Understanding Your SURS Benefits Tier I & Tier II - Important 2/24/2019
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2/24/2019
Understanding Your SURS Benefits
Tier I & Tier II
General Combo 02.01.19
Important
This presentation is for SURS members
who are in Tier I & II
2
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About SURS
• State Universities Retirement System
•
•
•
• 401(a) Qualified Plan
• Non-ERISA
•
• Governed by Illinois Compiled Statutes
3
SURS Members Are
• Public higher education employees
• Employees that have worked for at least
4 months at a SURS-covered employer
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SURS-Covered Employers
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Buyout of Pension Benefits for Vested Inactives
(Total Lump Sum Buyout)
• In lieu of any pension benefit
• Irrevocable election
• Timeframe: Implement by June 30, 2019* through June 30, 2021
• Eligible person:
• Terminated service/inactive
• Vested for retirement (cannot include reciprocal service for vesting)
• Has not received any retirement annuity from SURS
• Has not elected to take the reduced and delayed AAI buyout under 15-185.6
• Is not a participant in the SMP
• Buyout: Lump sum amount to be equal to 60% of the present value of the
pension benefit (includes applicable survivor benefits and anticipated annual
increases.
• Calculation will require full retirement claim calculation and then applying
actuarial factors
• Members who return to work will have future benefits calculated only on new
service. Accelerated buyout payments may never be repaid. Original Tier status
will remain. Original plan election will remain.
• Member retains eligibility for insurance*
• (currently State members only – no survivors or CIP – pending legislative review to correct omission)
*Anticipated implementation date – assuming no unforeseen setbacks
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Accelerated Payment for Reduction in AAI
For Retirement/Survivor
• Irrevocable election
• Timeframe: Implement by June 30, 2019* through June 30, 2021
• Eligible person:
• Tier I member
• Has submitted application for retirement annuity
• Meets the age and service requirements for vesting status
• Has not received a retirement annuity
• Has not applied for the Accelerated Lump Sum in lieu of annuity buyout under 15-
158.2
• Members electing this option receive monthly annuity (no affect on annuity calculation),
plus an accelerated lump sum payment in exchange for a reduced and delayed AAI.
• Payment: 70% of the difference in the present value of Tier I member AAI (3%
compounded beginning Jan 1 after retirement) and a AAI of 1.5% (non-compounding)
beginning January 1 following age 67 or January 1 following the first anniversary of the
retirement date, whichever is later. The AAI for survivor benefit is also delayed. Present
value will be calculated using actuarial tables.
• Accelerated payment cannot be repaid
*Anticipated implementation date – assuming no unforeseen setbacks
What We Do
• Retirement
• Disability
• Disability Retirement
• Refund
• Death
• Survivor
• Service Credit Purchases
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One Piece of the Puzzle
• Think of your SURS benefit, or any retirement benefit for
that matter, as just one piece to your retirement puzzle
• After retirement, an estimated 75-80% of pre- retirement
income is needed to maintain pre-retirement lifestyle
• Social Security benefits could be affected by the Windfall
Elimination Provision or the Government Pension Offset
• Personal savings is a key component to retirement security
• Take advantage of payroll deducted and tax deferred
403(b) or 457 savings plans offered by your employer
9
Need to Know
Participation date:
•
•
•
•
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Benefit Plans
Traditional
Portable
SMP
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Contributions
Traditional Portable SMP
Plan Type
Your
Contribution
Your
Contribution
Breakdown
Employer
Contribution
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Earnings Contribution Limits
Tier I – All plans
•
•
•
•
Tier II – Traditional & Portable Plans
•
•
Tier II – SMP Plan
•
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Earnings Limits – Tier I
Traditional Portable SMP
Maximum
Pensionable
•
Earnings •
Or
IRS Limit •
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Earnings Limits – Tier II
Traditional Portable SMP
• • •
Maximum • •
Pensionable • •
•
Earnings •
Or • •
IRS Limit
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Retirement Eligibility
Vested
(Based on participation date)
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Service Credit
• Earned service
• Unused, unpaid sick leave
• Purchases
• Reciprocal service
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Earned Service Credit
• Service year is September 1-August 31
Days/Months Worked Service Earned
• Only 1 year of service is allowed per service year
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Part-time Employee
• Employer verifies all academic contracts at the
time of retirement
•
•
• Employer reports the part-time percentage to
SURS on payrolls
•
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Sick Leave Service Credit
• Unused/unpaid sick leave reported to
SURS by employer upon termination of
employment
• Must retire within 60 days of termination
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Service Credit Purchases
Types of purchases
•
•
•
•
•
•
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Repayment of Refund
If you previously participated in SURS and
accepted a separation refund, you may
reinstate that service credit if:
•
•
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Prior Service
• Employment with any SURS-covered
employer prior to the date you began SURS
participation (certification date)
•
•
•
• Employment must have been at least 50%
•
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Other Public Employment (OPE)
• Prior employment with a public school,
college, or university in the U.S.
• Must be 100%
• Must contribute to SURS at least 5 years
following the employment
• OPE may not be used to meet SURS
minimum vesting requirements
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Military
• Active duty military service
that occurred prior to your
certification date can be
purchased
•
•
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Purchases
General Information
• All purchase types must be verified
•
• Not required to make the purchase
• Payments must be made prior to retirement date
• SMP members must be actively employed in the
SURS system
•
• Cost increases each month by interest
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Purchases
Methods of Payment
1.Check
2.Rollover
3.Installment Plan
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Reciprocal Service
• SURS has reciprocity with other Illinois
public retirement systems in determining
your eligibility for and amount of
retirement benefits
• Minimum requirements for retirement
benefit:
•
•
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Reciprocal Systems
CEABF
CTPF
FPEABF
IMRF
JRS/GARS*
LABF
MEABF
MWRD
PEABF
SRS
SURS
TRS
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Retirement Calculations
Traditional & Portable
• General Formula
• Money Purchase
•
• Minimum & Guarantee (PA89-616)
• Police & Firefighter
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General Formula
Traditional & Portable
1. 2.2% * x years of service = percentage
2. Percentage x final average earnings
3. Less age reduction, if applicable
Note:
80% maximum benefit = 36.364 years of service
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Final Average Earnings (FAE)
Tier I
• Average of:
•
•
•
•
• SURS uses the higher of these calculations,
if applicable
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Final Average Earnings (FAE)
Tier II
• Average of:
•
•
•
•
• SURS uses the higher of these calculations,
if applicable
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General Formula
Example
• Age at retirement = 60 years
• 28 years service credit
• Final Average Earnings= $48,350
Calculation of Benefit:
28 yrs x 2.2% = 61.6%
Annual Benefit: 61.6% x $48,350 = $29,783
Monthly Benefit: $29,783 ÷ 12 = $2,481
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Age Reduction
Example – Tier I
If less than 30 years of service credit, annuity
reduced by ½ of 1% for each month under age 60.
Age 60 $2,481 No reduction
Age 59 $2,332 6% reduction
Age 58 $2,183 12% reduction
Age 57-1/2 $2,108 15% reduction
Age 56 $1,885 24% reduction
Age 55 $1,736 30% reduction
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Age Reduction
Example – Tier II
If under age 67, annuity reduced by ½ of 1% for
each month under age 67.
Age 67 $2,481 No reduction
Age 66 $2,332 6% reduction
Age 65 $2,183 12% reduction
Age 64-1/2 $2,108 15% reduction
Age 63 $1,885 24% reduction
Age 62 $1,736 30% reduction
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Money Purchase Calculation
Traditional and Portable – Tier I only
(Money Purchase calculation not applicable if certification date is on or after 7/1/05)
1. Retirement contributions and interest
2. Plus employer (State of Illinois) share
3. Divided by actuarial factor
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Money Purchase Calculation
Facts
(Money Purchase calculation not applicable if certification date is on or after 7/1/05)
• State actuary requires annual review of the economic assumptions
(State actuary was designated in 2012)
• PA99-232 effective 08/03/15 requires an experience study be
conducted at least every three years.
• Both the economic assumption review and the experience study can
result in change to Money Purchase factors
• Current factors effective 1/4/16 – 7/1/19
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New Money Purchase Factors
Effective July 2, 2019
• New Money Purchase factors effective 7/2/19
• Recent Experience study conducted in fall of 2017
• Members who retire on or after 7/2/19 will see a reduction in
benefit of approximately 5-6%
• Active members can recover the reduction by delaying retirement
for 6-7 months. Inactive members can recover the reduction by
delaying retirement for approximately 9 months.
• Money Purchase factors do not affect:
• General Formula calculation
• Members in the Self-Managed Plan
• Members who certified after 7/1/05 (including Tier II
members)
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Money Purchase Calculation
Example – Tier I only
(Money Purchase formula not applicable if certification date is on or after 7/1/05)
Money Purchase Calculation: MP Factors
Effective
Member Age 60 07/02/2019
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Calculation Results
• General Formula $2,481
• Money Purchase $2,720
• SURS calculates all applicable formulas
and pays highest benefit to member
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Calculation Recap
Traditional and Portable
General Formula Calculation
Money Purchase Calculation
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Determining a Retirement Date
• Termination Date
• Retirement Date
• Annuity Begin Date
Note: Any insurance benefits you are eligible for as a retiree
will not begin until your annuity begin date.
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Retirement Date
Examples
Example 1:
Example 2:
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Self Managed Plan
TIAA
Fidelity
Principal*
http://www.surs.org/fund-overview
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Two Types of SMP Investors
Which type are you
•
•
•
•
•
•
•
•
•
•
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SMP Distributions
• Based on value of member’s account on
retirement date
• Contact provider(s) for estimate
• Member chooses form of distribution
•
•
•
*If qualified for insurance, not eligible for insurance benefits
with this option
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SMP Types of Annuity
Single-Life Annuity
•
• •
•
•
Joint & Survivor Annuity
•
•
•
•
•
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SMP Annuity
Example
Projected Account Values
Type of Annuity Age $100,000 $150,000 $200,000
Single-Life
50% Joint & Survivor
100% Joint &
Survivor
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Refund
Traditional Portable SMP
Less than • • •
5 years of • •
service •
• •
•
5 or more • • •
years of • •
service •
•
•
•
Note: Taking a refund will forfeit any/all retirement benefits, including insurance
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Disability Benefits
• Disability
• Disability Retirement Allowance (DRA)
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Monthly Survivor Benefits
Tier I
Traditional Portable SMP
•
• • •
Qualified
Survivors
• • •
•
•
Eligibility • • •
•
Benefit
• •
Amount •
Automatic
Annual • • •
Increases
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Monthly Survivor Benefits
Tier II
Traditional Portable SMP
•
• • •
Qualified
Survivors
• • •
•
•
Eligibility • • •
•
Benefit
• •
Amount •
Automatic
Annual • • •
Increases
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Death Benefit
One-Time Lump Sum
Traditional Portable SMP
Beneficiaries • • •
•
•
Pre- • • •
Retirement
Post- • •
Retirement
•
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Insurance Eligibility
at Retirement
• College Insurance Program (CIP)
• State Group Health Plan
•
•
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Enrollment Process
• Complete and submit insurance participation election form
to SURS
• Member registration will be required and members will
need their CMS-issued Employee ID Number
• My Benefits is responsible for:
– Initial enrollment online or via telephone
– Provide insurance coverage and plan information
• SURS is responsible for:
– Determining insurance eligibility
– Collecting premiums
– Explaining and initiating the enrollment process
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How to Contact
MyBenefits
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Insurance Program Rates
College Insurance Program (CIP)
• Rates are determined by the
Department of Central Management
Services (CMS)
• For more information contact
MyBenefits
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Insurance Program Rates
State Group Health Plan
• State pays 5% of total health insurance premium
per full active year of service
• Members actively employed on July 7, 1997
•
• Rates are determined by the Department of
Central Management Services (CMS)
• For more information contact MyBenefits
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Medicare
• SURS cannot provide information regarding
Medicare eligibility or the benefits provided
• For information about the CIP or State
insurance and Medicare, please contact:
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Medicare Advantage Plans
CIP and State MAPD
• Total Retiree Advantage Illinois (TRAIL)
• You and all of your covered dependents must be eligible
and enrolled in Medicare A & B
• You continue to pay Medicare premiums
• Enrollment
enrollment is in the Fall
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Member’s Responsibility
• Anticipate, plan, decide
• Utilize retirement checklist
• Obtain, complete, and submit retirement
application to SURS at least 60 days prior to
retirement date
• Notify employer of retirement
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Employer’s Responsibility
• Process employee’s final payments
• Submit Termination Report to SURS
• Verify academic contracts
• Verify part-time service
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SURS’ Responsibility
• Request and gather information
• Accurately calculate Traditional
and Portable claims
• Notify provider(s) for SMP
claims
• Ensure member receives every
dollar the law allows
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Preliminary Estimated Payment
(PEP)
Traditional & Portable
• Completed retirement application
• 80-90% based on what we know
• Makeup payment sent when claim finalized
• PEP may be for 120-180 days
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Employment After Retirement
• SURS-covered employment
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Employment After Retirement
• Non SURS-covered employment
• Employer Restrictions
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Social Security
• Windfall Elimination Provision
• Government Pension Offset
Contact Social Security for more information:
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SURS Counseling Appointments
• Eligibility
• Type of Appointment
• Process
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Retirement Estimate Information
• Estimates calculated are only as good as the
information you provide
• Critical information
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SURS Website
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Member Home Page
123 American Way
Any City, IL xxxxxx
(217)555-5555 (Home)
emailaddress@server.com
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How to Contact SURS
SURS 800-275-7877
1901 Fox Drive 217-378-8800
Champaign, IL 61820 217-378-9800
www.surs.org
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Disclaimer
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