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91_HB1080
LRB9103350EGfgA
1 AN ACT to amend the Illinois Pension Code by adding
2 Sections 3-105.2 and 3-111.2 and changing Sections 3-111 and
3 3-111.1 and to amend the State Mandates Act.
4 Be it enacted by the People of the State of Illinois,
5 represented in the General Assembly:
6 Section 5. The Illinois Pension Code is amended by
7 adding Sections 3-105.2 and 3-111.2 and changing Sections
8 3-111 and 3-111.1 as follows:
9 (40 ILCS 5/3-105.2 new)
10 Sec. 3-105.2. Deferred Retirement Option Plan.
11 "Deferred Retirement Option Plan" or "DROP plan" means the
12 Deferred Retirement Option Plan established under Section
13 3-111.2.
14 (40 ILCS 5/3-111) (from Ch. 108 1/2, par. 3-111)
15 Sec. 3-111. Pension.
16 (a) A police officer age 50 or more with 20 or more
17 years of creditable service, who is no longer in service as a
18 police officer, shall receive a pension of 1/2 of the salary
19 attached to the rank held by the officer on the police force
20 for one year immediately prior to retirement or, beginning
21 July 1, 1987 for persons terminating service on or after that
22 date, the salary attached to the rank held on the last day of
23 service or for one year prior to the last day, whichever is
24 greater. The pension shall be increased by 2% of such salary
25 for each additional year of service over 20 years, up to 30
26 years, and 1% of such salary for each additional year of
27 service over 30 years, to a maximum of 75% of such salary.
28 No pension in effect on or granted after June 30, l973 shall
29 be less than $200 per month. Beginning July 1, 1987, the
30 minimum retirement pension for a police officer having at
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1 least 20 years of creditable service shall be $400 per month,
2 without regard to whether or not retirement occurred prior to
3 that date.
4 For a police officer who retires at the conclusion of
5 participation in the DROP plan, calculation of the amount of
6 the retirement pension shall be based on the police officer's
7 salary and accumulated service on the date he or she began
8 participation in the DROP plan and shall include any annual
9 increases that would have accrued under Section 3-111.1 if
10 the police officer had retired on that date.
11 (b) A police officer mandatorily retired from service
12 due to age by operation of law, having at least 8 but less
13 than 20 years of creditable service, shall receive a pension
14 equal to 2 1/2% of the salary attached to the rank he or she
15 held on the police force for one year immediately prior to
16 retirement or, beginning July 1, 1987 for persons terminating
17 service on or after that date, the salary attached to the
18 rank held on the last day of service or for one year prior to
19 the last day, whichever is greater, for each year of
20 creditable service.
21 A police officer who retires or is separated from service
22 having at least 8 years but less than 20 years of creditable
23 service, who is not mandatorily retired due to age by
24 operation of law, and who does not apply for a refund of
25 contributions at his or her last separation from police
26 service, shall receive a pension upon attaining age 60 equal
27 to 2.5% of the salary attached to the rank held by the police
28 officer on the police force for one year immediately prior to
29 retirement or, beginning July 1, 1987 for persons terminating
30 service on or after that date, the salary attached to the
31 rank held on the last day of service or for one year prior to
32 the last day, whichever is greater, for each year of
33 creditable service.
34 (c) A police officer no longer in service who has at
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1 least one but less than 8 years of creditable service in a
2 police pension fund but meets the requirements of this
3 subsection (c) shall be eligible to receive a pension from
4 that fund equal to 2.5% of the salary attached to the rank
5 held on the last day of service under that fund or for one
6 year prior to that last day, whichever is greater, for each
7 year of creditable service in that fund. The pension shall
8 begin no earlier than upon attainment of age 60 (or upon
9 mandatory retirement from the fund by operation of law due to
10 age, if that occurs before age 60) and in no event before the
11 effective date of this amendatory Act of 1997.
12 In order to be eligible for a pension under this
13 subsection (c), the police officer must have at least 8 years
14 of creditable service in a second police pension fund under
15 this Article and be receiving a pension under subsection (a)
16 or (b) of this Section from that second fund. The police
17 officer need not be in service on or after the effective date
18 of this amendatory Act of 1997.
19 (Source: P.A. 90-460, eff. 8-17-97.)
20 (40 ILCS 5/3-111.1) (from Ch. 108 1/2, par. 3-111.1)
21 Sec. 3-111.1. Increase in pension.
22 (a) Except as provided in subsection (e), the monthly
23 pension of a police officer who retires after July 1, 1971,
24 and prior to January 1, 1986, shall be increased, upon either
25 the first of the month following the first anniversary of the
26 date of retirement if the officer is 60 years of age or over
27 at retirement date, or upon the first day of the month
28 following attainment of age 60 if it occurs after the first
29 anniversary of retirement, by 3% of the originally granted
30 pension and by an additional 3% of the originally granted
31 pension in January of each year thereafter.
32 (b) The monthly pension of a police officer who retired
33 from service with 20 or more years of service, on or before
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1 July 1, 1971, shall be increased in January of the year
2 following the year of attaining age 65 or in January of 1972,
3 if then over age 65, by 3% of the originally granted pension
4 for each year the police officer received pension payments.
5 In each January thereafter, he or she shall receive an
6 additional increase of 3% of the original pension.
7 (c) The monthly pension of a police officer who retires
8 on disability or is retired for disability shall be increased
9 in January of the year following the year of attaining age
10 60, by 3% of the original grant of pension for each year he
11 or she received pension payments. In each January
12 thereafter, the police officer shall receive an additional
13 increase of 3% of the original pension.
14 (d) The monthly pension of a police officer who retires
15 after January 1, 1986, shall be increased, upon either the
16 first of the month following the first anniversary of the
17 date of retirement if the officer is 55 years of age or over
18 at the retirement date, or upon the first day of the month
19 following attainment of age 55 if it occurs after the first
20 anniversary of retirement, by 3% of the originally granted
21 pension for each full year that has elapsed since the pension
22 began, and by an additional 3% of the originally granted
23 pension in January of each year thereafter.
24 For the purpose of calculating eligibility for increases
25 under this Section, the date of retirement of a police
26 officer who retires at the conclusion of participation in the
27 DROP plan shall be deemed to be the date he or she began
28 participation in the DROP plan.
29 (e) Notwithstanding the provisions of subsection (a),
30 upon the first day of the month following (1) the first
31 anniversary of the date of retirement, or (2) the attainment
32 of age 55, or (3) July 1, 1987, whichever occurs latest, the
33 monthly pension of a police officer who retired on or after
34 January 1, 1977 and on or before January 1, 1986, and did not
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1 receive an increase under subsection (a) before July 1, 1987,
2 shall be increased by 3% of the originally granted monthly
3 pension for each full year that has elapsed since the pension
4 began, and by an additional 3% of the originally granted
5 pension in each January thereafter. The increases provided
6 under this subsection are in lieu of the increases provided
7 in subsection (a).
8 (f) Notwithstanding the other provisions of this
9 Section, beginning with increases granted on or after July 1,
10 1993, the second and all subsequent automatic annual
11 increases granted under subsection (a), (b), (d), or (e) of
12 this Section shall be calculated as 3% of the amount of
13 pension payable at the time of the increase, including any
14 increases previously granted under this Section, rather than
15 3% of the originally granted pension amount. Section 1-103.1
16 does not apply to this subsection (f).
17 (Source: P.A. 87-1265.)
18 (40 ILCS 5/3-111.2 new)
19 Sec. 3-111.2. Deferred Retirement Option Plan.
20 (a) The Deferred Retirement Option Plan created by this
21 Section shall first become available to eligible police
22 officers on January 1, 2000.
23 (b) To be eligible to participate in the DROP plan, a
24 police officer must (i) be in active service, (ii) have
25 attained age 50, and (iii) have at least 20 years of
26 creditable service in the Fund. A police officer may
27 participate in the DROP plan only once.
28 (c) An election to participate in the DROP plan must be
29 made within 3 years after becoming eligible under subsection
30 (b) or by January 1, 2003, whichever is later. The election,
31 once made, is irrevocable.
32 The election to participate in the DROP plan shall be
33 made in writing on forms provided for that purpose by the
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1 Board and shall be filed with the Board. The application
2 must indicate the date upon which participation in the DROP
3 plan is to begin, which shall be the first day of a calendar
4 month and not less than 30 days nor more than 90 days after
5 the date of filing the application.
6 As a part of the application, the police officer must
7 file with the Board and with his or her employer an
8 irrevocable letter of resignation from employment, effective
9 on the date of termination of the police officer's
10 participation in the DROP plan (unless that termination
11 results from acceptance of a disability benefit).
12 (d) A police officer's participation in the DROP plan
13 shall commence on the date specified in the application and
14 shall end upon (i) termination of service, (ii) death of the
15 police officer, (iii) disability for which the police officer
16 receives a benefit under Section 3-114.1, 3-114.2, or
17 3-114.3, or (iv) expiration of 3 years from the date the
18 police officer's participation in the DROP plan began,
19 whichever occurs first.
20 (e) A police officer who is participating in the DROP
21 plan shall be considered an active police officer for the
22 purposes of this Article, including Section 3-128, but shall
23 be subject to the special conditions of the DROP plan.
24 A police officer shall continue to make the contributions
25 that are required for active police officers during his or
26 her participation in the DROP plan. These contributions
27 shall be accumulated in the police officer's DROP account and
28 shall be treated as being "picked up" within the meaning of
29 Section 3-125.2 of this Code and Section 414(h)(2) of the
30 Internal Revenue Code of 1986, as amended.
31 A police officer who is participating in the DROP plan
32 shall not receive service credit for the period of that
33 participation, and the salary earned during that period shall
34 be disregarded in calculating the police officer's benefits
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1 under this Article.
2 (f) A police officer who participates in the DROP plan
3 may terminate service at any time during participation in the
4 DROP plan. A police officer who participates in the DROP
5 plan must terminate service on the last day of participation
6 in the DROP plan, unless participation in the DROP plan is
7 ended due to acceptance of a disability benefit.
8 (g) A police officer who is participating in the DROP
9 plan remains eligible to apply for a disability benefit under
10 Section 3-114.1, 3-114.2, or 3-114.3, but participation in
11 the DROP plan ceases upon acceptance of the disability
12 benefit. If participation in the DROP plan is ended due to
13 acceptance of a disability benefit, (1) the disabled police
14 officer shall be credited with employee contributions and
15 creditable service for the period of participation in the
16 DROP plan, (2) the police officer's letter of resignation
17 from service that is required to be filed at the time of
18 application to participate in the DROP plan is void, and (3)
19 the amounts in the disabled police officer's DROP account are
20 forfeited to the Fund.
21 (h) The Fund shall maintain a separate DROP account for
22 the benefit of each police officer who becomes a participant
23 in the DROP plan. The Fund shall pay into the police
24 officer's DROP account:
25 (1) for each month of the police officer's
26 participation in the DROP plan, an amount equal to the
27 monthly retirement pension that the police officer would
28 have been eligible to receive if the police officer had
29 terminated service and taken a retirement pension on the
30 date his or her participation in the DROP plan began,
31 including any increases in pension for which the police
32 officer would have been eligible under Section 3-111.1;
33 (2) the employee contributions paid by the police
34 officer during the period of participation in the DROP
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1 plan; and
2 (3) interest on the balance in the DROP account, at
3 the rate of 7% per annum, paid and compounded monthly,
4 throughout the period of participation in the DROP plan.
5 The DROP account shall cease earning interest when the
6 police officer's participation in the DROP plan ends.
7 (i) In addition to the retirement pension under Section
8 3-111, a police officer who terminates service and retires at
9 the conclusion of his or her participation in the DROP plan
10 shall receive, upon retirement, a DROP benefit equal to the
11 balance in the police officer's DROP account at the time of
12 retirement.
13 At the time of application for a retirement pension, the
14 police officer shall elect to receive the DROP benefit in the
15 form of either a lump sum or an actuarially equivalent
16 annuity for life. If a lump sum payment is elected, it may
17 be taken in the form of cash or a cash equivalent or be
18 rolled over into an individual retirement account (IRA) or a
19 qualified retirement plan. A DROP benefit payable in the
20 form of an annuity shall be in a fixed amount not subject to
21 annual or other increases. A DROP benefit shall be treated
22 as a retirement benefit for the purposes of Section 1-119
23 (QILDROs).
24 (j) If a police officer receiving a DROP benefit in the
25 form of an annuity re-enters service, the DROP benefit
26 annuity payments shall be suspended until the police
27 officer's subsequent retirement.
28 (k) If a police officer dies while participating in the
29 DROP plan, the DROP benefit shall be paid as a lump sum to
30 the surviving spouse or other survivor of the police officer
31 entitled to a pension under Section 3-112 or, if there is no
32 such survivor, then to the deceased police officer's estate.
33 (l) If a retired police officer dies while receiving a
34 DROP benefit in the form of an annuity, and the DROP account
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1 balance at the time of retirement exceeds the total amount of
2 DROP benefit annuity payments received, the excess shall be
3 refunded to the surviving spouse or other survivor of the
4 police officer entitled to a pension under Section 3-112 or,
5 if there is no such survivor, then to the deceased police
6 officer's estate.
7 Section 90. The State Mandates Act is amended by adding
8 Section 8.23 as follows:
9 (30 ILCS 805/8.23 new)
10 Sec. 8.23. Exempt mandate. Notwithstanding Sections 6
11 and 8 of this Act, no reimbursement by the State is required
12 for the implementation of any mandate created by this
13 amendatory Act of the 91st General Assembly.
14 Section 99. Effective date. This Act takes effect upon
15 becoming law.