Glossary of Retirement Terms
These terms will appear in the Member/Retiree/Survivor Information section as links, and when clicked a small window will open and provide the definition of the term.
Accumulated Contributions: The sum contributed by the member, including credits granted during disability.
Actuarial Tables: Tables of mathematical formulas for mortality and disability rates.
Administrative Rules: Official rules adopted by SERS that identify the meaning of SERS benefit provisions.
Annuity: Payment of twelve equal monthly installments for the member's lifetime (See Pension).
Agency Retirement Coordinator: Person in each state agency who interacts with the employees of their agency and SERS.
Alternative Retirement Formula: The retirement formula for state employees in high-risk jobs. If a member has contributed toward the alternative retirement formula but does not qualify for an alternative formula benefit, the member will receive a refund of any excess contributions made for the alternative formula at retirement.
Annuitant: Any retired member or survivor receiving a SERS benefit.
Automatic Increase in Retirement Annuity (Tier 1): A 3% increase of a member's retirement annuity each January 1 following the first full year of retirement, or age 60, whichever is later. Under the Rule of 85, the increase is paid on January 1 following the first full year of retirement, regardless of age. Under the alternative formula, the 3% increase is paid on January 1 following the first full year of retirement or age 55, whichever is later.
For survivor, widow or occupational death annuity: A 3% increase is paid on January 1 following one full year of benefits.
Automatic Increase in Retirement Annuity (Tier 2): A 3% increase or one-half of the Consumer Price Index, whichever is less, during the preceding calendar year. Under the alternative formula, the increase is paid on January 1 following the first full year of retirement or age 60, whichever is later.
For survivor, widow or occupational death annuity: The increase is paid on January 1 following one full year of benefits.
Beneficiary for Lump Sum Death Benefit: The beneficiary designated by the member to receive SERS benefits. This should not be confused with the Group Life Insurance beneficiary, or the Deferred Compensation beneficiary. (See Nominated Beneficiary)
Benefit Choice Period: A period of time established by the Department of Central Management Services for a member to make changes in their health insurance coverage, or to enroll in a different insurance plan.
Benefit Statement: The annual benefit statement summarizing the member's account and benefits. It includes service credit, projected and accrued pension benefits, and lists the members beneficiaries. The statement is mailed in August to active members, and to inactive members in February.
Board of Trustees: The Board created to direct the affairs of SERS.
Civil Union Partner: A legal partner who is entitled to the same legal obligations, responsibilities, protections and benefits as spouses in Illinois.
COLA (Cost-of Living Adjustment): An automatic, annual 3% compounded increase to certain benefits.
Compensation: All payments for personal services as defined as wages under the Social Security Enabling Act, except lump sum payments for vacation, sick leave or holiday pay.
Coordinated/Covered: A SERS member who contributes to Social Security.
Cost of Annuity (employee contributions): Generally refers to three areas: Contributions made to SERS before January 1, 1982; Interest paid on the repayment of contributions; Contributions made for optional service purchases.
Credited Service: The total service certified to a member's record.
DD214: A document issued by the U.S. armed forces used to verify active duty as it pertains to military service credit.
Defined Benefit Plan: A plan which provides a predetermined benefit amount using a formula combining service credit and salary.
Direct Deposit: By choosing Direct Deposit, the member's benefit is electronically deposited into their bank account.
Employee Contributions (cost of annuity): Generally refers to three areas: Contributions made to SERS before January 1, 1982; Interest paid on the repayment of contributions; Contributions made for optional service purchases.
Final Average Compensation (FAC): Tier 1 - For Retirement and Survivor Benefits - Final Average Compensation is the the average of the highest 48 highest consecutive months over the last 120 months of service. For alternative formula members, FAC is the final rate of pay, the average of the last 48 months of service, or the average of the highest consecutive 48 months of service over the last 120 months of service (for members in service before January 1, 1998), whichever is greater. For Death and Disability Benefits - Final Average Compensation is the rate of pay at the date of death or disability, or the 48 highest consecutive months of service within the last 120 months, whichever is greater.
Final Average Compensation (FAC): Tier 2 - FAC may not exceed $106,800; however, this amount may be adjusted annually. For Retirement and Survivor Benefits - Final Average Compensation is the 96 highest consecutive months of service within the last 120 months of service. For alternative formula members, FAC is the average of 96 months of service out of the last 120 months of service. For Death and Disability Benefits - Final Average Compensation is the average of the 96 highest consecutive months of service within the last 120 months from the date of death or disability.
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. SERS is governed by 40 ILCS 5/14, et al.
Informer: The SERS newsletter for retirees and survivors that contains timely and pertinent information, and is mailed in January, March and September.
IRS Form 1099-R: The annual tax form issued by the Office of the Comptroller that lists gross contributions, taxable & nontaxable amounts, and federal withholding.
Leave of Absence: An interruption in employment granted by the employer that contains a right of reemployment. A leave of absence may be purchased as optional service provided that it was less than one year and began on or after January 1, 1982.
Level Income Option: An option for coordinated/covered members where their SERS benefit is increased for the period before receiving Social Security benefits. Their SERS benefit is reduced when Social Security benefits begin. This option provides an income leveling effect throughout an individual's retirement years.
Medical Leave of Absence: An excused absence without pay, granted to an employee for an illness or injury not job-related.
Member: An active SERS employee, any former employee who has contributions credited to their account but has not received a refund, or is not receiving a retirement annuity.
Member Handbook: Provides a general explanation of SERS benefits. It is intended to serve as a supplement to the annual Benefit Statement, which includes a member's personal information.
Membership Service: Allowable service rendered while a member of SERS.
Military Service: Service in the United States Army, Navy, Air Force, Marines, Coast Guard, or any women's auxiliary allowed as credit by SERS.
Nominated Beneficiary: The person designated by the member to receive SERS benefits (See Beneficiary for Lump Sum Death Benefit).
Non-Occupational Death Benefit: Benefits payable when a members death results from a non-work related illness or injury.
Non-Occupational Disability Benefit: A benefit paid to a member for an injury or illness not work-related.
Non-Coordinated/Non-Covered: A SERS member who does not contribute to Social Security.
Occupational Death Benefit: Benefits payable when the member's death results from a work-related injury or illness.
Occupational Disability Benefit: A benefit paid to a member for an injury or illness sustained while performing their duties as a state employee.
Optional Service Credit: Periods of time that can be purchased for additional service credit. Examples include military time, qualifying periods, repayment of refund, leaves of absence, and short periods of employment.
Pension: Payment of twelve equal monthly installments for the member's lifetime (See Annuity)
Public Act: Legislation that becomes law by passing both the House of Representatives and the Senate, and then signed by the Governor.
Qualified Plan: A retirement plan qualified under the Internal Revenue Code allowing SERS and its members certain tax advantages. SERS is a qualified retirement plan under Section 401(a) of the Internal Revenue Code.
Qualifying Period: A period of state employment prior to becoming a SERS member.
QILDRO: The Qualified Illinois Domestic Relations Order (QILDRO) allows for the division of a retirement benefit, a refund of contributions, or a lump sum death benefit due to divorce.
Rate of Compensation: A member's actual rate of compensation as certified on an agency's payroll.
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: If reemployment with the State in a nonpermanent position will last less than 75 working days during a calendar year, the member will continue to receive a pension payment. During employment, the member makes no contributions to SERS, but must contribute to Social Security. Reemployment to a permanent/nonpermanent position for more than 75 days requires contributions to SERS and Social Security.
Refund: Upon withdrawal from State service, a member is entitled to receive a refund of contributions if they have been off the State payroll for 14 days. The member then forfeits all rights and benefits under SERS.
Regular Retirement Formula: The retirement formula for state employees in positions not designated as high-risk.
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 plan, or to an Individual Retirement Account (IRA).
Rule of 85: Allows employees to retire without a penalty when the sum of their age and years of service equals 85 or greater.
SERS-O-GRAM: The SERS newsletter for active employees that contains timely and pertinent information, and is mailed in April and August.
Service Credit: Time credited with SERS. Service credit is part of the equation used to calculate SERS benefits.
Sick Leave: An absence from work due to illness, or the days that accrue for use in the event of illness and may be used to establish additional service credit at retirement.
State Employee: Any person who performs services for the State of Illinois and receives a salary from a regular state payroll.
Survivor Annuity: Benefits payable when the member's death results from a non-work-related injury or illness.
Survivor Annuity Beneficiary: A beneficiary (spouse, child, dependent parent) designated by statute to receive a monthly annuity upon the death of the member.
Tax-Sheltered/Tax-Deferred: Contributions made by a member that are not taxed until a benefit is paid.
TDD: Telecommunication Device for the Deaf. A means for our disabled members to communicate with our office.
Temporary Disability: A benefit payable during a period when an injury or illness is being contested as work-related. A temporary benefit eventually becomes a nonoccupational or occupational disability benefit.
Tier 1: Any member hired before January 1, 2011
Tier 2: Any member hired after December 31, 2010
W-4P Form: This form is used to designate federal income tax withholding.
Widow's Annuity: If you were a member of SERS before July 19, 1961, and die leaving a surviving widow, she may have the option of taking a widow's annuity rather than a survivor's benefit.
Withdrawal: Severance of employment of a member of the State by resignation, discharge, dismissal or layoff.