401(a) plan:  A retirement plan that allows for contributions by the employee, the employer, or both.  Contribution amounts, whether dollar-based or percentage-based, eligibility, and vesting schedule are all determined by the sponsoring employer.

Active Member: Active members include (1) those currently working in a position classified as “labor service” by the City of Chicago, (2) some Board of Education members, and (3) individuals employed by certain retirement boards.  A member receiving LABF disability benefits is also an active member.

Accrual Rate:  The rate that is multiplied by your service credit to determine the percentage of your highest average salary.  The rate used is 2.4% and the maximum limit of your salary is 80%.

Actuary: A statistician who estimates future funding needs based on rates of mortality, disability, turnover, ages at retirement, rate of investment income, and salary trends.

Actuarial Tables:  Tables of mathematical formulas for mortality and disability rates.

Affidavit:  A sworn statement in writing, made before an authorized official, generally a notary.

Age Reduction: Depending upon the age and service of a member upon retirement a member’s monthly pension could be reduced a percentage based on the number of months they retire younger than age 60 or for Tier 2 employees, younger than age 67.

Annuity:  Payment of twelve specified equal monthly pension payments on the 1st of the month to a member, widow or child. 

Annuitant:  Any retired member or survivor receiving a monthly annuity payment.

Automatic Increase: Upon attaining eligibility, an annuitant may receive an automatic percentage increase to their annuity payment.

Beneficiary:  The individual(s) or organizations(s) designated by a member, or by the terms of an employee benefit plan, who may be entitled to a benefit in the event the member dies before collecting his/her contributions prior to their death.

Benefit: Monies or services that members or beneficiaries are entitled to under LABF’s defined benefit plan that may include disability and retirement.

Board of Trustees: Eight members that administer the Fund, approve benefits, and invest Fund monies in addition to other duties.

Certified Copy:  Copy of document issued by a court or government agency guaranteed to be a true and exact copy of the original.  LABF requires certified copies of birth certificates, death certificates, marriage licenses, divorce decrees and QILDRO documents.

Civil Union Partner: A legal partner who is entitled to the same legal obligations, responsibilities, protections and benefits as spouses in Illinois.

Contributions: Deductions automatically taken from your gross salary every payday of 8.5% to cover your retirement benefit, a widow’s annuity and a cost of living benefit. 

Contribution Refund:  Members who are no longer employed by the City, BOE or Fund, can apply for a refund of their contributions if they are under age 55 with any length of service or if over 55 have less than 10 years of service.

CPI-u – (Consumer Price Index For All Urban Consumers):  An index the Bureau of Labor Statistics uses to measure and track cost of living expenses for adjusting payments to consumers based on current days prices.

Defined Benefit Plan:  A retirement plan that provides a predetermined benefit amount using a formula combining the members’ age, pension service credit and final average salary. 

Disability Credit: 25% of your total Fund service credit (not including previous non-work related disability time) for up to a maximum of 5 years.   For example: If you have 7.5 years of service credit with the fund, you have 1.875 years of disability credit.

Direct Deposit: Monthly retirement benefits are electronically transferred to a member’s bank or other accepted financial institution to be credited to a member’s account.  If a payment is delivered by direct deposit, that doesn’t guarantee eligibility for that payment. 

Divorce: The dissolution of a marriage or civil union entered into court.

Duty Disability Benefit: A supplemental benefit available to active members who have reported a work related injury and are receiving a benefit from Workers’ Compensation. You must contact the fund to apply.

Eligible Spouse: If you and your spouse were legally married or in a civil union recognized by the state prior to terminating your employment with the City of Chicago, Board of Education or Retirement Fund.

Emerging Investment Manager: As defined in 40 ILCS 5/1-109.1(4) a “qualified investment advisor that manages an investment portfolio of at least $10,000,000 but less than $10,000,000,000 and is a ‘minority owned business,’ ‘female owned business,’ or ‘business owned by a person with a disability’ as those terms are defined in the Business Enterprise for Minorities, Females, and Person with Disabilities Act” (see 30 ILCS 575/et seq.)

Estimate:  Determination of eligibility and estimated calculation of retirement benefits based projections of age, service credit and final average salary for member’s future retirement benefits.

Fiduciary:  “A person is a ‘fiduciary’ with respect to a pension fund or retirement system established under this Code to the extent that the person: (1) exercises any discretionary authority or discretionary control respecting management of the pension fund or retirement system, or exercises any authority or control respecting management or disposition or its assets; (2) renders investment advice or renders advice on the selection of fiduciaries for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the pension fund or retirement system, or has any authority or responsibility to do so; or (3) has any discretionary authority or discretionary responsibilities in the administration of the pension fund or retirement system’ per 40 ILCS 5/1-101.2

Final Average Salary (Tier 1): The average of the highest four consecutive years of salary within the last ten years of service preceding retirement.

Final Average Salary (Tier 2): The average of the highest eight consecutive years of salary within the last ten years of service preceding retirement.

Freedom of Information Act (FOIA): Information that is available for public review and can be requested under this Act. The details on how to request information can be found at Requests For Information.

Guardianship: A guardian is a person, institution or agency appointed by the Probate Court to manage the affairs of another, called the ward.  The guardian may serve as a substitute decision maker if the person is disabled because of (1) mental deterioration, (2) physical incapacity, (3) mental illness, or (4) developmental disability.   See Illinois Guardianship and Advocacy Commission website. 

HIPPA: Health Insurance Portability and Accountability Act of 1996 gives the right of security and privacy of health data.   See U.S. Department of Health & Human Services website.

Illinois Compiled Statutes (ILCS):  The laws of the State of Illinois arranged in a numerical order that classifies the laws by their subject matter.  ILCS numbers are used to cite laws in documents.  LABF is governed by 40 ILCS 5/11, et al.

Inactive Member: An individual who once participated in and contributed to LABF but are no longer employed by the City of Chicago or Board of Education or the Fund and left their contributions in the Fund.

Investment Consultant:  As defined in 40 ILCS 5/1-101.5  “any person or entity retained or employed by the board of a retirement system, pension fund, or investment board to make recommendations in developing an investment strategy, assist with finding appropriate investment advisors, or monitor the board’s investments.”

IRA: Individual Retirement Account.  A tax-deferred retirement account for an individual that permits individuals to set aside up to $4,000 per year, with earnings tax-deferred until withdrawals begin at age 59 ½ or later (if earlier, required to pay an additional 10% penalty tax)

IRS Form 1099-R:  The annual tax form issued by LABF through Northern Trust Bank that lists gross contributions, pre-tax contributions, taxable and federal withholding amounts.

LABF: Abbreviation for the Laborers’ & Retirement Board Employees’ Annuity and Benefit Fund of Chicago.

Leave of Absence:  An approved leave (LOA) from your department for a specified period of time off of work for a non work related illness or injury. 

Means Test:  Certain low income Plan participants may be eligible to have their co-pays for mail order drugs and/or their premiums reduced.  You may review the eligibility requirements and obtain an application from the City of Chicago.  For further information read the section on the Means Test.

Member:  A current or former employee of the City of Chicago that has contributions credited to their account within the LABF Fund who has not received a refund of those contributions.

Military Service:  Service in the United States Army, Navy, Air Force, Marines or Coast Guard, or any women’s auxiliary allowed as credit by LABF.

Money Purchase Annuity: Monthly retirement benefit calculated based upon the amount of contributions both the employee and the City have made to their account with LABF.

Minimum Formula Annuity: Monthly retirement benefit calculated based on an employees age, service credit and final average salary.

ODCX Date: The last day of your available disability period expires the day after your ODCX date.

Office Number:  5 digit unique ID number assigned to each member by the LAB F for quick identification  in lieu of using a Social Security Number.

Open Meetings Act: Illinois Open Meetings Act, 5 ILCS 120 et seq.,. .permits the attendance of members of a public body at public meetings.  For further details please see the Open Meetings Act Policy.

Ordinary Disability:  A benefit payment available to active employees on an approved leave of absence with the City who are disabled as a result of a non work related illness or injury . Must contact the fund to apply.

Participant Statement: An annual statement detailing an active member’s contribution balances in their individual retirement account.

Pension Service Credit:  Counting of service based on your work history with the City, Board of Education or the Retirement Fund.  Service credit granted only for time pension contributions were received. 

Petitioner In Lieu: Determination conducted at a hearing by LABF’s Board of Trustees to certify a member to be under legal disability and waiver of guardianship. Finding effective only to LABF matters.

Power of Attorney for Property:  The legal delegation of decision-making authority to an agent (someone you trust) concerning financial affairs and the management of property.  A person, such as yourself (the principal) gives another person (called an agent), written power to make decisions regarding your assets.  It is your choice what you give them power over and can range from finances, bank accounts, retirement plans and/or other types of property including real estate.  The agent will act on your behalf (the principal) and make decisions according to your wishes when you are physically or mentally incapacitated.  See Illinois Department of Aging website. Search for Power of Attorney for Property

Public Act:  Legislation that becomes law by passing both the House of Representatives and the Senate, and then signed by the Governor of Illinois.

QILDRO:  The Qualified Illinois Domestic Relations Order allows for the division of a retirement benefit, a refund of contributions, due to divorce or legal separation.  A QILDRO may require LABF to pay all or a portion of a members retirement benefits to an “alternate payee,” usually a member’s former spouse, current spouse, child or other dependent of the member. 

Reciprocal Act: Service under LABF and 12 other Illinois public pension funds may be considered together to determine eligibility and an estimated benefit payable from more than one fund.

Reciprocal Retirement Systems:  There are thirteen Illinois public retirement systems participating in the Retirement Systems’ Reciprocal Act. 

Reciprocity:  A member who has at least one year of credited service under another Illinois Public Retirement System, may use their service under that system when determining eligibility for a benefit from SERS.

Reemployment: Return to active employment, in any capacity, with the City of Chicago or specified entity that could potentially result in a suspension of an annuity payment. 

Refundable Benefit: Whenever the total amount accumulated to a deceased members account from employee contributions for annuity purposes have not been paid to such an employee, and their surviving spouse in the form of an annuity before the death of the last of such persons, a refund is made payable. For further explanation

Refund To Heirs: The named beneficiary(ies) entitled to receive a refund of a deceased members contributions in the event they have not been paid to the member either as a retirement benefit or a refund of contributions.

Refund To Small Estate: Process where heirs may apply for a benefit a member was entitled to preceding their death.

Reversionary Annuity:  A member may elect to receive a lesser retirement benefit and provide a greater benefit for a designated beneficiary.

Rollover:  Postponing taxation of distributions by “rolling-over” the payment to another retirement type plan, or to an Individual Retirement Account (IRA).  Taxes are paid when the member elects to receive payment from the rollover plan.

Service Credit: The period of time for which the LABF receives contributions from the member’s pay from the City, BOE or Retirement Boards or the period of time the member is on an LABF approved disability. 

Signature Verification Form: Annual form mailed to all annuity recipients to verify they continued eligibility to receive a benefit along with capturing current contact information and notarized signature by member, authorized agent or guardian. 

Tier 1:  A LABF member hired with the City of Chicago before January 1, 2011.

Tier 2:  A LABF member hired with the City of Chicago after December 31, 2010.  See specific benefit descriptions under (Pension Benefits-age reduction, Final Average Salary, Average Salary Limit, COLA, Spouse Annuity, Spouse COLA, Refund – age). 

W-4P Form:  This form is used to designate federal income tax withholding.

Wage Cap: Under Tier 2, a member’s wages are capped at $106.800 in 2011. A member does not pay contributions on wages above this limit.  The limit is also applied when the Fund calculates a member’s benefit. 

Widow’s Annuity: Benefits payable to a surviving spouse who was legally married to the member when the member’s death occurred prior to separating from service.

Windfall Elimination Provision: Social Security benefits are lowered if you receive a pension from a job where you did not pay Social Security tax. 

Withdraw and Wait:  When a member leaves their employment with the City of Chicago and meets the service requirement for retirement but hasn’t attained an eligible age to retire.  By leaving their contributions in the LABF Fund, they are eligible to apply for a retirement annuity a few months prior to their eligible birthday.

Workers’ Compensation:  This is a no-fault system of benefits paid by the City to workers who experience job-related injuries or illnesses.  The WC Commission operates the state court system for workers’ compensation cases.  Further information can be found at the Illinois Workers’ Compensation Website.

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