State Universities Retirement System
All new eligible employees (i.e., those with appointments of 4 months or more) are required to become participants in the State Universities Retirement System (SURS) beginning the first day of employment. (Foreign nationals with F-1 or J-1 visas are exempt from participation.) Employee contributions of 8% are deducted from all gross earnings and include the following:
- Normal retirement contribution of 6.5%;
- Contribution of 0.5% to cover automatic annual increases;
- Contribution of 1.0% for survivor insurance benefits.
Contributions to SURS are picked up by salary reduction, thereby deferring income tax on this portion of the employee's earnings until retirement or withdrawal from the system. The current year's includable income, as reported on the employee's W-2 tax statement, will reflect this reduction.
Contributions earn interest while held by SURS (rate changes from time to time). If an employee separates from university employment and applies for a lump sum refund of contributions, the interest earned will be reduced to 4.5%. Employer contributions are not included in the refund amount.
The following general descriptions are highlights only. The SURS Member Guide, which may be obtained from Employee Benefits, describes in detail all aspects of SURS programs.
SURS Service Credit
Service credit is an important factor in determining eligibility for and the amount of SURS benefits. Service credit is given for periods during which contributions are made or while an employee is receiving disability or workers' compensation benefits.
In addition, it may be possible to purchase service credit. This is true for prior employment (half-time or more, including student work and graduate assistantships) at an Illinois employer covered by SURS and/or for employment with a previous public employer. Employees are encouraged to discuss the possibility of purchasing service credit with counselors at Employee Benefits or at SURS.
SURS grants service credit based upon the period September 1 through August 31. Service credit is computed as follows:
|15-31 calendar days||= 1 month|
|1 or 2 months||= 0.25 year|
|3 through 5 months||= 0.50 year|
|6 through 7 months||= 0.75 year|
|8 through 12 months||= 1.00 year|
Based on the above, an employee will be granted the following amount of service credit for the final period of employment prior to retirement if termination occurs at the close of business on the date shown:
|September 30 or October 31||.25 year|
|November 30, December 31 or January||.50 year|
|February 28 or March 31||.75 year|
|April 30 through August 31||1.00 year|
Retirement Age and Service Requirements
An employee may retire at any age without reduction for early retirement if the employee has 35 or more years of service credit. This includes credit that has been purchased and credit for unused and unpaid sick leave granted at termination.
An employee with 8 or more years of Illinois service credit may retire between ages 55 to 60 with reduction, or at age 60 without reduction. Other public employment service credit will not be counted toward the required 8 years. An employee with more than 5 but less than 8 years of service credit may retire no earlier than age 62.
SURS Retirement Annuity
SURS, using several formulae to calculate retirement annuities, selects the one which produces the highest benefit for the annuitant. The two most common methods are the General Formula and the Money Purchase Formula, described below.
- General Formula. The annuity is calculated by multiplying two factors together: the average monthly salary times a percentage, which is based on the number of years of service credit. SURS calculates the average monthly salary in two different ways, choosing the calculation producing the higher average monthly salary for the employee. The more common of these is calculated as follows: for those on academic-year appointments, the monthly salary is based on earnings during the high 4 consecutive academic years, including summer session; for those on fiscal-year appointments, the calculation is based on the salary earned during the preceding 48 months. In both cases the calculation includes overtime pay and up to 56 work days of accrued vacation.
The following schedule shows the percent to be used for calculation for an employee aged 60 or above or at any age with 35 or more years of service credit.
Years of Service
Percent for Each Year Each 10-Year Period
Cumulative Total at End of Each Period
First 10 Years 1.67 16.7 16.70 (10 Years) Second 10 1.90 19.0 35.70 (20 Years) Third 10 Years 2.10 21.0 56.70 (30 Years) Fourth 10 years 2.30 23.0 79.70 (40 Years) Over 40 Years 2.30 80.00 (40+ Years)
The general formula reduces the annuity if retirement begins before age 60, unless the employee has 35 or more years of service credit or retires from disability after exhausting all disability benefits. The annuity is reduced 1/2% for each month the employee is under the age of 60.
It is possible for an employee to avoid this reduction by making a one time lump sum payment to SURS under the Early Retirement Option. The Early Retirement Option does not buy additional years of service credit. It simply provides a way for the employee to avoid a reduction in the annuity.
- Money Purchase Formula. The annuity is calculated by dividing the total of the employee's contributions plus accumulated interest and the state's matching contributions plus interest by a factor based on the employee's age at retirement. There is no additional reduction for retirement between the ages 55 and 60 in this formula since the factor is based on age. The money purchase formula will usually provide the best annuity for an employee who retires with a relatively low number of years of service credit.
Additional information about retirement can be obtained by contacting Employee Benefits or the State Universities Retirement System. Staff at Employee Benefits offer small group seminars on retirement issues throughout the year. Counselors from SURS are also available for seminars and pre-retirement counseling at on-campus and off-campus locations periodically throughout the year.
Application for Retirement
Employees are encouraged to apply for retirement through Employee Benefits. A counselor will assist with the entire application and separation process and provide information about continuation of insurance and other benefits. It is recommended that the employee discuss retirement with a SURS counselor at least a year in advance of termination.
A retiring employee may elect to receive a reduced retirement annuity in order to provide a spouse or other dependent with a monthly income in addition to that which would be payable under the survivor insurance program. The Election of Reversionary Annuity must be filed at least one year prior to the date of retirement.
SURS Disability Benefits
In order to qualify for disability benefits based upon illness, the employee must have established 2 years of service credit. There is no minimum service requirement for disability based upon an accident. Disability benefits are provided through SURS. After 60 calendar days of disability or the termination of salary or sick leave payments (whichever is later) the employee is entitled to 50% of
- Basic compensation as of the date the disability occurred, or
- Average earnings during the 24 months immediately preceding disability, whichever is greater.
Benefits may continue until the total amount paid equals 50% of the employee's total earnings for the entire period of participation in the plan. Following expiration of this benefit, a totally and permanently disabled employee may apply for a Disability Retirement Allowance of 35% of salary at the time the disability occurred. If the Disability Retirement Allowance is approved, the employee must separate from university employment. If the Disability Retirement Allowance is not approved or is not applicable, the employee must return to work or, if unable or unwilling to do so, the employee must resign or, if eligible, retire.
Death and Survivor Insurance Benefits for Active Employees
Death benefits under SURS consist of a refund of 7/8 of the employee's normal retirement contributions and interest. These benefits are paid to the employee's beneficiaries listed on the most recent Beneficiary Designation form on file with SURS.
Survivor insurance benefits under SURS are separate from death benefits and are paid only to an eligible surviving spouse, an eligible dependent parent, unmarried children under age 18, or disabled children age 18 or over who meet certain conditions. The benefit is based on the number of eligible survivors and the employee's average earnings. However, the total monthly survivor's annuity will be at least 1/2 of the employee's earned retirement annuity. (Spouses who are themselves annuitants are not disqualified, thereby, from receiving survivor annuity benefits in addition to their own retirement annuities.) A spouse receiving a monthly survivor insurance benefit may also qualify to receive health and dental insurance coverage.
Additional Retirement Benefits
Employees are eligible for a number of benefits and services following retirement. Health and dental insurance for eligible retirees is provided under the state-paid plan. Retirees may, if eligible, elect to maintain optional health and dental insurance for their dependents. Retirees and annuitants receive $5000 of state-paid life insurance. Optional life insurance for both themselves and for their dependents is also available. The retirement system must be authorized to make the appropriate withholding for these insurance programs.
For further details regarding the State Universities Retirement System, consult the most recent edition of the SURS Member Guide, contact Employee Benefits, or write the State Universities Retirement System, P.O. Box 2710, 1901 Fox Drive, Champaign, IL 61825-2710.
1. Police officers contribute 9.5% of earnings. The additional 1.5% is for their normal retirement contribution.
2. This provision will expire on September 1, 1997, if the General Assembly does not act to extend the benefit.