Illinois SERS Tier 2 (Coordinated)

This page documents how FinZot models the Illinois SERS Tier 2 (Coordinated) defined benefit pension plan.

Who this plan covers: General members of State Employees’ Retirement System of Illinois, coordinated variant, on or after January 1, 2011: first became a member of SERS or a reciprocal system (other than JRS or GARS).

Employee Contributions

Employee contributions are the portion of salary that the employee pays into the pension fund.

Field	Value
Contribution Rate	4% of salary
Tax Treatment	Pre-tax (reduces taxable income)

Vesting & Retirement Eligibility

Vesting

Vesting determines when an employee has earned the right to receive pension benefits. The following formula must evaluate to TRUE for the employee to be vested:

service_credits >= 10

Retirement Eligibility

Retirement eligibility determines when an employee can begin receiving pension payouts. The following formula must evaluate to TRUE:

service_credits >= 10 AND commencement_age >= 62

Formula Variables:

• service_credits: Years of credited service
• commencement_age: Age when pension payments commence

Benefit Calculation

The annual pension benefit is calculated as:

Annual Benefit = Final Compensation × Benefit Factor × Service Credits

Final Compensation

Final compensation is the salary figure used in the benefit calculation, typically an average of the employee’s highest-earning years.

Field	Value
Method	Highest Consecutive Years
Years Averaged	8

Benefit Factor

The benefit factor is a percentage multiplier that typically varies based on retirement age. Higher ages generally yield higher factors.

CASE
  WHEN service_credits < 10 OR commencement_age < 62 THEN 0.0
  WHEN commencement_age >= 67 THEN MIN(0.0167, 0.75 / service_credits)
  ELSE MIN(0.0167, 0.75 / service_credits) *(1 - 0.005 *(804 - commencement_age_months))
END

Formula Variables:

• commencement_age: Age when pension payments commence
• service_credits: Years of credited service

Cost-of-Living Adjustment (COLA)

The COLA formula determines how pension benefits grow over time after retirement to keep pace with inflation.

IF(years_since_retirement >= 2 AND age >= 67, current_pension_benefit + initial_pension_benefit * MIN(0.03, MAX(0.0, inflation_rate / 2)), current_pension_benefit)

Formula Variables:

• initial_pension_benefit: The annual benefit amount at retirement
• years_since_retirement: Number of years since retirement began

Tax Treatment

Pension payouts from this plan are taxable as ordinary income.

Social Security Coverage

Illinois SERS Tier 2 (Coordinated) members generally pay into Social Security alongside the pension, so a job with this plan is treated as covered and earns Social Security credits normally.

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Note: FinZot’s pension estimates are for planning purposes only and may not reflect all plan provisions. For official benefit estimates, contact your plan administrator.