Illinois SURS Tier 2 Traditional
This page documents how FinZot models the Illinois SURS Tier 2 Traditional defined benefit pension plan.
Who this plan covers: Education and general members of State Universities Retirement System of Illinois, traditional variant, on or after January 1, 2011: first began participation in SURS (or a reciprocal Illinois system).
Employee Contributions
Section titled “Employee Contributions”Employee contributions are the portion of salary that the employee pays into the pension fund.
| Field | Value |
|---|---|
| Contribution Rate | 8% of salary |
| Tax Treatment | Pre-tax (reduces taxable income) |
Vesting & Retirement Eligibility
Section titled “Vesting & Retirement Eligibility”Vesting
Section titled “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 >= 10Retirement Eligibility
Section titled “Retirement Eligibility”Retirement eligibility determines when an employee can begin receiving pension payouts. The following formula must evaluate to TRUE:
commencement_age >= 62 AND service_credits >= 10Formula Variables:
service_credits: Years of credited servicecommencement_age: Age when pension payments commence
Benefit Calculation
Section titled “Benefit Calculation”The annual pension benefit is calculated as:
Annual Benefit = Final Compensation × Benefit Factor × Service CreditsFinal Compensation
Section titled “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
Section titled “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 THEN 0.0 WHEN commencement_age_months >= 804 THEN MIN(0.022, 0.80 / service_credits) WHEN commencement_age_months >= 744 THEN MIN(0.022, 0.80 / service_credits) *(1 - 0.005 *(804 - commencement_age_months)) ELSE 0.0ENDFormula Variables:
commencement_age: Age when pension payments commenceservice_credits: Years of credited service
Cost-of-Living Adjustment (COLA)
Section titled “Cost-of-Living Adjustment (COLA)”The COLA formula determines how pension benefits grow over time after retirement to keep pace with inflation.
IF(age >= 67 AND years_since_retirement >= IF(commencement_month = 1, 1, 2), current_pension_benefit + initial_pension_benefit * MAX(0.0, MIN(0.03, inflation_rate / 2)), current_pension_benefit)Formula Variables:
initial_pension_benefit: The annual benefit amount at retirementyears_since_retirement: Number of years since retirement began
Tax Treatment
Section titled “Tax Treatment”Pension payouts from this plan are taxable as ordinary income.
Social Security Coverage
Section titled “Social Security Coverage”Most Illinois SURS Tier 2 Traditional employers do not participate in Social Security. FinZot marks a job with this plan as non-covered by default: no 6.2% Social Security tax is withheld and those wages earn no Social Security benefit. Medicare is still withheld. If your employer does participate, turn that setting off on the income stream.
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.