Early Retirement Incentive

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:

• Your employer must adopt the program.
• You must be participating in IMRF on the effective date of your employer's ERI program. You would still be considered participating in IMRF if you are on layoff status with right of re-employment, on IMRF Benefit Protection Leave of Absence, or receiving IMRF disability benefits for less than two years.
• You must be at least age 50 and have at least 20 years of IMRF service credit by your date of retirement. The 20 years of service credit can only include service with IMRF employers. It cannot include service credit with another retirement system, reciprocal system, or unused, unpaid sick leave.
• Your date of retirement must be the first day of the month following your date of termination.
• Your date of retirement must be no later than 12 months from the effective date of your employer's ERI program.
• You cannot have previously received a pension using IMRF service credit.

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

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).

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. Employer determines retiring members' termination dates. Employer is to give members 30 days' notice of the date. Members may waive the 30-day notice.
4. Member submits an "Application for IMRF Pension” form to IMRF 30 days before termination date.
5. Employer submits a " Termination of IMRF Participation" form for member.
6. IMRF calculates the member's cost for the ERI and sends invoice to the member and employer. IMRF will begin deducting 24 equal installments from member’s pension toward ERI cost.
7. IMRF begins paying an estimated ERI enhanced pension, typically within eight weeks following member's final date of employment. The member is notified of their Benefit options. If they are eligible for a refund of contributions (surviving spouse, SLEP, Voluntary Additional Contributions), members can use their refunds to pay their ERI cost, if desired.
8. After final payroll is received, IMRF recalculates member's pension to determine final pension amount and ERI cost.

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.

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.

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

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 would be required to repay IMRF for all pension payments received less the amount you paid
• When you again retire, your pension will be recalculated without the enhancements.

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 a surviving spouse pension is payable, the remainder of the 24 equal installments will be deducted from the surviving spouse pension
• If a surviving spouse pension is not payable, the balance will be deducted from the lump sum death benefit payment.

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.