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Repeal 3% Rule and Reenact 6% Rule

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HB 350 amends the State Universities Retirement System and Teachers’ Retirement System Articles of the Illinois Pension Code to repeal the 3% rule and reenact the 6% rule.

Specifically, HB 350 repeals 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% during the participant’s final rate of earnings period. Instead, HB 350 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% 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).

HB 350 is identical to SB 60 of the 101st General Assembly.

HB 350 takes effect immediately upon becoming law.

Sponsor: 
Representative Kathleen Willis