97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB6188

 

Introduced , by Rep. Michael J. Zalewski

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-139  from Ch. 108 1/2, par. 7-139
40 ILCS 5/8-226.7 rep.

    Amends the Illinois Municipal Retirement Fund (IMRF) Article of the Illinois Pension Code. Repeals and declares void ab initio a provision added to the Code by Public Act 95-504. Makes related changes. Effective immediately.


LRB097 21821 JDS 70455 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB6188LRB097 21821 JDS 70455 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Retroactive repeal. This amendatory Act of the
597th General Assembly hereby repeals and declares void ab
6initio Section 8-226.7 of the Illinois Pension Code as
7contained in Section 5 of Public Act 95-504 as that Section
8furnishes no vested rights because it violates multiple
9provisions of the 1970 Illinois Constitution, including, but
10not limited to, Article VIII, Section 1 and Article IV, Section
1113. Upon receipt of an application within 6 months after the
12effective date of this amendatory Act of the 97th General
13Assembly, the System shall immediately refund any
14contributions made by or on behalf of a person to receive
15service credit pursuant to the text set forth in said Section
168-226.7, as well as any amount determined by the Board to be
17equal to the investment earned by the System on those
18contributions since their receipt.
 
19    Section 2. The Illinois Pension Code is amended by changing
20Section 7-139 as follows:
 
21    (40 ILCS 5/7-139)  (from Ch. 108 1/2, par. 7-139)
22    Sec. 7-139. Credits and creditable service to employees.

 

 

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1    (a) Each participating employee shall be granted credits
2and creditable service, for purposes of determining the amount
3of any annuity or benefit to which he or a beneficiary is
4entitled, as follows:
5        1. For prior service: Each participating employee who
6    is an employee of a participating municipality or
7    participating instrumentality on the effective date shall
8    be granted creditable service, but no credits under
9    paragraph 2 of this subsection (a), for periods of prior
10    service for which credit has not been received under any
11    other pension fund or retirement system established under
12    this Code, as follows:
13        If the effective date of participation for the
14    participating municipality or participating
15    instrumentality is on or before January 1, 1998, creditable
16    service shall be granted for the entire period of prior
17    service with that employer without any employee
18    contribution.
19        If the effective date of participation for the
20    participating municipality or participating
21    instrumentality is after January 1, 1998, creditable
22    service shall be granted for the last 20% of the period of
23    prior service with that employer, but no more than 5 years,
24    without any employee contribution. A participating
25    employee may establish creditable service for the
26    remainder of the period of prior service with that employer

 

 

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1    by making an application in writing, accompanied by payment
2    of an employee contribution in an amount determined by the
3    Fund, based on the employee contribution rates in effect at
4    the time of application for the creditable service and the
5    employee's salary rate on the effective date of
6    participation for that employer, plus interest at the
7    effective rate from the date of the prior service to the
8    date of payment. Application for this creditable service
9    may be made at any time while the employee is still in
10    service.
11        A municipality that (i) has at least 35 employees; (ii)
12    is located in a county with at least 2,000,000 inhabitants;
13    and (iii) maintains an independent defined benefit pension
14    plan for the benefit of its eligible employees may restrict
15    creditable service in whole or in part for periods of prior
16    service with the employer if the governing body of the
17    municipality adopts an irrevocable resolution to restrict
18    that creditable service and files the resolution with the
19    board before the municipality's effective date of
20    participation.
21        Any person who has withdrawn from the service of a
22    participating municipality or participating
23    instrumentality prior to the effective date, who reenters
24    the service of the same municipality or participating
25    instrumentality after the effective date and becomes a
26    participating employee is entitled to creditable service

 

 

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1    for prior service as otherwise provided in this subdivision
2    (a)(1) only if he or she renders 2 years of service as a
3    participating employee after the effective date.
4    Application for such service must be made while in a
5    participating status. The salary rate to be used in the
6    calculation of the required employee contribution, if any,
7    shall be the employee's salary rate at the time of first
8    reentering service with the employer after the employer's
9    effective date of participation.
10        2. For current service, each participating employee
11    shall be credited with:
12            a. Additional credits of amounts equal to each
13        payment of additional contributions received from him
14        under Section 7-173, as of the date the corresponding
15        payment of earnings is payable to him.
16            b. Normal credits of amounts equal to each payment
17        of normal contributions received from him, as of the
18        date the corresponding payment of earnings is payable
19        to him, and normal contributions made for the purpose
20        of establishing out-of-state service credits as
21        permitted under the conditions set forth in paragraph 6
22        of this subsection (a).
23            c. Municipality credits in an amount equal to 1.4
24        times the normal credits, except those established by
25        out-of-state service credits, as of the date of
26        computation of any benefit if these credits would

 

 

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1        increase the benefit.
2            d. Survivor credits equal to each payment of
3        survivor contributions received from the participating
4        employee as of the date the corresponding payment of
5        earnings is payable, and survivor contributions made
6        for the purpose of establishing out-of-state service
7        credits.
8        3. For periods of temporary and total and permanent
9    disability benefits, each employee receiving disability
10    benefits shall be granted creditable service for the period
11    during which disability benefits are payable. Normal and
12    survivor credits, based upon the rate of earnings applied
13    for disability benefits, shall also be granted if such
14    credits would result in a higher benefit to any such
15    employee or his beneficiary.
16        4. For authorized leave of absence without pay: A
17    participating employee shall be granted credits and
18    creditable service for periods of authorized leave of
19    absence without pay under the following conditions:
20            a. An application for credits and creditable
21        service is submitted to the board while the employee is
22        in a status of active employment.
23            b. Not more than 12 complete months of creditable
24        service for authorized leave of absence without pay
25        shall be counted for purposes of determining any
26        benefits payable under this Article.

 

 

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1            c. Credits and creditable service shall be granted
2        for leave of absence only if such leave is approved by
3        the governing body of the municipality, including
4        approval of the estimated cost thereof to the
5        municipality as determined by the fund, and employee
6        contributions, plus interest at the effective rate
7        applicable for each year from the end of the period of
8        leave to date of payment, have been paid to the fund in
9        accordance with Section 7-173. The contributions shall
10        be computed upon the assumption earnings continued
11        during the period of leave at the rate in effect when
12        the leave began.
13            d. Benefits under the provisions of Sections
14        7-141, 7-146, 7-150 and 7-163 shall become payable to
15        employees on authorized leave of absence, or their
16        designated beneficiary, only if such leave of absence
17        is creditable hereunder, and if the employee has at
18        least one year of creditable service other than the
19        service granted for leave of absence. Any employee
20        contributions due may be deducted from any benefits
21        payable.
22            e. No credits or creditable service shall be
23        allowed for leave of absence without pay during any
24        period of prior service.
25        5. For military service: The governing body of a
26    municipality or participating instrumentality may elect to

 

 

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1    allow creditable service to participating employees who
2    leave their employment to serve in the armed forces of the
3    United States for all periods of such service, provided
4    that the person returns to active employment within 90 days
5    after completion of full time active duty, but no
6    creditable service shall be allowed such person for any
7    period that can be used in the computation of a pension or
8    any other pay or benefit, other than pay for active duty,
9    for service in any branch of the armed forces of the United
10    States. If necessary to the computation of any benefit, the
11    board shall establish municipality credits for
12    participating employees under this paragraph on the
13    assumption that the employee received earnings at the rate
14    received at the time he left the employment to enter the
15    armed forces. A participating employee in the armed forces
16    shall not be considered an employee during such period of
17    service and no additional death and no disability benefits
18    are payable for death or disability during such period.
19        Any participating employee who left his employment
20    with a municipality or participating instrumentality to
21    serve in the armed forces of the United States and who
22    again became a participating employee within 90 days after
23    completion of full time active duty by entering the service
24    of a different municipality or participating
25    instrumentality, which has elected to allow creditable
26    service for periods of military service under the preceding

 

 

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1    paragraph, shall also be allowed creditable service for his
2    period of military service on the same terms that would
3    apply if he had been employed, before entering military
4    service, by the municipality or instrumentality which
5    employed him after he left the military service and the
6    employer costs arising in relation to such grant of
7    creditable service shall be charged to and paid by that
8    municipality or instrumentality.
9        Notwithstanding the foregoing, any participating
10    employee shall be entitled to creditable service as
11    required by any federal law relating to re-employment
12    rights of persons who served in the United States Armed
13    Services. Such creditable service shall be granted upon
14    payment by the member of an amount equal to the employee
15    contributions which would have been required had the
16    employee continued in service at the same rate of earnings
17    during the military leave period, plus interest at the
18    effective rate.
19        5.1. In addition to any creditable service established
20    under paragraph 5 of this subsection (a), creditable
21    service may be granted for up to 48 months of service in
22    the armed forces of the United States.
23        In order to receive creditable service for military
24    service under this paragraph 5.1, a participating employee
25    must (1) apply to the Fund in writing and provide evidence
26    of the military service that is satisfactory to the Board;

 

 

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1    (2) obtain the written approval of the current employer;
2    and (3) make contributions to the Fund equal to (i) the
3    employee contributions that would have been required had
4    the service been rendered as a member, plus (ii) an amount
5    determined by the board to be equal to the employer's
6    normal cost of the benefits accrued for that military
7    service, plus (iii) interest on items (i) and (ii) from the
8    date of first membership in the Fund to the date of
9    payment. The required interest shall be calculated at the
10    regular interest rate.
11        The changes made to this paragraph 5.1 by Public Acts
12    95-483 and 95-486 apply only to participating employees in
13    service on or after August 28, 2007 (the effective date of
14    those Public Acts).
15        6. For out-of-state service: Creditable service shall
16    be granted for service rendered to an out-of-state local
17    governmental body under the following conditions: The
18    employee had participated and has irrevocably forfeited
19    all rights to benefits in the out-of-state public employees
20    pension system; the governing body of his participating
21    municipality or instrumentality authorizes the employee to
22    establish such service; the employee has 2 years current
23    service with this municipality or participating
24    instrumentality; the employee makes a payment of
25    contributions, which shall be computed at 8% (normal) plus
26    2% (survivor) times length of service purchased times the

 

 

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1    average rate of earnings for the first 2 years of service
2    with the municipality or participating instrumentality
3    whose governing body authorizes the service established
4    plus interest at the effective rate on the date such
5    credits are established, payable from the date the employee
6    completes the required 2 years of current service to date
7    of payment. In no case shall more than 120 months of
8    creditable service be granted under this provision.
9        7. For retroactive service: Any employee who could have
10    but did not elect to become a participating employee, or
11    who should have been a participant in the Municipal Public
12    Utilities Annuity and Benefit Fund before that fund was
13    superseded, may receive creditable service for the period
14    of service not to exceed 50 months; however, a current or
15    former elected or appointed official of a participating
16    municipality may establish credit under this paragraph 7
17    for more than 50 months of service as an official of that
18    municipality, if the excess over 50 months is approved by
19    resolution of the governing body of the affected
20    municipality filed with the Fund before January 1, 2002.
21        Any employee who is a participating employee on or
22    after September 24, 1981 and who was excluded from
23    participation by the age restrictions removed by Public Act
24    82-596 may receive creditable service for the period, on or
25    after January 1, 1979, excluded by the age restriction and,
26    in addition, if the governing body of the participating

 

 

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1    municipality or participating instrumentality elects to
2    allow creditable service for all employees excluded by the
3    age restriction prior to January 1, 1979, for service
4    during the period prior to that date excluded by the age
5    restriction. Any employee who was excluded from
6    participation by the age restriction removed by Public Act
7    82-596 and who is not a participating employee on or after
8    September 24, 1981 may receive creditable service for
9    service after January 1, 1979. Creditable service under
10    this paragraph shall be granted upon payment of the
11    employee contributions which would have been required had
12    he participated, with interest at the effective rate for
13    each year from the end of the period of service established
14    to date of payment.
15        8. For accumulated unused sick leave: A participating
16    employee who is applying for a retirement annuity shall be
17    entitled to creditable service for that portion of the
18    employee's accumulated unused sick leave for which payment
19    is not received, as follows:
20            a. Sick leave days shall be limited to those
21        accumulated under a sick leave plan established by a
22        participating municipality or participating
23        instrumentality which is available to all employees or
24        a class of employees.
25            b. Except as provided in item b-1, only sick leave
26        days accumulated with a participating municipality or

 

 

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1        participating instrumentality with which the employee
2        was in service within 60 days of the effective date of
3        his retirement annuity shall be credited; If the
4        employee was in service with more than one employer
5        during this period only the sick leave days with the
6        employer with which the employee has the greatest
7        number of unpaid sick leave days shall be considered.
8            b-1. If the employee was in the service of more
9        than one employer as defined in item (2) of paragraph
10        (a) of subsection (A) of Section 7-132, then the sick
11        leave days from all such employers shall be credited,
12        as long as the creditable service attributed to those
13        sick leave days does not exceed the limitation in item
14        f of this paragraph 8. In calculating the creditable
15        service under this item b-1, the sick leave days from
16        the last employer shall be considered first, then the
17        remaining sick leave days shall be considered until
18        there are no more days or the maximum creditable sick
19        leave threshold under item f of this paragraph 8 has
20        been reached.
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        Until January 1, 2010, members who transferred service
4    from an Article 3 system under the provisions of Public Act
5    94-356 may establish additional credit in this Fund, but
6    only up to the amount of the service credit reduction in
7    that transfer, as calculated under the actuarial
8    assumptions. This credit may be established upon payment by
9    the member of an amount to be determined by the board,
10    equal to (1) the amount that would have been contributed as
11    employee and employer contributions had all the service
12    been as an employee under this Article, plus interest
13    thereon compounded annually from the date of service to the
14    date of transfer, less (2) the total amount transferred
15    from the Article 3 system, plus (3) interest on the
16    difference at the effective rate for each year, compounded
17    annually, from the date of the transfer to the date of
18    payment. The additional service credit is allowed under
19    this amendatory Act of the 95th General Assembly
20    notwithstanding the provisions of Article 3 terminating
21    all transferred credits on the date of transfer.
22    (b) Creditable service - amount:
23        1. One month of creditable service shall be allowed for
24    each month for which a participating employee made
25    contributions as required under Section 7-173, or for which
26    creditable service is otherwise granted hereunder. Not

 

 

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

 

 

HB6188- 17 -LRB097 21821 JDS 70455 b

1rule.
2    (d) Upon the granting of a retirement, surviving spouse or
3child annuity, a death benefit or a separation benefit, on
4account of any employee, all individual accumulated credits
5shall thereupon terminate. Upon the withdrawal of additional
6contributions, the credits applicable thereto shall thereupon
7terminate. Terminated credits shall not be applied to increase
8the benefits any remaining employee would otherwise receive
9under this Article.
10(Source: P.A. 96-299, eff. 8-11-09; 97-415, eff. 8-16-11.)
 
11    (40 ILCS 5/8-226.7 rep.)
12    Section 3. The Illinois Pension Code is amended by
13repealing Section 8-226.7.
 
14    Section 97. Severability. The provisions of this Act are
15severable under Section 1.31 of the Statute on Statutes.
 
16    Section 99. Effective date. This Act takes effect upon
17becoming law.