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   ARCP Overview

Alternative Retirement Cancellation Payment (Severance Plan)


ARCP Counter

Governor Blagojevich has signed Public Act #93-0839 allowing State employees to receive an Alternative Retirement Cancellation Payment (ARCP) consisting of a lump sum payment of their contributions with regular interest, times two.

Also included in the legislation is a provision allowing the Department of Central Management Services to create the Contingent Lump Sum Incentive Program for early termination of State service. This is a separate program that may or may not be offered. Any employee interested in or considering the plan which may be offered by CMS is urged to view important information posted on the CMS website: www.state.il.us/cms


To participate in the SERS portion of the legislation (the Alternative Retirement Cancellation Payment ) a member must fall within the two groups listed below.

Group 1                                       ARCP Counter

To be eligible in Group 1, a SERS member must:

  • Be on active payroll during June, 2004.
  • Have continuous employment on and after January 1, 2004.
  • Be in a specific job title.
  • Be among the first 3,000 employees to file a written application before September 30, 2004.
  • If the member has a Qualified Illinois Domestic Relations Order (QILDRO) in effect, the member must have a consent to participate from all alternate payees.
  • Terminate employment within two weeks after approval of their application or no later than October 31, whichever comes first.

During August 2004, all members eligible to participate should receive an estimate of the amount payable to them, and an application to participate from SERS.

To view the eligible job titles in Group 1, click here.


Group 2

To be eligible in Group 2, SERS members in any position with the Speaker of the House of Representatives, the Minority Leader of the House, the President of the Senate, the Minority Leader of the Senate, the Attorney General, the Secretary of State, the Comptroller, the Treasurer, the Auditor General, the Supreme Court, the Court of Claims and all legislative agencies are eligible to participate, with the approval of their agency head.

Their eligibility requirements are the same as Group 1 except that they must file and terminate by October 31, 2004. There is no limit to the number of employees who can participate in this group. They will receive an estimate after September 1, 2004.


To view the eligible job titles in Group 2, click here.

Notification

  • All members in department and positions deemed eligible will receive from SERS:
    • An estimate of the amount payable to them.
    • An application to participate.

    • When SERS receives and approves a member’s application:
      • An approval letter will be mailed to the ARCP participant.
      • Form 3900 will be mailed to the participant’s agency with a copy of the approval letter.


    Payment

    • The ARCP participant would receive a one-time lump sum retirement cancellation payment equal to their retirement contributions plus interest, times two.

    • The taxable portion of the lump sum amount may be rolled-over into a qualified employer plan that accepts rollovers, or to a traditional Individual Retirement Account (IRA).

    Payment Example

                            Retire.Contrib.         Interest             Total              ARCP

    Member A           $3,000*          $1,000=        $4,000 X 2=      $8,000

    Member B           6,000*              2,000 =        8,000 X 2 =     16,000

    Member C           9,000*              4,000 =        13,000 X 2 =    26,000


    Returning to State Service

    If an ARCP participant returns to State service, the participant must:

    • Repay to SERS the amount that the ARCP exceeded the original employee contributions.

    • Payment must be made 60 days after reemployment.

    Repayment Example of Retirement Contributions

                            ARCP              Refund Contrib.             Repayment

    Member A      $8,000 –               $3,000*                     = $5,000

    Member B       16,000 –                6,000*                     = 10,000

    Member C       26,000 –                9,000*                     = 17,000

    * Original Employee Contributions (refers to payment example)


    Insurance Coverage

    • ARCP participants in the Alternative Retirement Cancellation Payment Plan would be eligible for insurance coverage if they are vested (8 years of service credit) with the State.

    • Under the current Group Insurance program, ARCP participants with 20 or more years of service would be eligible for free insurance coverage.

    • If a vested ARCP participant has less than 20 years of service, they would pay a portion of the insurance premiums, currently 5% for each full year under 20 years.

    • Participants in the Alternative Retirement Cancellation Payment Plan would be eligible for insurance coverage on the date they would have been eligible to retire using their service on the date of the ARCP if they are vested (8 years of service credit) with the State.

    For example, if a member terminates at age 27 with 9 years of service, he would be eligible for State insurance on the first of the month after reaching age 60.


    Maximum Incentive Payments for Early Termination of State Service

    This is a separate program that may or may not be offered. It will be administered by the Department of Central Management Services. The purpose is to allow CMS the opportunity to adopt by an emergency rulemaking a program of incentive payments for early termination of State service. For additional information visit CMS website at www.state.il.us/cms

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    Overview Links

    Overview
    Group 1
    Group 2
    Notification
    Payment
    Returning to State Service
    Insurance Coverage
    Maximum Incentive Payments for Early Termination of State Service
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