95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB3030

 

Introduced 4/9/2008, by Sen. Larry K. Bomke

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-139   from Ch. 108 1/2, par. 7-139
30 ILCS 805/8.32 new

    Amends the Illinois Municipal Retirement Fund Article of the Illinois Pension Code. Allows an employee to establish credits and creditable service for up to 36 months of volunteer work with the Peace Corps prior to employment by a municipality. Requires payment of (i) the employee contributions that would have been required had the service been rendered as a member, plus (ii) an amount determined by the Fund to be equal to the employer's normal cost of the benefits accrued for that service, plus (iii) interest. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB095 20601 AMC 48635 b

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

 

 

A BILL FOR

 

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1     AN ACT concerning 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 Section 7-139 as follows:
 
6     (40 ILCS 5/7-139)  (from Ch. 108 1/2, par. 7-139)
7     Sec. 7-139. Credits and creditable service to employees.
8     (a) Each participating employee shall be granted credits
9 and creditable service, for purposes of determining the amount
10 of any annuity or benefit to which he or a beneficiary is
11 entitled, as follows:
12         1. For prior service: Each participating employee who
13     is an employee of a participating municipality or
14     participating instrumentality on the effective date shall
15     be granted creditable service, but no credits under
16     paragraph 2 of this subsection (a), for periods of prior
17     service for which credit has not been received under any
18     other pension fund or retirement system established under
19     this Code, as follows:
20         If the effective date of participation for the
21     participating municipality or participating
22     instrumentality is on or before January 1, 1998, creditable
23     service shall be granted for the entire period of prior

 

 

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1     service with that employer without any employee
2     contribution.
3         If the effective date of participation for the
4     participating municipality or participating
5     instrumentality is after January 1, 1998, creditable
6     service shall be granted for the last 20% of the period of
7     prior service with that employer, but no more than 5 years,
8     without any employee contribution. A participating
9     employee may establish creditable service for the
10     remainder of the period of prior service with that employer
11     by making an application in writing, accompanied by payment
12     of an employee contribution in an amount determined by the
13     Fund, based on the employee contribution rates in effect at
14     the time of application for the creditable service and the
15     employee's salary rate on the effective date of
16     participation for that employer, plus interest at the
17     effective rate from the date of the prior service to the
18     date of payment. Application for this creditable service
19     may be made at any time while the employee is still in
20     service.
21         A municipality that (i) has at least 35 employees; (ii)
22     is located in a county with at least 2,000,000 inhabitants;
23     and (iii) maintains an independent defined benefit pension
24     plan for the benefit of its eligible employees may restrict
25     creditable service in whole or in part for periods of prior
26     service with the employer if the governing body of the

 

 

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1     municipality adopts an irrevocable resolution to restrict
2     that creditable service and files the resolution with the
3     board before the municipality's effective date of
4     participation.
5         Any person who has withdrawn from the service of a
6     participating municipality or participating
7     instrumentality prior to the effective date, who reenters
8     the service of the same municipality or participating
9     instrumentality after the effective date and becomes a
10     participating employee is entitled to creditable service
11     for prior service as otherwise provided in this subdivision
12     (a)(1) only if he or she renders 2 years of service as a
13     participating employee after the effective date.
14     Application for such service must be made while in a
15     participating status. The salary rate to be used in the
16     calculation of the required employee contribution, if any,
17     shall be the employee's salary rate at the time of first
18     reentering service with the employer after the employer's
19     effective date of participation.
20         2. For current service, each participating employee
21     shall be credited with:
22             a. Additional credits of amounts equal to each
23         payment of additional contributions received from him
24         under Section 7-173, as of the date the corresponding
25         payment of earnings is payable to him.
26             b. Normal credits of amounts equal to each payment

 

 

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1         of normal contributions received from him, as of the
2         date the corresponding payment of earnings is payable
3         to him, and normal contributions made for the purpose
4         of establishing out-of-state service credits as
5         permitted under the conditions set forth in paragraph 6
6         of this subsection (a).
7             c. Municipality credits in an amount equal to 1.4
8         times the normal credits, except those established by
9         out-of-state service credits, as of the date of
10         computation of any benefit if these credits would
11         increase the benefit.
12             d. Survivor credits equal to each payment of
13         survivor contributions received from the participating
14         employee as of the date the corresponding payment of
15         earnings is payable, and survivor contributions made
16         for the purpose of establishing out-of-state service
17         credits.
18         3. For periods of temporary and total and permanent
19     disability benefits, each employee receiving disability
20     benefits shall be granted creditable service for the period
21     during which disability benefits are payable. Normal and
22     survivor credits, based upon the rate of earnings applied
23     for disability benefits, shall also be granted if such
24     credits would result in a higher benefit to any such
25     employee or his beneficiary.
26         4. For authorized leave of absence without pay: A

 

 

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1     participating employee shall be granted credits and
2     creditable service for periods of authorized leave of
3     absence without pay under the following conditions:
4             a. An application for credits and creditable
5         service is submitted to the board while the employee is
6         in a status of active employment, and within 2 years
7         after termination of the leave of absence period for
8         which credits and creditable service are sought.
9             b. Not more than 12 complete months of creditable
10         service for authorized leave of absence without pay
11         shall be counted for purposes of determining any
12         benefits payable under this Article.
13             c. Credits and creditable service shall be granted
14         for leave of absence only if such leave is approved by
15         the governing body of the municipality, including
16         approval of the estimated cost thereof to the
17         municipality as determined by the fund, and employee
18         contributions, plus interest at the effective rate
19         applicable for each year from the end of the period of
20         leave to date of payment, have been paid to the fund in
21         accordance with Section 7-173. The contributions shall
22         be computed upon the assumption earnings continued
23         during the period of leave at the rate in effect when
24         the leave began.
25             d. Benefits under the provisions of Sections
26         7-141, 7-146, 7-150 and 7-163 shall become payable to

 

 

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1         employees on authorized leave of absence, or their
2         designated beneficiary, only if such leave of absence
3         is creditable hereunder, and if the employee has at
4         least one year of creditable service other than the
5         service granted for leave of absence. Any employee
6         contributions due may be deducted from any benefits
7         payable.
8             e. No credits or creditable service shall be
9         allowed for leave of absence without pay during any
10         period of prior service.
11         5. For military service: The governing body of a
12     municipality or participating instrumentality may elect to
13     allow creditable service to participating employees who
14     leave their employment to serve in the armed forces of the
15     United States for all periods of such service, provided
16     that the person returns to active employment within 90 days
17     after completion of full time active duty, but no
18     creditable service shall be allowed such person for any
19     period that can be used in the computation of a pension or
20     any other pay or benefit, other than pay for active duty,
21     for service in any branch of the armed forces of the United
22     States. If necessary to the computation of any benefit, the
23     board shall establish municipality credits for
24     participating employees under this paragraph on the
25     assumption that the employee received earnings at the rate
26     received at the time he left the employment to enter the

 

 

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1     armed forces. A participating employee in the armed forces
2     shall not be considered an employee during such period of
3     service and no additional death and no disability benefits
4     are payable for death or disability during such period.
5         Any participating employee who left his employment
6     with a municipality or participating instrumentality to
7     serve in the armed forces of the United States and who
8     again became a participating employee within 90 days after
9     completion of full time active duty by entering the service
10     of a different municipality or participating
11     instrumentality, which has elected to allow creditable
12     service for periods of military service under the preceding
13     paragraph, shall also be allowed creditable service for his
14     period of military service on the same terms that would
15     apply if he had been employed, before entering military
16     service, by the municipality or instrumentality which
17     employed him after he left the military service and the
18     employer costs arising in relation to such grant of
19     creditable service shall be charged to and paid by that
20     municipality or instrumentality.
21         Notwithstanding the foregoing, any participating
22     employee shall be entitled to creditable service as
23     required by any federal law relating to re-employment
24     rights of persons who served in the United States Armed
25     Services. Such creditable service shall be granted upon
26     payment by the member of an amount equal to the employee

 

 

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1     contributions which would have been required had the
2     employee continued in service at the same rate of earnings
3     during the military leave period, plus interest at the
4     effective rate.
5         5.1. In addition to any creditable service established
6     under paragraph 5 of this subsection (a), creditable
7     service may be granted for up to 48 months of service in
8     the armed forces of the United States.
9         In order to receive creditable service for military
10     service under this paragraph 5.1, a participating employee
11     must (1) apply to the Fund in writing and provide evidence
12     of the military service that is satisfactory to the Board;
13     (2) obtain the written approval of the current employer;
14     and (3) make contributions to the Fund equal to (i) the
15     employee contributions that would have been required had
16     the service been rendered as a member, plus (ii) an amount
17     determined by the board to be equal to the employer's
18     normal cost of the benefits accrued for that military
19     service, plus (iii) interest on items (i) and (ii) from the
20     date of first membership in the Fund to the date of
21     payment. The required interest shall be calculated at the
22     regular interest rate.
23         The changes made to this paragraph 5.1 by Public Acts
24     95-483 and 95-486 this amendatory Act of the 95th General
25     Assembly apply only to participating employees in service
26     on or after August 28, 2007 (the effective date of those

 

 

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1     Public Acts) its effective date.
2         6. For out-of-state service: Creditable service shall
3     be granted for service rendered to an out-of-state local
4     governmental body under the following conditions: The
5     employee had participated and has irrevocably forfeited
6     all rights to benefits in the out-of-state public employees
7     pension system; the governing body of his participating
8     municipality or instrumentality authorizes the employee to
9     establish such service; the employee has 2 years current
10     service with this municipality or participating
11     instrumentality; the employee makes a payment of
12     contributions, which shall be computed at 8% (normal) plus
13     2% (survivor) times length of service purchased times the
14     average rate of earnings for the first 2 years of service
15     with the municipality or participating instrumentality
16     whose governing body authorizes the service established
17     plus interest at the effective rate on the date such
18     credits are established, payable from the date the employee
19     completes the required 2 years of current service to date
20     of payment. In no case shall more than 120 months of
21     creditable service be granted under this provision.
22         7. For retroactive service: Any employee who could have
23     but did not elect to become a participating employee, or
24     who should have been a participant in the Municipal Public
25     Utilities Annuity and Benefit Fund before that fund was
26     superseded, may receive creditable service for the period

 

 

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1     of service not to exceed 50 months; however, a current or
2     former elected or appointed official of a participating
3     municipality may establish credit under this paragraph 7
4     for more than 50 months of service as an official of that
5     municipality, if the excess over 50 months is approved by
6     resolution of the governing body of the affected
7     municipality filed with the Fund before January 1, 2002.
8         Any employee who is a participating employee on or
9     after September 24, 1981 and who was excluded from
10     participation by the age restrictions removed by Public Act
11     82-596 may receive creditable service for the period, on or
12     after January 1, 1979, excluded by the age restriction and,
13     in addition, if the governing body of the participating
14     municipality or participating instrumentality elects to
15     allow creditable service for all employees excluded by the
16     age restriction prior to January 1, 1979, for service
17     during the period prior to that date excluded by the age
18     restriction. Any employee who was excluded from
19     participation by the age restriction removed by Public Act
20     82-596 and who is not a participating employee on or after
21     September 24, 1981 may receive creditable service for
22     service after January 1, 1979. Creditable service under
23     this paragraph shall be granted upon payment of the
24     employee contributions which would have been required had
25     he participated, with interest at the effective rate for
26     each year from the end of the period of service established

 

 

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1     to date of payment.
2         8. For accumulated unused sick leave: A participating
3     employee who is applying for a retirement annuity shall be
4     entitled to creditable service for that portion of the
5     employee's accumulated unused sick leave for which payment
6     is not received, as follows:
7             a. Sick leave days shall be limited to those
8         accumulated under a sick leave plan established by a
9         participating municipality or participating
10         instrumentality which is available to all employees or
11         a class of employees.
12             b. Only sick leave days accumulated with a
13         participating municipality or participating
14         instrumentality with which the employee was in service
15         within 60 days of the effective date of his retirement
16         annuity shall be credited; If the employee was in
17         service with more than one employer during this period
18         only the sick leave days with the employer with which
19         the employee has the greatest number of unpaid sick
20         leave days shall be considered.
21             c. The creditable service granted shall be
22         considered solely for the purpose of computing the
23         amount of the retirement annuity and shall not be used
24         to establish any minimum service period required by any
25         provision of the Illinois Pension Code, the effective
26         date of the retirement annuity, or the final rate of

 

 

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1         earnings.
2             d. The creditable service shall be at the rate of
3         1/20 of a month for each full sick day, provided that
4         no more than 12 months may be credited under this
5         subdivision 8.
6             e. Employee contributions shall not be required
7         for creditable service under this subdivision 8.
8             f. Each participating municipality and
9         participating instrumentality with which an employee
10         has service within 60 days of the effective date of his
11         retirement annuity shall certify to the board the
12         number of accumulated unpaid sick leave days credited
13         to the employee at the time of termination of service.
14         9. For service transferred from another system:
15     Credits and creditable service shall be granted for service
16     under Article 3, 4, 5, 8, 14, or 16 of this Act, to any
17     active member of this Fund, and to any inactive member who
18     has been a county sheriff, upon transfer of such credits
19     pursuant to Section 3-110.3, 4-108.3, 5-235, 8-226.7,
20     14-105.6, or 16-131.4, and payment by the member of the
21     amount by which (1) the employer and employee contributions
22     that would have been required if he had participated in
23     this Fund as a sheriff's law enforcement employee during
24     the period for which credit is being transferred, plus
25     interest thereon at the effective rate for each year,
26     compounded annually, from the date of termination of the

 

 

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1     service for which credit is being transferred to the date
2     of payment, exceeds (2) the amount actually transferred to
3     the Fund. Such transferred service shall be deemed to be
4     service as a sheriff's law enforcement employee for the
5     purposes of Section 7-142.1.
6         10. For service transferred from an Article 3 system
7     under Section 3-110.8: Credits and creditable service
8     shall be granted for service under Article 3 of this Act as
9     provided in Section 3-110.8, to any active member of this
10     Fund upon transfer of such credits pursuant to Section
11     3-110.8. If the amount by which (1) the employer and
12     employee contributions that would have been required if he
13     had participated in this Fund during the period for which
14     credit is being transferred, plus interest thereon at the
15     effective rate for each year, compounded annually, from the
16     date of termination of the service for which credit is
17     being transferred to the date of payment, exceeds (2) the
18     amount actually transferred to the Fund, then the amount of
19     creditable service established under this paragraph 10
20     shall be reduced by a corresponding amount in accordance
21     with the rules and procedures established under this
22     paragraph 10.
23         The board shall establish by rule the manner of making
24     the calculation required under this paragraph 10, taking
25     into account the appropriate actuarial assumptions; the
26     member's service, age, and salary history; the level of

 

 

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1     funding of the employer; and any other factors that the
2     board determines to be relevant.
3     (b) Creditable service - amount:
4         11. For volunteer service in the Peace Corps: Credits
5     and creditable service shall be granted for up to 36 months
6     of volunteer work with the Peace Corps prior to employment
7     by a municipality. To receive credit for such service the
8     employee must apply in writing within 6 months after the
9     effective date of this amendatory Act of the 95th General
10     Assembly and must make contributions to the Fund equal to
11     (i) the employee contributions that would have been
12     required had the service been rendered as a member, plus
13     (ii) an amount determined by the Fund to be equal to the
14     employer's normal cost of the benefits accrued for that
15     service, plus (iii) interest on items (i) and (ii) from the
16     date of first membership in the Fund to the date of
17     payment. This paragraph 11. applies only to participating
18     employees in service on or after its effective date.
19         1. One month of creditable service shall be allowed for
20     each month for which a participating employee made
21     contributions as required under Section 7-173, or for which
22     creditable service is otherwise granted hereunder. Not
23     more than 1 month of service shall be credited and counted
24     for 1 calendar month, and not more than 1 year of service
25     shall be credited and counted for any calendar year. A
26     calendar month means a nominal month beginning on the first

 

 

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1     day thereof, and a calendar year means a year beginning
2     January 1 and ending December 31.
3         2. A seasonal employee shall be given 12 months of
4     creditable service if he renders the number of months of
5     service normally required by the position in a 12-month
6     period and he remains in service for the entire 12-month
7     period. Otherwise a fractional year of service in the
8     number of months of service rendered shall be credited.
9         3. An intermittent employee shall be given creditable
10     service for only those months in which a contribution is
11     made under Section 7-173.
12     (c) No application for correction of credits or creditable
13 service shall be considered unless the board receives an
14 application for correction while (1) the applicant is a
15 participating employee and in active employment with a
16 participating municipality or instrumentality, or (2) while
17 the applicant is actively participating in a pension fund or
18 retirement system which is a participating system under the
19 Retirement Systems Reciprocal Act. A participating employee or
20 other applicant shall not be entitled to credits or creditable
21 service unless the required employee contributions are made in
22 a lump sum or in installments made in accordance with board
23 rule.
24     (d) Upon the granting of a retirement, surviving spouse or
25 child annuity, a death benefit or a separation benefit, on
26 account of any employee, all individual accumulated credits

 

 

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1 shall thereupon terminate. Upon the withdrawal of additional
2 contributions, the credits applicable thereto shall thereupon
3 terminate. Terminated credits shall not be applied to increase
4 the benefits any remaining employee would otherwise receive
5 under this Article.
6 (Source: P.A. 95-483, eff. 8-28-07; 95-486, eff. 8-28-07;
7 95-504, eff. 8-28-07; revised 11-9-07.)
 
8     Section 90. The State Mandates Act is amended by adding
9 Section 8.32 as follows:
 
10     (30 ILCS 805/8.32 new)
11     Sec. 8.32. Exempt mandate. Notwithstanding Sections 6 and 8
12 of this Act, no reimbursement by the State is required for the
13 implementation of any mandate created by this amendatory Act of
14 the 95th General Assembly.
 
15     Section 99. Effective date. This Act takes effect upon
16 becoming law.