Pension Options & Refunds at Retirement

IMRF wants to start your pension payments as soon as possible after you retire, so your initial payment amounts are estimated and based on:

• The current wage and service credit information we have at the time of your retirement.
• IMRF’s Standard pension formula.

Once we receive final wage information from your employer, we calculate your final pension amount. 

If you are retiring reciprocally, you must apply for retirement with each of your reciprocal systems at the same time. We cannot approve your IMRF pension until we have confirmation from all of your reciprocal systems that you have filed an application with them. 

Pension Options

At retirement, you are always eligible for the Standard pension option. If you are eligible for any additional pension payment or retirement refund options (in addition to the Standard pension option):

• After your initial claim is approved, we will send you a "Preliminary Benefit Statement – Pension" letter
• You will select your final payment choice(s) and return your "Preliminary Benefit Statement – Pension" letter to IMRF.

Standard Pension

Under the standard pension you receive a payment every month after you retire for the rest of your life. Annual increases begin whichever date below is later:

• The January following the year your 60th birthday
• After you receive one year of benefit payments

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

• 3% 
• One-half of the increase in the Consumer Price Index (urban) for the preceding year of the original amount. If the CPI decreases or is zero, no increase is paid.

Optional Pension

If you retire under age 62, you are eligible to choose an optional pension. The optional pension is a lifetime pension where you receive a larger pension until age 62 but a reduced pension once you reach age 62.

Often the decrease in your pension once you turn 62 results in a much smaller monthly pension amount. You should think carefully before you choose this option.

Your Preliminary Benefit Statement - Pension letter will give you details about your monthly pension amounts and annual increases under the optional pension choice.

Reversionary Annuity

With the Reversionary Annuity option, you choose to receive a smaller IMRF pension so you can provide a lifetime pension for someone else upon your death.

For more information about the Reversionary Annuity, click here.

Retirement Refund Options

Voluntary Additional Contributions

If you participate in the Voluntary Additional Contribution (VAC) program and leave your VAC on deposit with IMRF until retirement, you may choose to receive your VAC as either:

• A lump sum of your VAC balance. Your VAC balance includes any interest earned.
• A monthly annuity if your VAC balance is $4,500 or more:
• Once you are eligible for annual increases on your pension benefit, you will also receive an annual increase on your VAC annuity.
• The increase is calculated on the original annuity amount, and is the lower of 3% or one-half of the increase in the Consumer Price Index (urban) for the preceding year. If the CPI decreases or is zero, no increase is paid.

Surviving Spouse Contributions

If you do not have an eligible spouse when you retire (married or in a civil union for at least one year before you stopped participating in IMRF, and still married to this spouse on your pension effective date), IMRF will refund your surviving spouse contributions, with interest. You can either:

• Choose a one-time lump sum payment
• Choose a lifetime monthly annuity, if the lump sum converted to an annuity would equal at least $10.00 a month.

SLEP or ECO Service Contributions

If you have SLEP and/or ECO service credit but do not qualify for a pension under one or both of these plans at retirement, these contributions will be refunded to you with interest. You can either:

• Choose a one-time lump sum payment
• Choose a lifetime monthly annuity, if the lump sum converted to an annuity would equal at least $10.00 a month

Additional Information About Converting Lump Sum Refunds into Annuities:

• Each additional annuity will be paid for your lifetime.
• Retirement refund annuities do not have a supplemental benefit ("13th Payment").
• The original lump sum amount is the guaranteed minimum payout. There is no maximum payout.
• If you die before receiving annuity payments that equal your contributions, the balance will be paid to your beneficiary(ies).
• If you have a surviving spouse and SLEP and/or ECO contribution refunds, you must choose either a lump sum or annuity for both. You cannot convert one refund to an annuity but not the other. 
• You must convert the entire amount of your refund.
• If you terminated participation before August 14, 1998, and do not have reciprocal credit after this date, you cannot convert your lump sum to an annuity.