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Fiscal Year 2020 Budget Implementation Bill

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Senate Amendment #1 to HB 816 creates the FY 2020 Budget Implementation Act to make changes in state programs that are necessary to implement the state budget for fiscal year 2020.  It authorizes the use of moneys in the State Pensions Fund as part of the FY 2020 state contribution to SURS and makes two additional changes: (1) it repeals the 3% Rule and reenacts the 6% Rule; and (2) it extends the existing accelerated pension benefit payment options for three years (from June 30, 2021 to June 30, 2024).

Repeal 3% Rule and Reenact 6% Rule

SA #1 amends the State Universities Retirement System and Teachers’ Retirement System’s articles of the Illinois Pension Code to repeal the requirement that employers pay the present value of the resulting increase in benefits attributable to the portion of any salary increases in excess of 3 percent during the participant’s final rate of earnings period.  Instead, SA #1 requires employers to pay the present value of the resulting increase in benefits attributable to the portion of any salary increases in excess of 6 percent during the participant’s final rate of earnings period.  (The 3% Rule became effective for academic years on or after July 1, 2018, with the exception of salary increases under contracts and collective bargaining agreements entered into, amended, or renewed before June 4, 2018.)

For members who first became members of SURS (or a reciprocal retirement system) before January 1, 2011 (Tier I members), the final rate of earnings is the four consecutive academic years of employment in which earnings are the highest (or the final 48 months of employment for certain employees).  For members who first become members of SURS on or after January 1, 2011 (Tier II members), the final rate of earnings is the eight consecutive academic years of employment out of the last 10 academic years of employment in which earnings are the highest (or the 96 consecutive months of employment out of the last 120 months of employment in which earnings are the highest for certain employees).

Extension of Accelerated Pension Benefit Payment Options

The accelerated pension benefit payment options created by Public Act 100-587 are scheduled to expire on June 30, 2021.   These voluntary options allow Tier I and Tier II vested, inactive members to receive an accelerated pension benefit payment in lieu of any pension benefit from SURS and Tier I members to receive an accelerated pension benefit payment in exchange for reduced and delayed automatic annual increases in retirement and survivor benefits.  SA #1 extends these accelerated pension benefit payment options until June 30, 2024, and makes similar changes to accelerated pension benefit payment options under the State Employees’ Retirement System and Teachers’ Retirement System.

SA #1 to HB 816 also makes other changes.

Effective Date

SA #1 to HB 816 takes effect immediately upon becoming law.

Sponsor: 
Representative Emanuel Chris Welch and Senator Heather A. Steans