Public Act 100-0411 and IMRF Pension “Spiking”
Oct 30, 2017
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For those employees participating in IMRF, the Illinois Municipal Retirement Fund has treated accrued sick time and vacation time payments to retirees as pension “spikes” and has required local governments to make an additional payment to IMRF. Most units of local government do not intend to have these benefit payments added to the pension benefit.
Public Act 100-0411, which took effect August 25, 2017, has corrected the problem with regard to payments of unused vacation time. The Act amends the Pension Code to exclude such payments made in the final 3 months of the final rate of earning period in determining any assessment to the unit of local government for “spiking” payments. The Act amends 40 ILCS 5/7-172(k) to add “When assessing payment for any amount due under this subsection (k), the fund [IMRF] shall exclude earnings increases resulting from payments for unused vacation time, but only for payments for unused vacation time made in the final 3 months of the final rate of earnings period.”
With regard to sick time, any accrued sick leave payments made after 30 days of an employee’s retirement does not have to be reported to IMRF as earnings. It is therefore recommended that accrued sick leave be paid to retirees more than 30 days after their retirement date, as suggested in the IMRF 2016 Pension Spiking and The Accelerated Payment Webinar –
(https://www.imrf.org/en/employers/employer-resources/pension-spiking-and-the-accelerated-payment-webinar-resources).
Employers should check their collective bargaining agreements to see if the timing of accrued benefit payout is addressed.
If you have any questions, please contact any of your Robbins Schwartz attorneys.
