IMRF Retirement Benefits: Regular Tier 2 Plan members

The information on this page applies to participants of IMRF’s Regular Tier 2 Plan only.

Table of contents:

• About IMRF Retirement Benefits
• How do you qualify for a Regular IMRF pension?
• To apply for your pension
• Your pension formula
• Reaching maximum benefit
• Pension increases
• Supplemental benefit payment (13th payment)
• If you return to work
  

About IMRF Retirement Benefits under the Regular Tier 2 Plan

IMRF provides for retirement benefits. Once you are vested (under the IMRF Regular Tier 2 plan, you are vested when you reach 10 years of service credit) and eligible to retire, the pension is paid as long as you live, and is increased each January 1 by the lower of 3% or one-half of the increase in the Consumer Price Index (urban) for the preceding year of the original amount. If the CPI decreases or is zero, no increase is paid.

Wage caps

Under Tier 2, a member's wages are capped at $106,800 in 2011 ($108,882.60 in 2012). You do not pay any contributions on wages above the cap. The wage cap is also applied when IMRF calculates your benefits.

The wage cap increases each year by the lesser of 3%, or 1/2 of the increase in the Consumer Price Index (urban) for the preceeding September.

Early Retirement Incentive

The Early Retirement Incentive (ERI) may be available for some IMRF members. For Tier 2 members, you must be at least 57 years old, have 20 years of service credit, and your employer must offer an ERI.

Pension payments

IMRF pensions are effective on the first day of the month after employment terminates and are paid in advance on the first day of every month. If you retire at any time during a month, you receive full service credit for that month, and your pension will be effective on the first day of the next month.

You will receive your IMRF benefit payment by Direct Deposit. Direct Deposit ensures the security of the your monthly pension by having the benefit payment electronically deposited into your checking, savings, or brokerage account.

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How do you qualify for a Regular Tier 2 Plan Pension?

• You must have at least 10 years of service credit (can include reciprocal service).
• You must not be working in any position which qualifies for IMRF coverage. An elected official holding an office that qualifies for IMRF participation can remain in the office and receive an IMRF pension if:
  
• he/she did not choose to participate in IMRF when first elected and
• his/her pension is not based on any service earned in that elected position during any term of office.
  
• You must be at least age 62.
  • If you retire between age 62 and 67 and have less than 30 years of service credit, your pension will be reduced by 1/2% for each month you are under age 67.
  • If you retire between age 62 and 67and have at least 30 but less than 35 years of service credit, your pension will be reduced by the lesser of
    • 1/2% for each month you are under age 67
      or
    • 1/2% for each month of service credit less than 35 years.
  • If you retire at age 67 or older or if you have 35 years of service credit, your pension will not be reduced.
  
  Please note: unused, unpaid sick days converted to service credit cannot be used to meet the 10-year requirement for an IMRF Regular Plan Tier 2 pension or to meet the 35-year requirement for an unreduced pension under age 67.

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To apply for your pension

To apply for your pension, complete IMRF Form 5.20, "Application for IMRF Pension," and submit it to IMRF one month before your desired retirement date.

IMRF pensions are effective on the first day of the month after you terminate employment. IMRF pays pensions in advance on the first day of every month. For example, your August pension will be paid to you on August 1. If you retire at any time during a month, you receive full service credit for that month, and your pension will be effective on the first day of the next month. If you retire on September 15, you will receive service credit for the month of September, and your pension will be effective on October 1. You will receive your first pension payment within 30 days of that date.

Please note: IMRF can "back date" a pension only 12 months.

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Pension formula under Regular Tier 2 Plan

Your IMRF pension is 1-2/3% of your final rate of earnings for each of the first 15 years of service credit, plus 2% of your final rate of earnings for each year of service credit in excess of 15 years. However, your total pension at retirement cannot exceed 75% of your final rate of earnings.

Final rate of earnings

Under the Regular Tier 2 plan, your final rate of earnings (FRE) is your highest total earnings during any 96 consecutive months within your last 10 years of IMRF service divided by 96. Usually, this is the average
of the last 96 months of service.

Wage caps

Under Tier 2, a member's wages are capped at $106,800 (in 2011). Your employer does not report any wages above the cap, and you do not pay any contributions on wages above the cap. The wage cap is also applied when IMRF calculates your benefits.

The wage cap increases each year by the lesser of 3%, or 1/2 of the increase in the Consumer Price Index (urban) for the preceeding September.

Service credit

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

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Reaching Maximum IMRF Pension Benefit

IMRF Regular Tier 2 Plan Members will receive the maximum retirement benefit after earning 40 years of Regular Tier 2 Plan service credit. If you have 40 or more years of service credit, you can elect to stop making IMRF contributions. If you stop contributing, you will still have the same death and disability benefit protecting as contributing members.

For more information, complete IMRF Form 6.24, "Election to Cease Making IMRF Contributions"

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Pension Payment Options for IMRF Regular Plan Tier 2 members

When you retire, your pension payments are always based on IMRF’s Standard plan. However, you may be eligible for another option:

Special Needs Annuity option

Under the Special Needs Annuity option (also known as a "reversionary annuity"), you choose to to receive a smaller IMRF pension so that upon your death you can provide your spouse with a pension in addition to the IMRF surviving spouse pension or some other individual with a monthly pension. (For example, you can provide a pension for your your current spouse if he or she is not eligible for an IMRF surviving spouse pension, or provide a pension for a child, an ex-spouse, or any other loved one.)

Read more about the Special Needs Annuity for IMRF Tier 2 members.

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Pension increases under the Regular Tier 2 Plan

Your IMRF pension is paid as long as you live. If you retire under the Regular Tier 2 plan, annual increases begin once you reach age 67, or after you receive one year of benefit payments, whichever is later. It is then increased each January 1 by the lower of 3% or one-half of the increase in the Consumer Price Index (urban) for the preceding year of the original amount. If the CPI decreases or is zero, no increase is paid.

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