If the member retired under ERI, refer to 5.20 C. 16. Return to Work for an IMRF Employer Prohibited.
Once a member begins receiving an IMRF pension, he or she must contact IMRF if the member returns to employment or compensated elected office with a unit of government that participates in IMRF. This applies even if the member is considering independent contract work with a unit of government.
Performing work for any unit of government that participates in IMRF after a member is receiving an IMRF pension can affect his or her pension status. Failure to inform IMRF of a return to work that qualifies for IMRF participation could result in significant financial repercussions to the member.
If the return to work results in a situation where the member is again eligible for IMRF participation, not only would the member be responsible for any benefit prepayments, but he or she would be required to pay IMRF any missing member contributions that should have been made from the start of his or her employment.
For terminations on or after January 1, 2021, members may not return to work of any kind with an IMRF employer within sixty days of the member's retirement date. If a member returns to work with an IMRF employer within sixty days of retirement (beginning an IMRF retirement annuity), the member will be required to return any annuity payments received.
Members must not prearrange to work for an IMRF employer. For terminations on or after January 1, 2021, members may also not prearrange work within the sixty days following retirement. This prohibition applies to prearrangement of employment, as well as work as an independent contractor, or an employee of an entity which contracts with the employer.
A member must contact IMRF to discuss his or her individual situation and how the pension may be affected.
Public Act 99-745 gives IMRF the authority to assess employers penalties for return-to-work violations, up to half of the annuity paid to the member during the return-to-work period. This may happen if the retiree is not properly enrolled upon returning to work.
As a general rule, an IMRF pension is suspended if a retiree returns to work for any IMRF employer in a position which qualifies for IMRF coverage (see 3.20A General Requirements for IMRF Coverage (600-Hour Standard) and 3.65A General Requirements for IMRF Coverage (600 or 1,000 Hour Standard). The pension is suspended and the retiree must again participate in IMRF (see the Exception to the Rule, below). Once the member retires again, the pension is reinstated, plus a supplemental amount for the additional service. Note that as of January 1, 2021, if a member returns to employment within sixty days of retirement, the member will be required to pay to IMRF any retirement annuity payments received, regardless of whether they are working in a qualifying position.
If the retired member previously participated with a 600-hour employer and returns to that same employer in a position exceeding 600 hours (even if the employer has changed to a 1,000-hour standard), the retiree’s pension will be suspended and the retiree must again participate in IMRF.
If the retired member received his or her refund of surviving spouse or SLEP contributions as additional annuity payments, those payments will not stop when the retiree returns to work in a position that qualifies for IMRF participation.
As of January 1, 2021, retirees who begin employment with an IMRF participating employer should not be immediately enrolled, even if they are hired into a position which is normally expected to meet the hourly standard. Instead, employers must enroll the retiree in IMRF once he or she actually works 600 or 1,000 hours (depending on the hourly standard) in a 12-month period. The 12-month periods shall be counted as of the first employment date following retirement with a particular IMRF employer. These periods restart on the anniversary of the employment date. If a retiree wishes to immediately enroll in IMRF if they are hired into a position normally expected to meet the applicable hourly standard, the retiree must send a written request to IMRF to suspend the pension.
See Exhibit 5S, Public Act 98-0389 Return-to-Work Rules Chart.
The actual hours of work expected for the position are counted. This is true even if a position requires payment for a minimum number of hours even though not actually worked. For example, if a contract requires payment for a minimum of four hours per day, but the particular assignment requires three hours, it is only the three hours that is counted toward the hours expected.
If the retiree is elected to a public office, the pension may not be suspended, even if the elected position qualifies for IMRF coverage. The pension is suspended only if:
the pension is based on any service credit earned while participating in IMRF in that elected office; or,
the retiree elects to participate in IMRF while holding that elected office.:
There is no relationship between the Social Security retirement test on earnings and IMRF coverage rules. The Social Security retirement test is based on dollar earnings, whereas the IMRF test is based solely on the hours that a position requires. The fact that a person can earn up to a certain dollar amount and continue to receive Social Security benefits does not mean that IMRF can continue to pay pension benefits.
If the position qualifies for IMRF coverage, IMRF benefits are suspended, even though Social Security may continue to pay its benefits.
Most retirees will continue to receive the IMRF pension if the position does not qualify for IMRF coverage. Exception: If the retiree worked for that same employer before it adopted the 1000-hour standard, the retiree must be reenrolled if the position requires 600 or more hours. Note that as of January 1, 2021, if a member returns to employment within sixty days of retirement, the member will be required to pay to IMRF any retirement annuity payments received, regardless of whether they are working in a qualifying position.
A Regular Tier 1 retiree may continue to receive an IMRF pension while working for any private enterprise, or any federal, state, or local governmental agency not covered by IMRF, or while self-employed, regardless of the hours worked or earnings received.
A Regular Tier 2 retiree may continue to receive an IMRF pension while working for any private enterprise, or any federal agency, or while self-employed, regardless of the hours worked or earnings received. However, the pension will be suspended if the retiree is employed full time in a position covered by any of the Illinois Pension Code reciprocal retirement systems.
Note: A recent change to the law applies different rules to members who first participate in IMRF or a reciprocal retirement system on or after January 1, 2012; does not apply to SLEP members.
This change provides that if a retired member performs services for his or her former IMRF employer on a contractual basis, the member’s pension will be suspended during that contractual service. The retired member must inform IMRF of the contract and must inform the employer that he/she is receiving an IMRF pension. If the retired member does not inform IMRF and his/her employer, the retired member will be guilty of a Class A misdemeanor and required to pay a $1,000 fine. Once the contractual work ends, the retired member’s pension will resume. See Exhibit 5R for more details.
A member who retired under the Reciprocal Act will have his or her pension suspended if the member returns to a participating position with IMRF or the other system(s) under which he or she retired.
See Exhibit 5R Return to Work and Effect on Tier 1 and Tier 2 Members for another explanation of the process.