HB4797 94TH GENERAL ASSEMBLY

LRB094 16200 AMC 51444 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB4797

Introduced 1/18/2006, by Rep. Robert S. Molaro

SYNOPSIS AS INTRODUCED:

40 ILCS 5/17-119	from Ch. 108 1/2, par. 17-119
40 ILCS 5/17-119.2 new
40 ILCS 5/17-122	from Ch. 108 1/2, par. 17-122
30 ILCS 805/8.30 new

Amends the Chicago Teacher Article of the Illinois Pension Code. Provides for a one-time increase in certain retirement and survivor's annuities. Declares it to be the public policy of this State and the intention of the General Assembly to protect annuitants against significant decreases in the purchasing power of retirement and survivor's annuities. Directs the retirement system to review and report on significant changes in purchasing power. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

AN ACT in relation to public employee benefits.

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

Section 5. The Illinois Pension Code is amended by changing Sections 17-119 and 17-122 and adding Section 17-119.2 as follows:

(40 ILCS 5/17-119) (from Ch. 108 1/2, par. 17-119)

Sec. 17-119. Automatic annual increase in pension.

(a) Each teacher retiring on or after September 1, 1959, is entitled to the annual increase in pension, defined herein, while he is receiving a pension from the Fund.

1. The term "base pension" means a service retirement or disability retirement pension in the amount fixed and payable at the date of retirement of a teacher.

2. The annual increase in pension shall be at the rate of 1 1/2% of base pension. This increase shall first occur in January of the year next following the first anniversary of retirement. At such time the Fund shall pay the pro rata part of the increase for the period from the first anniversary date to the date of the first increase in pension. Beginning January 1, 1972, the rate of annual increase in pension shall be 2% of the base pension. Beginning January 1, 1979, the rate of annual increase in pension shall be 3% of the base pension. Beginning January 1, 1990, all automatic annual increases payable under this Section shall be calculated as a percentage of the total pension payable at the time of the increase, including all increases previously granted under this Article, notwithstanding Section 17-157.

3. An increase in pension shall be granted only if the retired teacher is age 60 or over. If the teacher attains age 60 after retirement, the increase in pension shall begin in January of the year following the 61st birthday. At such time the Fund also shall pay the pro rata part of the increase from the 61st birthday to the date of first increase in pension.

(b) In addition to other increases which may be provided by this Section, on January 1, 1981 any teacher who was receiving a retirement pension on or before January 1, 1971 shall have his retirement pension then being paid increased $1 per month for each year of creditable service. On January 1, 1982, any teacher whose retirement pension began on or before January 1, 1977, shall have his retirement pension then being paid increased $1 per month for each year of creditable service.

On January 1, 1987, any teacher whose retirement pension began on or before January 1, 1977, shall have the monthly retirement pension increased by an amount equal to 8˘ per year of creditable service times the number of years that have elapsed since the retirement pension began.

(c) On July 1, 2006, every pensioner who began receiving a retirement pension before January 1, 1980 shall have the monthly retirement pension increased by whichever of the following percentages is applicable:

5% if the annuity began in 1979;

10% if the annuity began in 1978;

14% if the annuity began in 1977;

14% if the annuity began in 1976;

18% if the annuity began in 1975;

23% if the annuity began in 1974;

32% if the annuity began in 1973 or before.

The increase under this subsection shall be calculated as a percentage of the amount of the retirement pension payable on June 30, 2006, including any increases previously received under this Article, and shall be included in the calculation of increases granted thereafter under subsection (a). Section 17-157 does not apply to the increase provided under this subsection.

(Source: P.A. 90-566, eff. 1-2-98.)

(40 ILCS 5/17-119.2 new)

Sec. 17-119.2. Reduction of purchasing power; policy; report; increase.

(a) The General Assembly finds and declares that:

(1) The purchasing power of a fixed annuity can be eroded over time by the effects of inflation and increases in the general cost of living.

(2) For a person whose income consists primarily of a fixed annuity, the reduction in purchasing power resulting from increases in the cost of living can become catastrophic over time, transforming a once-comfortable retirement into a time of poverty and need.

(3) The State of Illinois is concerned about the effects that a significant reduction in purchasing power can have on the quality of life of retired employees and their survivors.

(4) The General Assembly has previously addressed this concern by providing for automatic annual increases in retirement and survivor's pensions under this Article. Recognizing that these automatic annual increases, by themselves, are not a complete answer in times of high inflation, the General Assembly has also, from time to time, provided specific one-time increases in pensions for certain categories of pensioners.

(b) It is the public policy of this State and the intention of the General Assembly to protect pensioners against significant decreases in the purchasing power of the retirement and survivor's pensions granted under this Article.

(c) The Fund shall regularly review the changes that have occurred in the purchasing power of the retirement and survivor's pensions being paid under this Article, and it shall report to the General Assembly, the Governor, and the Economic and Fiscal Commission whenever it determines that the original purchasing power of those pensions has been reduced by 20% or more for any category or group of pensioners. The Fund may include in the report its recommendations, if any, for legislative action to address its findings.

(d) As used in this Section, the term "retirement and survivor's pensions" means all service retirement pensions, disability retirement pensions, survivor's pensions, and children's pensions.

(40 ILCS 5/17-122) (from Ch. 108 1/2, par. 17-122)

Sec. 17-122. Survivor's and children's pensions - Amount.

(a) Upon the death of a teacher who has completed at least 1 1/2 years of contributing service with either this Fund or the State Universities Retirement System or the Teachers' Retirement System of the State of Illinois, provided his death occurred while (a) in active service covered by the Fund or during his first 18 months of continuous employment without a break in service under any other participating system as defined in the Illinois Retirement Systems Reciprocal Act except the State Universities Retirement System and the Teachers' Retirement System of the State of Illinois, (b) on a creditable leave of absence, (c) on a noncreditable leave of absence of no more than one year, or (d) a pension was deferred or pending provided the teacher had at least 10 years of validated service credit, or upon the death of a pensioner otherwise qualified for such benefit, the surviving spouse and unmarried minor children of the deceased teacher under age 18 shall be entitled to pensions, under the conditions stated hereinafter. Such survivor's and children's pensions shall be based on the average of the 4 highest consecutive years of salary in the last 10 years of service or on the average salary for total service, if total service has been less than 4 years, according to the following percentages:

30% of average salary or 50% of the retirement pension earned by the teacher, whichever is larger, subject to the prescribed maximum monthly payment, for a surviving spouse alone on attainment of age 50;

60% of average salary for a surviving spouse and eligible minor children of the deceased teacher.

If no eligible spouse survives, or the surviving spouse remarries, or the parent of the children of the deceased member is otherwise ineligible for a survivor's pension, a children's pension for eligible minor children under age 18 shall be paid to their parent or legal guardian for their benefit according to the following percentages:

30% of average salary for one child;

60% of average salary for 2 or more children.

(b) On January 1, 1981, any survivor or child who was receiving a survivor's or children's pension on or before January 1, 1971, shall have his survivor's or children's pension then being paid increased by 1% for each full year which has elapsed from the date the pension began. On January 1, 1982, any survivor or child whose pension began after January 1, 1971, but before January 1, 1981, shall have his survivor's or children's pension then being paid increased 1% for each full year which has elapsed from the date the pension began. On January 1, 1987, any survivor or child whose pension began on or before January 1, 1977, shall have the monthly survivor's or children's pension increased by $1 for each full year which has elapsed since the pension began.

(c) On July 1, 2006, every survivor or child who began receiving a survivor's or children's pension before January 1, 1980 shall have the monthly pension increased by whichever of the following percentages is applicable:

5% if the annuity began in 1979;

10% if the annuity began in 1978;

14% if the annuity began in 1977;

14% if the annuity began in 1976;

18% if the annuity began in 1975;

23% if the annuity began in 1974;

32% if the annuity began in 1973 or before.

In the case of the survivor of a deceased annuitant who died while receiving a retirement annuity, "original annuity" means the deceased annuitant's retirement pension; in all other cases, "original annuity" means the survivor's or children's pension.

The increase under this subsection shall be calculated as a percentage of the amount of the survivor's or children's pension payable on June 30, 2006, including any increases previously received under this Article, and shall be included in the calculation of increases granted thereafter under subsection (d). Section 17-157 does not apply to the increase provided under this subsection.

(d) Beginning January 1, 1990, every survivor's and children's pension shall be increased (1) on each January 1 occurring on or after the commencement of the pension if the deceased teacher died while receiving a retirement pension, or (2) in other cases, on each January 1 occurring on or after the first anniversary of the commencement of the pension, by an amount equal to 3% of the current amount of the pension, including all increases previously granted under this Article, notwithstanding Section 17-157. Such increases shall apply without regard to whether the deceased teacher was in service on or after the effective date of this amendatory Act of 1991, but shall not accrue for any period prior to January 1, 1990.

(e) Subject to the minimum established below, the maximum amount of pension for a surviving spouse alone or one minor child shall be $400 per month, and the maximum combined pensions for a surviving spouse and children of the deceased teacher shall be $600 per month, with individual pensions adjusted for all beneficiaries pro rata to conform with this limitation. If proration is unnecessary the minimum survivor's and children's pensions shall be $40 per month. The minimum total survivor's and children's pension payable upon the death of a contributor or annuitant which occurs after December 31, 1986, shall be 50% of the earned retirement pension of such contributor or annuitant, calculated without early retirement discount in the case of death in service.

On death after retirement, the total survivor's and children's pensions shall not exceed the monthly retirement or disability pension paid to the deceased retirant. Survivor's and children's benefits described in this Section shall apply to all service and disability pensioners eligible for a pension as of July 1, 1981.

(Source: P.A. 90-32, eff. 6-27-97; 90-566, eff. 1-2-98.)

Section 90. The State Mandates Act is amended by adding Section 8.30 as follows:

(30 ILCS 805/8.30 new)

Sec. 8.30. Exempt mandate. Notwithstanding Sections 6 and 8 of this Act, no reimbursement by the State is required for the implementation of any mandate created by this amendatory Act of the 94th General Assembly.

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