a. Calculation of a SLEP pension (Tier 1 and Tier 2)
A Tier 1 SLEP plan pension is based on the member’s length of SLEP service and final rate of earnings. The final rate of earnings is the highest total earnings during any 48 consecutive months within the last 10 years of service divided by 48.
A Tier 2 SLEP plan pension is based on the member’s length of SLEP service and final rate of earnings. The final rate of earnings is the highest total earnings under the wage cap during any 96 consecutive months within the last 10 years of service divided by 96.
Those 48 or 96 months (as appropriate) can include the month after the member’s last day of work, if the member receives his or her final paycheck in that month. In that case, the member could still receive a SLEP pension for that month.
SLEP Tier 1 members are subject to an earnings limitation on their FRE period. For Tier 1 members, the earnings in each of the last three months of the FRE period are limited to no more than a 25% increase over the highest of the other 45 months in the final rate period. This limitation should be applied before determining which months will be used for the FRE period. This limitation does not apply to SLEP Tier 2 members.
b. SLEP pension calculation illustration
For SLEP pensions for members who terminate service on or after July 1, 2004, the formula for computing a SLEP monthly pension is 2.50% of the final rate of earnings for each year of SLEP service credit. The total pension at retirement cannot exceed 80 percent (75% for SLEP Tier 2) of the final rate of earnings.
For example:
20 years of service 50% of final rate of earnings
25 years of service 62.5% of final rate of earnings
30 years of service 75% of final rate of earnings
The total pension at retirement cannot exceed 80% of the member’s final rate of earnings (reached after earning 32 years of SLEP service) for SLEP Tier 1. SLEP Tier 2 maximum pension is 75% of the member’s final rate of earnings (after 30 years of service).
Example:
A SLEP Tier 1 member who retires at age 50 with 27 years of service and average monthly earnings of $5,000 will receive a pension of $3,375 a month. The pension calculation is as follows:
27 years of service: 2.5% x 27 = 67.5% x $5,000 = $3,375
Total monthly pension $3,375
Note: SLEP Tier 2 pensions are reduced ½% for each month a member is under age 55 at retirement.
If a member with 20 or more years of SLEP service has other periods of non-SLEP service under IMRF, the member will receive a pension under the SLEP formula plus a pension under the Regular plan formula for the non-SLEP service.
For SLEP pensions for members who terminated service before July 1, 2004, the formula for computing a SLEP pension is 50% of the final rate of earnings for the first 20 years of service credit, plus 2% of the final rate of earnings for each year of service credit over 20 and under 30 years, plus 1% of the final rate of earnings for each year of service credit over 30 years. The total pension at retirement cannot exceed 75 percent of the final rate of earnings.