Full Text of HB1527 94th General Assembly
HB1527eng 94TH GENERAL ASSEMBLY
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| AN ACT in relation to public employee benefits.
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| Be it enacted by the People of the State of Illinois, | 3 |
| represented in the General Assembly:
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| Section 5. The Illinois Pension Code is amended by changing | 5 |
| Section
7-141.1 as follows:
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| (40 ILCS 5/7-141.1)
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| Sec. 7-141.1. Early retirement incentive.
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| (a) The General Assembly finds and declares that:
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| (1) Units of local government across the State have | 10 |
| been functioning
under a financial crisis.
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| (2) This financial crisis is expected to continue.
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| (3) Units of local government must depend on additional | 13 |
| sources of
revenue and, when those sources are not | 14 |
| forthcoming, must establish
cost-saving programs.
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| (4) An early retirement incentive designed | 16 |
| specifically to target
highly-paid senior employees could | 17 |
| result in significant annual cost
savings.
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| (5) The early retirement incentive should be made | 19 |
| available only to
those units of local government that | 20 |
| determine that an early retirement
incentive is in their | 21 |
| best interest.
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| (6) A unit of local government adopting a program of | 23 |
| early retirement
incentives under this Section is | 24 |
| encouraged to implement personnel procedures
to prohibit, | 25 |
| for at least 5 years, the rehiring (whether on payroll or | 26 |
| by
independent contract) of employees who receive early | 27 |
| retirement incentives.
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| (7) A unit of local government adopting a program of | 29 |
| early retirement
incentives under this Section is also | 30 |
| encouraged to replace as few of the
participating employees | 31 |
| as possible and to hire replacement employees for
salaries | 32 |
| totaling no more than 80% of the total salaries formerly |
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| paid to the
employees who participate in the early | 2 |
| retirement program.
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| It is the primary purpose of this Section to encourage | 4 |
| units of local
government that can realize true cost savings, | 5 |
| or have determined that an early
retirement program is in their | 6 |
| best interest, to implement an early retirement
program.
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| (b) Until the effective date of this amendatory Act of | 8 |
| 1997, this
Section does not apply to any employer that is a | 9 |
| city, village, or incorporated
town, nor to the employees of | 10 |
| any such employer. Beginning on the effective
date of this | 11 |
| amendatory Act of 1997, any employer under this Article, | 12 |
| including
an employer that is a city, village, or incorporated | 13 |
| town, may establish an
early retirement incentive program for | 14 |
| its employees under this Section. The
decision of a city, | 15 |
| village, or incorporated town to consider or establish an
early | 16 |
| retirement program is at the sole discretion of that city, | 17 |
| village, or
incorporated town, and nothing in this amendatory | 18 |
| Act of 1997 limits or
otherwise diminishes this discretion. | 19 |
| Nothing contained in this Section shall
be construed to require | 20 |
| a city, village, or incorporated town to establish an
early | 21 |
| retirement program and no city, village, or incorporated town | 22 |
| may be
compelled to implement such a program.
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| The benefits provided in this Section are available only to | 24 |
| members
employed by a participating employer that has filed | 25 |
| with the Board of the
Fund a resolution or ordinance expressly | 26 |
| providing for the creation of an
early retirement incentive | 27 |
| program under this Section for its employees and
specifying the | 28 |
| effective date of the early retirement incentive program.
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| Subject to the limitation in subsection (h), an employer may | 30 |
| adopt a resolution
or ordinance providing a program of early | 31 |
| retirement incentives under this
Section at any time.
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| The resolution or ordinance shall be in substantially the | 33 |
| following form:
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| RESOLUTION (ORDINANCE) NO. ....
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| A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
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| RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
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| IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
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| WHEREAS, Section 7-141.1 of the Illinois Pension Code | 4 |
| provides that a
participating employer may elect to adopt an | 5 |
| early retirement
incentive program offered by the Illinois | 6 |
| Municipal Retirement Fund by
adopting a resolution or | 7 |
| ordinance; and
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| WHEREAS, The goal of adopting an early retirement program | 9 |
| is
to realize a substantial savings in personnel costs by | 10 |
| offering early
retirement incentives to employees who have | 11 |
| accumulated many years of
service credit; and
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| WHEREAS, Implementation of the early retirement program | 13 |
| will provide a
budgeting tool to aid in controlling payroll | 14 |
| costs; and
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| WHEREAS, The (name of governing body) has determined that | 16 |
| the adoption of an
early retirement incentive program is in the | 17 |
| best interests of the (name of
participating employer); | 18 |
| therefore be it
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| RESOLVED (ORDAINED) by the (name of governing body) of | 20 |
| (name of
participating employer) that:
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| (1) The (name of participating employer) does hereby adopt | 22 |
| the Illinois
Municipal Retirement Fund early retirement | 23 |
| incentive program as provided in
Section 7-141.1 of the | 24 |
| Illinois Pension Code. The early retirement incentive
program | 25 |
| shall take effect on (date).
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| (2) In order to help achieve a true cost savings, a person | 27 |
| who retires under
the early retirement incentive program shall | 28 |
| lose those incentives if he or she
later accepts employment | 29 |
| with any IMRF employer in a position for which
participation in | 30 |
| IMRF is required or is elected by the employee.
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| (3) In order to utilize an early retirement incentive as a | 32 |
| budgeting
tool, the (name of participating employer) will use | 33 |
| its best efforts either
to limit the number of employees who | 34 |
| replace the employees who retire under
the early retirement | 35 |
| program or to limit the salaries paid to the employees who
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| replace the employees who retire under the early retirement |
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| program.
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| (4) The effective date of each employee's retirement under | 3 |
| this early
retirement program shall be set by (name of | 4 |
| employer) and shall be no
earlier than the effective date of | 5 |
| the program and no later than one year after
that effective | 6 |
| date; except that the employee may require that the retirement
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| date set by the employer be no later than the June 30 next | 8 |
| occurring after the
effective date of the program and no | 9 |
| earlier than the date upon which the
employee qualifies for | 10 |
| retirement.
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| (5) To be eligible for the early retirement incentive under | 12 |
| this Section,
the employee must have attained age 50 and have | 13 |
| at least 20 years of creditable
service by his or her | 14 |
| retirement date.
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| (6) The (clerk or secretary) shall promptly file a | 16 |
| certified copy of
this resolution (ordinance) with the Board of | 17 |
| Trustees of the Illinois
Municipal Retirement Fund.
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| CERTIFICATION
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| I, (name), the (clerk or secretary) of the (name of | 20 |
| participating
employer) of the County of (name), State of | 21 |
| Illinois, do hereby certify
that I am the keeper of the books | 22 |
| and records of the (name of employer)
and that the foregoing is | 23 |
| a true and correct copy of a resolution
(ordinance) duly | 24 |
| adopted by the (governing body) at a meeting duly convened
and | 25 |
| held on (date).
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| SEAL
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| (Signature of clerk or secretary)
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| (c) To be eligible for the benefits provided under an early | 29 |
| retirement
incentive program adopted under this Section, a | 30 |
| member must:
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| (1) be a participating employee of this Fund who, on | 32 |
| the effective date of
the program, (i) is in active payroll | 33 |
| status as an employee of a participating
employer that has | 34 |
| filed the required ordinance or resolution with the Board,
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| (ii) is on layoff status from such a position with a right |
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| of re-employment or
recall to service, (iii) is on a leave | 2 |
| of absence from such a position, or (iv)
is on disability | 3 |
| but has not been receiving benefits under Section 7-146 or
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| 7-150 for a period of more than 2 years from the date of | 5 |
| application;
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| (2) have never previously received a retirement | 7 |
| annuity under
this Article or under the Retirement Systems | 8 |
| Reciprocal Act using service
credit established under this | 9 |
| Article;
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| (3) (blank);
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| (4) have at least 20 years of creditable service in the | 12 |
| Fund by the date
of retirement, without the use of any | 13 |
| creditable service established under this
Section;
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| (5) have attained age 50 by the date of retirement, | 15 |
| without the use of any
age enhancement received under this | 16 |
| Section; and
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| (6) be eligible to receive a retirement annuity under | 18 |
| this Article by the
date of retirement, for which purpose | 19 |
| the age enhancement and creditable
service established | 20 |
| under this Section may be considered.
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| (d) The employer shall determine the retirement date for | 22 |
| each employee
participating in the early retirement program | 23 |
| adopted under this Section. The
retirement date shall be no | 24 |
| earlier than the effective date of the program and
no later | 25 |
| than one year after that effective date, except that the | 26 |
| employee may
require that the retirement date set by the | 27 |
| employer be no later than the June
30 next occurring after the | 28 |
| effective date of the program and no earlier than
the date upon | 29 |
| which the employee qualifies for retirement. The employer shall
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| give each employee participating in the early retirement | 31 |
| program at least 30
days written notice of the employee's | 32 |
| designated retirement date, unless the
employee waives this | 33 |
| notice requirement.
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| (e) An eligible person may establish up to 5 years of | 35 |
| creditable service
under this Section. In addition, for each | 36 |
| period of creditable service
established under this Section, a |
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| person shall have his or her age at
retirement deemed enhanced | 2 |
| by an equivalent period.
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| The creditable service established under this Section may | 4 |
| be used for all
purposes under this Article and the Retirement | 5 |
| Systems Reciprocal Act,
except for the computation of final | 6 |
| rate of earnings and the determination
of earnings, salary, or | 7 |
| compensation under this or any other Article of the
Code.
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| The age enhancement established under this Section may be | 9 |
| used for all
purposes under this Article (including calculation | 10 |
| of the reduction imposed
under subdivision (a)1b(iv) of Section | 11 |
| 7-142), except for purposes of a
reversionary annuity under | 12 |
| Section 7-145 and any distributions required because
of age. | 13 |
| The age enhancement established under this Section may be used | 14 |
| in
calculating a proportionate annuity payable by this Fund | 15 |
| under the Retirement
Systems Reciprocal Act, but shall not be | 16 |
| used in determining benefits payable
under other Articles of | 17 |
| this Code under the Retirement Systems Reciprocal Act.
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| (f) For all creditable service established under this | 19 |
| Section, the
member must pay to the Fund an employee | 20 |
| contribution consisting of 4.5%
of the member's highest annual | 21 |
| salary rate used in the determination of the
final rate of | 22 |
| earnings for retirement annuity purposes for each year of
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| creditable service granted under this Section. For creditable | 24 |
| service
established under this Section by a person who is a | 25 |
| sheriff's law
enforcement employee to be deemed service as a | 26 |
| sheriff's law enforcement
employee, the employee contribution | 27 |
| shall be at the rate of 6.5%
of highest annual salary per year | 28 |
| of creditable service granted.
Contributions for fractions of a | 29 |
| year of service shall be prorated.
Any amounts that are | 30 |
| disregarded in determining the final rate of earnings
under | 31 |
| subdivision (d)(5) of Section 7-116 (the 125% rule) shall also | 32 |
| be
disregarded in determining the required contribution under | 33 |
| this subsection (f).
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| The employee contribution shall be paid to the Fund as | 35 |
| follows: If the
member is entitled to a lump sum payment for | 36 |
| accumulated vacation, sick leave,
or personal leave upon |
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| withdrawal from service, the employer shall deduct the
employee | 2 |
| contribution from that lump sum and pay the deducted amount | 3 |
| directly
to the Fund. If there is no such lump sum payment or | 4 |
| the required employee
contribution exceeds the net amount of | 5 |
| the lump sum payment, then the remaining
amount due, at the | 6 |
| option of the employee, may either be paid to the Fund
before | 7 |
| the annuity commences or deducted from the retirement annuity | 8 |
| in 24
equal monthly installments.
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| (g) An annuitant who has received any age enhancement or | 10 |
| creditable service
under this Section and thereafter accepts | 11 |
| employment with or enters into a
personal services contract | 12 |
| with an employer under this Article thereby forfeits
that age | 13 |
| enhancement and creditable service ; except that this | 14 |
| restriction
does not apply to service in an elective office, so | 15 |
| long as the annuitant
does not participate in this Fund with | 16 |
| respect to that office . A person
forfeiting early retirement | 17 |
| incentives under this subsection (i) must repay to
the Fund | 18 |
| that portion of the retirement annuity already received which | 19 |
| is
attributable to the early retirement incentives that are | 20 |
| being forfeited, (ii)
shall not be eligible to participate in | 21 |
| any future early retirement program
adopted under this Section, | 22 |
| and (iii) is entitled to a refund of the employee
contribution | 23 |
| paid under subsection (f). The Board shall deduct the required
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| repayment from the refund and may impose a reasonable payment | 25 |
| schedule for
repaying the amount, if any, by which the required | 26 |
| repayment exceeds the refund
amount.
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| (h) The additional unfunded liability accruing as a result | 28 |
| of the adoption
of a program of early retirement incentives | 29 |
| under this Section by an employer
shall be amortized over a | 30 |
| period of 10 years beginning on January 1 of the
second | 31 |
| calendar year following the calendar year in which the latest | 32 |
| date for
beginning to receive a retirement annuity under the | 33 |
| program (as determined by
the employer under subsection (d) of | 34 |
| this Section) occurs; except that the
employer may provide for | 35 |
| a shorter amortization period (of no less than 5
years) by | 36 |
| adopting an ordinance or resolution specifying the length of |
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| the
amortization period and submitting a certified copy of the | 2 |
| ordinance or
resolution to the Fund no later than 6 months | 3 |
| after the effective date of the
program. An employer, at its | 4 |
| discretion, may accelerate payments to the Fund.
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| An employer may provide more than one early retirement | 6 |
| incentive program
for its employees under this Section. | 7 |
| However, an employer that has provided
an early retirement | 8 |
| incentive program for its employees under this Section may
not | 9 |
| provide another early retirement incentive program under this | 10 |
| Section until the liability arising from the earlier program | 11 |
| has been fully paid to
the Fund.
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| (Source: P.A. 90-32, eff. 6-27-97; 91-887, eff. 7-6-00.)
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| Section 99. Effective date. This Act takes effect upon | 14 |
| becoming law. |
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