Buying Service Can Increase Your Pension
The amount of your IMRF pension is partially determined by the amount and type of service credit you have. If you have previously taken a refund of IMRF contributions or are eligible for other types of past service credit, you can buy back this service to increase the amount of your pension.
How much will it cost?
To find out how much it will cost you to purchase your past service, you must complete and return a past service application to IMRF. The type of application you fill out depends on the type of service you are eligible to purchase.
After you send in your application you will receive a payment schedule that shows your cost to purchase:
- All of your service credit
- One or more months at a time
Returning your application does not mean you have to buy this service. After you receive your payment schedule, you can review the cost and decide what you want to do.
When Can You Apply?
To apply to purchase past service:
- You must be actively participating in IMRF. (In some cases you may be able to purchase IMRF past service if you are participating in an Illinois reciprocal system.)
- You must return your application to IMRF before you stop working for your IMRF or reciprocal retirement system employer.
- For some types of service, you may need to participate in IMRF or a reciprocal system for at least two years following the date of your last refund.
Several Ways to Pay for Past Service
You can pay for your past service in a few different ways:
- Lump Sum Payment Plan - Purchase all or a portion of your service with one payment.
- Unit Payment Plan - Purchase one or more months at a time.
- Rollover -- you can directly rollover money you have in another qualified retirement plan(s).
Once you stop working for your IMRF or a reciprocal system employer, you may make only one payment to purchase your IMRF service credit.
Converting Existing Service to ECO
As a member of the Original ECO plan, you may convert any IMRF service credit to ECO service credit. The cost to convert existing service is as follows:
- 3% of earnings plus interest for each month of Regular service credit converted
- 1% to 3% (depending on the original contribution) of earnings plus interest for each month of SLEP service credit converted
Counties have the authority to require elected officials who convert Regular or SLEP service to ECO service to also pay the county’s additional costs.
The interest rate used is IMRF’s "prescribed" interest rate which varies over time. IMRF’s prescribed interest rate has been 7.50% since 1992. Interest is calculated from the date the service credit was earned to the date payment is received.
The ECO plan member determines how many months of service credit he or she would like to convert, buying back credit from the latest month to the earliest month of eligible service.
You would complete a "Conversion of Regular or SLEP Service to ECO Service" form to find the cost to convert this service.
Reinstated Service (Pay back a refund)
If you stopped working for your IMRF employer and took a refund of your contributions, you may redeposit those withdrawn contributions plus interest and reinstate your years of service credit.
To be eligible for reinstatement of refunded service credit you must meet both of these criteria:
- You must be currently participating in IMRF or another retirement system covered by the Illinois Retirement Systems Reciprocal Act.
- You must have completed at least two years of contributing service under IMRF or another retirement system covered by the Illinois Retirement Systems Reciprocal Act following the date of your last refund.
You would complete an "Application for Reinstatement of Service Credit" (paper form or through Member Access). See the instructions on this application to verify you meet the criteria to apply.
Occasionally, an employer incorrectly omits a member from IMRF coverage. In some cases, the employee is not enrolled in IMRF or the employer does not report a member’s wages to IMRF for a certain month(s). If you were not enrolled in IMRF and you should have been, or if your employer did not report your wages to IMRF, you can receive omitted service credit. To do so, your employer would have to correct the error by submitting the appropriate form and you would have pay the member contributions (interest charges may apply). Your employer must complete an "Omitted Service Credit Verification" form.
If you served in the U.S. military, you may be eligible to convert your military service to IMRF service. The most common type is military service earned before you joined IMRF.
You may qualify for military leave service credit under the Illinois Pension Code or under a federal law.
Under Federal Law
If you left your IMRF participating employment because you were drafted, enlisted for regular military service, or performed active duty in a reserve or national guard unit of the United States Armed Forces, you may receive military leave service credit if you:
- Return to IMRF participation with the same employer within the number of days required under this law following your discharge (The number of days required depends upon your circumstances.)
- Submit the appropriate documents to IMRF.
- Pay the appropriate member contributions plus interest.
Under the Illinois Pension Code
Military Service that interrupts IMRF participation but you return within 90 days of discharge
If you left your IMRF position to serve in the Armed Forces, you will be eligible to convert your military service if:
- The IMRF employer you return to submits a resolution to IMRF authorizing IMRF to grant service credit for military leave.
- You returned to IMRF participation within 90 days of your discharge. (You don’t have to return to the same employer or to the same position.)
- You submit the appropriate documents to IMRF.
You do not make any member contributions toward the military leave service credit. Such military service cannot be used toward a military pension.
Other Military Service You Can Purchase
If the military service occurred before you began participation in IMRF, or you did not return to IMRF participation within 90 days of discharge or the service is not covered by state or federal law, such as inactive or military reserves you will be eligible to purchase that service if:
- Your current IMRF employer adopts a resolution making its IMRF members eligible to purchase military service credit prior to IMRF participation. Employer adoption of the resolution is optional.
- Your employer's authorizing resolution is active on the date IMRF receives your application.
- You would pay member contributions, "normal" employer contributions, plus interest. ("Normal" employer contributions do not represent the entire employer cost.) Such military service can be used toward a military pension.
To process conversion of military service to IMRF service you must complete an "Application for Military Service Credit." You must include a copy of your release order or a copy of your military discharge when you return the form to IMRF.
The cost to purchase this type of military service depends upon many different factors. You can use IMRF's spreadsheet to help you estimate the cost of converting your military service:
- Spreadsheet to calculate member cost (updated 4/2012)
If you were already working for your employer when it joined IMRF, you received prior service credit (assuming your position qualified for IMRF participation).
You received five years of your prior service credit or 20% of your total prior service, whichever is less, at no cost. You can purchase any remaining prior service by paying the member contributions based on your current salary as of the date your employer joined IMRF, plus interest.
If you previously worked for an employer and you return to work for the same employer after it has joined IMRF, you may apply for prior service credit after returning and participating for two years with that employer.
You would complete an "Application for Prior Service Credit."
Benefit Protection Leave
If you are taking a leave of absence, your employer can provide you with IMRF service credit and IMRF disability and death benefit protection while you are on leave. You are allowed to establish a maximum of 12 months of benefit protection leave over your entire IMRF career.
Your employer’s governing body approves the purchase of Benefit Protection Leave service on a case-by-case basis. Your employer is not obligated to approve your request for a Benefit Protection Leave.
You would complete an "Application for Benefit Protection Leave."
Some IMRF members can purchase service credit for time they worked in an IMRF-covered position before the member was enrolled in IMRF. The most common examples are elected officials who held an office that qualified for IMRF but chose not to participate and city hospital employees who worked in an IMRF-covered position before they were enrolled in IMRF. They may purchase up to 50 months (over their lifetime) of retroactive service credit.
Elected officials may be eligible to purchase more than 50 months of retroactive service credit if their governing body adopted the appropriate resolution.
You would complete an "Application for Retroactive Service Credit."
If you have service credit earned through working for local governmental unit in another state, you may be able to transfer that service to IMRF.
To be eligible to transfer out of state service to IMRF:
- Your IMRF employer must agree to grant the service. Out-of-state service credit is authorized at the employer’s discretion on a case-by-case basis.
- You must have completed two or more years of contributing service under IMRF with the employer who has approved the purchase of this service credit.
You may receive a maximum of 120 months of out-of-state credit. Also, once you transfer the service, you give up your right to a pension from the out-of state system.
You would complete an "Out-of-State Credit Authorization" form.