95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB4275

 

Introduced , by Rep. Robert S. Molaro

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/17-116   from Ch. 108 1/2, par. 17-116
40 ILCS 5/17-119.1
30 ILCS 805/8.32 new

    Amends the Chicago Teacher Article of the Illinois Pension Code. Provides that the service retirement pension for a teacher who retires on or after the effective date of this amendatory Act shall be 2.4% (now 2.2%) of average salary for each year of creditable service. Eliminates the required contribution for converting past service to the augmented retirement formula, and provides for a refund of such contributions already paid. Also provides for recalculation of the pension and a lump sum payment of the difference between the augmented and unaugmented rates for certain pensioners. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB095 14506 AMC 40413 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

HB4275 LRB095 14506 AMC 40413 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 17-116 and 17-119.1 as follows:
 
6     (40 ILCS 5/17-116)  (from Ch. 108 1/2, par. 17-116)
7     Sec. 17-116. Service retirement pension.
8     (a) Each teacher having 20 years of service upon attainment
9 of age 55, or who thereafter attains age 55 shall be entitled
10 to a service retirement pension upon or after attainment of age
11 55; and each teacher in service on or after July 1, 1971, with
12 5 or more but less than 20 years of service shall be entitled
13 to receive a service retirement pension upon or after
14 attainment of age 62.
15     (b) The service retirement pension for a teacher who
16 retires on or after June 25, 1971, at age 60 or over, shall be
17 calculated as follows:
18         (1) For creditable service earned before July 1, 1998
19     that has not been augmented under Section 17-119.1: 1.67%
20     for each of the first 10 years of service; 1.90% for each
21     of the next 10 years of service; 2.10% for each year of
22     service in excess of 20 but not exceeding 30; and 2.30% for
23     each year of service in excess of 30, based upon average

 

 

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1     salary as herein defined.
2         (2) For creditable service earned on or after July 1,
3     1998 by a member who has at least 30 years of creditable
4     service on July 1, 1998 and who does not elect to augment
5     service under Section 17-119.1: 2.3% of average salary for
6     each year of creditable service earned on or after July 1,
7     1998.
8         (3) For all other creditable service: for persons who
9     retire before the effective date of this amendatory Act of
10     the 95th General Assembly, 2.2% of average salary for each
11     year of creditable service, for persons who retire on or
12     after the effective date of this amendatory Act of the 95th
13     General Assembly, 2.4% of average salary for each year of
14     creditable service.
15     (c) When computing such service retirement pensions, the
16 following conditions shall apply:
17         1. Average salary shall consist of the average annual
18     rate of salary for the 4 consecutive years of validated
19     service within the last 10 years of service when such
20     average annual rate was highest. In the determination of
21     average salary for retirement allowance purposes, for
22     members who commenced employment after August 31, 1979,
23     that part of the salary for any year shall be excluded
24     which exceeds the annual full-time salary rate for the
25     preceding year by more than 20%. In the case of a member
26     who commenced employment before August 31, 1979 and who

 

 

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1     receives salary during any year after September 1, 1983
2     which exceeds the annual full time salary rate for the
3     preceding year by more than 20%, an Employer and other
4     employers of eligible contributors as defined in Section
5     17-106 shall pay to the Fund an amount equal to the present
6     value of the additional service retirement pension
7     resulting from such excess salary. The present value of the
8     additional service retirement pension shall be computed by
9     the Board on the basis of actuarial tables adopted by the
10     Board. If a member elects to receive a pension from this
11     Fund provided by Section 20-121, his salary under the State
12     Universities Retirement System and the Teachers'
13     Retirement System of the State of Illinois shall be
14     considered in determining such average salary. Amounts
15     paid after the effective date of this amendatory Act of
16     1991 for unused vacation time earned after that effective
17     date shall not under any circumstances be included in the
18     calculation of average salary or the annual rate of salary
19     for the purposes of this Article.
20         2. Proportionate credit shall be given for validated
21     service of less than one year.
22         3. For retirement at age 60 or over the pension shall
23     be payable at the full rate.
24         4. For separation from service below age 60 to a
25     minimum age of 55, the pension shall be discounted at the
26     rate of 1/2 of one per cent for each month that the age of

 

 

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1     the contributor is less than 60, but a teacher may elect to
2     defer the effective date of pension in order to eliminate
3     or reduce this discount. This discount shall not be
4     applicable to any participant who has at least 34 years of
5     service or a retirement pension of at least 74.6% of
6     average salary on the date the retirement annuity begins.
7         5. No additional pension shall be granted for service
8     exceeding 45 years. Beginning June 26, 1971 no pension
9     shall exceed the greater of $1,500 per month or 75% of
10     average salary as herein defined.
11         6. Service retirement pensions shall begin on the
12     effective date of resignation, retirement, the day
13     following the close of the payroll period for which service
14     credit was validated, or the time the person resigning or
15     retiring attains age 55, or on a date elected by the
16     teacher, whichever shall be latest.
17         7. A member who is eligible to receive a retirement
18     pension of at least 74.6% of average salary and will attain
19     age 55 on or before December 31 during the year which
20     commences on July 1 shall be deemed to attain age 55 on the
21     preceding June 1.
22         8. A member retiring after the effective date of this
23     amendatory Act of 1998 shall receive a pension equal to 75%
24     of average salary if the member is qualified to receive a
25     retirement pension equal to at least 74.6% of average
26     salary under this Article or as proportional annuities

 

 

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1     under Article 20 of this Code.
2 (Source: P.A. 90-566, eff. 1-2-98; 90-582, eff. 5-27-98.)
 
3     (40 ILCS 5/17-119.1)
4     Sec. 17-119.1. Optional increase in retirement annuity.
5     (a) Beginning on the effective date of this amendatory Act
6 of the 95th General Assembly, a member of the Fund shall may
7 qualify for the augmented rate under subdivision (b)(3) of
8 Section 17-116 for all years of creditable service without
9 earned before July 1, 1998 by making any the optional
10 contribution. Any such contribution already paid under this
11 Section shall be refunded by the Fund to the teacher or
12 pensioner (or, if deceased, to the teacher or pensioner's
13 survivor, beneficiary, or estate), together with interest at
14 the rate of 5%, compounded annually, from the date of payment
15 of the contribution to the date of refund; except that any such
16 contribution that has been paid by an employer under subsection
17 (e) shall be refunded to the employer. specified in subsection
18 (b); except that a member who retires on or after July 1, 1998
19 with at least 30 years of creditable service at retirement
20 qualifies for the augmented rate without making any
21 contribution under subsection (b).
22     Any member who retires on or after July 1, 1998 and before
23 the effective date of this amendatory Act of the 95th 92nd
24 General Assembly and whose pension was calculated using an
25 unaugmented rate may elect to have the pension recalculated

 

 

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1 using the applicable augmented rate and to with at least 30
2 years of creditable service shall be paid a lump sum equal to
3 the amount he or she would have received under the augmented
4 rate minus the amount he or she actually received prior to the
5 effective date of the recalculation.
6     The changes to this Section made by this amendatory Act of
7 the 95th General Assembly apply without regard to whether the
8 member was in service on or after its effective date and
9 notwithstanding Section 17-157.
10     A member may not elect to qualify for the augmented rate
11 for only a portion of his or her creditable service earned
12 before July 1, 1998.
13     (b) (Blank). The contribution shall be an amount equal to
14 1.0% of the member's highest salary rate in the 4 consecutive
15 school years immediately prior to but not including the school
16 year in which the application occurs, multiplied by the number
17 of years of creditable service earned by the member before July
18 1, 1998 or 20, whichever is less. This contribution shall be
19 reduced by 1.0% of that salary rate for every 3 full years of
20 creditable service earned by the member after June 30, 1998.
21 The contribution shall be further reduced at the rate of 25% of
22 the contribution (as reduced for service after June 30, 1998)
23 for each year of the member's total creditable service in
24 excess of 34 years. The contribution shall not in any event
25 exceed 20% of that salary rate.
26     The member shall pay to the Fund the amount of the

 

 

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1 contribution as calculated at the time of application under
2 this Section. The amount of the contribution determined under
3 this subsection shall be recalculated at the time of
4 retirement, and if the Fund determines that the amount paid by
5 the member exceeds the recalculated amount, the Fund shall
6 refund the difference to the member with regular interest from
7 the date of payment to the date of refund.
8     The contribution required by this subsection shall be paid
9 in one of the following ways or in a combination of the
10 following ways that does not extend over more than 5 years:
11         (i) in a lump sum on or before the date of retirement;
12         (ii) in substantially equal installments over a period
13     of time not to exceed 5 years, as a deduction from salary
14     in accordance with Section 17-130.2;
15         (iii) in substantially equal monthly installments over
16     a 24-month period, by a deduction from the annuitant's
17     monthly benefit.
18     (c) (Blank). If the member fails to make the full
19 contribution under this Section in a timely fashion, the
20 payments made under this Section shall be refunded to the
21 member, without interest. If the member (including a member who
22 has become an annuitant) dies before making the full
23 contribution, the payments made under this Section shall be
24 refunded to the member's designated beneficiary if there is no
25 survivor's or children's pension benefit payable. If there is a
26 survivor's or children's benefit payable, then all payments

 

 

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1 made under this Section shall be retained by the Fund and all
2 such survivor's or children's benefits payable shall be
3 calculated as if all contributions required under this Section
4 have been paid in full.
5     (d) (Blank). For purposes of this Section and subsection
6 (b) of Section 17-116, optional creditable service established
7 by a member shall be deemed to have been earned at the time of
8 the employment or other qualifying event upon which the service
9 is based, rather than at the time the credit was established in
10 this Fund.
11     (e) (Blank). The contributions required under this Section
12 are the responsibility of the teacher and not the teacher's
13 employer. However, an employer of teachers may, after the
14 effective date of this amendatory Act of 1998, specifically
15 agree, through collective bargaining or otherwise, to make the
16 contributions required by this Section on behalf of those
17 teachers.
18 (Source: P.A. 91-17, eff. 6-4-99; 92-416, eff. 8-17-01; 92-599,
19 eff. 6-28-02; 92-651, eff. 7-11-02.)
 
20     Section 90. The State Mandates Act is amended by adding
21 Section 8.32 as follows:
 
22     (30 ILCS 805/8.32 new)
23     Sec. 8.32. Exempt mandate. Notwithstanding Sections 6 and 8
24 of this Act, no reimbursement by the State is required for the

 

 

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1 implementation of any mandate created by this amendatory Act of
2 the 95th General Assembly.
 
3     Section 99. Effective date. This Act takes effect upon
4 becoming law.