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1 | AN ACT concerning public employee benefits.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Pension Code is amended by adding | ||||||||||||||||||||||||||
5 | Section 6-127.5 as follows: | ||||||||||||||||||||||||||
6 | (40 ILCS 5/6-127.5 new) | ||||||||||||||||||||||||||
7 | Sec. 6-127.5. Lump sum payment option. | ||||||||||||||||||||||||||
8 | (a) This Section applies only to a fireman not in receipt | ||||||||||||||||||||||||||
9 | of disability benefits who (i) is otherwise eligible and | ||||||||||||||||||||||||||
10 | applies for a minimum annuity under subsection (c) of Section | ||||||||||||||||||||||||||
11 | 6-128 and (ii) withdraws from service as an active fireman on | ||||||||||||||||||||||||||
12 | or after the effective date of this Section. | ||||||||||||||||||||||||||
13 | (b) A qualifying fireman may elect, at the time of applying | ||||||||||||||||||||||||||
14 | for a retirement annuity under subsection (c) of Section 6-128, | ||||||||||||||||||||||||||
15 | to have a lump sum payment established to his or her credit in | ||||||||||||||||||||||||||
16 | an account to be held by the Fund, in exchange for which he or | ||||||||||||||||||||||||||
17 | she agrees to forfeit a portion of his or her service credit | ||||||||||||||||||||||||||
18 | that is in excess of the minimum amount required to qualify for | ||||||||||||||||||||||||||
19 | an annuity under subsection (c) of Section 6-128. | ||||||||||||||||||||||||||
20 | The service credit to be forfeited shall not exceed 36 | ||||||||||||||||||||||||||
21 | months and shall be the latest service credit actively earned | ||||||||||||||||||||||||||
22 | by the fireman prior to retirement. | ||||||||||||||||||||||||||
23 | The lump sum payment shall be an amount equal to the sum of |
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1 | (1) an amount representing the employee contributions credited | ||||||
2 | to the fireman's account for the period of service credit being | ||||||
3 | forfeited, adjusted as provided in this Section, and (2) an | ||||||
4 | amount equal to the number of months of service credit | ||||||
5 | forfeited, multiplied by the limited monthly annuity amount | ||||||
6 | (calculated in accordance with this Section for the sole | ||||||
7 | purpose of determining the lump sum amount). | ||||||
8 | For the purposes of calculating employee contributions | ||||||
9 | under item (1) and the limited monthly annuity amount under | ||||||
10 | item (2), the fireman's salary shall be deemed to be the salary | ||||||
11 | attached to the fireman's career service rank, without any | ||||||
12 | increases or cost of living adjustments during the forfeited | ||||||
13 | period of service. | ||||||
14 | The limited monthly annuity amount under item (2) shall be | ||||||
15 | calculated by: | ||||||
16 | (i) determining the fireman's average salary as | ||||||
17 | defined in subsection (d) of Section 6-128, but using the | ||||||
18 | limitations applicable to that determination that are | ||||||
19 | provided in this Section, and | ||||||
20 | (ii) applying the formula in subsection (c) of Section | ||||||
21 | 6-128, including the 75% limitation, using the average | ||||||
22 | salary determined under item (i) and all of the fireman's | ||||||
23 | service credit (including the service credit to be | ||||||
24 | forfeited), and then | ||||||
25 | (iii) reducing the resulting monthly annuity by an | ||||||
26 | amount equal to 1/12th of 2.5% of that average salary for |
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1 | each month of forfeited service credit. | ||||||
2 | (c) Interest shall accrue on any portion of a lump sum | ||||||
3 | payment held by the Fund, beginning on the fireman's date of | ||||||
4 | withdrawal from service, at a rate to be determined annually by | ||||||
5 | the Fund. For the first 2 years after the fireman's date of | ||||||
6 | withdrawal from service, the interest rate shall be no less | ||||||
7 | than 50% of the Fund's most recent 10-year overall average rate | ||||||
8 | of return. At least 90 days before any change in the interest | ||||||
9 | rate takes effect, the Fund must send written notification of | ||||||
10 | the change to all annuitants directly affected by the change. | ||||||
11 | (d) One-half of the lump sum payment, including any | ||||||
12 | interest that has accrued, shall become payable to the fireman | ||||||
13 | (or in the case of death to the fireman's designated | ||||||
14 | beneficiary or estate) one year after the fireman's date of | ||||||
15 | withdrawal from service. The balance of the lump sum payment, | ||||||
16 | including any interest that may have accrued, shall become | ||||||
17 | payable 2 years after the fireman's date of withdrawal from | ||||||
18 | service. The fireman may withdraw all or a portion of the lump | ||||||
19 | sum payment, including any interest that may have accrued, at | ||||||
20 | any time after it becomes payable. Lump sum payments and the | ||||||
21 | interest thereon shall remain in the fireman's account with the | ||||||
22 | Fund until withdrawn. The fireman may direct that any | ||||||
23 | withdrawal be rolled over into another qualified plan. The Fund | ||||||
24 | may require up to 30 days of advance notice for any substantial | ||||||
25 | withdrawal from a fireman's account. The limitations on the | ||||||
26 | withdrawal of lump sum payments contained in this subsection |
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1 | (d) may be permanently or temporarily reduced or eliminated by | ||||||
2 | a majority vote of the Board. | ||||||
3 | (e) For a fireman who has elected the lump sum payment | ||||||
4 | option under this Section, the service credit forfeited under | ||||||
5 | this Section and the salary received for that forfeited service | ||||||
6 | shall be excluded from the calculation of the fireman's | ||||||
7 | retirement annuity and average salary under subsections (c) and | ||||||
8 | (d) of Section 6-128. The resulting monthly retirement annuity | ||||||
9 | shall constitute the originally granted annuity amount for all | ||||||
10 | purposes of this Article. The forfeiture of service credit | ||||||
11 | under this Section does not reduce the fireman's career service | ||||||
12 | for any purpose used by the City of Chicago. The withdrawal of | ||||||
13 | a lump sum payment from a fireman's account shall be treated as | ||||||
14 | the payment of a retirement benefit and not as a refund of | ||||||
15 | contributions for the purposes of this Article and other | ||||||
16 | applicable laws. | ||||||
17 | (f) A fireman's election of the lump sum payment option | ||||||
18 | under this Section is irrevocable.
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19 | Section 90. The State Mandates Act is amended by adding | ||||||
20 | Section 8.32 as follows: | ||||||
21 | (30 ILCS 805/8.32 new) | ||||||
22 | Sec. 8.32. Exempt mandate. Notwithstanding Sections 6 and 8 | ||||||
23 | of this Act, no reimbursement by the State is required for the | ||||||
24 | implementation of any mandate created by this amendatory Act of |
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1 | the 95th General Assembly.
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2 | Section 99. Effective date. This Act takes effect upon | ||||||
3 | becoming law.
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