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91_HB4145
LRB9110801LDdvB
1 AN ACT to amend the Illinois Pension Code by changing
2 Sections 15-112, 15-113.2, 15-120, 15-134.5, 15-136.4, and
3 15-141 and adding Section 15-132.2.
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 changing Sections 15-112, 15-113.2, 15-120, 15-134.5,
8 15-136.4, and 15-141 and adding Section 15-132.2 as follows:
9 (40 ILCS 5/15-112) (from Ch. 108 1/2, par. 15-112)
10 Sec. 15-112. Final rate of earnings. "Final rate of
11 earnings": For an employee who is paid on an hourly basis or
12 who receives an annual salary in installments during 12
13 months of each academic year, the average annual earnings
14 during the 48 consecutive calendar month period ending with
15 the last day of final termination of employment or the 4
16 consecutive academic years of service in which the employee's
17 earnings were the highest, whichever is greater. For any
18 other employee, the average annual earnings during the 4
19 consecutive academic years of service in which his or her
20 earnings were the highest. For an employee with less than 48
21 months or 4 consecutive academic years of service, the
22 average earnings during his or her entire period of service.
23 The earnings of an employee with more than 36 months of
24 service prior to the date of becoming a participant are, for
25 such period, considered equal to the average earnings during
26 the last 36 months of such service. For an employee on leave
27 of absence with pay, or on leave of absence without pay who
28 makes contributions during such leave, earnings are assumed
29 to be equal to the basic compensation on the date the leave
30 began. For an employee on disability leave, earnings are
31 assumed to be equal to the basic compensation on the date
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1 disability occurs or the average earnings during the 24
2 months immediately preceding the month in which disability
3 occurs, whichever is greater.
4 For a participant who retires on or after the effective
5 date of this amendatory Act of 1997 with at least 20 years of
6 service as a firefighter or police officer under this
7 Article, the final rate of earnings shall be the annual rate
8 of earnings received by the participant on his or her last
9 day as a firefighter or police officer under this Article, if
10 that is greater than the final rate of earnings as calculated
11 under the other provisions of this Section.
12 If a participant is an employee for at least 6 months
13 during the academic year in which his or her employment is
14 terminated, the annual final rate of earnings shall be 25% of
15 the sum of (1) the annual basic compensation for that year,
16 and (2) the amount earned during the 36 months immediately
17 preceding that year, if this is greater than the final rate
18 of earnings as calculated under the other provisions of this
19 Section.
20 In the determination of the final rate of earnings for an
21 employee, that part of an employee's earnings for any
22 academic year beginning after June 30, 1997, which exceeds
23 the employee's earnings with that employer for the preceding
24 year by more than 20 percent shall be excluded, except in the
25 case of a change in position; in the event that an employee
26 has more than one employer this limitation shall be
27 calculated separately for the earnings with each employer.
28 In making such calculation, only the basic compensation of
29 employees shall be considered, without regard to vacation or
30 overtime or to contracts for summer employment.
31 The following are not considered as earnings in
32 determining final rate of earnings: separation pay,
33 retirement pay, payment in lieu of unused sick leave and
34 payments from an employer for the period used in determining
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1 final rate of earnings for any purpose other than services
2 rendered, leave of absence or vacation granted during that
3 period, and vacation of up to 56 work days allowed upon
4 termination of employment under a vacation policy of an
5 employer which was in effect on or before January 1, 1977.
6 Intermittent periods of service shall be considered as
7 consecutive in determining final rate of earnings.
8 (Source: P.A. 90-65, eff. 7-7-97; 90-511, eff. 8-22-97.)
9 (40 ILCS 5/15-113.2) (from Ch. 108 1/2, par. 15-113.2)
10 Sec. 15-113.2. Service for leaves of absence. "Service
11 for leaves of absence" includes those periods of leaves of
12 absence at less than 50% pay, except military leave and
13 periods of disability leave in excess of 60 days, for which
14 the employee pays the contributions required under Section
15 15-157 in accordance with rules prescribed by the board based
16 upon the employee's basic compensation on the date the leave
17 begins, or in the case of leave for service with a teacher
18 organization, based upon the actual compensation received by
19 the employee for such service after January 26, 1988, if the
20 employee so elects within 30 days of that date or the date
21 the leave for service with a teacher organization begins,
22 whichever is later; provided that the employee (1) returns to
23 employment covered by this system at the expiration of the
24 leave, or within 30 days after the termination of a
25 disability which occurs during the leave and continues this
26 employment at a percentage of time equal to or greater than
27 the percentage of time immediately preceding the leave of
28 absence for at least 8 consecutive months or a period equal
29 to the period of the leave, whichever is less, or (2) is
30 precluded from meeting the foregoing conditions because of
31 disability or death. If service credit is denied because the
32 employee fails to meet these conditions, the contributions
33 covering the leave of absence shall be refunded without
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1 interest. The return to employment condition does not apply
2 if the leave of absence is for service with a teacher
3 organization.
4 Service credit provided under this Section shall not
5 exceed 3 years in any period of 10 years, unless the employee
6 is on special leave granted by the employer for service with
7 a teacher organization. Commencing with the fourth year in
8 any period of 10 years, a participant on such special leave
9 is also required to pay employer contributions equal to the
10 normal cost as defined in Section 15-155, based upon the
11 employee's basic compensation on the date the leave begins,
12 or based upon the actual compensation received by the
13 employee for service with a teacher organization if the
14 employee has so elected.
15 (Source: P.A. 90-65, eff. 7-7-97; 90-511, eff. 8-22-97.)
16 (40 ILCS 5/15-120) (from Ch. 108 1/2, par. 15-120)
17 Sec. 15-120. Beneficiary; survivor annuitant under
18 portable benefit package. "Beneficiary": The person or
19 persons designated by the participant or annuitant in the
20 last written designation on file with the board; or if no
21 person so designated survives, or if no designation is on
22 file, the estate of the participant or annuitant. Acceptance
23 by the participant of a refund of accumulated contributions
24 shall result in cancellation of all beneficiary designations
25 previously filed. A spouse whose marriage was dissolved shall
26 be disqualified as beneficiary unless the spouse was
27 designated as beneficiary after the effective date of the
28 dissolution of marriage.
29 After a joint and survivor annuity commences under the
30 portable benefit package, the survivor annuitant of a joint
31 and survivor annuity is not disqualified, and may not be
32 removed, as the survivor annuitant by a dissolution of the
33 survivor's marriage with the participant or annuitant.
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1 (Source: P.A. 83-1440.)
2 (40 ILCS 5/15-132.2 new)
3 Sec. 15-132.2 Retire and retirement. A participant
4 "retires" and his or her "retirement" begins, when his or her
5 annuity payment period begins.
6 (40 ILCS 5/15-134.5)
7 Sec. 15-134.5. Retirement Program Elections.
8 (a) All participating employees are participants under
9 the traditional benefit package prior to January 1, 1998.
10 Effective as of the date that an employer elects, as
11 described in Section 15-158.2, to offer to its employees the
12 portable benefit package and the self-managed plan as
13 alternatives to the traditional benefit package, each of that
14 employer's eligible employees (as defined in subsection (b)
15 shall be given the choice to elect which retirement program
16 he or she wishes to participate in with respect to all
17 periods of covered employment occurring on and after the
18 effective date of the employee's election. The retirement
19 program election made by an eligible employee must be made in
20 writing, in the manner prescribed by the System, and within
21 the time period described in subsection (d) or (d-1).
22 The employee election authorized by this Section is a
23 one-time, irrevocable election. If an employee terminates
24 employment after making the election provided under this
25 subsection (a), then upon his or her subsequent re-employment
26 with an employer the original election shall automatically
27 apply to him or her, provided that the employer is then a
28 participating employer as described in Section 15-158.2.
29 An eligible employee who fails to make this election
30 shall, by default, participate in the traditional benefit
31 package.
32 (b) "Eligible employee" means an employee (as defined in
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1 Section 15-107) who is either a currently eligible employee
2 or a newly eligible employee. For purposes of this Section,
3 a "currently eligible employee" is an employee who is
4 employed by an employer on the effective date on which the
5 employer offers to its employees the portable benefit package
6 and the self-managed plan as alternatives to the traditional
7 benefit package. A "newly eligible employee" is an employee
8 who first becomes employed by an employer after the effective
9 date on which the employer offers its employees the portable
10 benefit package and the self-managed plan as alternatives to
11 the traditional benefit package. A newly eligible employee
12 participates in the traditional benefit package until he or
13 she makes an election to participate in the portable benefit
14 package or the self-managed plan. If an employee does not
15 elect to participate in the portable benefit package or the
16 self-managed plan, he or she shall continue to participate in
17 the traditional benefit package by default.
18 (c) An eligible employee who at the time he or she is
19 first eligible to make the election described in subsection
20 (a) does not have sufficient age and service to qualify for a
21 retirement annuity under Section 15-135 may elect to
22 participate in the traditional benefit package, the portable
23 benefit package, or the self-managed plan. An eligible
24 employee who has sufficient age and service to qualify for a
25 retirement annuity under Section 15-135 at the time he or she
26 is first eligible to make the election described in
27 subsection (a) may elect to participate in the traditional
28 benefit package or the portable benefit package, but may not
29 elect to participate in the self-managed plan.
30 (d) A currently eligible employee must make this
31 election within one year after the effective date of the
32 employer's adoption of the self-managed plan. A newly
33 eligible employee must make this election within 6 months
34 after the date on which the System receives the report of
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1 status certification from the employer 60 days after becoming
2 an eligible employee. If an employee elects to participate in
3 the self-managed plan, no employer contributions shall be
4 remitted to the self-managed plan when the employee's account
5 balance transfer is made. Employer contributions to the
6 self-managed plan shall commence as of the first pay period
7 that begins after the System receives the employee's
8 election.
9 (d-1) A newly eligible employee who, prior to the
10 effective date of this amendatory Act of the 91st General
11 Assembly, fails to make the election within the period
12 provided under subsection (d) and participates by default in
13 the traditional benefit package may make a late election to
14 participate in the portable benefit package or the
15 self-managed plan instead of the traditional benefit package
16 at any time within 6 months after the effective date of this
17 amendatory Act of the 91st General Assembly. The employer
18 shall not remit contributions to the system on behalf of a
19 newly eligible employee until the earlier of the expiration
20 of the employee's 60-day election period or the date on which
21 the employee submits a properly completed election to the
22 employer or to the system.
23 (e) If a currently an eligible employee elects the
24 portable benefit package, that election shall not become
25 effective until the one-year anniversary of the date on which
26 the election is filed with the system, provided the employee
27 remains continuously employed by the employer throughout the
28 one-year waiting period, and any benefits payable to or on
29 account of the employee before such one-year waiting period
30 has ended shall not be determined under the provisions
31 applicable to the portable benefit package but shall instead
32 be determined in accordance with the traditional benefit
33 package. If a currently an eligible employee who has elected
34 the portable benefit package terminates employment covered by
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1 the system before the one-year waiting period has ended, then
2 no benefits shall be determined under the portable benefit
3 package provisions while he or she is inactive in the system
4 and upon re-employment with an employer covered by the system
5 he or she shall begin a new one-year waiting period before
6 the provisions of the portable benefit package become
7 effective.
8 (f) An eligible employee shall be provided with written
9 information prepared or prescribed by the system which
10 describes the employee's retirement program choices. The
11 eligible employee shall be offered an opportunity to receive
12 counseling from the system prior to making his or her
13 election. This counseling may consist of videotaped
14 materials, group presentations, individual consultation with
15 an employee or authorized representative of the system in
16 person or by telephone or other electronic means, or any
17 combination of these methods.
18 (Source: P.A. 90-766, eff. 8-14-98.)
19 (40 ILCS 5/15-136.4)
20 Sec. 15-136.4. Retirement and Survivor Benefits Under
21 Portable Benefit Package.
22 (a) This Section 15-136.4 describes the form of annuity
23 and survivor benefits available to a participant who has
24 elected the portable benefit package and has completed the
25 one-year waiting period required under subsection (e) of
26 Section 15-134.5. For purposes of this Section, the term
27 "eligible spouse" means the husband or wife of a participant
28 to whom the participant is married on the date the
29 participant's retirement annuity begins, provided however,
30 that if the participant should die prior to the commencement
31 of retirement annuity benefits, then "eligible spouse" means
32 the husband or wife, if any, to whom the participant was
33 married throughout the one-year period preceding the date of
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1 his or her death.
2 (b) This subsection (b) describes the normal form of
3 annuity payable to a participant subject to this Section
4 15-136.4. If the participant is unmarried on the date his or
5 her annuity payments commence, then the annuity payments
6 shall be made in the form of a single-life annuity as
7 described in Section 15-118. If the participant is married
8 on the date his or her annuity payments commence, then the
9 annuity payments shall be paid in the form of a qualified
10 joint and survivor annuity that is the actuarial equivalent
11 of the single-life annuity. Under the "qualified joint and
12 survivor annuity", a reduced amount shall be paid to the
13 participant for his or her lifetime and his or her eligible
14 spouse, if surviving at the participant's death, shall be
15 entitled to receive thereafter a lifetime survivorship
16 annuity in a monthly amount equal to 50% of the reduced
17 monthly amount that was payable to the participant. The last
18 payment of a qualified joint and survivor annuity shall be
19 made as of the first day of the month in which the death of
20 the survivor occurs.
21 (c) Instead of the normal form of annuity that would be
22 paid under subsection (b), a participant may elect in writing
23 within the 90-day period prior to the date his or her annuity
24 payments commence to waive the normal form of annuity payment
25 and receive an optional form of annuity as described in
26 subsection (h). If the participant is married and elects an
27 optional form of annuity under subsection (h) other than a
28 joint and survivor annuity with the eligible spouse
29 designated as the contingent annuitant, then such election
30 shall require the consent of his or her eligible spouse in
31 the manner described in subsection (d). At any time during
32 the 90-day period preceding the date the participant's
33 annuity commences, the participant may revoke the optional
34 form elected under this subsection (c) and reinstate coverage
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1 under the qualified joint and survivor annuity without the
2 spouse's consent, but an election to revoke the optional form
3 elected and elect a new optional form or designate a
4 different contingent annuitant shall not be effective without
5 the eligible spouse's consent.
6 (d) The eligible spouse's consent to any election made
7 pursuant to this Section that requires the eligible spouse's
8 consent shall be in writing and shall acknowledge the effect
9 of the consent. In addition, the eligible spouse's signature
10 on the written consent must be witnessed by a notary public.
11 The eligible spouse's consent need not be obtained if the
12 system is satisfied that there is no eligible spouse, that
13 the eligible spouse cannot be located, or because of any
14 other relevant circumstances. An eligible spouse's consent
15 under this Section is valid only with respect to the
16 specified optional form of payment and, if applicable,
17 contingent annuitant designated by the participant. If the
18 optional form of payment or the contingent annuitant is
19 subsequently changed (other than by a revocation of the
20 optional form and reinstatement of the qualified joint and
21 survivor annuity), a new consent by the eligible spouse is
22 required. The eligible spouse's consent to an election made
23 by a participant pursuant to this Section, once made, may not
24 be revoked by the eligible spouse.
25 (e) Within a reasonable period of time preceding the
26 date a participant's annuity commences, a participant shall
27 be supplied with a written explanation of (1) the terms and
28 conditions of the normal form single-life annuity and
29 qualified joint and survivor annuity, (2) the participant's
30 right to elect a single-life annuity or an optional form of
31 payment under subsection (h) subject to his or her eligible
32 spouse's consent, if applicable, and (3) the participant's
33 right to reinstate coverage under the qualified joint and
34 survivor annuity prior to his or her annuity commencement
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1 date by revoking an election of an optional form of benefit
2 under subsection (h).
3 (f) If a married participant with at least 5 years of
4 service dies prior to commencing retirement annuity payments
5 and prior to taking a refund under Section 15-154, his or her
6 eligible spouse is entitled to receive a pre-retirement
7 survivor annuity, if there is not then in effect a waiver of
8 the pre-retirement survivor annuity. The pre-retirement
9 survivor annuity payable under this subsection shall be a
10 monthly annuity payable for the eligible spouse's life,
11 commencing as of the beginning of the month next following
12 the later of the date of the participant's death or the date
13 the participant would have first met the eligibility
14 requirements for retirement, and continuing through the
15 beginning of the month in which the death of the eligible
16 spouse occurs. The monthly amount payable to the spouse
17 under the pre-retirement survivor annuity shall be equal to
18 the monthly amount that would be payable as a survivor
19 annuity under the qualified joint and survivor annuity
20 described in subsection (b) if: (1) in the case of a
21 participant who dies on or after the date on which the
22 participant has met the eligibility requirements for
23 retirement, the participant had retired with an immediate
24 qualified joint and survivor annuity on the day before the
25 participant's date of death; or (2) in the case of a
26 participant who dies before the earliest date on which the
27 participant would have met the eligibility requirements for
28 retirement age, the participant had separated from service on
29 the date of death, survived to the earliest retirement age
30 based on service prior to his or her death, retired with an
31 immediate qualified joint and survivor annuity at the
32 earliest retirement age, and died on the day after the day on
33 which the participant would have attained the earliest
34 retirement age.
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1 (g) A married participant who has not retired may elect
2 at any time to waive the pre-retirement survivor annuity
3 described in subsection (f). Any such election shall require
4 the consent of the participant's eligible spouse in the
5 manner described in subsection (e). A waiver of the
6 pre-retirement survivor annuity shall increase the lump sum
7 death benefit payable under subsection (b) of Section 15-141.
8 Prior to electing any waiver of the pre-retirement survivor
9 annuity, the participant shall be provided with a written
10 explanation of (1) the terms and conditions of the
11 pre-retirement survivor annuity and the death benefits
12 payable from the system both with and without the
13 pre-retirement survivor annuity, (2) the participant's right
14 to elect a waiver of the pre-retirement survivor annuity
15 coverage subject to his or her spouse's consent, and (3) the
16 participant's right to reinstate pre-retirement survivor
17 annuity coverage at any time by revoking a prior waiver of
18 such coverage.
19 (h) By filing a timely election with the system, a
20 participant who will be eligible to receive a retirement
21 annuity under this Section may waive the normal form of
22 annuity payment described in subsection (b), subject to
23 obtaining the consent of his or her eligible spouse, if
24 applicable, and elect to receive any one of the following
25 optional annuity forms:
26 (1) Joint and Survivor Annuity Options: The
27 participant may elect to receive a reduced annuity
28 payable for his or her life and to have a lifetime
29 survivorship annuity in a monthly amount equal to 50%,
30 75%, or 100% (as elected by the participant) of that
31 reduced monthly amount, to be paid after the
32 participant's death to his or her contingent annuitant,
33 if the contingent annuitant is alive at the time of the
34 participant's death.
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1 (2) Single-Life Annuity Option (optional for
2 married participants). The participant may elect to
3 receive a single-life annuity payable for his or her life
4 only.
5 (3) Lump sum retirement benefit. The participant
6 may elect to receive a lump sum retirement benefit that
7 is equal to the amount of a refund payable under Section
8 15-154(a-2).
9 All optional annuity forms shall be in an amount that is the
10 actuarial equivalent of the single-life annuity.
11 For the purposes of this Section, the term "contingent
12 annuitant" means the beneficiary who is designated by a
13 participant at the time the participant elects a joint and
14 survivor annuity to receive the lifetime survivorship annuity
15 in the event the beneficiary survives the participant at the
16 participant's death.
17 (i) Under no circumstances may an option be elected,
18 changed, or revoked after the date the participant's
19 retirement annuity commences.
20 (j) An election made pursuant to subsection (h) shall
21 become inoperative if the participant or the contingent
22 annuitant dies before the date the participant's annuity
23 payments commence, or if the eligible spouse's consent is
24 required and not given.
25 (k) For purposes of applying the provisions of Section
26 20-123 of this Code, the portable benefit package shall be
27 treated as if it were provided by a participating system that
28 has no survivor's annuity benefit.
29 (l) The automatic annual increases described in
30 subsection (d) of Section 15-136 shall apply to retirement
31 benefits under the portable benefit package and the automatic
32 annual increases described in subsection (j) of Section
33 15-145 shall apply to survivor benefits under the portable
34 benefit package.
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1 (Source: P.A. 90-448, eff. 8-16-97; 90-766, eff. 8-14-98.)
2 (40 ILCS 5/15-141) (from Ch. 108 1/2, par. 15-141)
3 Sec. 15-141. Death benefits - Death of participant.
4 (a) The beneficiary of a participant under the
5 traditional benefit package is entitled to a death benefit
6 equal to the sum of (1) the employee's accumulated normal and
7 additional contributions on the date of death, (2) the
8 employee's accumulated survivors insurance contributions on
9 the date of death, if a survivors insurance benefit is not
10 payable, (3) an amount equal to the employee's final rate of
11 earnings, but not more than $5,000 if (i) the beneficiary,
12 under rules of the board, was dependent upon the participant,
13 (ii) the participant was a participating employee immediately
14 prior to his or her death, and (iii) a survivors insurance
15 benefit is not payable, and (4) $2,500 if (i) the beneficiary
16 was not dependent upon the participant, (ii) the participant
17 was a participating employee immediately prior to his or her
18 death, and (iii) a survivors insurance benefit is not
19 payable.
20 (b) If the participant has elected to participate in the
21 portable benefit package and has completed the one-year
22 waiting period required under subsection (e) of Section
23 15-134.5, the death benefit shall be equal to the employee's
24 accumulated normal and additional contributions on the date
25 of death plus, if the employee died with 5 or more years of
26 service for employment as defined in Section 15-113.1,
27 employer contributions in an amount equal to the sum of the
28 accumulated normal and additional contributions; except that
29 if a pre-retirement survivor annuity is payable under Section
30 15-136.4, the death benefit payable under this paragraph
31 shall be reduced, but to not less than zero, by the actuarial
32 value of the benefit payable to the surviving spouse. If the
33 recipient of a pre-retirement survivor annuity dies before an
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1 amount equal to all accumulated normal and additional
2 contributions as of the date of death have been paid out, the
3 remaining difference shall be paid to the member's
4 beneficiary. The primary beneficiary of the participant must
5 be his or her spouse unless the spouse has consented to the
6 designation of another beneficiary in the manner described in
7 subsection (d) of Section 15-136.4.
8 (c) If payments are made under any State or Federal
9 Workers' Compensation or Occupational Diseases Law because of
10 the death of an employee, the portion of the death benefit
11 payable from employer contributions shall be reduced by the
12 total amount of the payments.
13 (Source: P.A. 90-448, eff. 8-16-97; 90-766, eff. 8-14-98.)
14 Section 99. Effective date. This Act takes effect upon
15 becoming law.