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Berwyn Police Pension Fund 6401W. 31st Berwyn IL
60402
708-795-5600 ext.108 |
POLICE PARTICIPANTAND SURVIVOR HANDBOOK 40 ILCS 5/3 09-01-02
Illinois Public Pension Fund Association 40 DuPage Court, Suite 304 Elgin, Illinois 60120 847-608-6014 Fax 847-608-6019
DISCLAIMER: THE INFORMATION CONTAINED IN THIS HANDBOOK IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NO INTENDED FOR LEGAL ADVICE. PENSION FUND TRUSTEES, PARTICIPANTS AND BENEFICIARIES SHOULD CONSULT WITH LEGAL COUNSEL BEFORE TAKING ANY ACTION. ADMINISTRATIVE RULES AND REGULATIONS AND POLICIES MAY DIFFER FROM PENSION BOARD TO PENSION BOARD. BE SURE TO CONSULT WITH YOUR PENSION BOARD BEFORE TAKING ACTION.
-RICHARD J REIMER, ESQ., 2002
Overview of Benefits and Provisions of Article 3 of the Illinois Pension Code
I. Nature of Police Pension Fund II. Funding of Police Pension Fund III. Admission into Pension Fund VIII. Increases in Retirement and Disability Pension X. Transfer of Creditable Service Between other Article 3 Funds “Pension Portability” XI. Transfer of Creditable Service Between other Public Employee Pension Funds in Illinois XII. Divestiture of Pension Benefits XIII. Deduction for Group Health Insurance Plans XIV. Taxation of Pension Benefits XV. Non-Alienation of Pension Benefits XVI. Consequences of Divorce on Pension Benefits XVII. Marriage After Retirement XVIII. Marriage and Remarriage of Surviving Spouse
Related Illinois Statutory Provisions
I. Public Employee Disability Act II. Police Officer’s Insurance Continuance Privilege III. Public Safety Employee Benefits Act
Federal Statutory Provision
I. Public Safety Officers’ Death Benefits
Overview of Benefits and Provisions of Article 3 of the Illinois Pension Code
I. Nature of Police Pension Funda. Defined benefit program under IRC Officers hired after 02/01/01 have option of participation in self-managed plan. b. Provisions set by statute – Article 3 of Illinois Pension Code (40 ILCS 5/3-101 et seq.)1 c. Provides the following benefits: i. Retirement (5/3-111) ii. Disability 1. Duty (5/3-114.3) 2. Non-Duty (5/3-114.2) iii. Heart attack or stroke (5/3-114.3) iv. Occupational disease (5/3-114.6) v. Survivor Benefits (5/3-112)
1References are to Article 3 of the Illinois Pension Code.
II. Funding of Police Pension Funda. Officer’s required contributions (5/3-125.1) 9.91% of salary i. Included as part of salary (50 III. Adm. Code 6302.35) 1. Base pay 2. Education pay 3. Holiday pay if paid regardless of whether officer works 4. Longevity pay 5. Temporary pay if assigned for ii. Excluded as salary for pension purposes (50 III. Adm. Code 6302.35) 1. Accumulated used time 2. Cash awards 3. Clothing allowance 4. Food allowance 5. Housing allowance 6. Merit pay if not added to salary for next increases 7. Overtime pay 8. Shift differential 9. Temporary pay – ASC 10. Uniform allowance b. Municipal annual tax levy (5/3-125) c. Interest income on Pension Fund Investments d. Donations (5/3-125(4))
2Reference are to the Illinois Administrative Code.
III. Admission into Pension Funda. Police officer must be appointed, sworn and commissioned to perform police duties and; i. Within three (3) months of appointments, make written application for admission into the pension fund ii. Admission is automatic- pension board has no discretion (5/3-106) b. Persons excluded (5/3-109) i. Part-time, auxiliary police, temporary employees ii. Officer who fails to make required contributions (5/125.1)3- c. Re-admission into pension fund if re-appointed, the officer must repay all refunds received under 5/3-124 and 2% per annum from date of refund to date of repayment
IV. Creditable Service – (5/3-110) a. Time spent by police officer as a member of police department b. Any periods of disability or leave of absence for which no disability pension payments received is included c. Furloughs without pay exceeding 30 days not counted i.e., disciplinary suspension, leave of absence d. Service in military while employed as police officer if either i. Declaration of war by U.S. ii. Draft iii. Police officer must pay 9.91% contributions before retirement iv. Not to exceed 5 years total credible service e. Police officer on leave of absence to server as executive of an organization representing police officers if; i. Officer must have at least 10 years credible service ii. Officer doesn’t receive credit for service, in any other retirement system iii. Officer pays, required 9.91% contribution equal to municipality’s normal cost for that period iv. The organization pays contributions required to municipality’s normal cost for that period f. Up to three years time spent on disability pension if i. Officer returns to active service for period at least equal to period for which credible serve is sought; and ii. Officer makes required contribution as per 5/3-125.1 iii. Can be paid prior to retirement and iv. Can elect installment payments at 6% per annum to be deducted from disability benefits.
V. Retirement Benefits (5/3-111) a. 0-7 years of credible service equals no Pension – refund of contribution only b. 8-19 years of credible service equals pension based on 2.5% for each full year of credible service, payable at age 60 (deferred pensioner) c. 20 years of credible service equals 50% of salary at date of retirement at age 50 (must have 20 full years and attained age 50) d. Over 20 years an additional 2.5% for each full year up to 30 years, to maximum of 75% salary
VI. Disability Benefitsa. Non duty disability benefits (5/3-114.2) i. Vested at time of entry into pension fund ii. 50% of salary attached to rank on date of suspension from duty (removed from payrolls) iii. Requirements for non-duty disability3 1. Must be police officer at time of application 2. Suffer from an accident, illness or sickness as a result of any cause 3. Found to be physically or mentally disabled 4. Renders necessary suspension from police service b. Duty related disability benefits (5/3-114.1) i. Vested at time of entry into pension fund ii. 65% of salary attached to rank on date of suspension from duty (removed from payrolls) or amount officer would be eligible to receive if retired, which-ever is greater. iii. Requirements for duty-related pension must be a police officer at time of application 1. Accident, injury or sickness was incurred from the performance of “act of duty”: 2. Found to be physically or mentally disabled 3. Disability renders necessary officer’s suspension from duty iv. Robbin’s test for what constitutes “act of duty” “Act of Duty” Any acto of police duty inherently involving special risk, not ordinarily assumed by a citizen in the ordinary walks of life, imposed on a policeman by the statutes of the State or by the ordinances or police regulations of the city in which this Article is in effect or by a special assignment; or any act of heroism, performed in the city having for its direct purpose the savin of the life or property of a person other than the policeman. v. Must be “causal connection” between “act of duty and disability vi. Possible aggravation of pre-existing non-duty condition c. Heart attacks or stroke (5/3-114.3) – If suffered as a result of the performance of “act of duty” 65% of salary attached to rank. d. Occupational disease disability pension (5/3-114.6) i. Applies only if combined police/fire department with regular firefighting duties ii. 65% of salary attached to range or amount eligible for regular retirement, whichever is greater iii. Heart, lung disease or cancer, creates reputable presumption that arose out of service as officer e. Determining eligibility for disability benefits (5/3-116) Requires that three physicians selected by the pension board certify the applicant’s disability f. Examination and emergency service (5/3-116) i. Disabled officer is examined at least once per year to verify disability until age 50 ii. If recovered from disability, pension board certifies to chief of police that officer is no longer disabled, and can return to duty iii. Open question – does Department have to take you back? iv. This only time disability counts toward credible service g. Non-resident pensioner (5/3-123) Pension Board can require affidavits as proof as determined by the Pension Board or require the office ro return to Illinois for annual exam. h. Disability conversion option – (5/3-116.1) i. If 50 years old and have total of 20 years service including active and disability time, officer can convert to regular pension ii. If hired prior to October 1, 1973, officer can convert to 50% of salary attached to rank on date of disability iii. If hired after Octover 1, 1973, officer can convert to 50% of salary attached to rank on date of disability iv. Only time off on disability i. Re-entry into active service after disability (5/3-114.4) If officer receives disability pension for more than two (2) years and returns to active service, the officer must remain in service for at least five (5) years before becoming eligible for increased disability pension benefits.
3Batka vs. Orland Park Pension Board. 186 Ill.App3d 715,542 N.E.2d 839 (1st Dist. 1989) 4Wall vs. Schaumburg Police Board. 178 Ill.App.3d 438,533 N.E. 2d 458 (1st Dist 1989) 5Robbins vs. Carbondale Police Pension Board. 117 Ill.2d 533, 687 N.E. 2d 39 (III.Sup. Ct. 1997)
VII. Survivorship Benefits – (5/3-I12) a. Death of a police officer receiving pension benefits – surviving spouse is entitled to officer’s pension. If no surviving spouse: i. Dependent children guardianship – under 18 or under legal guardianship with disability ii. If no surviving spouse or children, pension goes to dependent parents b. Death of a police officer either in or out of service with at least 20 years credible service – spouse or dependent receives whichever pension officer earned under (5/3-111) c. Death of a police officer with at least 10 years of credible service but less than 20 – spouse dependents eligible for 50% of officer’s salary (note: 10 year vesting period) d. Death of police officer incuured in or resulting from performance of act of duty, regardless of credible service, 100% of officer’s salary (note: 10 year minimum doesn’t apply) e. Death of police officer with less than 10 years credible service – not on duty – no survivorship pension – estate entitled to refund of contributions only
VIII. Increases in Retirement and Disability Pension (5/3 - 111.1) a. Officers on retirement receive a cost of living (COLA) raise of 1/12 of 3% for each full month on retirement upon attainment of age 55 and an additional 3% each year, in January, compounded each year thereafter b. Disabled officers receive a COLA raise of 3% for each full year on disability a age 60, and additional 3% each year, in January, compounded each year thereafter
IX. Refund of Contributions (5.3 – 124) a. Upon separation from service, offiders with less than 20 years of credible service may receive full refund of contributions b. After attainment of 20 years – no refund c. Acceptance of refund bars receipt of any further benefits under Article 3 d. Death of officer with less than 10 years (not on duty) surviving spouse receives refund e. Re-entry to active service – officer must pay full amount of refund plus 2% per annum from date of repayment until date of repayment
X. Transfer of Creditable Service Between other Article 3 Funds “Pension Portability” (5/3 - 110.7) a. Allows for transfer of creditable service between Article 3 funds under the following criteria: i. The officer is an active member of Article 3 Pension Fund ii. The officer actively served in the previous police department including IMRF for at least 2 years, unless; iii. Voluntary separation from department through no fault of the office i.e. layoff b. Officer can repay amount of refund from previous pension fund to reinstate previous creditable service c. Steps for transfer of credible service i. Officer makes application to current fund of intention to transfer from previous fund; ii. Officer repays the amount of refund from preious fund, plus 6% per annum per year compounded annually, from the date of refund to date of repayment iii. Previous pension fund notifies current fund of total years of credible service and transfer the amount of monies to the current pension fund consisting of the following: 1. The police officer’s contributions 2. The municipalities’ contributions 3. Interest on the above 4. Any contribution repayments iv. The current pension fund determines any additional “true cost” v. The officer must pay the additional “true cost” either lump osum or payment plan, if approved by the Pension Board, within 5 years vi. If officer dies before repayment is made the surviving spouse can elect to pay the remaining amount within 6 months of death to receive credit vii. If officer doesn’t pay within required time period, refund is received under new formula set by 5/3 – 110.7
XI. Transfer of Creditable Service Between other Public Employee Pension Funds in IllinoisCreditable service earned by a police officer under Article 3 of the Pension Code may be transferred to any of the following Illinois public employee pension funds, however the rules for transferring are not uniform; a. General Assembly Retirement System – (5/3 – 110.2) b. Illinois Municipal Retirement Fund – (5/3 – 110.3) c. State Employee’s Retirement Fund – (5/3 – 110.5) d. County Employees Benefit Fund – (5/3 – 110.4) e. Sanitary District Employee’s Benefit Fund – (5/3 – 110.4) f. Other Article 3 Police Pension Funds – (5/3 – 110.7)
XII. Divestiture of Pension Benefits – (5/3 – 147) Under 5/3 – 147 a police officer convicted of a felony that is: a. Related to; b. Arising out of, or c. In connection with service as a police officer, the officer can receive no benefits under Article 3 and is entitles to a refund of contributions only
XIII. Deduction for Group Health Insurance PlansIf municipality provides group hospitalization and medical plans that included retired police officers and spoused, officers can make written requests that monthly premium be deducted from monthly pension check, at expense of officer.
XIV. Taxation of Pension Benefitsa. Taxation of retirement benefits under 5/3 – 111 – taxed as income under I.R.C. when received. However, retirement benefits are not taxed in Illinois (35 ILCS 5/203) b. Taxation of duty disability benefits under 5/3 – 114.1 – I.R.C. excluded from gross income, compensation for personal injuries or sickness under a workers’ compensation act of a statute “in the nature of a worker’s compensation act.”6 c. Taxation of non-duty disability benefits under 5/3 – 114.2 benefits received under 5/3 – 114.2 are taxable because not under a statute “in the nature of workers compensation act” and does not result from injury occurred in the line of duty.7 d. Taxation of survivorship benefits under 5/3 – 112 – survivorship benefits for line of duty death of officer are not taxable as income. If a disabled police officer dies before converting a duty disability pension to a regular retirement pension, the benefits are still excludable when paid to surviving spouse.
628 W.S.C. 910(a)(1); Reg. $1.104(b) 7Matter of Dwyer, 71TC560(A)(1979); Rev. Ruling BO – 14(1980)
XV. Non-Alienation of Pension Benefits (5/3 – 144.1) Article 3 of the Pension code provides that pension benefits are exempt from garnishment, attachment, assignment or levy on account of any debts, judgments, court orders or damage awards that may have been entered against the police officer. Thus, these benefits are for the exclusive payment to participants and beneficiaries and the pension board cannot be forced to pay these benefits to any creditors.
XVI. Consequences of Divorce on Pension Benefitsa. Police officer’s pension benefits are a form of deferred compensation and considered to be marital property b. A police officer’s beneficial interests acquired during marriage are subject to distribution when marriage is dissolved c. Qualified Illinois Domestic Relations order (QILDRO) – (5/3 – 119) d. Effective July 1, 1999, all public pensions are subject to QILDRO, a court order requiring the Pension Board to pay portions of officer’s pension benefits for third party i.e. ex-spouse i. If hired prior to 07/01/99 must sign “irrevocable consent” to issue QILDRO
XVII. Marriage after RetirementIf a police officer who marries subsequent to retirement after November 15, 1995, the spouse continues to receive the survivorship benefits. If remarriage occurred prior to November 15, 1995, the marriage terminates the entitlement to surviving spouse benefits.
XVIII. Marriage and Remarriage of Surviving Spouse (5/3-121)If the surviving spouse of a police officer remarries after November 15, 1995, the spouse continues to receive the survivorship benefits. If remarriage occurred prior to November 15, 1995, the marriage terminates the entitlement to surviving spouse benefits.
Related Illinois Statutory Provisions
I. Public Employee Disability Act – (5 ILCS 345/0.01) a. Applicable to any full-time law enforcement officer, correctional officer, fireman; b. Who suffers any injury in the line of duty that causes him to be unable to perform his duties; c. Eligible for up to one (1) year full compensation from date of injury, without deduction from accumulated, sick, vacation, or compensatory time d. Employer can require independent medical examination e. Cannot be employed in any other capacity, i.e. side jobs f. Not eligible for pension benefits – but in credible service g. Must make separate application to municipality/employer
II. Police Officer’s Insurance Continuance Privilege – (215 ILCS 5/367g) a. Provides for an officer’s right to continue in municipality’s group health insurance policy, including self-insured municipalities at officer’s expense b. Eligibility commences on either the “retirement or disability period,” includes: i. Officer retires as a deferred pensioner ii. Officer retires on regular retirement pension iii. The officer is awarded a disability pension c. Continuance privilege terminates on occurrence of any one of the following events; i. Officer’s reinstatement or re-entry to active service ii. Officer’s acceptance of a refund of contributions iii. Officer’s felony conviction for service related felony (5/3 – 147) iv. Officer’s death, however qualified surviving spouse is eligible until death or remarriage of spouse d. Continuance privilege must be accepted or waived, if waived, continuance privilege is lost
III. Public Safety Employee Benefits Act – (820 ILCS 315/4) a. Applies to full-time law enforcement, correctional or correctional probation officer, or firefighter who is; i. Killed in line of duty, or ii. Is catastrophically injured b. Provides two (2) types of benefits to officer and/or his family i. Health insurance premium – municipality must pay 100% of health insurance premium for officer and or his family or, Upon death of officer, municipality must pay health insurance premium for surviving spouse and dependent children until 25 years old if a dependent student ii. Required educational benefits – if officer is killed, children entitled to free tuition at State supported institution, includes technical school, public community college or State University, total of 120 credit hours iii. Eligibility – Death or injury must have occurred as a result of officer’s fresh pursuit, or the officer’s response to what is reasonably believed to be an emergency, an unlawful act perpetrated by another, or during the investigation of a criminal act, on or after November 14, 1997.
IV. Law Enforcement Officers, Civil Defense Workers, Civil Air Patrol Members, Paramedics, Firemen, Chaplains, and Sate Employees Compensation Act (820 ILCS 315/1) a. Applicable to policeman, police officer and auxiliary policemen b. Killed in the line of duty means loss of life in the active performance of duties as a law enforcement officer, if death occurs one (1) year from date injury was received. Excludes death resulting from willful misconduct or intoxication of the officer. Burden is on Attorney General to prove willful misconduct or intoxication, includes; & |
