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 SLEP Tier 2

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. For example:

Members participating this plan and who are age 55 or older may also purchase up to five years of additional service credit. Although age enhancement is no longer necessary, the additional service credit will result in a larger pension.

Be aware that purchasing service credit totaling more than 30 years (including unused and unpaid sick leave) will not positively impact your retirement benefit.

Pension Reductions Under SLEP Tier 2

The IMRF ERI does not alter the existing IMRF benefit formula. Under SLEP Tier 2, the current benefit formula calls for a pension reduction if you retire before age 55. This reduction will apply if your ERI enhanced age is less than 55.

If/when you retire under SLEP Tier 2 ERI:

• Your ERI enhanced age is between 50 and 55, your pension will be reduced by 1/2% for each month your ERI enhanced age is under age 55.
• Your ERI enhanced age is 55 or greater, the full amount of the pension is paid.

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:

• Submit the form through your Member Access account or
• Open the form, print, complete and mail the form to IMRF or you can FAX the form to IMRF at 630-706-4289

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. 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.
4. Member submits an "Application for Retirement Annuity" (through Member Access or paper form) to IMRF 30 days before termination date.
5. IMRF sends request for employer’s “Notice of Termination of IMRF Participation” two weeks before termination date provided on member’s retirement application.
6. 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.
7. IMRF begins paying an estimated ERI enhanced pension, typically within the first two weeks of the month following member’s final date of employment.
8. Employer submits member's final payroll report, typically within 1 or 2 months of member’s final date of employment.
9. After final payroll received, IMRF recalculates member's pension to determine final pension amount.
10. If a member is eligible for optional payment plan (actual age less than 62), IMRF notifies member of the optional payment plan.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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 SLEP Tier 2 Retirement Benefits page.

In the example below, we’ll be calculating the ERI costs of a member who has purchased 5 years of SLEP Tier 2 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%.

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

• Completing and submitting a "Pension Estimate Request" form
• Creating an ERI pension estimate online through Member Access if your employer currently has an open ERI program. Through your Member Access account, click on the Pension Calculator Quick Link, navigate to the Scenario tab, and adjust your ERI Service metrics under the Optional Service Enhancements section.
• Calling a Member Services Representative at 1-800-ASK-IMRF (1-800-275-4673). Be prepared to provide information requested on the Pension Estimate Request form, such as:
• Your final date of employment
• The percent of any expected future employer pay increases
• The total number of unused and unpaid sick days. If needed, you may want to contact your employer for these totals before calling IMRF.
• Payout information, including the amount and month it will be paid. A retirement payout, for example, may include payment for remaining accrued paid time off, bonuses, or severance. For your employer policy or payout information, contact your employer directly before calling IMRF.

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 both Regular and SLEP service credit the type of service credit you can purchase under the ERI will be determined by your current employer:

• If your current employer is SLEP and it adopts the ERI, you would purchase SLEP service credit.
• If your current employer is Regular, you would purchase Regular service credit

If you are participating under two IMRF employers, one SLEP and one Regular, the type of service credit purchased under the ERI will be determined by which employer adopts the ERI.

• If both employers adopt the program and of your 20 years of total service credit you have:
  • Less than 5 years of SLEP service credit: you would purchase Regular service credit (4.5% per year purchased x Regular ERI final rate of earnings*)
  • 5 or more years of SLEP service credit: you would purchase the number of years desired; your cost would be calculated as follows:
    • 7.5% per year purchased x SLEP ERI final rate of earnings plus*
    • 4.5% per year purchased x Regular ERI final rate of earnings*

    *If you do not have an eligible surviving spouse when you retire, the ERI contribution will be adjusted to:

    • 6.75% per year purchased x SLEP ERI final rate of earnings plus
    • 3.75% per year purchased x Regular ERI final rate of earnings

For information on how your Tier 2 SLEP pension is calculated and refunded, see the Retirement Benefits and Penson Options & Refunds at Retirement pages.