Signed by Governor Pat Quinn

Vote Smart's Synopsis:

Vote to adopt a conference report that amends state employee pension plans.

Highlights:

• Requires the annual increase of retirement annuities for an employee who retired at 55 years of age or over before January 1, 1970, to be calculated as 3 percent of the lesser of the following amounts (Sec. 15):
• The total annuity payable at the time of the increase; or
• $800 multiplied by the number of years of creditable service upon which the annuity is based.

• Repeals automatic increases for a retirement annuity for a Tier 1 participant who has not begun receiving retirement annuities before July 1, 2014 (Sec. 15).

• Defines “Tier 1 participant” as a participant who first became a state employee before January 1, 2011 (Sec. 15).

• Defines “Tier 2 participant” as a participant who first became a state employee on or after January 1, 2011 (Sec. 15).

• Increases the retirement age of a Tier 1 participant by an increment of 4 months for every year if an individual is less than 46 years old by June 1, 2014, to a maximum of 60 months, including, but not limited to, the following retirement age increases (Sec. 15):
• If the participant is between 45 and 46 years old, the increase is 4 months;
• If the participant is between 41 and 42 years old, the increase is 20 months;
• If the participant is between 36 and 37 years old, the increase is 40 months; and
• If the participant is less than 32 years old, the increase is 60 months.

• Requires a state retirement system to prepare and implement a “voluntary defined contribution plan” for up to 5 percent of eligible active Tier 1 participants that consists of employer and employee contributions in individual participant accounts (Sec. 15).

• Requires a participant in the defined contribution plan to pay an employee contribution of 6 percent of earnings to the program, except for a participant with an eligible disability (Sec. 15).

• Defines “defined benefit plan” as a retirement plan available under the provisions of this bill to Tier 1 participants who have not elected to cease accruing benefits in the plan and begin accruing benefits for future service in the plan (Sec. 15).

• Requires a Tier 1 participant to contribute 7 percent of his or her salary towards the cost of a retirement annuity, which shall be considered “normal contributions”, beginning July 1, 2014 (Sec. 15).

• Prohibits a state retirement system from using a contribution received by the system to provide a subsidy for the cost of participation in a retiree health care program (Sec. 15).

• Requires a Tier 1 participant to contribute 6 percent of his or her earnings toward the retirement benefits payable under the retirement programs applicable to the employee, beginning July 1, 2014 (Sec. 15).

• Requires a Tier 1 participant who is a police officer or firefighter to contribute 7.5 percent of his or her earnings toward the retirement benefits payable under the retirement programs applicable to the employee, unless he or she has filed a waiver, beginning July 1, 2014 (Sec. 15).

• Exempts an individual who becomes an employee of certain state agencies on or after the effective date of this bill from its provisions, including, but not limited to, the following agencies (Sec. 15):
• The Illinois Municipal League;
• The Illinois Association of Park Districts; and
• The Illinois Supervisors, County Commissioners, and Superintendents of Highways Association.

• Prohibits an individual who becomes a participant on or after the effective date of this bill from receiving payment or service credit for unused sick or vacation time (Sec. 15).

• Requires the state to annually contribute to a state retirement system the sum of the state’s portion of the projected cost for that year and an amount sufficient to bring the total assets of the system up to 100 percent of its total actuarial liabilities by the end of fiscal year 2044, beginning in fiscal year 2015 (Sec. 15).

• Requires the State Treasurer to transfer $1 billion annually from the General Revenue Fund to the Pension Stabilization Fund, beginning in fiscal year 2020 until fiscal year 2045 or when each of the designated retirement systems have achieved 100 percent funding, whichever comes first (Sec. 15).

• Prohibits an employer from being required to bargain over matters affected by the changes, the impact of changes, and the implementation of changes made to the Illinois Pension Code by the provisions of this bill, with the exception of an employment contract or collective bargaining agreement that is in effect on the effective date of this bill (Secs. 3 & 20).

Full Bill Text

Vote Smart's Synopsis:

Vote to adopt a conference report that amends state employee pension plans.

Highlights:

• Requires the annual increase of retirement annuities for an employee who retired at 55 years of age or over before January 1, 1970, to be calculated as 3 percent of the lesser of the following amounts (Sec. 15):
• The total annuity payable at the time of the increase; or
• $800 multiplied by the number of years of creditable service upon which the annuity is based.

• Repeals automatic increases for a retirement annuity for a Tier 1 participant who has not begun receiving retirement annuities before July 1, 2014 (Sec. 15).

• Defines “Tier 1 participant” as a participant who first became a state employee before January 1, 2011 (Sec. 15).

• Defines “Tier 2 participant” as a participant who first became a state employee on or after January 1, 2011 (Sec. 15).

• Increases the retirement age of a Tier 1 participant by an increment of 4 months for every year if an individual is less than 46 years old by June 1, 2014, to a maximum of 60 months, including, but not limited to, the following retirement age increases (Sec. 15):
• If the participant is between 45 and 46 years old, the increase is 4 months;
• If the participant is between 41 and 42 years old, the increase is 20 months;
• If the participant is between 36 and 37 years old, the increase is 40 months; and
• If the participant is less than 32 years old, the increase is 60 months.

• Requires a state retirement system to prepare and implement a “voluntary defined contribution plan” for up to 5 percent of eligible active Tier 1 participants that consists of employer and employee contributions in individual participant accounts (Sec. 15).

• Requires a participant in the defined contribution plan to pay an employee contribution of 6 percent of earnings to the program, except for a participant with an eligible disability (Sec. 15).

• Defines “defined benefit plan” as a retirement plan available under the provisions of this bill to Tier 1 participants who have not elected to cease accruing benefits in the plan and begin accruing benefits for future service in the plan (Sec. 15).

• Requires a Tier 1 participant to contribute 7 percent of his or her salary towards the cost of a retirement annuity, which shall be considered “normal contributions”, beginning July 1, 2014 (Sec. 15).

• Prohibits a state retirement system from using a contribution received by the system to provide a subsidy for the cost of participation in a retiree health care program (Sec. 15).

• Requires a Tier 1 participant to contribute 6 percent of his or her earnings toward the retirement benefits payable under the retirement programs applicable to the employee, beginning July 1, 2014 (Sec. 15).

• Requires a Tier 1 participant who is a police officer or firefighter to contribute 7.5 percent of his or her earnings toward the retirement benefits payable under the retirement programs applicable to the employee, unless he or she has filed a waiver, beginning July 1, 2014 (Sec. 15).

• Exempts an individual who becomes an employee of certain state agencies on or after the effective date of this bill from its provisions, including, but not limited to, the following agencies (Sec. 15):
• The Illinois Municipal League;
• The Illinois Association of Park Districts; and
• The Illinois Supervisors, County Commissioners, and Superintendents of Highways Association.

• Prohibits an individual who becomes a participant on or after the effective date of this bill from receiving payment or service credit for unused sick or vacation time (Sec. 15).

• Requires the state to annually contribute to a state retirement system the sum of the state’s portion of the projected cost for that year and an amount sufficient to bring the total assets of the system up to 100 percent of its total actuarial liabilities by the end of fiscal year 2044, beginning in fiscal year 2015 (Sec. 15).

• Requires the State Treasurer to transfer $1 billion annually from the General Revenue Fund to the Pension Stabilization Fund, beginning in fiscal year 2020 until fiscal year 2045 or when each of the designated retirement systems have achieved 100 percent funding, whichever comes first (Sec. 15).

• Prohibits an employer from being required to bargain over matters affected by the changes, the impact of changes, and the implementation of changes made to the Illinois Pension Code by the provisions of this bill, with the exception of an employment contract or collective bargaining agreement that is in effect on the effective date of this bill (Secs. 3 & 20).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that amends state employee pension plans.

Highlights:

• Amends certain age-related requirements for Tier I participants who begin receiving annuity on or after July 1, 2013, including, but not limited to, the following changes (Sec. 20):
• Increases age-specific eligibility references by 5 years if the participant is less than 35 years old;
• Increases age-specific eligibility references by 3 years if the participant is between 35 and 40 years old;
• Increases age-specific eligibility references by 1 year if the participant is between 40 and 45 years old; and
• Exempts participants who are at least 45 years old from increases in age-specific eligibility references.

• Defines “Tier I participant” as an individual who first became a retirement system participant before January 1, 2011 (Sec. 20).

• Requires a Tier I participant to make the following contributions toward the retirement benefits payable under the retirement program, which shall be considered “normal contributions” (Sec. 20):
• 1 percent of earnings between July 1, 2013 and June 30, 2014; and
• 2 percent of earnings beginning July 1, 2014.

• Requires the annual increase of retirement annuities for a retired Tier I participant to be calculated as 3 percent of the lesser of the following amounts (Sec. 20):
• The total annuity payable at the time of the increase; or
• $800 multiplied by the number of years of creditable service upon which the annuity is based.

• Requires the State Treasurer to transfer $1 billion from the General Revenue Fund to the Pension Stabilization Fund, beginning in state fiscal year 2020 until the end of fiscal year 2045 or when each of the designated retirement systems have achieved the prescribed funding ratio for that retirement system, whichever occurs first (Sec. 15).

• Defines “designated retirement systems” as the following systems (Sec. 15):
• The State Employees’ Retirement System of Illinois;
• The Teachers’ Retirement System of the State of Illinois;
• The State Universities Retirement System;
• The Judges Retirement System of Illinois; and
• The General Assembly Retirement System.

• Requires the state to annually contribute to a state retirement system the sum of the state’s portion of the projected cost for that year and an amount sufficient to bring the total assets of the system up to 100 percent of its total actuarial liabilities by the end of fiscal year 2044, beginning in fiscal year 2015 (Sec. 20). 

• Requires the board of trustees of a state retirement system to seek payment of the guaranteed contribution amount if the state does not pay its proportionate share of the annual projected cost, and to bring a mandamus action in the Supreme Court of Illinois if the amount remains unpaid (Sec. 20).

• Prohibits an individual who first becomes a participant of a state retirement system on or after the effective date of this bill and receives a lump sum compensation for accumulated vacation, sickness, or personal business from receiving service credit for such periods (Sec. 20).

• Prohibits payments for unused sick or vacation time to be used in the calculation of average salary when computing service retirement pensions for an individual who first becomes a participant of a state retirement system on or after the effective date of this bill (Sec. 20).

• Prohibits an employer from being required to bargain over matters affected by the changes, the impact of changes, and the implementation of changes made to the Illinois Pension Code by the provisions of this bill, with the exception of an employment contract or collective bargaining agreement that is in effect on the effective date of this bill (Secs. 3 & 25). 

• Prohibits a state retirement system from using a contribution received by the system to provide a subsidy for the cost of participation in a retiree health care program (Sec. 20).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that amends state employee pension plans.

Highlights:

• Establishes the “Optional Cash Balance Plan” which provides to participating Tier I employees an automatic annual increase in retirement annuity of 3 percent or one-half of the annual unadjusted percentage increase in the Consumer Price Index-U, whichever is less, of the original granted retirement annuity (Sec. 25).

• Authorizes Tier I employees from the following retirement systems to opt into the Optional Cash Balance Plan (Sec. 25):
• The Teachers’ Retirement System of the State of Illinois;
• The State Employees’ Retirement System of Illinois;
• The State Universities Retirement System;
• The Judges Retirement System of Illinois; and
• The General Assembly Retirement System.

• Requires Tier I employees to make a decision to opt into the retirement annuity plan between January 1, 2014 and May 31, 2014, except in the following circumstances (Sec. 25):
• The individual becomes a Tier I employee after January 1, 2014; or
• The individual returns to active service as a Tier I employee after January 1, 2014.

• Specifies that employees who fail to make a decision to opt into the retirement annuity plan by May 31, 2014 will be deemed to have not opt into the plan (Sec. 25).

• Prohibits employees who opt out of the retirement annuity plan from being required to make contributions toward the program of health benefits while he or she is an employee or active contributor (Sec. 12).

• Requires the cash balance account of a participating Tier I employee to consist of the following (Sec. 25):
• The amounts contributed by or on behalf of the participant as employee contributions;
• The “notional employer contributions”; and
• The interest credit that is attributable to the account.

• Requires Tier I employees participating in the Optional Cash Balance Plan to make a contribution to the applicable retirement system at the rate of 2 percent of each payment of salary (Sec. 25).

• Authorizes a participant in the optional cash balance plan to begin collecting a retirement annuity at age 59 and one-half (Sec. 25).

• Requires the State Treasurer to transfer $1 billion from the General Revenue Fund to the Pension Stabilization Fund from fiscal year 2020 through fiscal year 2045 or until each of the designated retirement systems has achieved the funding ratio defined by law for that retirement system, whichever occurs first (Sec. 22).

• Specifies that there no disability benefits are provided under the Optional Cash Balance Plan (Sec. 25).

Full Bill Text