been less than 4 years,
8 according to the following percentages:
9         30% of average salary or 50% of the retirement pension
10     earned by the teacher, whichever is larger, subject to the
11     prescribed maximum monthly payment, for a surviving spouse
12     alone on attainment of age 50;
13         60% of average salary for a surviving spouse and
14     eligible minor children of the deceased teacher.
15     If no eligible spouse survives, or the surviving spouse
16 remarries, or the parent of the children of the deceased member
17 is otherwise ineligible for a survivor's pension, a children's
18 pension for eligible minor children under age 18 shall be paid
19 to their parent or legal guardian for their benefit according
20 to the following percentages:
21         30% of average salary for one child;
22         60% of average salary for 2 or more children.
23     (b) On January 1, 1981, any survivor or child who was
24 receiving a survivor's or children's pension on or before
25 January 1, 1971, shall have his survivor's or children's
26 pension then being paid increased by 1% for each full year

 

 

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1 which has elapsed from the date the pension began. On January
2 1, 1982, any survivor or child whose pension began after
3 January 1, 1971, but before January 1, 1981, shall have his
4 survivor's or children's pension then being paid increased 1%
5 for each full year which has elapsed from the date the pension
6 began. On January 1, 1987, any survivor or child whose pension
7 began on or before January 1, 1977, shall have the monthly
8 survivor's or children's pension increased by $1 for each full
9 year which has elapsed since the pension began.
10     (c) On July 1, 2007, every survivor or child who began
11 receiving a survivor's or children's pension before January 1,
12 1980 shall have the monthly pension increased by whichever of
13 the following percentages is applicable:
14     5% if the annuity began in 1979;
15     10% if the annuity began in 1978;
16     14% if the annuity began in 1977;
17     14% if the annuity began in 1976;
18     18% if the annuity began in 1975;
19     23% if the annuity began in 1974;
20     32% if the annuity began in 1973 or before.
21     In the case of the survivor of a deceased annuitant who
22 died while receiving a retirement annuity, "original annuity"
23 means the deceased annuitant's retirement pension; in all other
24 cases, "original annuity" means the survivor's or children's
25 pension.
26     The increase under this subsection shall be calculated as a

 

 

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1 percentage of the amount of the survivor's or children's
2 pension payable on June 30, 2007, including any increases
3 previously received under this Article, and shall be included
4 in the calculation of increases granted thereafter under
5 subsection (d). Section 17-157 does not apply to the increase
6 provided under this subsection.
7     (d) Beginning January 1, 1990, every survivor's and
8 children's pension shall be increased (1) on each January 1
9 occurring on or after the commencement of the pension if the
10 deceased teacher died while receiving a retirement pension, or
11 (2) in other cases, on each January 1 occurring on or after the
12 first anniversary of the commencement of the pension, by an
13 amount equal to 3% of the current amount of the pension,
14 including all increases previously granted under this Article,
15 notwithstanding Section 17-157. Such increases shall apply
16 without regard to whether the deceased teacher was in service
17 on or after the effective date of this amendatory Act of 1991,
18 but shall not accrue for any period prior to January 1, 1990.
19     (e) Subject to the minimum established below, the maximum
20 amount of pension for a surviving spouse alone or one minor
21 child shall be $400 per month, and the maximum combined
22 pensions for a surviving spouse and children of the deceased
23 teacher shall be $600 per month, with individual pensions
24 adjusted for all beneficiaries pro rata to conform with this
25 limitation. If proration is unnecessary the minimum survivor's
26 and children's pensions shall be $40 per month. The minimum

 

 

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1 total survivor's and children's pension payable upon the death
2 of a contributor or annuitant which occurs after December 31,
3 1986, shall be 50% of the earned retirement pension of such
4 contributor or annuitant, calculated without early retirement
5 discount in the case of death in service.
6     On death after retirement, the total survivor's and
7 children's pensions shall not exceed the monthly retirement or
8 disability pension paid to the deceased retirant. Survivor's
9 and children's benefits described in this Section shall apply
10 to all service and disability pensioners eligible for a pension
11 as of July 1, 1981.
12 (Source: P.A. 90-32, eff. 6-27-97; 90-566, eff. 1-2-98.)
 
13     Section 90. The State Mandates Act is amended by adding
14 Section 8.31 as follows:
 
15     (30 ILCS 805/8.31 new)
16     Sec. 8.31. Exempt mandate. Notwithstanding Sections 6 and 8
17 of this Act, no reimbursement by the State is required for the
18 implementation of any mandate created by this amendatory Act of
19 the 95th General Assembly.
 
20     Section 99. Effective date. This Act takes effect upon
21 becoming law.