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Bruce Rauner, Governor

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   Public Act 100-0587   

Accelerated Pension Benefit Programs


   

Public Act 100-587 provides two voluntary buyout program for State Employees' Retirement System. These voluntary programs expire on June 30, 2021. Implementation of both programs will take time and details will be forthcoming over the next few months. We are planning internally and developing the systems and processes necessary to administer these programs. Additional details will be provided in the July newsletter that accompanies your June 30, 2018 active member statement.



Vested Inactive Accelerated Pension Benefit Payment Option - Tiers 1 and 2

Eligibility requirements for an accelerated pension benefit payment:

  • Member must have terminated service;
  • Member must have enough service credit to qualify for a retirement annuity; and
  • Member cannot have received a retirement annuity.

Members that elect this option will forfeit all rights to future benefit payments, but retain access to state retiree healthcare. The payment will equal 60% of the present value of the retirement benefit which the member is entitled to at the date they elect this payment, including automatic annual increases (AAI), survivor benefits and disability benefits. The retirement system will calculate the present value of the benefit using actuarial factors.

Members forfeit all service credit for all purposes under the Illinois Pension Code, including benefits provided under the Illinois Reciprocal Act. However, years of service will be considered when calculating the premiums for retiree healthcare benefits.

This election is irrevocable and any member who elects this option and later returns to service will be eligible for a benefit based solely on future service and will not have the option to repay the amount received under this program to reestablish the previous service credit.



Accelerated Pension Benefit Payment at Retirement Option -Tier 1 only

Eligibility requirements for this payment option:

  • Member must have terminated service;
  • Member must be eligible for a retirement annuity; and
  • Member cannot have received a retirement annuity.

At retirement, Tier 1 members could elect to forfeit the Tier 1, 3% compounded AAI and instead receive 1.5% non-compounded AAIs, beginning the January 1st following the 1st anniversary of retirement or the 67th birthdate, whichever is later. Survivors of members that elect this option will also receive 1.5% non-compounded AAIs beginning on the January 1st following the anniversary of the start of the survivor annuity.

Members who elect to forego the Tier 1 AAIs will receive a lump sum payment equal to 70% of the difference in the present value of the Tier 1 AAI and the 1.5% non-compounded AAI, as calculated by the System. In the calculation, the system will use current actuarial assumptions and all relevant member information. Buyout payments are subject to applicable withholding and taxation provisions and must be transferred to a qualified retirement plan authorized by the IRS.



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