by Michael B. Weinstein (November 2017)
For a limited time, firefighters in an Article 4 fund can transfer up to six (6) years of accumulated creditable service from an Article 3 police pension fund administered by the same unit of local government, and City of Chicago firefighters transfer up to 10 years of creditable service from an Article 4 fund to the Firemen’s Annuity and Benefit Fund of Chicago. The Illinois General Assembly’s recent override of Governor Rauner’s veto of House Bill 688 made this possible under Public Act 100-544, which became law on November 9, 2017.
Article 3 to Article 4 transfer
The new law provides that at any time during the six (6) months following the Act’s effective date (until May 9, 2018), an active member of an Article 4 firefighters’ pension fund may apply for transfer of accumulated Article 3 police pension fund creditable service into the firefighters’ fund. Up to six (6) years of creditable service can be transferred. Note, however, two additional criteria must be met to transfer the service:
- The service must have been accumulated in the police pension fund for the same municipality in which the firefighter is currently employed.
- Additionally, the member must not have been subject to disciplinary action at the time that he or she terminated his or her police employment.
Moreover, if the member previously received a refund of contributions from the police pension fund, he or she will be allowed to reinstate creditable service, for transfer purposes, by repaying the police pension fund the amount of the refund, along with accumulated interest at a compounded rate of 6% per year from the date of refund to the date of repayment.
In order to effectuate the transfer of service, the Article 3 police pension fund will pay the Article 4 fund the member contributions, plus employer contributions in an amount equal to the member contributions, as well as any interest paid by the applicant in order to reinstate service. Once the creditable service is transferred, the applicant’s participation in the Article 3 police pension fund will terminate, and the transferred service will be added to all other creditable service earned under Article 4.
Article 4 to Article 6 transfer
As originally introduced, House Bill 688 would have reopened the time in which a City of Chicago firefighter could transfer up to 10 years of Article 4 service to the Firemen’s Annuity and Benefit Fund of Chicago. This provision — found in Sections 4-108.6 and 6-227 of the Illinois Pension Code — had expired on January 1, 2010. Prior to passage in the House, the bill was amended to limit the application period to six (6) months after the Act’s effective date (from November 9, 2017 to May 9, 2018). The bill was further amended in the Senate to add the downstate police/firefighters’ pension fund transfer language.
Transfer Requirements Checklist – Article 3 to Article 4
- Alert your members to this six-month opportunity to transfer service.
- Member must be currently active with your Article 4 fund.
- Member must have previously served as a police officer in your same municipality and been a member of the Article 3 fund.
- The request for the transfer should be in writing.
- Member must not have been subject to discipline at time he or she terminated service as a police officer.
- Municipal police department should be asked to confirm in writing that the applicant was not subject to discipline at the time he or she terminated service as a police officer.
Transfer Requirements Checklist – Article 4 to Article 6
- Alert former members who are current Chicago firefighters of this six-month opportunity to transfer service.
- Former member must be currently active with the Article 6 fund (Chicago).
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Thus, until May 9, 2018, Article 3 police pension funds should be ready to receive creditable service transfer applications from former members who are currently employed as firefighters in the same municipality. Similarly, Article 4 pension funds should be ready to accept properly funded transfers of creditable service from Article 3 funds in their same municipality. Finally, Article 4 pension funds should be ready to receive transfer applications from former members who wish to transfer accumulated creditable service to the City of Chicago’s Firemen’s Annuity and Benefit Fund. If you have questions regarding these provisions, please contact any of the firm’s pension attorneys.