Early Retirement Incentive

for Original ECO Plan Members
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IMRF’s Early Retirement Incentive (ERI) is an employer option that allows eligible members to purchase up to five years of service credit at retirement. For each month and/or year of service credit a member purchases, the member’s retirement age is enhanced accordingly.

Eligible Members

To be eligible to retire under the IMRF ERI:

ERI Member Benefits Under Original ECO

If you are eligible for an ERI, you may purchase from one month up to five years of additional service credit. For each month of service established, your age at retirement will be enhanced accordingly.

Example

Your actual retirement age 51 years 5 months Your actual service 22 years 3 months
You purchase of ERI 3 years 7 months Purchased ERI Service 3 years 7 months
Your ERI retirement age 55 years 0 months Your ERI service 25 years 10 months

However, age 55 is the minimum age to retire under the Original ECO plan. If you retire under ERI with 20 years of ECO service, your age will be enhanced for benefit calculation purposes, but the pension amount will not be increased (because it is already at the maximum amount).

Notice of Intent to Retire Under ERI

If your employer adopts the ERI and you intend to retire under it, you would notify IMRF of your intention to do by submitting a "Notice of Intent to Retire Under Employer’s IMRF Early Retirement Incentive" form.

You can:

IMRF must receive your "Notice of Intent" no later than when you file your "Application for Retirement" form. We recommend you file your "Notice of Intent" form as soon as your employer adopts the ERI and you decide to retire under it. If you were to pass away before you retired, as long as IMRF has your "Notice of Intent" on file your eligible spouse would have the option to choose a death benefit under the enhanced ERI benefit.

IMRF will notify your employer that you submitted your "Notice of Intent". As a general rule, your "Notice of Intent" form is not a letter of resignation. However, some employers may treat a "Notice of Intent" form as a letter of resignation. If you have any questions about this, talk with your employer. When IMRF receives your "Notice of Intent" form to retire under your employer's ERI, you are not guaranteed that you are eligible for a pension or for the ERI.

Although you may file a "Notice of Intent" form, you are not required to apply for an IMRF pension. When IMRF receives your "Notice of Intent", you will receive a letter of acknowledgement and the publication, "Can I Afford to Retire?". Your employer will receive a courtesy copy of the acknowledgment letter.

Steps to Retire with ERI

  1. Employer passes the resolution adopting the IMRF ERI.
  2. Employer informs its IMRF members of the adoption of the ERI and of the program's effective date.
  3. Members intending to retire under the ERI notify IMRF of their intent by completing a "Member's Notice of Intent to Retire Under the IMRF ERI" form (paper form or through Member Access). The Notice of Intent does not guarantee a member's eligibility for the ERI or for an IMRF pension.
  4. IMRF sends a letter to the member and employer after receiving the member’s Notice of Intent. Member letter includes a copy of “Can I Afford to Retire?” publication.
  5. Employer determines retiring members' termination dates. Employer is to give members 30 days' notice of the date. Members may waive the 30-day notice. However, if a member requests to retire before July 1st so he or she will be eligible for the 13th payment the following year, the employer must allow the member to do so.
  6. Member submits an "Application for Retirement Annuity" (through Member Access or paper form) to IMRF 30 days before termination date.
  7. IMRF sends request for employer’s “Notice of Termination of IMRF Participation” two weeks before termination date provided on member’s retirement application.
  8. Employer submits a "Notice of Termination of IMRF Participation" for member no later than the final day of employment. The employer also reports any unused and unpaid sick days on this notice.
  9. IMRF begins paying an estimated ERI enhanced pension, typically within the first two weeks of the month following member’s final date of employment.
  10. Employer submits member's final payroll report, typically within 1 or 2 months of member’s final date of employment.
  11. After final payroll received, IMRF recalculates member's pension to determine final pension amount.
  12. If a member is eligible for optional payment plan (actual age less than 62), IMRF notifies member of the optional payment plan.
  13. Simultaneously, if member is eligible for a refund of contributions (surviving spouse, SLEP, Voluntary Additional), IMRF notifies member of refund. Member can use refund to pay ERI costs, if desired, and can call 1-800-ASK-IMRF (1-800-275-4673) after receiving the member cost letter (detailed in step 15) for additional instructions on this process.
  14. IMRF calculates the member's cost for the ERI and sends an invoice to employer. Employer is given thirty days to respond, after which the invoice is sent to the member.
  15. Employer returns invoice with the net payment for the member's sick, vacation, and/or personal time. If net payment greater than member's ERI cost, employer forwards balance of net payment to member.
  16. Thirty days after the employer invoice is sent, IMRF sends an invoice to the member indicating ERI service purchased, payments received, and balance remaining. Member can return invoice with any payments toward his or her cost of the ERI.
  17. If any balance remains for member's ERI cost 30 days after the member invoice is sent, IMRF begins deducting 24 equal installments (without interest) from the member's pension.
    • Note that, depending on IMRF scheduling considerations, it may take longer than thirty days before deductions begin. For example, if your member invoice is dated April 15th, and a balance remains to be paid, the deductions will most likely not begin until June 1st due to the deduction instruction cutoff.

Calculating the Cost of Your ERI Service

For each year of service credit you purchase, you will pay 7.5% of your highest 12 consecutive months of salary within the Final Rate of Earnings (FRE) period. For more information on how your FRE is determined, refer to the Original ECO Plan Retirement Benefits page.

In the example below, we’ll be calculating the ERI costs of a member who has purchased 5 years of Original ECO Plan service credit.

Example - 5 Years of Service
The highest 12 months of salary $50,000
x (times) Original ECO Plan member contribution x (times) 7.5%*
Total cost for one year of service $3,750
x (times) 5 years x (times)5
Member ERI cost for five years of service $18,750

To determine the cost for a portion of a year of service, you need to divide the number of months by 12 to get the multiplier you need for your calculation. For example, to calculate the cost of 3 years and 7 months of service, follow the equation below.

Example - 3 Years and 7 Months of Service
The highest 12 months of salary $50,000
x (times) Original ECO Plan member contribution x (times) 7.5%*
Total cost for one year of service $3,750
x (times) 3 years 7 months
(7 months = 7/12 years or .583)
x (times)3.583
Member ERI cost for five years of service $13,436.25

*If you do not have an eligible surviving spouse when you retire, your contribution is reduced to 6.75%.

You can also request an ERI pension estimate which will include your ERI costs by

Paying ERI Member Costs

Lump Sum Payments from Employer

If you receive any lump sum payments for vacation, sick leave and/or personal leave, your employer must forward the net payment (gross amount less federal and state taxes, IMRF member contributions, etc.) to IMRF. The net payment will be applied toward your ERI cost.

If the net payment for sick, vacation, and/or personal time is greater than your ERI cost, your employer would forward to IMRF an amount required to pay your cost. Your employer would forward to you any remaining balance of the net payment.

If the net payment is less than your ERI cost, you will be billed separately by IMRF. Please do not send any payment to IMRF until you receive an invoice from IMRF.

This payment must be sent to IMRF. As long as the payment for vacation, sick leave and/or personal leave is due to your ERI retirement, it is payable to IMRF.

Refunds from IMRF

If you are entitled to a refund from IMRF for surviving spouse, SLEP, or Voluntary Additional Contributions, you may request that the refund be applied toward your ERI cost. If the refund is greater than your ERI cost, IMRF will refund the balance to you.

See the Death and Survivor Benefits and Voluntary Additional Contributions pages for more information.

Rollover from IRA, 457 Plan or 403b Plan

You may roll over funds from a traditional IRA, a conduit IRA, 457 plan, or 403b plan to pay your ERI cost. A conduit IRA is an IRA where you have rolled over only funds from a qualified pension plan (like IMRF); you have not added any other money to it. Funds from a Roth IRA cannot be used to pay for the ERI.

24 Equal Installments

Your contributions for the ERI can be paid in a single sum or deducted from your pension in 24 equal monthly installments. Interest is not charged during the 24 months. The 24-month payment period is fixed by law and cannot be extended.

Additional Member Payments

Once deductions for the 24 equal monthly installments begin, you can forward additional payments or pay off the balance of your ERI cost at any time.

Returning to Work After ERI

If you retire under ERI, you can never work for any IMRF employer, even in a position that does not participate in IMRF or as an independent contractor, without facing financial consequences. If you return to work for any IMRF employer in any position, you will lose the ERI enhancements and pay IMRF the difference between the ERI enhanced pension and the pension you would have received without the ERI (less the amount you paid for the ERI).

Exception: you can hold an elected position and continue to receive your ERI pension if you choose to not participate in IMRF and your pension is not based on any service earned in that position during any term of office.

If you would not have been entitled to a pension without an ERI,

You may retire under ERI only once. For example, you retire under ERI and return to work for an IMRF employer. If that employer adopted ERI, you would not be eligible to retire under it.

Death Benefits After ERI

If a surviving spouse pension is payable, your qualified spouse would receive 66-2/3% of your enhanced ERI pension.

If you die and a balance for your ERI cost remains, the remainder will be deducted from the IMRF death benefit:

If you paid more for the ERI than the amount paid out to you and an eligible surviving spouse, then the amount not paid out will be paid as a benefit to your beneficiary or estate.

Participation in Multiple Plans

If you have any combination of service credit, e.g., SLEP and Regular, or Regular and ECO, the type of service credit you can purchase under the ERI will be determined by the plan you currently participate in.

If your current employer adopts ERI and you participate in ECO, you would purchase ECO service credit (7.5% per year purchased x Regular ERI final rate of earnings).

If you are participating under two IMRF employers, you will purchase ECO service credit, regardless which employer adopts ERI.

For information on how your Original ECO pension is calculated and refunded, see the Retirement Benefits and Pension Options & Refunds at Retirement pages.