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JB Pritzker, Governor

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   Retirement Benefits Information for Tier 2  


Regular Retirement Formula


This information applies to all active state employees. If you terminate employment with the State, your benefits will be determined by the law in effect on your last day of employment. This information is intended to serve as a supplement to your Annual Benefit Statement, which includes your personal benefit information about. The regular retirement formula applies to all members not covered by the alternative formula.

Benefit Payments

In order to receive any benefit, you must apply for it through the Claims Division. Your agency’s Retirement Coordinator can assist you in filing a benefit claim. After you begin receiving benefits, you should notify SERS if you change your name, address, or if you wish to change your beneficiary(ies) for the lump sum death benefit. All SERS records are maintained according to your Social Security and Public ID number. Make sure these numbers are correct when filing a claim.

All benefit claims and appeals are reviewed by the SERS Executive Committee of the Board of Trustees. If your claim is denied, or you question the payment of any benefit, you or your representative may file a written appeal or request a hearing before the Executive Committee.


Eligibility

To receive a pension benefit, you must have a minimum of 10 years of credited service with SERS. You may retire at:

• Age 67, with 10 years of credited service.

• Between ages 62-67 with 10 years of credited service (reduced 1/2 of 1% for each month under age 67).

Your pension will start on the first day of the month following withdrawal from service.

Final Average Compensation

Your retirement benefit is based on final average compensation and credited service.For regular formula employees, final average compensation is the average of the 96 highest consecutive months of service within the last 120 months of service. The retirement benefit is calculated on a maximum salary earned (Social Security wage base). This amount increases annually by 3% or one-half of the Consumer Price Index, whichever is less.


Reduced Retirement Benefit

A regular formula member can retire between the ages of 62-67 with 10 years of service with a pension reduced 1/2 of 1% for each month under age 67.

Calculating the Formula

Covered: 1.67% for each year of service

Non-Covered: 2.2% for each year of service

Covered Example:

The member is covered under Social Security, is 67 years old, has 30 years of credited service, and a final average compensation of $3,600 per month.

30 years x 1.67% = 50.1% • 50.1% x $3,600 FAC = $1,803.60 per month, or $21,643.20 annually.

Non-Covered Example:

The employee is not covered by Social Security, is 67 years old, has 30 years of credited service, and a final average compensation of $3,800 per month.

30 years x 2.2% = 66% • 66% x $3,800 FAC = $2,508.00 per month, or $30,096.00 annually.

Annual Pension Increase

If you retire at age 67 or older, you will receive a pension increase of 3% or one-half of the Consumer Price Index for the preceding year, whichever is less, every year on January 1, following your first full year of retirement. If you retire before age 67 with a reduced retirement benefit, you will receive a pension increase of 3% or one-half of the Consumer Price Index for the preceding calendar year, whichever is less, every January 1 after you turn age 67 and have been retired at least one full year. These pension increases are not limited by the 75% maximum.

Normal Form of Payment

Your retirement benefit is paid monthly for your lifetime, but you can choose one of the optional forms of payment.

Optional Forms of Payment

Level Income: This option allows members who have paid into SERS and Social Security to receive their benefits at a level amount throughout their retirement years by combining their Social Security and SERS benefits. The Level Income option can be helpful when a member retires years before the age when (s)he qualifies for a Social Security benefit.

Under the Level Income Option

A member retires at age 60 with a monthly pension of $1,800 from SERS. The member is also eligible for a monthly Social Security benefit of $1,000 at age 66.

At Age 60: The member’s $1,000 monthly Social Security benefit is discounted to $523.50. Therefore, the SERS benefit would be $2,323.50, increasing 3% each year to $2,774.38 per month by age 66.

At Age 66: The member’s monthly SERS benefit would be reduced to $1,774.38, because the Social Security benefit of $1,000 per month would begin. The member’s combined monthly benefit would still total $2,774.38.

Under Level Income, SERS pays an amount (based on your estimated Social Security benefit) in addition to your regular retirement benefit until you qualify for Social Security benefits. At this time, your pension is reduced regardless of when you actually begin receiving Social Security and regardless of how much this benefit actually is. This reduced amount will be paid for your lifetime. If you choose Level Income, it is your responsibility to apply for Social Security benefits.

Reversionary Annuity

Reversionary Annuity: This option reduces your monthly retirement benefit to provide a lifetime income for your designated dependent after your death. The monthly amount paid to your dependent after your death may not be less than $10 and may not exceed the amount of your reduced benefit. This benefit is in addition to the survivors’ benefit.

The reversionary annuity is useful for providing income to a surviving spouse or other dependent who doesn’t work, or worked very little, and won’t receive much retirement or Social Security income. If you choose the reversionary annuity, it cannot be rescinded.

Qualified Illinois Domestic Relations Order (QILDRO) (click here for QILDRO forms)

A QILDRO allows for the division of a retirement benefit or a refund of contributions due to divorce. It does not establish a new benefit, nor does it create a new member or beneficiary. Generally, the QILDRO orders the payment of a benefit to the spouse as the alternate payee. It may also be payable to a child or other dependent as the alternate payee. The QILDRO does not apply to survivor annuities, or disability benefits.


Returning to Employment After Retiring

If you return to state employment after retirement, you must notify the SERS Claims Division immediately. If you return to state employment on a contractual basis, or to the private sector, your SERS retirement benefit is not affected.


Nonpermanent Reemployment

If your employment with the state lasts less than 75 working days during a calendar year (any part of a day is counted as a full day), you will continue to receive your pension payment. During your employment, you make no contributions to SERS, but you must contribute to Social Security. If you work more than 75 working days, your pension benefit will end on the 76th day, and you will resume contributing to SERS.


Permanent Reemployment

If you are reemployed by the state on a permanent basis, you will not be eligible for pension benefits while working. You will make contributions to both SERS and Social Security during your employment, and earn additional credited service. After you again retire from state employment, you must reapply for a pension. Your new pension amount will be the total amount before reemployment, plus the amount earned during your reemployment.

If you reenter state service within three years after the date you retired, you may qualify to have your new retirement benefit computed as though you never retired. To qualify, you must repay all of the money you received, plus interest. This repayment may be made in a lump sum, by installments paid within five years after your reemployment, or before your next retirement date, whichever is first. If you choose not to complete installment payments before retirement or the end of the five-year period, your installment payments will be refunded and your pension will not be recomputed.


Alternative Retirement Formula


The Alternative Formula applies to members in certain positions with 20 years of alternative service. Members eligible for the alternative formula may retire at age 60 with 20 years of service.

Benefit Claims

In order to receive any benefit, you must apply for it and provide proof of age. All benefit claims should be made to the Claims Division. Your agency’s Retirement Coordinator can assist you in filing a benefit claim. After you begin receiving benefits, you should notify SERS if you change your name, address, or if you wish to change your beneficiary(ies) for the lump sum death benefit. All SERS records are maintained according to your Social Security number. Make sure your Social Security number is correct when filing a claim.

All benefit claims and appeals are reviewed by the SERS Executive Committee of the Board of Trustees. If your claim is denied, or you question the payment of any benefit, you or your representative may file a written appeal or request a hearing before the Executive Committee.

Final Average Compensation

For an alternative formula employee, final average compensation is the average monthly salary during the 96 highest consecutive months of service within the last 120 months. The retirement benefit is calculated on a maximum salary earned (Social Security wage base). This amount increases annually by 3% or one-half of the Consumer Price Index, whichever is less.

Calculate Alternative Retirement Formula

Covered: 2.5% for each year of service.

Non-Covered: 3.0% for each year of service

Alternative Formula Example #1: The employee is not covered by Social Security, is 60 years old, has 26 years, 8 months (320 months) of credited service, and a final average compensation of $5,000 per month.

26 Years, 8 months x 3% = 80%

80% x $5,000 = $4,000 per month, or $48,000 annually

Example #2: The employee is covered by Social Security, is 60 years old, has 32 years (384 months) of credited service, and a final average compensation of $4,000 per month.

32 Years x 2.5% = 80%

80% x $4,000 = $3,200 per month, or $38,400 annually

Annual Pension Increases

Alternative formula retirees receive their first pension increase of 3% or one-half of the Consumer Price Index for the preceding year, whichever is less, following your first full year of retirement after age 60. These increases are not limited by the 80% maximum.

Unused Sick Leave

Unused and sick leave can be used to meet service eligibility requirements and increase your retirement benefit. This additional service credit does not affect final average compensation (11-21 days sick & vacation leave equals one month of service credit). unused sick leave chart

Paid Vacation Time

If you receive a lump-sum payment for vacation, or personal days when you retire, you may establish credit for this time to meet service eligibility requirements and increase your retirement benefit by making the required contributions on a pre- or post-tax basis (11-21 days of sick, vacation and personal leave equals one month of service credit). unused sick leave chart

Positions Eligible for Benefits Under the Alternative Formula

State Policeman

• Fire Fighter

• Security Employee with the Department of Corrections or Juvenile Justice

Normal Form of Payment

Your retirement benefit is paid monthly for your lifetime, but you can choose several optional forms of payment.

Optional Forms of Payment

Level Income: This option allows members who have paid into SERS and Social Security to receive their benefits at a level amount throughout their retirement years by combining their Social Security and SERS benefits. The Level Income option can be helpful when a member retires before the age when (s)he qualifies for a Social Security benefit.

Under the Level Income Option

A member retires at age 60 with a monthly pension of $1,800 from SERS. The member is also eligible for a monthly Social Security benefit of $1,000 at age 66.

At Age 60

The member’s monthly SERS benefit would be $2,323.50, and increase 3% each year to $2,774.38 per month by age 66.

At Age 66

The member’s monthly SERS benefit would be reduced to $1,774.38, because the Social Security benefit of $1,000 per month would begin. The member’s combined monthly benefit would still total $2,774.38.

Reversionary Annuity

Reversionary Annuity: This option reduces your monthly retirement benefit to provide a lifetime income for your designated dependent after your death. The monthly amount paid to your dependent after your death, may not be less than $10, and may not exceed the amount of your reduced benefit. This benefit is in addition to the survivors’ benefit.

Qualified Illinois Domestic Relations Order (QILDRO) (click here for QILDRO forms)

A QILDRO allows for the division of a retirement benefit or a refund of contributions due to divorce. It does not establish a new benefit, nor does it create a new member or beneficiary. Generally, the QILDRO orders the payment of a benefit to the spouse as the alternate payee. It may also be payable to a child or other dependent as the alternate payee. The QILDRO does not apply to survivor annuities, or disability benefits.

Returning to Employment After Retiring

If you return to state employment after retirement, you must notify the SERS Claims Division immediately. If you return to state employment on a contractual basis or to the private sector, your SERS benefit is not affected.

Nonpermanent Reemployment

If your employment with the state lasts less than 75 working days during a calendar year (any part of a day is counted as a full day), you will continue to receive your pension payment. During your employment, you make no contributions to SERS but you must contribute to Social Security. If you work more than 75 working days, your pension benefit will end on the 76th day, and you will resume contributing to SERS.

Permanent Reemployment

If you are reemployed by the state on a permanent basis, you will not be eligible for pension benefits while working. You will make contributions to both SERS and Social Security during your employment, and earn additional credited service. After you again retire from state employment, you must reapply for a pension. Your new pension amount will be the total amount before reemployment, plus the amount earned during your reemployment.

If you reenter state service within three years after the date you retired, you may qualify to have your new retirement benefit computed as though you never retired. To qualify, you must repay all of the money you received, plus interest. This repayment may be made in a lump sum, by installments paid within five years after your reemployment, or before your next retirement date, whichever is first. If you choose not to complete installment payments before retirement or the end of the five-year period, your installment payments will be refunded and your pension will not be recomputed.

Regular Retirement Formula

Benefit Claims
Eligibility
Final Average Compensation
Reduced Retirement Benefits
Calculating the Formula
Annual Increase
Normal Form of Payment
Optional Forms of Payment
Reversionary Annuity
Returning to Employment After Retiring
QILDRO
Member/Retiree/Survivor Menu Page
State Employees' Tier 2 Handbook

Alternative Retirement Formula

Benefit Claims
Final Average Compensation
Calculating Alternative Formula
Annual Pension Increases
Unused Sick Leave
Positions Eligible for Benefits
Normal Form of Payment
Optional Forms of Payment
Returning to Employment After Retiring
QILDRO
Member/Retiree/Survivor Menu Page
State Employees' Tier 2 Handbook
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