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90_SB0273
40 ILCS 5/7-141.1
Amends the Illinois Municipal Retirement Fund Article of
the Pension Code to make the early retirement program
available to employees of municipalities. Specifies that the
decision to provide a program of early retirement incentives
is within the sole discretion of the employer. Effective
immediately.
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1 AN ACT to amend the Illinois Pension Code by changing
2 Section 7-141.1.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Pension Code is amended by
6 changing Section 7-141.1 as follows:
7 (40 ILCS 5/7-141.1)
8 Sec. 7-141.1. Early retirement incentive.
9 (a) The General Assembly finds and declares that:
10 (1) Units of local government across the State have
11 been functioning under a financial crisis.
12 (2) This financial crisis is expected to continue.
13 (3) Units of local government must depend on
14 additional sources of revenue and, when those sources are
15 not forthcoming, must establish cost-saving programs.
16 (4) An early retirement incentive designed
17 specifically to target highly-paid senior employees could
18 result in significant annual cost savings.
19 (5) The early retirement incentive should be made
20 available only to those units of local government that
21 determine that an early retirement incentive is in their
22 best interest.
23 (6) A unit of local government adopting a program
24 of early retirement incentives under this Section is
25 encouraged to implement personnel procedures to prohibit,
26 for at least 5 years, the rehiring (whether on payroll or
27 by independent contract) of employees who receive early
28 retirement incentives.
29 (7) A unit of local government adopting a program
30 of early retirement incentives under this Section is also
31 encouraged to replace as few of the participating
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1 employees as possible and to hire replacement employees
2 for salaries totaling no more than 80% of the total
3 salaries formerly paid to the employees who participate
4 in the early retirement program.
5 It is the primary purpose of this Section to encourage
6 units of local government that can realize true cost savings,
7 or have determined that an early retirement program is in
8 their best interest, to implement an early retirement
9 program.
10 (b) This Section does not apply to any employer that is
11 a city, village, or incorporated town, nor to the employees
12 of any such employer. All references in this Section to an
13 "employer" or "unit of local government" are specifically
14 intended to exclude every employer that is a city, village,
15 or incorporated town.
16 The benefits provided in this Section are available only
17 to members employed by a participating employer that has
18 filed with the Board of the Fund a resolution or ordinance
19 expressly providing for the creation of an early retirement
20 incentive program under this Section for its employees and
21 specifying the effective date of the early retirement
22 incentive program. Subject to the limitation in subsection
23 (h), an employer may adopt a resolution or ordinance
24 providing a program of early retirement incentives under this
25 Section at any time, but no more often than once in 5 years.
26 The decision to consider or establish an early retirement
27 program is at the sole and unilateral discretion of the
28 employer, and no other statutory provision shall act to limit
29 or otherwise diminish this discretion. Nothing contained in
30 this provision shall be construed to require an employer to
31 establish an early retirement program and no employer may be
32 compelled, by this or any other statute, to implement such a
33 program.
34 The resolution or ordinance shall be in substantially the
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1 following form:
2 RESOLUTION (ORDINANCE) NO. ....
3 A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
4 RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
5 IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
6 WHEREAS, Section 7-141.1 of the Illinois Pension Code
7 provides that a participating employer may elect to adopt an
8 early retirement incentive program offered by the Illinois
9 Municipal Retirement Fund by adopting a resolution or
10 ordinance; and
11 WHEREAS, The goal of adopting an early retirement program
12 is to realize a substantial savings in personnel costs by
13 offering early retirement incentives to employees who have
14 accumulated many years of service credit; and
15 WHEREAS, Implementation of the early retirement program
16 will provide a budgeting tool to aid in controlling payroll
17 costs; and
18 WHEREAS, The (name of governing body) has determined that
19 the adoption of an early retirement incentive program is in
20 the best interests of the (name of participating employer);
21 therefore be it
22 RESOLVED (ORDAINED) by the (name of governing body) of
23 (name of participating employer) that:
24 (1) The (name of participating employer) does hereby
25 adopt the Illinois Municipal Retirement Fund early retirement
26 incentive program as provided in Section 7-141.1 of the
27 Illinois Pension Code. The early retirement incentive
28 program shall take effect on (date).
29 (2) In order to help achieve a true cost savings, a
30 person who retires under the early retirement incentive
31 program shall lose those incentives if he or she later
32 accepts employment with any IMRF employer in a position for
33 which participation in IMRF is required or is elected by the
34 employee.
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1 (3) In order to utilize an early retirement incentive as
2 a budgeting tool, the (name of participating employer) will
3 use its best efforts either to limit the number of employees
4 who replace the employees who retire under the early
5 retirement program or to limit the salaries paid to the
6 employees who replace the employees who retire under the
7 early retirement program.
8 (4) The effective date of each employee's retirement
9 under this early retirement program shall be set by (name of
10 employer) and shall be no earlier than the effective date of
11 the program and no later than one year after that effective
12 date; except that the employee may require that the
13 retirement date set by the employer be no later than the June
14 30 next occurring after the effective date of the program and
15 no earlier than the date upon which the employee qualifies
16 for retirement.
17 (5) To be eligible for the early retirement incentive
18 under this Section, the employee must have attained age 50
19 and have at least 20 years of creditable service by his or
20 her retirement date.
21 (6) The (clerk or secretary) shall promptly file a
22 certified copy of this resolution (ordinance) with the Board
23 of Trustees of the Illinois Municipal Retirement Fund.
24 CERTIFICATION
25 I, (name), the (clerk or secretary) of the (name of
26 participating employer) of the County of (name), State of
27 Illinois, do hereby certify that I am the keeper of the books
28 and records of the (name of employer) and that the foregoing
29 is a true and correct copy of a resolution (ordinance) duly
30 adopted by the (governing body) at a meeting duly convened
31 and held on (date).
32 SEAL
33 (Signature of clerk or secretary)
34 (c) To be eligible for the benefits provided under an
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1 early retirement incentive program adopted under this
2 Section, a member must:
3 (1) be a participating employee of this Fund who,
4 on the effective date of the program, (i) is in active
5 payroll status as an employee of a participating employer
6 that has filed the required ordinance or resolution with
7 the Board, (ii) is on layoff status from such a position
8 with a right of re-employment or recall to service, (iii)
9 is on a leave of absence from such a position, or (iv) is
10 on disability but has not been receiving benefits under
11 Section 7-146 or 7-150 for a period of more than 2 years
12 from the date of application;
13 (2) have never previously received a retirement
14 annuity under this Article or under the Retirement
15 Systems Reciprocal Act using service credit established
16 under this Article;
17 (3) file with the Board within 60 days of the
18 effective date of the program an application requesting
19 the benefits provided in this Section;
20 (4) have at least 20 years of creditable service in
21 the Fund by the date of retirement, without the use of
22 any creditable service established under this Section;
23 (5) have attained age 50 by the date of retirement,
24 without the use of any age enhancement received under
25 this Section; and
26 (6) be eligible to receive a retirement annuity
27 under this Article by the date of retirement, for which
28 purpose the age enhancement and creditable service
29 established under this Section may be considered.
30 (d) The employer shall determine the retirement date for
31 each employee participating in the early retirement program
32 adopted under this Section. The retirement date shall be no
33 earlier than the effective date of the program and no later
34 than one year after that effective date, except that the
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1 employee may require that the retirement date set by the
2 employer be no later than the June 30 next occurring after
3 the effective date of the program and no earlier than the
4 date upon which the employee qualifies for retirement. The
5 employer shall give each employee participating in the early
6 retirement program at least 30 days written notice of the
7 employee's designated retirement date, unless the employee
8 waives this notice requirement.
9 (e) An eligible person may establish up to 5 years of
10 creditable service under this Section. In addition, for each
11 period of creditable service established under this Section,
12 a person shall have his or her age at retirement deemed
13 enhanced by an equivalent period.
14 The creditable service established under this Section may
15 be used for all purposes under this Article and the
16 Retirement Systems Reciprocal Act, except for the computation
17 of final rate of earnings and the determination of earnings,
18 salary, or compensation under this or any other Article of
19 the Code.
20 The age enhancement established under this Section may be
21 used for all purposes under this Article (including
22 calculation of the reduction imposed under subdivision
23 (a)1b(iv) of Section 7-142), except for purposes of a
24 reversionary annuity under Section 7-145 and any
25 distributions required because of age. The age enhancement
26 established under this Section may be used in calculating a
27 proportionate annuity payable by this Fund under the
28 Retirement Systems Reciprocal Act, but shall not be used in
29 determining benefits payable under other Articles of this
30 Code under the Retirement Systems Reciprocal Act.
31 (f) For all creditable service established under this
32 Section, the member must pay to the Fund an employee
33 contribution consisting of 4.5% of the member's highest
34 annual salary rate used in the determination of the final
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1 rate of earnings for retirement annuity purposes for each
2 year of creditable service granted under this Section. For
3 creditable service established under this Section by a person
4 who is a sheriff's law enforcement employee to be deemed
5 service as a sheriff's law enforcement employee, the employee
6 contribution shall be at the rate of 6.5% of highest annual
7 salary per year of creditable service granted. Contributions
8 for fractions of a year of service shall be prorated. Any
9 amounts that are disregarded in determining the final rate of
10 earnings under subdivision (d)(5) of Section 7-116 (the 125%
11 rule) shall also be disregarded in determining the required
12 contribution under this subsection (f).
13 The employee contribution shall be paid to the Fund as
14 follows: If the member is entitled to a lump sum payment for
15 accumulated vacation, sick leave, or personal leave upon
16 withdrawal from service, the employer shall deduct the
17 employee contribution from that lump sum and pay the deducted
18 amount directly to the Fund. If there is no such lump sum
19 payment or the required employee contribution exceeds the net
20 amount of the lump sum payment, then the remaining amount
21 due, at the option of the employee, may either be paid to the
22 Fund before the annuity commences or deducted from the
23 retirement annuity in 24 equal monthly installments.
24 (g) An annuitant who has received any age enhancement or
25 creditable service under this Section and thereafter accepts
26 employment with or enters into a personal services contract
27 with an employer under this Article thereby forfeits that age
28 enhancement and creditable service. A person forfeiting
29 early retirement incentives under this subsection (i) must
30 repay to the Fund that portion of the retirement annuity
31 already received which is attributable to the early
32 retirement incentives that are being forfeited, (ii) shall
33 not be eligible to participate in any future early retirement
34 program adopted under this Section, and (iii) is entitled to
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1 a refund of the employee contribution paid under subsection
2 (f). The Board shall deduct the required repayment from the
3 refund and may impose a reasonable payment schedule for
4 repaying the amount, if any, by which the required repayment
5 exceeds the refund amount.
6 (h) The additional unfunded liability accruing as a
7 result of the adoption of a program of early retirement
8 incentives under this Section by an employer shall be
9 amortized over a period of 10 years beginning on January 1 of
10 the second calendar year following the calendar year in which
11 the latest date for beginning to receive a retirement annuity
12 under the program (as determined by the employer under
13 subsection (d) of this Section) occurs; except that the
14 employer may provide for a shorter amortization period (of no
15 less than 5 years) by adopting an ordinance or resolution
16 specifying the length of the amortization period and
17 submitting a certified copy of the ordinance or resolution to
18 the Fund no later than 6 months after the effective date of
19 the program. An employer, at its discretion, may accelerate
20 payments to the Fund.
21 An employer may provide more than one early retirement
22 incentive program for its employees under this Section.
23 However, an employer that has provided an early retirement
24 incentive program for its employees under this Section may
25 not provide another early retirement incentive program under
26 this Section until (1) the liability arising from the earlier
27 program has been fully paid to the Fund and (2) at least 6
28 years have elapsed from the effective date of the previous
29 program.
30 (Source: P.A. 89-329, eff. 8-17-95.)
31 Section 99. Effective date. This Act takes effect upon
32 becoming law.