Current Elgin employees exempt from new pension law

The City of Elgin has saved itself from having to make extra pension contributions for current employees that could have been possible based on a new state law.

An amendment to the Illinois Municipal Retirement Fund will force employers — generally municipalities — to pay more toward their employees’ pensions if those individuals got raises of more than 6 percent in any of the four years — that employees’ highest paid four years — used to calculate pension amounts. It took effect Jan. 1.

Elgin Corporation Counsel William Cogley said the amendment was an attempt to limit “pension spiking.”

“We don’t engage in this practice, but the law does allow you to exempt existing employees from the application of this provision,” Cogley said. Local action had to take place before the start of the year.

Cogley said the council addressed exempting employees hired before Jan. 1 “just in case.”

For any future employees who get what amounts to a more than 6-percent raise — or more than the Consumer Price Index increase, whichever is higher — the city will be held to the new state law and be expected to contribute more to the employee’s pension to make up the difference.

Cogley said city staff members discussed the amendment earlier in the year but didn’t act because they figured Elgin would not be affected. In the end, Cogley said, they realized especially large vacation payouts could put an employee over the threshold in rare cases.

A special meeting was held Dec. 27 to get the ordinance in place that would keep the city safe from the extra payments. Cogley said about 400 employees draw pensions from the Illinois Municipal Retirement Fund, out of just more than 1,000 total employees.

But Cogley doesn’t expect this to actually change much, because of the way the city already handles its employee compensation.

“This may not have any affect at all,” Cogley said.