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STATE UNIVERSITIES RETIREMENT SYSTEM

Executive Director: William E. Mabe

Chairperson:  Lindsay Anderson

Learn the Facts about Pension Reform

Learn the Facts about Pension Reform

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Posted: 
March 24, 2014
Pension Reform on Capitol

On Dec. 5, 2013, Gov. Quinn signed SB 1, the comprehen­sive pension reform bill, into law (Public Act 98-599). The bill's components, mostly based on an earlier con­ference committee report, represent compromise lan­guage hashed-out by legislative leaders. Both chambers approved the bill almost simultaneously on Dec. 3, 2013. (The House voted 62-53 and the Senate voted 30-24.)

The main elements of the reform package include:

  • Reduction of the Automatic Annual Increase for current and future Tier 1 retirees
  • Automatic Annual Increase deferments for future Tier 1 retirees
  • Capping pensionable earnings for Tier 1 participants
  • Delaying the retirement age for current Tier 1 state workers under age 45
  • Eliminating the use of sick and vacation days for service credit or pensionable earnings for future participants
  • Changes to the Effective Rate of Interest
  • Reduction of employee contributions (1%) for Tier 1 participants
  • Funding guarantees
  • The option for 5% of present Tier 1 participants to join a new defined-contribution plan

The law is being challenged in court, but unless a stay is granted by the courts, it will go into effect on June 1, 2014,

SURS continues to analyze the 327-page law to determine its full impact on members, employers and the System in general. We have prepared a synopsis of the bill, a Webinar Presentation and a list of Frequently Asked Questions (FAQs) to help members make informed decisions – see below. SURS staff is also preparing Special Edition Advocate newsletters outlining how pension re­form provisions affect our different member groups. The editions will target annuitants/survivors, Tier 1 members, Tier 2 members, and SMP members.

In addition, SURS Outreach Department is hosting on-campus pre­sentations and webinars, as well as working with SUAA on annuitant seminars. To sign up for the Pension Reform webinars click on the link below. To find out if SURS is making an on-campus presentation at your school, contact your HR Department.

Click on the following for more detailed information:

Click here to sign up for a SURS Pension Reform Informational Webinar

Click here to read SURS synopsis of the legislation.

Click here to view the Pension Reform on-campus presentation.

Click here to view the SURS Pension Reform webinar video.

Pension Reform FAQs

Pension Reform Money Purchase Fact Sheet

Click here to view the Retirement Plan Comparison Chart

Click here to view a list of Legal Challenges to PA 98-599

Click here to read the entire bill.

Click here to view the House roll call.

Click here to view the Senate roll call

The written representations herein constitute interim guidance as to the current interpretive positions of the State Universities Retirement System with respect to plan changes under P.A. 98-599.  Interpretive and implementation efforts are ongoing and may be subject to modification, expansion, or revocation under future guidance, rulemaking, opinions of the Attorney General, court opinions, or legislation relating to the applicable provisions of the newly enacted law. This material does not constitute legal or tax advice as to individual circumstances.  Please seek the advice of a competent attorney, accountant, or qualified financial advisor if you wish to know the specific benefit or tax impact of P.A. 98-599 on your personal circumstances.