94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB1488

 

Introduced 2/23/2005, by Sen. James F. Clayborne, Jr.

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/15-142   from Ch. 108 1/2, par. 15-142
40 ILCS 5/15-145   from Ch. 108 1/2, par. 15-145

    Amends the State Universities Article of the Illinois Pension Code. Increases certain death benefits from $1,000 to $5,000. Provides that these benefits are in the nature of life insurance and are intended to be not subject to the federal income tax. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB1488 LRB094 10719 AMC 41126 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 15-142 and 15-145 as follows:
 
6     (40 ILCS 5/15-142)  (from Ch. 108 1/2, par. 15-142)
7     Sec. 15-142. Death benefits - Death of annuitant. Upon the
8 death of an annuitant receiving a retirement annuity or
9 disability retirement annuity, the annuitant's beneficiary
10 shall, if a survivor's insurance benefit is not payable under
11 Section 15-145 and an annuity is not payable under Section
12 15-136.4, be entitled to a death benefit equal to the greater
13 of the following: (1) the excess, if any, of the sum of the
14 accumulated normal, survivors insurance, and additional
15 contributions as of the date of retirement or the date the
16 disability retirement annuity began, whichever is earlier,
17 over the sum of all annuity payments made prior to the date of
18 death, or (2) $5,000 $1,000.
19 (Source: P.A. 90-448, eff. 8-16-97; 90-766, eff. 8-14-98;
20 91-887, eff. 7-6-00.)
 
21     (40 ILCS 5/15-145)  (from Ch. 108 1/2, par. 15-145)
22     Sec. 15-145. Survivors insurance benefits; conditions and
23 amounts.
24     (a) The survivors insurance benefits provided under this
25 Section shall be payable to the eligible survivors of a
26 participant covered under the traditional benefit package upon
27 the death of (1) a participating employee with at least 1 1/2
28 years of service, (2) a participant who terminated employment
29 with at least 10 years of service, and (3) an annuitant in
30 receipt of a retirement annuity or disability retirement
31 annuity under this Article.

 

 

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1     Service under the State Employees' Retirement System of
2 Illinois, the Teachers' Retirement System of the State of
3 Illinois and the Public School Teachers' Pension and Retirement
4 Fund of Chicago shall be considered in determining eligibility
5 for survivors benefits under this Section.
6     If by law, a function of a governmental unit, as defined by
7 Section 20-107, is transferred in whole or in part to an
8 employer, and an employee transfers employment from this
9 governmental unit to such employer within 6 months after the
10 transfer of this function, the service credits in the
11 governmental unit's retirement system which have been
12 validated under Section 20-109 shall be considered in
13 determining eligibility for survivors benefits under this
14 Section.
15     (b) A surviving spouse of a deceased participant, or of a
16 deceased annuitant who did not take a refund or additional
17 annuity consisting of accumulated survivors insurance
18 contributions, shall receive a survivors annuity of 30% of the
19 final rate of earnings. Payments shall begin on the day
20 following the participant's or annuitant's death or the date
21 the surviving spouse attains age 50, whichever is later, and
22 continue until the death of the surviving spouse. The annuity
23 shall be payable to the surviving spouse prior to attainment of
24 age 50 if the surviving spouse has in his or her care a
25 deceased participant's or annuitant's dependent unmarried
26 child under age 18 (under age 22 if a full-time student) who is
27 eligible for a survivors annuity.
28     Remarriage of a surviving spouse prior to attainment of age
29 55 that occurs before the effective date of this amendatory Act
30 of the 91st General Assembly shall disqualify him or her for
31 the receipt of a survivors annuity until July 6, 2000.
32     A surviving spouse whose survivors annuity has been
33 terminated due to remarriage may apply for reinstatement of
34 that annuity. The reinstated annuity shall begin to accrue on
35 July 6, 2000, except that if, on July 6, 2000, the annuity is
36 payable to an eligible surviving child or parent, payment of

 

 

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1 the annuity to the surviving spouse shall not be reinstated
2 until the annuity is no longer payable to any eligible
3 surviving child or parent. The reinstated annuity shall include
4 any one-time or annual increases received prior to the date of
5 termination, as well as any increases that would otherwise have
6 accrued from the date of termination to the date of
7 reinstatement. An eligible surviving spouse whose expectation
8 of receiving a survivors annuity was lost due to remarriage
9 before attainment of age 50 shall also be entitled to
10 reinstatement under this subsection, but the resulting
11 survivors annuity shall not begin to accrue sooner than upon
12 the surviving spouse's attainment of age 50.
13     The changes made to this subsection by this amendatory Act
14 of the 92nd General Assembly (pertaining to remarriage prior to
15 age 55 or 50) apply without regard to whether the deceased
16 participant or annuitant was in service on or after the
17 effective date of this amendatory Act.
18     (c) Each dependent unmarried child under age 18 (under age
19 22 if a full-time student) of a deceased participant, or of a
20 deceased annuitant who did not take a refund or additional
21 annuity consisting of accumulated survivors insurance
22 contributions, shall receive a survivors annuity equal to the
23 sum of (1) 20% of the final rate of earnings, and (2) 10% of the
24 final rate of earnings divided by the number of children
25 entitled to this benefit. Payments shall begin on the day
26 following the participant's or annuitant's death and continue
27 until the child marries, dies, or attains age 18 (age 22 if a
28 full-time student). If the child is in the care of a surviving
29 spouse who is eligible for survivors insurance benefits, the
30 child's benefit shall be paid to the surviving spouse.
31     Each unmarried child over age 18 of a deceased participant
32 or of a deceased annuitant who had a survivor's insurance
33 beneficiary at the time of his or her retirement, and who was
34 dependent upon the participant or annuitant by reason of a
35 physical or mental disability which began prior to the date the
36 child attained age 18 (age 22 if a full-time student), shall

 

 

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1 receive a survivor's annuity equal to the sum of (1) 20% of the
2 final rate of earnings, and (2) 10% of the final rate of
3 earnings divided by the number of children entitled to
4 survivors benefits. Payments shall begin on the day following
5 the participant's or annuitant's death and continue until the
6 child marries, dies, or is no longer disabled. If the child is
7 in the care of a surviving spouse who is eligible for survivors
8 insurance benefits, the child's benefit may be paid to the
9 surviving spouse. For the purposes of this Section, disability
10 means inability to engage in any substantial gainful activity
11 by reason of any medically determinable physical or mental
12 impairment that can be expected to result in death or that has
13 lasted or can be expected to last for a continuous period of at
14 least one year.
15     (d) Each dependent parent of a deceased participant, or of
16 a deceased annuitant who did not take a refund or additional
17 annuity consisting of accumulated survivors insurance
18 contributions, shall receive a survivors annuity equal to the
19 sum of (1) 20% of final rate of earnings, and (2) 10% of final
20 rate of earnings divided by the number of parents who qualify
21 for the benefit. Payments shall begin when the parent reaches
22 age 55 or the day following the participant's or annuitant's
23 death, whichever is later, and continue until the parent dies.
24 Remarriage of a parent prior to attainment of age 55 shall
25 disqualify the parent for the receipt of a survivors annuity.
26     (e) In addition to the survivors annuity provided above,
27 each survivors insurance beneficiary shall, upon death of the
28 participant or annuitant, receive a lump sum payment of $5,000
29 $1,000 divided by the number of such beneficiaries.
30     (f) The changes made in this Section by Public Act 81-712
31 pertaining to survivors annuities in cases of remarriage prior
32 to age 55 shall apply to each survivors insurance beneficiary
33 who remarries after June 30, 1979, regardless of the date that
34 the participant or annuitant terminated his employment or died.
35     The change made to this Section by this amendatory Act of
36 the 91st General Assembly, pertaining to remarriage prior to

 

 

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1 age 55, applies without regard to whether the deceased
2 participant or annuitant was in service on or after the
3 effective date of this amendatory Act of the 91st General
4 Assembly.
5     (g) On January 1, 1981, any person who was receiving a
6 survivors annuity on or before January 1, 1971 shall have the
7 survivors annuity then being paid increased by 1% for each full
8 year which has elapsed from the date the annuity began. On
9 January 1, 1982, any survivor whose annuity began after January
10 1, 1971, but before January 1, 1981, shall have the survivor's
11 annuity then being paid increased by 1% for each year which has
12 elapsed from the date the survivor's annuity began. On January
13 1, 1987, any survivor who began receiving a survivor's annuity
14 on or before January 1, 1977, shall have the monthly survivor's
15 annuity increased by $1 for each full year which has elapsed
16 since the date the survivor's annuity began.
17     (h) If the sum of the lump sum and total monthly survivor
18 benefits payable under this Section upon the death of a
19 participant amounts to less than the sum of the death benefits
20 payable under items (2) and (3) of Section 15-141, the
21 difference shall be paid in a lump sum to the beneficiary of
22 the participant who is living on the date that this additional
23 amount becomes payable.
24     (i) If the sum of the lump sum and total monthly survivor
25 benefits payable under this Section upon the death of an
26 annuitant receiving a retirement annuity or disability
27 retirement annuity amounts to less than the death benefit
28 payable under Section 15-142, the difference shall be paid to
29 the beneficiary of the annuitant who is living on the date that
30 this additional amount becomes payable.
31     (j) Effective on the later of (1) January 1, 1990, or (2)
32 the January 1 on or next after the date on which the survivor
33 annuity begins, if the deceased member died while receiving a
34 retirement annuity, or in all other cases the January 1 nearest
35 the first anniversary of the date the survivor annuity payments
36 begin, every survivors insurance beneficiary shall receive an

 

 

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1 increase in his or her monthly survivors annuity of 3%. On each
2 January 1 after the initial increase, the monthly survivors
3 annuity shall be increased by 3% of the total survivors annuity
4 provided under this Article, including previous increases
5 provided by this subsection. Such increases shall apply to the
6 survivors insurance beneficiaries of each participant and
7 annuitant, whether or not the employment status of the
8 participant or annuitant terminates before the effective date
9 of this amendatory Act of 1990. This subsection (j) also
10 applies to persons receiving a survivor annuity under the
11 portable benefit package.
12     (k) If the Internal Revenue Code of 1986, as amended,
13 requires that the survivors benefits be payable at an age
14 earlier than that specified in this Section the benefits shall
15 begin at the earlier age, in which event, the survivor's
16 beneficiary shall be entitled only to that amount which is
17 equal to the actuarial equivalent of the benefits provided by
18 this Section.
19     (l) The changes made to this Section and Section 15-131 by
20 this amendatory Act of 1997, relating to benefits for certain
21 unmarried children who are full-time students under age 22,
22 apply without regard to whether the deceased member was in
23 service on or after the effective date of this amendatory Act
24 of 1997. These changes do not authorize the repayment of a
25 refund or a re-election of benefits, and any benefit or
26 increase in benefits resulting from these changes is not
27 payable retroactively for any period before the effective date
28 of this amendatory Act of 1997.
29     (m) The changes made to subsection (e) and Section 15-142
30 by this amendatory Act of the 94th General Assembly, increasing
31 certain death benefits from $1,000 to $5,000, apply to deceased
32 members who die on or after the effective date of this
33 amendatory Act of the 94th General Assembly, regardless of
34 whether the deceased member was in service on or after that
35 date. The General Assembly declares its intent that up to
36 $5,000 of the death benefits provided in subsection (e) and

 

 

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1 Section 15-142 are in the nature of life insurance. Subject to
2 obtaining a favorable ruling from the U.S. Internal Revenue
3 Service, those death benefits shall not be subject to the
4 federal income tax.
5 (Source: P.A. 91-887, eff. 7-6-00; 92-749, eff. 8-2-02.)
 
6     Section 99. Effective date. This Act takes effect upon
7 becoming law.