Rauner signs police pension reform ending double dipping, introducing 401(k) plans

John Klingner

Policy Analyst

John Klingner
September 2, 2017

Rauner signs police pension reform ending double dipping, introducing 401(k) plans

The new law is a step toward more fairness within Illinois’ police pension system, while offering certain police officers more control over their retirements.

For years, too many government workers in Illinois have been “double dipping” when it comes to their pensions. Some workers retire to collect a pension, then return to government work to earn a salary and work toward a second pension, all while still receiving their original pension.

Fortunately, Gov. Bruce Rauner signed a new law designed to stop some forms of double dipping.

Under Public Act 100-0281, which Rauner signed Aug. 24th, Illinois police chiefs will no longer have the option of collecting a second pension by being rehired by a city as a civilian. And police officers who return to service in a new city after retiring won’t be able to collect a second police pension by enrolling in that city’s local police pension fund.

The new law also introduces 401(k)-style plans for some downstate police officers. Under the law, Illinois municipalities outside Chicago with a police pension fund are required to design a defined contribution 401(k)-style plan for their police officers going forward.

Here are the details:

    • Police chiefs are prevented from receiving both a police and a municipal pension, or “double dipping.”

Police chiefs in Illinois were previously eligible to enroll in either the Illinois Municipal Retirement Fund, or IMRF, or their local police pension fund. This created a loophole: A police officer could retire and start receiving his or her local police pension, then be rehired as a police chief in a civilian role and start accruing credit toward an IMRF pension, all while continuing to receive his or her police pension.

But under the new law, after Jan. 1, 2019, police chiefs will no longer be able to join IMRF. Instead, they will only be eligible for their city’s local police fund. That will prevent police officers who are rehired as police chiefs from “double dipping.” From now on, when a retired officer is hired back as a police chief, he or she won’t be able to enroll in IMRF as a civilian. Instead, the chief will start receiving a salary that counts toward a police pension, which he or she will not be eligible to receive until retiring again.

The law does not apply to police chiefs who became participants of IMRF before Jan. 1, 2019.

    • Municipalities are required to design 401(k)-style plans for their police.

Municipalities outside Chicago with their own police pension funds are required to create a 401(k)-style plan for their police officers. Each city will have control over the rules, contributions and benefits of their 401(k) plan. Only certain police officers will be eligible – and in some cases required – to participate in the plan going forward.

  • Police officers with 10 years of service – and who change police forces – have the option to enroll in 401(k)-style plans for benefits going forward. Police officers who leave one job and join the police force in a different city – and have already accumulated 10 years of service or more under their old local pension fund – can choose to join their new city’s 401(k)-style plan instead of the city’s local police pension fund.
  • New police officers who retire and come back to work are enrolled in 401(k)-style plans. New police officers (those hired on or after Jan. 1, 2019 and have no previous service) who return to work as an officer in a new city after retiring will no longer be allowed to double dip by collecting another police pension. Rehired officers will still be allowed to collect their pension benefits and salary, but will not be able to join their new city’s police fund and accrue more police pension benefits. Instead, they are only allowed to participate in their new city’s 401(k) plan.

This law only affects new police officers. Police officers hired before Jan. 1, 2019 will still be able accrue more police pension benefits instead of joining the 401(k) plan if they return to active service.

With this law in place, some police officers will join members of the State Universities Retirement System as the only public employees in Illinois with access to 401(k)-style retirement plans.

These are the only public employees in Illinois who have the option to avoid the state’s broken pension systems and their $267 billion crisis. And they’re the only public employees whose retirement plans don’t depend on funding IOUs from House Speaker Mike Madigan, Chicago Mayor Rahm Emanuel, Gov. Bruce Rauner or local politicians.

That retirement freedom should be extended to all workers. Access to local cities’ 401(k)-plans should be open to all downstate police officers – not just the few who move to a new city or come back to work. Local firefighters and municipal workers also deserve 401(k)-style plans going forward.

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