SERS outlines pension reduction and level income options for retirees

In a recent webinar hosted by the State Employees Retirement System (SERS) of Illinois, crucial information was shared regarding pension applications and options available to state employees nearing retirement. The session, held on May 15, 2025, aimed to clarify the complexities surrounding pension reductions and Social Security offsets, ensuring that participants left with a better understanding of their choices.

As the meeting unfolded, attendees learned about the implications of electing to participate in the pension removal option. By opting in, retirees would face a 3.825% reduction in their pension, but in return, their spouses would receive 50% of the retirement annuity upon their passing. Conversely, those who chose not to participate would still see their pensions reduced, with Social Security offsets potentially applied based on individual circumstances.

A key takeaway from the discussion was the importance of understanding who might not benefit from the Social Security offset. If neither the retiree nor their spouse has contributed to Social Security, or if the spouse's benefits exceed those of the state worker, the offset would not apply. This nuanced information is vital for members to consider as they plan for their financial futures.

The webinar also delved into the "level income option," which allows members who have contributed to both SERS and Social Security to receive a steady income throughout retirement. This option is particularly beneficial for those retiring before they qualify for Social Security benefits. Under this plan, SERS pays an estimated amount based on the retiree's future Social Security benefits until they reach the eligible age, at which point the pension is adjusted accordingly.

To utilize the level income option, participants were advised to obtain a Personal Earnings Benefit Estimate Statement (PEAP) from Social Security. This document is essential for calculating the level income estimate and must be signed and dated to ensure accuracy. The SERS website provides resources, including a link to the Social Security benefit estimate calculator, guiding members through the process of obtaining their estimates.

As the session concluded, attendees were reminded of the importance of timely applications for Social Security benefits, emphasizing that proper planning can lead to a more secure financial future. The insights shared during the webinar not only clarified the intricacies of pension applications but also empowered state employees to make informed decisions as they approach retirement.