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 Benefit Statement, which includes your personal benefit information about. The regular formula applies to all members not covered by the alternative formula.
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.
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 service credit.
- 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
Coordinated: 1.67% for each year of service
Non-Coordinated: 2.2% for each year of service
The member is coordinated with 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.
The employee is not coordinated with 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 non-compounded 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: 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) (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.
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.
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.