Retirement Benefits

for Tier 2 Regular Plan Members
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Earning an IMRF Pension

Your IMRF pension gives you life-long income protection. You earn service credit toward a Tier 2 Regular Plan IMRF pension by:

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 10 years of service credit to receive a future IMRF pension. This 10-year requirement can include reciprocal service. Once you have at least 10 years of service credit, you are guaranteed an IMRF pension for life. The more service credit you earn, the larger your pension will be.

Wage Caps

Under Tier 2, a member's wages are capped at $112,408.42 in 2017. Your employer does not report any wages above the cap, and you do not pay any contributions on wages above the cap. The wage cap is also applied when IMRF calculates your benefits.

The wage cap increases each year by the lesser of 3%, or one-half of the increase in the Consumer Price Index-Urban (CPI-U) for the preceding September. If the CPI-U is zero, the wage cap is not increased.

Receiving an IMRF Pension

To begin receiving an IMRF Tier 2 Regular Plan pension, you:

Although you can retire as early as age 62, age 67 is your full retirement age. Your pension may be reduced if you retire before age 67, 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 62 and 67 At least 10 years but less than 30 years of service credit 1/2% for each month you are under age 67
Between age 62 and 67 At least 30 but less than 35 years of service credit The lesser of:
  • 1/2% for each month you are under age 67 or
  • 1/2% for each month of service credit less than 35 years
At age 62 or later At least 35 years of service credit No reduction. You will receive your full, unreduced pension
At age 67 or later At least 10 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 10-year requirement for a Regular Tier 2 pension or 35-year requirement for an unreduced pension under age 67.

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:

The formula to calculate a Tier 2 Regular Plan pension is:

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 96 consecutive months within your last 10 years of IMRF service, divided by 96. Usually, this is the average of the last 96 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 (up to the wage cap) 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

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

Annual increases begin whichever January first below is later:

Each January 1 increase will be calculated on your original benefit amount, and will be the lower of:

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.