Q: Based upon possible changes in pension benefits that may result from decisions made at the June 2011 SURS meeting, what would be the impact to excess contributions for those of us university staff who have already reached 80% and have been paying into excess contributions for several years? For example, will SURS withhold a substantial portion of those excess contributions instead of making a lump sum payout at my date of retirement?
A: You are
correct that at the June 2011 SURS Meeting, SURS will determine the effective
date for changes to Money Purchase. According to SURS, the money purchase factors used to determine
monthly annuity benefits will change in 2012 based upon a recent experience
study conducted by SURS actuaries. The new factors will result in a lower
monthly benefit payment for those retiring after the 2012 effective date. For
additional information, please see the SURS news release at: http://www.surs.org/shepherd.surs?flk=News&shp=78&aid=152
Q: I have heard people, like me, who under the money purchase formula have excess contributions may lose those either by state legislatures changing the law to disallow any refund of excess contributions or by changing the actuarial tables. I understand that if actuarial tables of employees' lifespan are revised to assume an employee could virtually live forever, that is a way to wipe out any advantage from the money purchase formula. Is it true that those of us, who were hired before 2005, could essentially loose the money purchase formula and any excess contributions refund?
A: At the June
2011 SURS Meeting, SURS will determine the effective date for changes to Money
Purchase. According to SURS, the
money purchase factors used to determine monthly annuity benefits will change
in 2012 based upon a recent experience study conducted by SURS actuaries. The
new factors will result in a lower monthly benefit payment for those retiring
after the 2012 effective date. For additional information, please see the SURS
news release at: http://www.surs.org/shepherd.surs?flk=News&shp=78&aid=152.
The SURS estimates that the revisions to the
money purchase annuity factors will result in an average 7-8% reduction in
calculated benefits under that formula. Inquiries regarding excess contribution
estimates for an individual participant should be forwarded to the SURS.
Q: I am eligible to retire now at the age of 55. I had planned to continue to work 2 more years. Will the retirement age be increased for current employees and if so, would I then no longer be eligible to retire until I reach that age?
A: To date, no bills have been passed that would affect currently available benefits. While there has been much discussion about the need to address pension funding issues, few plan-specific details are available. Employees are encouraged to monitor the information on the budget and pension website so that they can make decisions with concrete information. A decision to retire is a personal one involving many factors for a given employee. Additional background information concerning the Illinois Constitution and Pension related provisions for State employees can be accessed at HERE).
Q: Legally, how much time do I need to tell NIU HRM that I wish to retire? Depending upon legislation movement, can I call/write and say I retire tomorrow? Of course, this would only be considered if a bill gets passed that would greatly diminish my benefits.
A: SURS recommends that individuals who would like to retire file their application with them 60 to 90 days prior to their retirement date. Human Resource policies recommend that salaried employees provide their supervisor with no less than one months notice. Timely notification is essential to assure timely calculation of available benefit payouts and the SURS annuity. It is recommended that employees with specific questions regarding their plan and investments contact SURS at 1-800-ASK-SURS.
Q: Is it possible that the legislation could be effective immediately?
A: Legislation passed PRIOR to June 1 with no effective date mentioned in bill: Takes effect January 1st of following year.
Legislation passed PRIOR to June 1 with immediate effective date mentioned in bill: Becomes law the day the Governor signs the bill into law. The Governor has 60 days in which to review legislation passed by the General Assembly before taking action. He can use all 60 days, or a portion thereof.
Legislation passed after May 31st shall not become effective until June 1st of the NEXT CALENDAR YEAR unless approved by a 3/5 vote of both the Senate and the House
Q: When I came to Illinois to work, I was forced to make a choice between a traditional state plan and a "self-managed plan". I was advised at the time to take the traditional plan because of the associated cost of living increases. My question is what is the difference between what will happen to my retirement funds, versus what will happen to the funds of someone in a self-managed plan? Will both of us lose out, or are people in self-managed plans in a better position?
A: The State Universities Retirement System (SURS) offers three retirement plans: Traditional, Portable, and Self-Managed (SMP). At the time of hire, employees are required to make a one-time irrevocable decision on the plan in which they wish to participate. At this time there are several proposals each affecting the pension system differently and until a proposal is passed we are unable to fully assess the impact.
Q: Is it true that a "general formula" for determining when you are eligible for the maximum pension amount is...the number of years employed at NIU plus your age must equal 85?
Q: I'm interested in how the pension discussion affects those of us who are already retired from NIU: 1) While the constitutionality of changes in pensions for current employees are being debated, I've read that it is definitely against our state's constitution to alter pensions of people who are already retired. Is this true? 2) If true, does it apply to only our pension payments or can the state alter current retirees' promised cost of living increases and/or start charging current retires health care premiums?
A: You are correct that the constitutionality of changes is certainly being debated in the State legislature. The legal implications of proposed changes has yet to be determined. However, taxation of benefits and retiree health care premiums are all on the agenda for debate. The Commission for Forecasting and Accountability recently issued a request for proposal (RFP) to investigate an “income-based formula for healthcare contributions by State of Illinois retirees." Legal opinions regarding the constitutionality of proposed actions can be accessed at several locations.
Q: I have heard that even employee contributions to state pension plans may be wiped. Is it true the state is can legally refuse to pay employee contributions?
A: We are not aware of any proposals that would liquidate employee contributions. Employee contributions are paid by the employee and not the state. State contributions are subject to vesting requirements under current SURS provisions.
Q: If I decide to pull out of my SURS Pension Plan program should the contribution increase, will I get penalized?
A: Under the Illinois Pension Code, individuals meeting the definition of employee under Article 15 (the State Universities Retirement System Article) are required to participate in the retirement system. Only at the time of separation can an employee request a refund.
Q: Can't NIU refuse to honor LEGISLATIVE SCHOLARSHIP that Springfield representatives have given to students to attend NIU but have not given NIU the money they promised to give NIU?
A: General Assembly scholarships are statutory, and as a public university, NIU is required to honor and uphold state law. Several proposals have been made this year alone in Springfield to abolish legislative scholarships, as well as dependent partial tuition waivers for public university employees. At this time, none of these proposals have been enacted.
Q: I hope NIU is prepared for mass retirement of their most experienced and knowledgeable staff members - especially office staff members, if there is a way to retire now and keep the benefits we currently have.
A: NIU is aware that any changes in retirement benefits could result in a number of dedicated staff deciding to retire as a result. Employees are encouraged to continue to monitor the budget and pension website for updated information. Other good resources include SURS and the annuitants association. While there has been much discussion about the need to address pension funding issues, few plan-specific details have been released. We will provide that information as soon as it is available.
Q: Sick leave and vacation payouts currently factor into annuity calculations. HB3427 states they will be excluded for the basis of determining an annuity - effective immediately - not July 1, 2011. So, when will this be voted on? I have a retirement date of April 30 but should I move it up? How can I know when this is going to be voted on?
A: You are correct that vacation payouts factor into annuity calculations. Non-compensable sick is reported to SURS for service credit along with half of the compensable sick value, if applicable. The payment of compensable sick, if applicable, does not factor into the annuity calculation. HB3427 is currently assigned to the Rules Committee and there has been no notice of hearing. To know when it is scheduled for hearing, you can watch the Rules Committee website or the bill status information. We will provide additional information as it becomes available.
Q: I left the University of Illinois at Chicago a year ago, but left my retirement money there based on the promised pension I would receive at retirement. Are any proposed changes out there that would affect what I was promised a year ago?
A: The State Universities Retirement System serves approximately 70 state universities, community colleges, and state agencies, including the University of Illinois at Chicago. Proposed changes could affect future benefits. It is recommended that employees with specific questions regarding their plan and investments contact SURS at 1-800-ASK-SURS.
Q: I'm wondering if it is advisable to change my end of the summer retirement date to a date before the end of the spring semester. Will any legislative changes affect someone so close to retirement . . . i.e. I will only be 55, but have 33 years of service.
Also, wondering about tuition waivers. After 33 years of service, am pretty upset if my daughter would not be able to use the tuition waiver for her last year at NIU. What should we do about processing her tuition waivers for summer 2011, fall 2011, and spring 2012?
A: To date, no bills have been passed that would affect currently available benefits. While there has been much discussion about the need to address pension funding issues, few plan-specific details have been released. We will not know the potential impact of the changes until details are received. Employees are encouraged to monitor the information on the budget and pension website so that they can make decisions with concrete information. A decision to retire is a personal one and should not be made lightly.
In regards to the tuition waivers, there is current legislation that will remove the dependent tuition waiver for all employees. SB1318 appears to remove the benefit for future employees, while grandfathering the benefit for employees hired prior to the effective date of the act. HB2959, on the other hand, repeals the statutory provisions altogether. Both of these bills are currently in committees. If they move forward and become law, employees will be notified as soon as possible.
Q: Is it accurate that if I enrolled in one of the self managed plans (e.g. TIAA-CREF) rather than contributing to SURS, that this legislation will not directly impact my retirement savings?
Q: I am eligible to retire right now under the Rule of 85. I am 54 and have 31 years of service in SURS. I had planned to wait to retire until the end of this calendar year (December 2011). Would any of the current proposed legislation prevent me from doing this? If so, I plan on notifying SURS at the end of May of my intent to retire as of June 1,2011.
A: Under the State Universities Retirement System (SURS) the maximum annuity payable under the SURS General Formula is determined by the Final Rate of Earnings (FRE) calculation, not the Rule of 85. Individuals who have 30 years of service are eligible to retire at any age without the age-related reduction.
Q: Are those who contribute to TIAA-CREF (through SURS) affected by the current situation differently? That is, since the money has to be deposited with a non-state investment corporation, is all of the money for all of the contributions already there?
A: The answer to this question is dependent on which plan an employee participates in and if the employee is vested. The State Universities Retirement System (SURS) offers three retirement plans: Traditional, Portable, and Self-Managed (SMP). If you elected the SURS Self-Managed Plan (SMP), the SMP is a defined contribution program where employee contributions are placed into individual accounts. The State contribution does not apply until the employee is vested (5 years).