TRS Explains Pension Calculations and New Supplemental Retirement Plan in Illinois

The Teachers' Retirement System (TRS) Board of Trustees in Illinois highlighted crucial updates regarding pension calculations and service credit during their recent meeting. A key focus was on how members can estimate their pensions, emphasizing that only TRS can calculate reciprocal service credits. Members are encouraged to reach out directly to TRS for personalized estimates, which consider various factors including service credit from employment and unused sick days.

The board clarified that the pension formula factor remains at 2.2%, a rate unchanged since 1998. This means that for every year of service, members receive 2.2% of their final average salary, which is determined by the highest consecutive years of earnings—four years for Tier 1 members and eight for Tier 2 members. Notably, Tier 2 members face a salary cap of $127,002.83, which limits contributions and pension calculations.

Additional discussions included the impact of district incentives on retirement benefits. Members can benefit significantly from salary increases during their final years of service, particularly if they receive raises above the standard rates. However, any increase over 20% in a single year will not enhance their pension calculations.

In a significant development, the board also announced the introduction of a supplemental retirement savings option, established by a law passed in 2018. This new plan, administered by Voya, aims to provide a uniform, low-cost savings option for all TRS members across Illinois.

These updates are vital for educators planning their retirement, as they navigate the complexities of pension calculations and new savings opportunities. Members are urged to stay informed and utilize TRS resources to maximize their retirement benefits.