Article 3 and Article 4 Pension Trustees and IPPFA Sponsors
SB 1300 providing for the consolidation of the Downstate and Suburban Police and Fire Pension assets into two Consolidated Funds has been passed by the General Assembly and is expected to be signed by the Governor.
The bill establishes a police investment fund and a fire investment fund to invest and manage the pension assets that we now manage at the local level. The boards of trustees will consist of five seats representing the active and retired members and four from the municipalities and fire districts. There will be a transition board and interim executive director, moving over to a permanent board and director at the end of a possible 30-month transition period.
The approval of this legislation was not the outcome we had hoped for. IPPFA was against the adoption of the bill, most particularly the mandatory nature of the consolidation. We have always felt that participation in any consolidation should be a voluntary, local decision. We drafted and distributed a resolution to our local pension boards to assist them in requesting that senators and assembly members not rush this matter through the legislative process. We appreciate the support of the member funds in this effort.
Note that the legislation does include important improvements for the Tier 2 membership. The salary used for calculation of pensions will be based on the final four (4) years of earnings instead of the final eight (8) years and the cap on salary that can be included in the pension calculation was improved. Also, benefits for survivors of Tier 2 police and fire actives and retirees were increased, essentially to the Tier 1 level. IPPFA will provide more detailed information on these improvements in the near future.
In addition to these changes, IPPFA was instrumental in assisting in the passage of SB 1670, another improvement on the Tier 2 structure. Under this improvement, when an officer is transferred from the Illinois Municipal Retirement Fund (IMRF) to an Article 3 police pension fund at the same municipality, the officer will have his or her tier for benefits (Tier 1 or Tier 2) determined based on when the officer entered first entered service as a police officer in that community.
Moving forward, it is the intention of IPPFA to fully support the local pension boards during the transition. The local boards continue to exist for tax collection, setting and paying benefits, contributions and record keeping, disability determination and participant service. We will work with the interim and permanent Consolidated Funds on matters of mutual interest, and promote the reduced but still very important missions of the local pension funds.
Once the Consolidated Fund boards are established, we will initiate a program of training on consolidation issues and provide ongoing information to you as we receive it. There will certainly be “bumps in the road” as many issues are addressed and resolved. There are a lot of unknowns to come. But the local boards and IPPFA have always ably served the interests of our active and retired police officers and firefighters and will continue to do so.