Illinois Compiled Statutes
Pensions
Illinois Pension Code
40 ILCS 5/



ARTICLE 3. POLICE PENSION FUND - MUNICIPALITIES 500,000 and UNDER
Return to Menu/Index

(40 ILCS 5/3-125)
Sec. 3-125. Financing.

The city council or the board of trustees of the municipality shall annually levy a tax upon all the taxable property of the municipality at the rate on the dollar which will produce an amount which, when added to the deductions from the salaries or wages of police officers, and revenues available from other sources, will equal a sum sufficient to meet the annual requirements of the police pension fund. The annual requirements to be provided by such tax levy are equal to (1) the normal cost of the pension fund for the year involved, plus (2) the amount necessary to amortize the fund's unfunded accrued liabilities as provided in Section 3-127. The tax shall be levied and collected in the same manner as the general taxes of the municipality, and in addition to all other taxes now or hereafter authorized to be levied upon all property within the municipality, and shall be in addition to the amount authorized to be levied for general purposes as provided by Section 8-3-1 of the Illinois Municipal Code, approved May 29, 1961, as amended.
The police pension fund shall consist of the following moneys which shall be set apart by the treasurer of the municipality:
  1. All moneys derived from the taxes levied hereunder;
  2. Contributions by police officers under Section 3-125.1;
  3. All moneys accumulated by the municipality under any previous legislation establishing a fund for the benefit of disabled or retired police officers;
  4. Donations, gifts or other transfers authorized by this Article.
(Source: P.A. 83-1440.)

(40 ILCS 5/3-125.1)
Sec. 3-125.1. Contributions by police officers.

Each police officer shall contribute to the pension fund the following percentages of salary for the periods stated: Beginning July 1, 1909 and prior to July 23, 1943, 1% (except that prior to July 1, 1921 not more than one dollar per month shall be deducted, and except that beginning July 1, 1921 and prior to July 1, 1927 not more than $2 per month shall be deducted); beginning July 23, 1943 and prior to July 20, 1949, 3%; beginning July 20, 1949 and prior to July 17, 1959, 5%; beginning July 17, 1959 and prior to July 1, 1971, 7%; beginning July 1, 1971 and prior to July 1, 1975, 7 1/2%; beginning July 1, 1975 and prior to January 1, 1987, 8 1/2%; and beginning January 1, 1987, 9%. Such sums shall be paid or deducted monthly.
"Salary" means the annual salary, including longevity, attached to the police officer's rank, as established by the municipality's appropriation ordinance, including any compensation for overtime which is included in the salary so established, but excluding any "overtime pay", "holiday pay", "bonus pay", "merit pay", or any other cash benefit not included in the salary so established.
(Source: P.A. 84-1472.)

(40 ILCS 5/3-125.2)
Sec. 3-125.2. Pick up of contributions.

A municipality may pick up the police officers' contributions required by Section 3-125.1 for all salary earned after December 31, 1981. If a municipality decides not to pick up the contributions, the required contributions shall continue to be deducted from salary. If contributions are picked up, they shall be treated as employer contributions in determining tax treatment under the United States Internal Revenue Code. However, the municipality shall continue to withhold Federal and State income taxes based upon these contributions until the Internal Revenue Service or the Federal courts rule that pursuant to Section 414(h) of the United States Internal Revenue Code these contributions shall not be included as gross income of the police officers until such time as they are distributed or made available. The municipality shall pay these contributions from the same source of funds which is used to pay the salaries of police officers. The municipality may pick up these contributions by a reduction in the cash salary of the police officer or by an offset against a future salary increase or by a combination of a reduction in salary and offset against a future salary increase. If contributions are picked up they shall be considered for all purposes of this Article as police officers' contributions made prior to the time that contributions were picked up.
(Source: P.A. 83-1440.)

(40 ILCS 5/3-127)
Sec. 3-127. Reserves.

The board shall establish and maintain a reserve to insure the payment of all obligations incurred under this Article. The reserve to be accumulated shall be equal to the estimated total actuarial requirements of the fund.
If a pension fund has a reserve of less than the accrued liabilities of the fund, the board of the pension fund, in making its annual report to the city council or board of trustees of the municipality, shall designate the amount, calculated as a level percentage of payroll, needed annually to insure the accumulation of the reserve to the level of the fund's accrued liabilities over a period of 40 years from July 1, 1993 for pension funds then in operation, or from the date of establishment in the case of a fund created thereafter, so that the necessary reserves will be attained over such a period.
(Source: P.A. 87-1265.)

Return to Menu/Index