Tier 2 Retirement Annuity
This information reflects the laws governing SERS on September 1, 2001. Your specific benefits are based on the laws in effect on your last day of employment. In order to receive any benefit, you must apply for it. All benefit claims should be made to the Claims Division. After you begin receiving benefits, you should notify SERS if you change your name or address. All SERS records are maintained according to your Social Security number.
First Retirement Annuity Payment
SERS will process your first annuity payment after we receive your pension application and other required information. The normal processing time is approximately 12 weeks from the date you leave service.
The first annuity payment will either be mailed directly to your home or electronically deposited into your account by the Comptroller’s office. You will also receive a Notice of Pension Approval, which contains information about your retirement annuity and a tax brochure, which provides an overview of your annuity taxes.
Future Retirement Annuity Payments
Future annuity payments are mailed on the 19th of each month, unless the 19th is on a weekend or holiday, when they are mailed on the last working day before the 19th. If your payment is mailed directly to your home, allow 14 business days for delivery.
If you have not received your payment after the 14 business days, call SERS. Failure to advise SERS of an address change may result in a delayed payment. A permanent mailing address is maintained for each annuitant of SERS. This is necessary for the mailing of special notices, newsletters and Group Insurance Program information. It is important to maintain your permanent mailing address and report any changes. Annuitants can submit a change of address in writing to the SERS Springfield or Chicago offices.
Direct Deposit (Electronic Funds Transfer)
When you apply for a SERS benefit, you will receive a Depository Agreement form along with an explanation of this program. We encourage you to have your monthly benefit directly deposited into your bank account. Complete and return this form with your application for benefits.
When you choose direct deposit, your first payment is mailed to your home. All future payments will be deposited into your bank account on the 19th of each month.
You can securely view your monthly earnings statement through the SRS Member Services website. To view your account information, you may register through our website at the Member Services website.
Taxation of Your Retirement Annuity
Illinois law exempts all SERS benefits from state income tax, but your benefits are subject to federal income tax. When you apply for retirement benefits, SERS sends you an IRS Form W-4P (Withholding Certificate for Pension or Annuity Payments).
If the W-4P is not returned to SERS, taxes are withheld using the rate for a married person with three exemptions. Each year, the Comptroller’s office is required to send you a 1099-R form showing the total annuity amount you received during the past year, as well as any taxes withheld.
Taxation of Refund Associated with Retirement
Widow/survivor contribution refunds and alternative formula contribution refunds are also subject to federal income tax withholding, but you can rollover your lump sum payment and defer tax on it until a later date. Refer to the Tax brochure for more information.
If you elect to rollover all or part of your widow/survivor refund, or alternative retirement formula refund, you will receive a 1099-R form by January 31 of the following year from the Comptroller’s office which will reflect the amount rolled-over.
Increases for Retirees
Tier 2 retirees receive an increase in their pensions on January 1 following their first full year of retirement, or age 67, whichever is later.
Future increases of 3% or one-half the annual increase in the consumer price index for the proceeding calendar year whichever is less of your current pension will also be made each January 1 thereafter. Future increases are not limited by the 75% maximum. If you retired under the alternative formula, you will receive an increase to your pension on January 1 following your first full year of retirement or age 60, whichever is later. Future increases are not limited by the 80% maximum.
Returning to Employment After Retiring
If you return to state employment on a contractual basis, or work in the private sector, your SERS benefit will not be affected. If you return to state employment on a non-permanent or permanent basis after retirement, you should notify the SERS Claims Division immediately.
If you receive a pension from more than one Illinois public retirement system which participates in the Retirement Systems' Reciprocal Act, you must notify all retirement systems. Each reciprocal retirement system has specific rules to determine if retirees are eligible to receive pension benefits during reemployment.
If your employment with the state will last for 75 or less working days during any calendar year (any part of a day is counted as a full day), you will continue to receive your pension payment while employed. 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 won’t be eligible for pension benefits while working. You will make contributions to both SERS and Social Security during your employment and earn additional service credit. 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. The 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.
Widow/Survivor Contribution Refund
If you receive a widow/survivor contribution refund because you were not married at retirement and you later remarry, you can repay the refund, plus interest, to qualify your spouse for a survivor benefit.