IMRF Glossary of Terms

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Alphabetical Index

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

Active member

See "participating member."

Actuary

A statistician who estimates future funding needs based on rates of mortality, disability, turnover, ages at retirement, rate of investment income, and salary trends.

Amortization period

One of the pieces of information an actuary uses to calculate an IMRF employer contribution rate.

Generally, each IMRF employer (unit of government) has an unfunded liability due to “prior service” of employees when the employer joined IMRF and due to benefit increases. (Prior service refers to the years and months an employee worked for a unit of government before that unit joined IMRF—assuming the position the employee held qualified for IMRF).

The unfunded liability is the estimated cost of retirement benefits earned to date that have not been funded. That is to say, the employer has no assets with IMRF to pay those benefits. A portion of the unfunded liability must be paid each year; the portion is determined by the employer’s structure.

 

Annuity

See pension.

Authorized Agent

The employee designated by an IMRF employer to administer IMRF locally. Each employer has one Authorized Agent.

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Beneficiaries

The individual(s) or organization(s) a member chooses to receive his or her IMRF death benefits. Refer to IMRF Form 6.11, "Designation of Beneficiary," for details. IMRF members also complete a new designation of beneficiary form after they retire, IMRF Form 6.11A.

Concurrent Service

If a member is reported under the same plan by more than one employer for the same month, the member's wages for the month are combined, and, by law, the member is credited with one month of service. Although the member receives only one month of service credit, the salaries are combined for that month. Therefore, if the concurrent service occurs during the member's "final rate of earnings" (FRE) period, it can increase the amount of his or her pension.

If a member is reported under more than one plan for the same month, the member earns only one month of service credit. However, the salaries from the positions are not combined. The member’s wages are recorded separately under each plan for the calculation of benefits.

Based upon the total earnings reported, the service credit for the concurrent month(s) is "allocated" between/among employers.

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Defined Benefit Plan

Also known as a "Traditional Pension Plan." Under a defined benefit plan (like IMRF), the future retirement benefit is calculated using a formula that includes a member's years of service credit and salary history rather than the amount of money in your member account. Your IMRF Defined Benefit Pension is payable for the rest of your life once you retire.

Defined Contribution Plan

Under a defined contribution plan, the future retirement benefit is based upon how much the participant contributed and the earnings made on those contributions. A 401(k) plan is an example of this type of plan.

Employees of a school district or hospital may be familiar with a Section 403(b) tax-deferred annuity. Employees who work for other types of IMRF employers may be familiar with a 457 deferred compensation plan. These plans function as defined contribution plans.

Direct Deposit

Direct Deposit allows IMRF to electronically deposit a pension payment or total and permanent disability benefit into the member's bank or other financial institution. Direct Deposit is a safer, faster, and more secure way of receiving benefit payments. Retiring members will receive their pension payments via Direct Deposit.

Disability benefits

While receiving IMRF temporary or total and permanent disability benefits, a member earns service credit and has the same death benefit protection as if he or she were working. You must apply for IMRF disability benefits. Read more.

Early Retirement Discount

(Not to be confused with the IMRF Early Retirement Incentive.) Under the early retirement discount, if a member retires between the age of 55 and 60 with less than 35 years of service credit, the pension is discounted (reduced) one-quarter percent for each month the member is less than age 60.

ECO

The IMRF Elected County Official Plan. This plan provides for an alternative benefit plan for Elected County Officials. In order for an elected county official to participate in this plan, his or her county must first adopt the program.

Effective Date of Retirement

The date a member is first eligible to receive pension benefits. IMRF pensions start as of the first day of the month after participation terminates. The effective date, not the date of you receive your first payment, is important when determining how you should report your IMRF pension payments for federal income tax purposes.

Eligible Spouse

If you and your spouse were married for more than one year when you stopped participating in IMRF, your spouse may eligible for an IMRF surviving spouse pension after you pass away.

ERI

The IMRF Early Retirement Incentive. An employer must elect to adopt ERI. Under ERI, a member can purchase up to five years of service credit. For each period of service credit purchased, the member's age is increased accordingly. The member must be at least age 50 and have at least 20 years of service credit (can include Reciprocal service).

EFT

Electronic Funds Transfer System. See Direct Deposit

Field Representatives

IMRF field representatives work with employers and members and assist them with IMRF related questions. IMRF Field Representatives also conduct employee workshops, Authorized Agent Certification Programs, and other informational presentations.

Final rate of earnings

A member’s Final Rate of Earnings (FRE) is the salary used to calculate the amount of retirement benefits.

• Under the Regular IMRF and SLEP plans:
  Final rate of earnings (FRE) are a member’s highest total earnings during any 48 consecutive months within the member’s last 10 years of IMRF service divided by 48. Usually, this is the average of the last 48 months of service. However, the earnings considered for each of the last three months cannot be more than 25 percent greater than the highest earnings in any of the first 45 months of the 48 consecutive months.
  
• Under the original Elected County Official plan:
  Under the original ECO plan, a member’s FRE is the annualized salary payable on the last day of participation in the ECO plan divided by 12. The ECO monthly FRE does not include any lump sum payments for vacation, sick leave, overtime, personal leave, etc. The ECO monthly FRE does include the annual stipend. However, the stipend is “annualized,” e.g., an annual stipend of $2,500 increases the monthly FRE by $208.33.
  
• Under the revised Elected County Official plan:
  Under the revised ECO plan, a member’s FRE is the average of the highest consecutive 48 months of ECO service in the last 10 years held in a specific office with the same county. A separate ECO FRE is calculated for each elected county position held in the same county. The ECO monthly FRE does not include any lump sum payments for vacation, sick leave, overtime, personal leave, etc. The ECO monthly FRE does include the annual stipend. However, the stipend is “annualized,” e.g., an annual stipend of $2,500 increases the monthly FRE by $208.33.

Formula

The Regular IMRF pension formula: 1-2/3% of a member’s FRE for each of the first 15 years of service credit, plus 2% of a member’s FRE for each year of service credit in excess of 15 years.

The SLEP Plan formula: The SLEP pension formula applies only to SLEP members with 20 or more years of Sheriff’s Law Enforcement service at age 50 or older. The SLEP pension formula is: 2.50% of your final rate of earnings for each year of SLEP service credit. The total pension at retirement, however, cannot exceed 80% of the member's final rate of earnings.

 

The original ECO formula is 3% of ECO monthly final rate of earnings for each of the first 8 years of ECO service credit, plus 4% of ECO monthly final rate of earnings for each of the next 4 years of ECO service credit, plus 5% of ECO monthly final rate of earnings for each year of ECO service credit in excess of 12 years. A member does not need eight years of ECO service to qualify for the ECO formula. The ECO formula is applied to the ECO service regardless of the amount of that service. For example, if a member has one month of ECO service, the ECO formula will be applied to that one month and the Regular or SLEP formulas applied to the remaining service.

The revised ECO formula is the same as original ECO: 3% of ECO monthly final rate of earnings for each of the first 8 years of ECO service credit, plus 4% of ECO monthly final rate of earnings for each of the next 4 years of ECO service credit, plus 5% of ECO monthly final rate of earnings for each year of ECO service credit in excess of 12 years. However, a revised ECO plan member must hold the same elected county position in the same county for a minimum of eight years to qualify for the ECO retirement formula.

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Hourly standard

The hourly standard (either 600 or 1,000 hours a year) determines whether or not a position qualifies for IMRF participation. Your Authorized Agent will know your employer's hourly standard. You are required to participate in IMRF if you work in an IMRF qualified position.

All school and special education districts are under an annual hourly standard of 600 hours.

All other IMRF employers have the option of choosing an annual hourly standard of either 600 or 1,000 hours a year.

"Full time" and "part time" do not mean anything in relation to the hourly standard. If the hours you work in a year are expected to meet or exceed your employer's chosen hourly standard (either 600 or 1,000 hours a year) you must participate in IMRF, regardless of full time or part time designation.

Your position is considered for participation in IMRF based on its expected hourly requirement. The actual hours you work may be more or less than the hours your position is expected to work.

Inactive member

An inactive IMRF member is someone who once participated in and contributed to IMRF and still has funds on deposit (i.e. has not taken a refund of their IMRF contributions). Inactive members can be vested (eligible for a pension) or could be working for a reciprocal system that they can combine with their existing IMRF service, among other scenarios.

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Level option

See "Optional Pension Benefit."

Member contributions

Members who participate in Regular IMRF contribute 4.5% of salary toward a future IMRF pension: 3.75% for the member and 0.75% for a surviving spouse pension. See "surviving spouse contributions." Members who participate in the SLEP and ECO plans contribute an additional 3% of salary.

Member Statement of Account

Each year IMRF mails to all members a Member Statement of Account. This statement provides a month-by-month report of a member's salary, member contributions, service credit earned, and an estimate of IMRF benefit payments.

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Optional Pension Benefit

If a member retires before age 62, he or she can choose IMRF's Optional Pension Benefit. The member would receive a larger pension until age 62 and a reduced pension thereafter.

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Participating member

Also known as active member. A member currently working in an IMRF qualified position and making contributions to IMRF. A member on an IMRF authorized leave or receiving IMRF disability benefits is also considered a participating member.

Past Service

A member can receive past service credit for service performed and earnings paid for a period prior to January 1 of the current year (January 1 through December 31).

Past service falls into three categories of authorization:

• Requires application by member only
  • Application for reinstatement of service
• Requires Governing Body approval or prior resolution on file:
  • Military leave provided by Illinois Pension Code
  • Retroactive service for Elected Officials
  • Application for prior service
  • IMRF Benefit Protection Leave
  • Out of state service credit authorization
• Requires approval of Authorized Agent
  • Military leave provided by Federal Government
  • Application for retroactive service
  • Omitted Service credit verification
  • General Assembly application for service
  • Certificate of Sheriff's Law Enforcement service

Pension

Also known as an annuity. Your IMRF pension is paid as long as you live and is increased by 3 percent of the original amount each year. You must have at least eight years of service credit and be age 55 to qualify for an Regular IMRF pension. You must have at least 20 years of SLEP service credit and be at least 50 years old to qualify for a SLEP pension.

Pension credits

Also known as service credit or "creditable service." Your total time as an IMRF member. Service is credited monthly while you are working, when on an IMRF authorized leave of absence, or receiving disability benefits.

Previously taxed contributions

If a member made contributions to IMRF before 1984, those contributions are previously taxed. That is, the money used to pay those contributions has already been subject to federal income tax—the member paid taxes on the money used to make them.
A portion of a member’s retirement benefit (and in some cases, a survivor’s benefit) is a return of the member’s own contributions. If those contributions are “previously taxed,” then that portion of the benefit payment is not subject to federal income tax. See also "tax deferred contributions."

Qualified position

Also known as a covered or participating position. An IMRF qualified position is one which will equal or exceed an employer's annual hourly standard. An employee is required to participate in IMRF if he or she works in an IMRF qualified position.

Reciprocal Act/Systems

Under the Reciprocal Act, service under IMRF and 12 other Illinois public pension funds may be considered together to determine eligibility for and the amount of retirement benefits.

Read more about the Reciprocal Act and IMRF.

Reinstatement

If a member has taken a refund of his or her IMRF contributions, he or she has forfeited all the earned service credit. Once certain conditions are met, a member may be able to repay (with interest) IMRF and reinstate those years of service credit.

Retiree Death Benefit

Also known as the lump sum death benefit. A $3,000 benefit, funded by IMRF employers, usually payable upon the death of a retired member (not a surviving spouse).

Seasonal employees

Seasonal employees of school districts and special education cooperatives automatically receive 12 months of service credit if they are employed for the entire year. Seasonal employees of other IMRF employers can receive 12 months of service credit if they are employed the entire year and the employer submits the appropriate information to IMRF.

Separation refund

A member can receive a separation refund--a return of all his/her member contributions (without interest) only if the member is no longer working for an IMRF employer. If a member takes a refund, the member forfeits all of the service credit earned. A refund may be reinstated (with interest) if the member meets certain requirements.

Service Credit

Service credit is a member's total time under IMRF, stated in years and fractions. Service is credited monthly while a member is working, receiving IMRF disability benefits or while he or she is on IMRF's Benefit Protection Leave.

A member earns one month of service credit for each month he or she:

• works in a qualified position and make a member contribution.
• worked in a qualified position prior to his or her employer joining IMRF.
• receives an IMRF disability benefit.
• is on an IMRF Benefit Protection Leave (limited to 12 months).
• purchases a month of past service credit.
  

A member cannot earn more than one month of service credit for any given calendar month. Read more about Service Credit.

SLEP

IMRF's Sheriff's Law Enforcement Personnel program. This plan is available to county sheriffs, deputy sheriffs, forest preserve rangers and airport police and certain police chiefs.

Social Security

With the exception of a small number of people, IMRF members participate in Social Security in addition to IMRF. Since you contributed to both plans, you are entitled to full retirement benefits from each. Your IMRF retirement benefits will never be reduced because you receive Social Security.

Social Security coverage for IMRF members is required, except for a limited number of firefighters and police officers, by an agreement between the State of Illinois and the Secretary of Health and Human Services under Section 218 of the Social Security Act.

IMRF members pay Social Security taxes on wages up to the wage base, and IMRF employers pay an equal amount. Your employer remits these taxes to the Internal Revenue Service.

Applications for benefits and questions about Social Security should be directed to the local Social Security district office or representative or call 1-800-772-1213.

Surviving Spouse Contributions

All IMRF members are required, by law, to contribute toward a surviving spouse pension. If a member retires does not have an eligible spouse (married to the member for at least one year before he/she terminated IMRF participation) when he/he retires, the member's surviving spouse contributions will be refunded, with interest.

Surviving Spouse Pension

A surviving spouse's monthly pension is usually one-half of the member's monthly pension.

T

Tax-deferred Payroll Deduction Program (TPDP)

IMRF members who are actively participating in IMRF may purchase optional Past Service credit, such as paying back a refund or purchasing military service, or they may purchase Early Retirement Incentive (ERI) service credit, on a tax-deferred basis through payroll deductions.

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Vesting

In order to qualify for an Regular Plan pension, a member needs eight or more years of service credit. A member must have at least 20 years of SLEP service credit and be at least 50 years old to qualify for a SLEP pension.

Members can meet this vesting requirement through service with a Reciprocal retirement system. See "Reciprocal Act."

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