Earning an IMRF Pension
Your IMRF pension gives you life-long income protection. You earn service credit toward a Tier 1 Regular Plan IMRF pension by:
- Working for an IMRF employer in an IMRF-eligible position
- Contributing 4.5% of your salary toward your future pension
You will continue to earn service credit if you are on IMRF Disability or on an IMRF Benefit Protection Leave.
You must have at least eight years of service credit to receive a future IMRF pension. This eight-year requirement can include reciprocal service. Once you have at least eight years of service credit, you are guaranteed an IMRF pension for life. The more service credit you earn, the larger your pension will be.
Receiving an IMRF Pension
To begin receiving an IMRF Tier 1 Regular Plan pension, you:
- Must have at least eight years of service credit (can include reciprocal retirement system service credit).
- Cannot be working in any position which qualifies for IMRF participation.
- Must be at least age 55.
Although you can retire as early as age 55, age 60 is your full retirement age. Your pension may be reduced if you retire before age 60, depending upon the amount of service credit you have.
|Amount Your Pension May Be Reduced|
|If you retire...||And you have...||Your pension will be reduced by...|
|Between age 55 and 60||At least 8 years but less than 30 years of service credit||1/4% for each month you are under age 60|
|Between age 55 and 60||At least 30 but less than 35 years of service credit||The lesser of:
|At age 55 or later||At least 35 years of service credit||No reduction. You will receive your full, unreduced pension|
|At age 60 or later||At least 8 years of service credit||No reduction. You will receive your full, unreduced pension|
Unused, unpaid sick days converted to service credit cannot be used to meet the eight-year requirement for a Regular Tier 1 pension or 35-year requirement for an unreduced pension under age 60.
How Much Will Your Pension Be?
The amount of your pension is based on your earnings and your service credit. To calculate the amount of your pension, IMRF uses a formula that includes:
- Your Final Rate of Earnings (FRE). Your FRE is your highest average earnings over a certain period of time.
- The total amount of your service credit
The formula to calculate a Tier I Regular Plan pension is:
- 1-2/3% of your FRE for each of the first 15 years of service credit, plus
- 2% of your FRE for each additional year of service credit over 15 years.
Your total pension at retirement cannot exceed 75% of your final rate of earnings.
Final Rate of Earnings (FRE)
Your highest average earnings will most likely come later in your IMRF career. If this is the case, the FRE used to calculate your pension will be your highest total earnings during any 48 consecutive months within your last 10 years of IMRF service, divided by 48. Usually, this is the average of the last 48 months of service.
Alternative FRE formula: Lifetime FRE
If you have higher earnings at the beginning of your career, an alternate FRE is used. The Lifetime FRE is an average of all your earnings reported by all your IMRF employer(s) over your entire IMRF career.
When you retire, IMRF will calculate your FRE using both methods and will use the FRE that provides you with the larger pension.
Service credit is your total time under IMRF, stated in years and months.
Create Pension Estimates in Member Access
Use the Pension Calculator in your Member Access account to create your own pension estimates. You can customize your estimates using a variety of different situations, such as different ages at retirement, different amounts of future service credit you think you might earn, etc.
Annual Pension Increases
Under Tier 1, your pension is increased by 3% of the original amount on January 1 every year after you retire.
Your first annual increase is based upon the number of months you are retired in your first year. If your pension effective date is January 1, your first year increase will also be 3%. Otherwise, your first year increase will be less than 3%.
|First Year Increase Calculation Example|
|This example uses a pension of $800.00 per month with an effective date of July 1, 2014|
|The full 3% annual increase on 12 months of pension payments is $24.00||$800.00 x 3% = $24|
|$24.00 divided by 12 months = an increase of $2.00 per month|
|However, the pension was in effect for only 6 months in the first year of retirement (July through December), so the first annual increase is applied to only 6 months of pension payments:|
|6 months = 1/2 of 12 months||Full increase of $24.00 x 1/2 = $12.00|
|$12.00 = an increase of $2.00 per month for the first six months of retirement|
|The annual increase for January 1, 2015:||$12.00|
|The annual increase for January 1, 2016, and every year after:||$24.00|
|Annual increases are always based on the original pension amount and are not compounded|
Supplemental Benefit Payment ("13th payment")
After you have retired and have received pension payments for at least 12 months in a row, you will be eligible for a supplemental benefit payment every July. When you first retire, you must have retired on or before June 30 to receive a 13th payment the next year. For example:
|If you retire…||You will receive your first 13th Payment in…|
|On or before June 30, 2015||July of 2016|
|After June 30, 2015||July of 2017
You will receive this supplemental payment approximately one week after your usual July pension payment. The amount varies every year, but it will always be less than your monthly pension amount.