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2016 IMRF Pension Enhancement Transparency Provision Signed into Law

August 8, 2016 | Legislative briefs

By Joe McCoy, Legislative Director

P.A. 99-0646 applies to employees who began participation in IMRF prior to 2011. The new law prohibits any late career pay increases that exceed 6% of the prior month’s salary unless approved by the board during a public meeting following disclosure of the financial impact and other information. To trigger the transparency provision, the pay increase (either a raise or cash-out for various purposes) must also occur between 12 months and 90 days before retirement following an employee’s declaration that they will retire.

The law does not apply to any increases paid under a collective bargaining agreement, refunds of contributions or payments required to be made under state or federal law.

A 2011 pension reform law created a disincentive for employers to allow end of career pay spikes by requiring the additional costs to be owed immediately via an “accelerated payment” provision.

There have been media stories about IMRF employees receiving such late-career salary increases. In some cases, the boards were unaware of the financial impact prior to approving the increase. The bill requires that the issue be discussed during a public meeting so that the elected officials and public are aware of the cost.

It should be noted that the Act is not in the Pension Code and IMRF has no authority to administer or interpret the provisions. IMRF is, however, developing a spreadsheet that employers can use to determine the estimated pension and employer costs resulting from pay increases that fall under the new law.

Illinois Municipal League 
500 East Capitol Avenue 
Springfield, Illinois 62701 
Phone: 217-525-1220 
Fax: 217-525-7438 
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www.iml.org

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