Generally, the 6% rule will apply to all employees eligible to receive a retirement benefit from SURS and who retire under the SURS general formula. The following information is provided to assist unit administrators in understanding what employees are eligible to participate in SURS, how and when an employee becomes eligible for retirement, and when the general formula applies.
Who is eligible to participate in SURS?
Who is eligible to receive a SURS retirement benefit?
Who retires under the SURS General Formula?
How is the SURS Money Purchase Formula calculated?
Will the rule apply to all participants or only those retiring directly upon termination?
In determining eligibility for retirement, how is service credit determined?
How can additional service credit be established, and under what circumstances?
Who is eligible to participate in SURS?
SURS covers all faculty and support staff of Illinois public higher education including universities, colleges, Class I community colleges, scientific surveys, and other related agencies. Generally, employees are eligible to participate if their position requires continuous work for one academic term or four months, whichever is less, and employment is not temporary, intermittent or irregular. SURS participation ends on the date the employee retires or terminates employment with a SURS covered employer. Students, staff in J1 or F1 Visa status who have not yet established residency, and rehired retirees are not eligible to participate.
Who is eligible to receive a SURS retirement benefit?
Participants in SURS are eligible to retire at the following age and service levels:
- Age 55 with 8 or more years of service (Benefits are reduced for early retirement if the employee retires under the general formula between ages 55 and 60)
- Age 62 with 5 or more years of service
- Any age with 30 or more years of service
- At least 25 years of service in this system as a police officer or firefighter on or after the attainment of age 50
Who retires under the SURS General Formula?
Upon retirement, there are four formulas used for calculating a retirement annuity. All eligible formulas are used to calculate the participant's retirement annuity. The participant then receives the larger of the eligible amounts. These formulas include the following:
- General Formula
- Money Purchase Formula
- Minimum Annuity Formula
- Police Officer & Firefighter Formula (modified general)
Currently, approximately 2/3rds of University employees retiring from SURS retire under the money purchase formula. However, for employees hired or rehired after 7/1/2005, the money purchase formula is not available and therefore these employees will represent a broader base of potential liability in future years.
How is the SURS Money Purchase Formula calculated?
The Money Purchase Formula is based on the employee's normal retirement contributions and interest, and an imputed employer (State of Illinois) contribution. This total dollar amount is then divided by an age annuity conversion factor, determined by the SURS actuary. If this formula produces a greater benefit than the General Formula, it will be used in determining the retirement annuity.
Will the rule apply to all participants or only those retiring directly upon termination?
The rule applies to any employee, current or terminated, who applies for retirement benefits through SURS and who retires under the general formula from the SURS Traditional or Portable plans. Therefore, it is possible for a liability to be created for any employee with five or more years of service in an employee class eligible for SURS participation. To qualify for SURS, years of service may be continuous or non-continuous, or established on the basis of prior service credit or reciprocity.
A liability can be created in each of the following circumstances:
- An employee terminates and immediately begins receiving a retirement benefit (immediate annuitant).
- An employee terminates who is not currently eligible to retire based on age and/or service criteria, but who will meet necessary criteria at a future date (deferred annuitant). Public Acts 094-0004 and 094-1057 exclude earnings increases paid to a participant at a time when the participant is 10 or more years from retirement eligibility.
- An employee terminates who is eligible to retire, but postpones retirement until a future date (deferred annuitant).
In each of these cases, the rule will be applied at the time the employee applies for retirement benefits.
NOTE: Under each of these scenarios, it is likely the majority of current employees will retire under the money purchase formula as this calculation currently yields a greater monthly benefit for most employees. However, this option is only available to employees hired prior to 7/1/2005. Any employee hired after that date will be limited to retirement under general formula if participating in the Traditional/Portable benefit plans.
In determining eligibility for retirement, how is service credit determined?
Service credit is earned based on the length of employment with a SURS employer in a SURS eligible job class. For employees meeting these criteria, service is earned for both full and part-time employment regardless of the percentage of employment.
For employees on leave with partial pay, service credit is earned providing the employee meets "return to work" requirements. For employees on leave without pay, service credit is earned providing the employee makes employee contributions on salary forfeited during the leave and meets "return to work" requirements.
How can additional service credit be established, and under what circumstances?
Additional service credit can be established under the following circumstances:
- Application of unused and unpaid sick leave balances providing the employee's retirement annuity begins within 60 days of termination. Limit is one year credit.
- Prior service with another SURS covered employer.
- Military leave, up to five years.
- Military service credit, if a SURS participant prior to 9/1/74.
- Other public employment, under certain conditions.
- Reciprocity with other Illinois public retirement systems.