SB0029 97TH GENERAL ASSEMBLY

LRB097 00067 AMC 40072 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB0029

Introduced 1/27/2011, by Sen. Chris Lauzen

SYNOPSIS AS INTRODUCED:

See Index

Amends the General Assembly, State Employees, State Universities, Downstate Teachers, and Judges Articles of the Illinois Pension Code. With respect to service on or after July 1, 2011 by current employees, adds provisions concerning the annuity rate of accrual, annuity calculations, automatic annual increases, and survivors' annuities. With respect to later entrants (members who first become members on or after July 1, 2011), adds provisions concerning creditable service, conditions for eligibility, amount of annuities, automatic annual increases, survivors' annuities, and refunds. Defines "salary", "earnings", "compensation", and "wages" for periods of service on and after July 1, 2011 for any participant or member of any retirement system or pension fund under this Code. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning public employee benefits.

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

ARTICLE 1.

Section 1-5. The Illinois Pension Code is amended by adding Sections 2-300, 2-305, 2-310, 2-315, 2-320, 2-325, 2-330, 14-300, 14-305, 14-310, 14-315, 14-320, 14-325, 14-330, 15-300, 15-305, 15-310, 15-315, 15-320, 15-325, 15-330, 16-300, 16-305, 16-310, 16-315, 16-320, 16-325, 16-330, 18-300, 18-305, 18-310, 18-315, 18-320, 18-325, and 18-330 as follows:

(40 ILCS 5/2-300 new)

Sec. 2-300. Provisions applicable to later entrants. The provisions of Sections 2-300, 2-305, 2-310, 2-315, 2-320, 2-325, and 2-330 apply only to members who first become members on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 2-300, 2-305, 2-310, 2-315, 2-320, 2-325, and 2-330 shall control for later entrants.

(40 ILCS 5/2-305 new)

Sec. 2-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A member may only establish creditable service for his or her service as a member under this Article.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/2-310 new)

Sec. 2-310. Retirement annuity; conditions for eligibility; later entrants. Later entrants under this Article shall be eligible to claim a retirement annuity under the following conditions:

(a) A member may claim a retirement annuity upon attainment of age 67 with at least 10 years of service credit.

(b) A member may claim a reduced retirement annuity under subsection (c) of Section 2-315 if he or she has reached age 62 and has at least 10 years of service.

(40 ILCS 5/2-315 new)

Sec. 2-315. Retirement annuity; amount; later entrants. Retirement annuities for later entrants shall be subject to the following conditions:

(a) With respect to later entrants, the following limitations shall apply when calculating an annuity under this Article:

(1) "Final average salary" means the monthly salary obtained by dividing the total salary of a participant during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12-month period. In no event shall the annual final average salary exceed $106,800, as automatically increased by the lesser of 3% or one-half of the annual increase in the consumer price index-u during the preceding 12-month calendar year.

For the purposes of this paragraph (1), "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds.

(2) "Salary" means base salary paid to a member.

(b) The retirement annuity shall be 2% of final average salary for each year of service.

(40 ILCS 5/2-320 new)

Sec. 2-320. Survivors' annuities for survivors of later entrants. The initial survivor's annuity of an otherwise eligible survivor of a later entrant shall be in the amount of 66 2/3% of the participant's earned retirement annuity at the date of death and shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/2-325 new)

Sec. 2-325. Automatic annual increases for later entrants. Notwithstanding any other provision of this Article, a person receiving a retirement or survivor annuity under Sections 2-315 or 2-320 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have his or her annuity increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/2-330 new)

Sec. 2-330. Refunds; later entrants. A participant who is a later entrant and who ceases to be a member, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as a member, a former member who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at the actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

(40 ILCS 5/14-300 new)

Sec. 14-300. Provisions applicable to later entrants. The provisions of Sections 14-300, 14-305, 14-310, 14-315, 14-320, 14-325, and 14-330 apply only to employees who first become employees on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 14-300, 14-305, 14-310, 14-315, 14-320, 14-325, and 14-330 shall control for later entrants.

(40 ILCS 5/14-305 new)

Sec. 14-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A member may only establish creditable service for his or her membership service, as defined in Section 14-103.13.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/14-315 new)

Sec. 14-315. Retirement annuity; amount; later entrants.

(a) With respect to calculating an annuity under this Article for later entrants, "compensation" means a member's base compensation.

(b) The retirement annuity shall be (1) 1.5% of final average compensation for each year of service for covered employees or (2) 2% of final average compensation for each year of service for noncovered employees.

(40 ILCS 5/14-330 new)

Sec. 14-330. Refunds; later entrants. An employee who is a later entrant and who ceases to be a member, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as a member, a former member who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

(40 ILCS 5/15-300 new)

Sec. 15-300. Provisions applicable to later entrants. The provisions of Sections 15-300, 15-305, 15-310, 15-315, 15-320, 15-325, and 15-330 apply only to employees who first become employees on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 15-300, 15-305, 15-310, 15-315, 15-320, 15-325, and 15-330 shall control for later entrants.

(40 ILCS 5/15-305 new)

Sec. 15-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A member may only establish creditable service for his or her service for employment with an employer, as defined in Section 15-106.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/15-315 new)

Sec. 15-315. Retirement annuity; amount; later entrants.

(a) With respect to calculating an annuity under this Article for later entrants, "earnings" means an employee's base earnings.

(b) The retirement annuity shall be 2% of the final rate of earnings for each year of service.

(40 ILCS 5/15-330 new)

Sec. 15-330. Refunds; later entrants. An employee who is a later entrant and who ceases to be a participant, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as an employee, a former participant who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at the actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

(40 ILCS 5/16-300 new)

Sec. 16-300. Provisions applicable to later entrants. The provisions of Sections 16-300, 16-305, 16-310, 16-315, 16-320, 16-325, and 16-330 apply only to teachers who first become teachers on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 16-300, 16-305, 16-310, 16-315, 16-320, 16-325, and 16-330 shall control for later entrants.

(40 ILCS 5/16-305 new)

Sec. 16-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A member may only establish creditable service for his or her service for employment as a teacher, as defined in Section 16-106.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/16-315 new)

Sec. 16-315. Retirement annuity; amount; later entrants.

(a) With respect to calculating an annuity under this Article for later entrants, "salary" means base salary paid to a member.

(b) The retirement annuity shall be 2% of final average salary for each year of service.

(40 ILCS 5/16-330 new)

Sec. 16-330. Refunds; later entrants. A teacher who is a later entrant and who ceases to be a member, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as a teacher, a former member who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at the actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

(40 ILCS 5/18-300 new)

Sec. 18-300. Provisions applicable to later entrants. The provisions of Sections 18-300, 18-305, 18-310, 18-315, 18-320, 18-325, and 18-330 apply only to judges who first become judges on or after July 1, 2011, who are referred to as "later entrants". Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 18-300, 18-305, 18-310, 18-315, 18-320, 18-325, and 18-330 shall control for later entrants.

(40 ILCS 5/18-305 new)

Sec. 18-305. Creditable service for later entrants. Creditable service for later entrants under this Article is subject to the following conditions:

(a) The maximum amount of creditable service a member may establish under this Article is 35 years.

(b) A participant may only establish creditable service for his or her service for employment as a judge, as defined in Section 18-112.

(c) A member may not convert any unused sick leave or vacation into creditable service under this Article.

(40 ILCS 5/18-310 new)

Sec. 18-310. Retirement annuity; conditions for eligibility; later entrants. Later entrants under this Article shall be eligible to claim a retirement annuity under the following conditions:

(a) A participant may claim a retirement annuity upon attainment of age 67 with at least 10 years of service credit.

(b) A participant may claim a reduced retirement annuity under subsection (c) of Section 18-315 if he or she has reached age 62 and has at least 10 years of service.

(40 ILCS 5/18-315 new)

Sec. 18-315. Retirement annuity; amount; later entrants. Retirement annuities for later entrants shall be subject to the following conditions:

(a) With respect to later entrants, the following limitations shall apply when calculating an annuity under this Article:

(1) "Final average salary" means the monthly salary obtained by dividing the total salary of a participant during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12-month period. In no event shall the annual final average salary exceed $106,800, as automatically increased by the lesser of 3% or one-half of the annual increase in the consumer price index-u during the preceding 12-month calendar year.

For the purposes of this paragraph (1), "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds.

(2) "Salary" means base salary paid to a participant.

(b) The retirement annuity shall be 2% of final average salary for each year of service.

(40 ILCS 5/18-320 new)

Sec. 18-320. Survivors' annuities for survivors of later entrants. The initial survivor's annuity of an otherwise eligible survivor of a later entrant shall be in the amount of 66 2/3% of the participant's earned retirement annuity at the date of death and shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/18-325 new)

Sec. 18-325. Automatic annual increases for later entrants. Notwithstanding any other provision of this Article, a person receiving a retirement or survivor annuity under Sections 18-315 or 18-320 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have his or her annuity increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/18-330 new)

Sec. 18-330. Refunds; later entrants. A judge who was a later entrant and who ceases to be a participant, other than an annuitant, shall, upon written request, receive a refund of his or her total contributions. Upon re-entry into service as a judge, a former participant who was a later entrant may reestablish any creditable service forfeited by acceptance of a refund by paying to the System the full amount refunded, plus interest at the actuarially assumed rate, not compounded, from the date of payment of the refund to the date of repayment.

ARTICLE 2.

Section 2-1. Legislative intent. Article XIII, Section 5 of the 1970 Illinois State Constitution provides public employees a right to retain their contractual rights to pension benefits that they have already earned. The goal and intent of the following provisions is to preserve the accrued benefits of members in the five State pension systems, while making changes on a prospective basis to protect the funded status of each State pension system, thereby preserving each system's ability to provide benefits for all members.

Section 2-5. The Illinois Pension Code is amended by adding Sections 2-400, 2-405, 2-410, 2-415, 2-420, 2-425, 14-400, 14-405, 14-410, 14-415, 14-420, 14-425, 15-400, 15-405, 15-410, 15-415, 15-420, 15-425, 16-400, 16-405, 16-410, 16-415, 16-420, 16-425, 18-400, 18-405, 18-410, 18-415, 18-420, and 18-425 as follows:

(40 ILCS 5/2-400 new)

Sec. 2-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 2-405, 2-410, 2-415, and 2-420 shall control for any annuity calculations and benefit accruals by members besides later entrants on or after July 1, 2011.

(40 ILCS 5/2-405 new)

Sec. 2-405. Rate of accrual on or after July 1, 2011. For all service by a member on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final average salary for each year of service.

(40 ILCS 5/2-410 new)

Sec. 2-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final average salary" means the monthly salary obtained by dividing the total salary of a participant during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12-month period. In no event shall the annual final average salary exceed $106,800, as automatically increased by the lesser of 3% or one-half of the annual increase in the consumer price index-u during the preceding 12-month calendar year.

For the purposes of this Section, "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds.

(b) "Salary" means base salary paid to a member.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the member's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service a member may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/2-415 new)

Sec. 2-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/2-420 new)

Sec. 2-420. Calculation of annuity. When calculating an annuity for a participant who has service before and after July 1, 2011, the participant's total accrued benefit shall be the sum of (A) the participant's benefit accruals prior to July 1, 2011 as if the participant had retired on that date, and (B) the participant's benefit accruals on or after July 1, 2011, as modified by the rules in sections 2-405, 2-410, and 2-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the participant's total accrued benefit be less, at his retirement, than if the participant's entire period of service had been as a later entrant.

(40 ILCS 5/2-425 new)

Sec. 2-425. Survivors' annuities based on service performed on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the initial survivor's annuity of an otherwise eligible survivor shall be in the amount of 66 2/3% of the participant's earned retirement annuity at the date of death and shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/14-400 new)

Sec. 14-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 14-405, 14-410, 14-415, and 14-420 shall control for any annuity calculations and benefit accruals by employees besides later entrants on or after July 1, 2011.

(40 ILCS 5/14-405 new)

Sec. 14-405. Rate of accrual on or after July 1, 2011. For all service by an employee on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final average compensation for each year of service for noncovered employees and 1.5% of final average compensation for each year of service for covered employees.

(40 ILCS 5/14-410 new)

Sec. 14-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final average compensation" means the monthly compensation obtained by dividing the total compensation of an employee during the period of: (A) the 96 consecutive months of service in which the total compensation was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly compensation to be considered in each of the last 12 months of the final average compensation period shall not exceed 125% of the highest compensation in any other month in the final average compensation period that precedes such final 12-month period. In no event shall the annual final average compensation exceed $106,800, as automatically increased by the lesser of 3% or one-half of the annual increase in the consumer price index-u during the preceding 12-month calendar year.

For the purposes of this Section, "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds.

(b) "Compensation" means base compensation paid to an employee.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the employee's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service an employee may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/14-415 new)

Sec. 14-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/14-420 new)

Sec. 14-420. Calculation of annuity. When calculating an annuity for an employee who has service before and after July 1, 2011, the employee's total accrued benefit shall be the sum of (A) the employee's benefit accruals prior to July 1, 2011 as if the employee had retired on that date, and (B) the employee's benefit accruals on or after July 1, 2011, as modified by the rules in sections 14-405, 14-410, and 14-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the employee's total accrued benefit be less, at his retirement, than if the employee's entire period of service had been as a later entrant.

(40 ILCS 5/14-425 new)

Sec. 14-425. Survivors' annuities based on service performed on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the initial survivor's annuity of an otherwise eligible survivor shall be in the amount of 66 2/3% of the participant's earned retirement annuity at the date of death and shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/15-400 new)

Sec. 15-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 15-405, 15-410, 15-415, and 15-420 shall control for any annuity calculations and benefit accruals by employees besides later entrants on or after July 1, 2011.

(40 ILCS 5/15-405 new)

Sec. 15-405. Rate of accrual on or after July 1, 2011. For all service by an employee on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final rate of earnings for each year of service.

(40 ILCS 5/15-410 new)

Sec. 15-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final rate of earnings" means the monthly earnings obtained by dividing the total earnings of an employee during the period of: (A) the 96 consecutive months of service in which the total earnings was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly earnings to be considered in each of the last 12 months of the final rate of earnings period shall not exceed 125% of the highest earnings in any other month in the final rate of earnings period that precedes such final 12-month period. In no event shall the annual final rate of earnings exceed $106,800, as automatically increased by the lesser of 3% or one-half of the annual increase in the consumer price index-u during the preceding 12-month calendar year.

For the purposes of this Section, "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds.

(b) "Earnings" means base salary paid to an employee.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the employee's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service an employee may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/15-415 new)

Sec. 15-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/15-420 new)

Sec. 15-420. Calculation of annuity. When calculating an annuity for a participant who has service before and after July 1, 2011, the participant's total accrued benefit shall be the sum of (A) the participant's benefit accruals prior to July 1, 2011 as if the participant had retired on that date, and (B) the participant's benefit accruals on or after July 1, 2011, as modified by the rules in sections 15-405, 15-410, and 15-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the participant's total accrued benefit be less, at his retirement, than if the participant's entire period of service had been as a later entrant.

(40 ILCS 5/15-425 new)

Sec. 15-425. Survivors' annuities based on service performed on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the initial survivor's annuity of an otherwise eligible survivor shall be in the amount of 66 2/3% of the participant's earned retirement annuity at the date of death and shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/16-400 new)

Sec. 16-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 16-405, 16-410, 16-415, and 16-420 shall control for any annuity calculations and benefit accruals by teachers besides later entrants on or after July 1, 2011.

(40 ILCS 5/16-405 new)

Sec. 16-405. Rate of accrual on or after July 1, 2011. For all service by a teacher on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final average salary for each year of service.

(40 ILCS 5/16-410 new)

Sec. 16-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final average salary" means the monthly salary obtained by dividing the total salary of an teacher during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12 month period. In no event shall the annual final average salary exceed $106,800, as automatically increased by the lesser of 3% or one-half of the annual increase in the consumer price index-u during the preceding 12-month calendar year.

For the purposes of this Section, "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds.

(b) "Salary" means base salary paid to a teacher.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the teacher's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service a teacher may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/16-415 new)

Sec. 16-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/16-420 new)

Sec. 16-420. Calculation of annuity. When calculating an annuity for a teacher who has service before and after July 1, 2011, the teacher's total accrued benefit shall be the sum of (A) the teacher's benefit accruals prior to July 1, 2011 as if the teacher had retired on that date, and (B) the teacher's benefit accruals on or after July 1, 2011, as modified by the rules in sections 16-405, 16-410, and 16-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the teacher's total accrued benefit be less, at his retirement, than if the teacher's entire period of service had been as a later entrant.

(40 ILCS 5/16-425 new)

Sec. 16-425. Survivors' annuities based on service performed on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the initial survivor's annuity of an otherwise eligible survivor shall be in the amount of 66 2/3% of the participant's earned retirement annuity at the date of death and shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/18-400 new)

Sec. 18-400. Provisions applicable to benefit accruals on or after July 1, 2011. Notwithstanding anything in the foregoing provisions of this Article to the contrary, the provisions of Sections 18-405, 18-410, 18-415, and 18-420 shall control for any annuity calculations and benefit accruals by judges besides later entrants on or after July 1, 2011.

(40 ILCS 5/18-405 new)

Sec. 18-405. Rate of accrual on or after July 1, 2011. For all service by a judge on or after July 1, 2011, the annual retirement annuity rate of accrual is 2% of final average salary for each year of service.

(40 ILCS 5/18-410 new)

Sec. 18-410. Annuity calculations for benefit accruals on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the following rules apply to benefit accruals on or after July 1, 2011:

(a) "Final average salary" means the monthly salary obtained by dividing the total salary of an judge during the period of: (A) the 96 consecutive months of service in which the total salary was the highest within the last 120 months of service, or (B) the total period of service, if less than 96 months, by the number of months of service in such period; provided that the monthly salary to be considered in each of the last 12 months of the final average salary period shall not exceed 125% of the highest salary in any other month in the final average salary period that precedes such final 12 month period. In no event shall the annual final average salary exceed $106,800, as automatically increased by the lesser of 3% or one-half of the annual increase in the consumer price index-u during the preceding 12-month calendar year.

For the purposes of this Section, "consumer price index-u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds.

(b) "Salary" means base salary paid to a judge.

(c) The portion of any annuity earned on or after July 1, 2011 shall be reduced by one-half of 1% for each month that the judge's retirement age is under the full (normal) retirement age as provided in the federal Social Security Act.

(d) The maximum amount of creditable service a judge may establish on or after July 1, 2011 is 35 years.

(40 ILCS 5/18-415 new)

Sec. 18-415. Automatic annual increases for accruals on or after July 1, 2011. A person receiving an annuity based on service performed on or after July 1, 2011 shall, on the first anniversary of retirement, but not before attaining the full (normal) retirement age as provided in the federal Social Security Act, and annually thereafter, have the portion of his or her annuity earned on or after July 1, 2011 increased by the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

(40 ILCS 5/18-420 new)

Sec. 18-420. Calculation of annuity. When calculating an annuity for a participant who has service before and after July 1, 2011, the participant's total accrued benefit shall be the sum of (A) the participant's benefit accruals prior to July 1, 2011 as if the participant had retired on that date, and (B) the participant's benefit accruals on or after July 1, 2011, as modified by the rules in sections 18-405, 18-410, and 18-415. Within 180 days after the effective date of this amendatory Act of the 96th General Assembly, the system shall promulgate rules and regulations to effectuate the provisions of this amendatory Act of the 96th General Assembly. In no event shall the participant's total accrued benefit be less, at his retirement, than if the participant's entire period of service had been as a later entrant.

(40 ILCS 5/18-425 new)

Sec. 18-425. Survivors' annuities based on service performed on or after July 1, 2011. For purposes of calculating an annuity based on service performed on or after July 1, 2011, the initial survivor's annuity of an otherwise eligible survivor shall be in the amount of 66 2/3% of the participant's earned retirement annuity at the date of death and shall be increased (1) on each January 1 occurring on or after the commencement of the annuity if the deceased member died while receiving a retirement annuity or (2) in other cases, on each January 1 occurring after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at the lesser of (1) 3% or (2) one-half of the percentage increase, if any, in the Consumer Price Index for All Urban Consumers measured from the preceding January 1 to the January 1 of the year during which the increase is being granted. The increase for each year shall be applied to the amount of the recipient's originally granted annuity.

ARTICLE 3.

Section 3-5. The Illinois Pension Code is amended by adding Section 1-165 as follows:

(40 ILCS 5/1-165 new)

Sec. 1-165. Definition of salary, earnings, compensation, and wages. Notwithstanding any other provision of this Code to the contrary, for periods of service on and after July 1, 2011 for any participant or member of any retirement system or pension fund under this Code, "salary", "earnings", "compensation", and "wages", as applicable under an Article of this Code, means all remuneration for personal services performed defined as "wages" under the Social Security Enabling Act, excluding remuneration which is in excess of the annual earnings, salary, or wages of a member or participant, but including any benefits received by an employee under a sick pay plan in effect before January 1, 1981. "Salary", "earnings", "compensation", and "wages" shall exclude lump sum salary payments:

(1) for vacation;

(2) for accumulated unused sick leave;

(3) upon discharge for approved holidays; and

(4) for approved holidays.

ARTICLE 99.

Section 99-99. Effective date. This Act takes effect upon becoming law.