Bill
HB 2796
Allows eligible downstate firefighters to enter a Deferred Retirement Option Plan (DROP) to accrue retirement benefits while continuing to work, with a future lump-sum distribution
Note on source material
- The materials provided include two different HB 2796 texts from different states: (1) an Arizona bill (Rep. Alexander Kolodin) about special approval for criminal charges against “politically engaged persons,” and (2) an Illinois bill (Rep. Janet Yang Rohr) that amends the Downstate Firefighter Article of the Pension Code to add a Deferred Retirement Option Plan (DROP). This summary focuses on the Illinois pension / DROP content consistent with the title “PEN CD‑DNST FIRE‑DROP PLAN.” If you want a separate summary of the Arizona text, say so and I will create one.
Purpose and intent
- Establish a Deferred Retirement Option Plan (DROP) for eligible downstate firefighters so they may remain in active service for a limited period while their retirement benefit is accrued and deposited into a special account for later distribution upon actual retirement. The aim is to provide a phased retirement option while preserving pension calculation rules.
Key provisions
- Statutory changes: Adds 40 ILCS 5/4‑105e (new) and 40 ILCS 5/4‑109.4 (new); and amends 40 ILCS 5/4‑109 and 4‑109.1 (Downstate Firefighter Pension Code).
- Eligibility: A firefighter age 50 or older with at least 20 years of creditable service may elect to enter the DROP.
- DROP term: Participation permitted for up to 3 years while the firefighter may remain in active service.
- Pension treatment while in DROP:
- The firefighter’s retirement pension is calculated and fixed based on the firefighter’s salary and accumulated service on the date the firefighter begins DROP participation.
- That pension is paid into a special DROP account while the firefighter remains employed; the accumulated balance is distributed to the firefighter upon actual retirement/termination.
- Calculation also includes any annual increases that would have accrued under Section 4‑109.1 as if the firefighter had retired on the DROP entry date.
- Termination required: A firefighter must terminate service at the end of DROP participation (i.e., cannot extend participation beyond the prescribed period).
- Procedural detail on benefits: The bill modifies existing pension calculation rules (including earlier subsections governing percentage accruals and final average salary definitions) to accommodate DROP calculations.
- State Mandates Act: The bill amends the State Mandates Act to require implementation without reimbursement (i.e., no state reimbursement to local governments for costs arising from the mandate).
- Effective date: Provisions are effective immediately upon enactment (per the bill text).
Who is affected
- Primary: Downstate firefighters who meet the eligibility criteria (age 50+, 20+ years service).
- Pension systems: Downstate Firefighter pension funds and administrators (40 ILCS pension funds) — actuarial valuations, contribution needs, and accounting practices will be affected.
- Employers / municipalities: Local fire departments and sponsoring units of government may experience administrative and fiscal impacts related to DROP accounts and potential timing of retirements.
- State/local budgets: Potential short- and long‑term fiscal effects depending on participation rates and actuarial treatment (not quantified in the provided text).
Potential impacts and considerations
- Cash flow and actuarial effects: Moving the pension benefit into a DROP account while the member remains employed may change the timing of employer contributions and benefit payouts; actuarial assumptions and liabilities could be affected.
- Employer costs: Depending on statutory contribution rules and actuarial responses, municipalities might face higher near‑term employer contribution requirements or administrative costs.
- Workforce implications: DROP can allow experienced firefighters to continue working while accruing retirement benefits, potentially smoothing retirements but also influencing workforce planning (e.g., delayed turnover).
- No fiscal detail in text: The bill text does not include a fiscal note; the State Mandates Act language indicates local implementation without state reimbursement.
Legislative status (from provided materials)
- Introduced in the Illinois General Assembly (Rep. Janet Yang Rohr). Procedural steps in the provided excerpt show introduction and committee references. (If you want a current status check, I can look up the latest actions.)
If you want:
- A short plain‑language explainer for firefighters or municipal officials;
- A fiscal impact checklist for local governments; or
- A separate summary of the Arizona HB 2796 (politically engaged persons / criminal charge approval) — tell me which and I will produce it.
Compiled from official sources — confirm details with the bill’s official record.
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