Illinois § 16-190.6

§ 16-190.6.

Accelerated pension benefit payment for a reduction in annual retirement annuity and survivor's annuity increases. (a) As used in this Section: "Accelerated pension benefit payment" means a lump sum payment equal to 70% of the difference of the present value of the automatic annual increases to a Tier 1 member's retirement annuity and survivor's annuity using the formula applicable to the Tier 1 member and the present value of the automatic annual increases to the Tier 1 member's retirement annuity using the formula provided under subsection (b-5) and the survivor's annuity using the formula provided under subsection (b-6). "Eligible person" means a person who: (1) is a Tier 1 member; (2) has submitted an application for a retirement annuity under this Article; (3) meets the age and service requirements for receiving a retirement annuity under this Article; (4) has not received any retirement annuity under this Article; and (5) has not made the election under Section 16-190.5. (b) As soon as practical after June 4, 2018 the effective date of Public Act 100-587) and until June 30, 2026, the System shall implement an accelerated pension benefit payment option for eligible persons. Upon the request of an eligible person, the System shall calculate, using actuarial tables and other assumptions adopted by the Board, an accelerated pension benefit payment amount and shall offer that eligible person the opportunity to irrevocably elect to have his or her automatic annual increases in retirement annuity calculated in accordance with the formula provided under subsection (b-5) and any increases in survivor's annuity payable to his or her survivor's annuity beneficiary calculated in accordance with the formula provided under subsection (b-6) in exchange for the accelerated pension benefit payment. The election under this subsection must be made before the eligible person receives the first payment of a retirement annuity otherwise payable under this Article. (b-5) Notwithstanding any other provision of law, the retirement annuity of a person who made the election under subsection (b) shall be subject to annual increases on the January 1 occurring either on or after the attainment of age 67 or the first anniversary of the annuity start date, whichever is later. Each annual increase shall be calculated at 1.5% of the originally granted retirement annuity. (b-6) Notwithstanding any other provision of law, a survivor's annuity payable to a survivor's annuity beneficiary of a person who made the election under subsection (b) shall be subject to annual increases on the January 1 occurring on or after the first anniversary of the commencement of the annuity. Each annual increase shall be calculated at 1.5% of the originally granted survivor's annuity. (c) If a person who has received an accelerated pension benefit payment returns to active service under this Article, then: (1) the calculation of any future automatic annual increase in retirement annuity shall be calculated in accordance with the formula provided in subsection (b-5); and (2) the accelerated pension benefit payment may not be repaid to the System. (d) As a condition of receiving an accelerated pension benefit payment, the accelerated pension benefit payment must be transferred into a tax qualified retirement plan or account. The accelerated pension benefit payment under this Section may be subject to withholding or payment of applicable taxes, but to the extent permitted by federal law, a person who receives an accelerated pension benefit payment under this Section must direct the System to pay all of that payment as a rollover into another retirement plan or account qualified under the Internal Revenue Code of 1986, as amended. (d-5) Upon receipt of a member's irrevocable election to receive an accelerated pension benefit payment under this Section, the System shall submit a voucher to the Comptroller for payment of the member's accelerated pension benefit payment. The Comptroller shall transfer the amount of the voucher from the State Pension Obligation Acceleration Bond Fund to the System, and the System shall transfer the amount into the member's eligible retirement plan or qualified account. (e) The Board shall adopt any rules, including emergency rules, necessary to implement this Section. (f) No provision of this Section shall be interpreted in a way that would cause the applicable System to cease to be a qualified plan under the Internal Revenue Code of 1986. (Source: P.A. 101-10, eff. 6-5-19; 102-718, eff. 5-5-22.)