With the implementation of the FY18 Illinois State budget comes changes to state pensions. Of the three bills that make up the FY18 budget, SB 42 creates an optional third tier for new hires under many of the state’s pension systems. Included in the change are State Universities Retirement System (SURS), Teachers’ Retirement System (TRS) and State Employees’ Retirement System (SERS). The Illinois Municipal Retirement Fund (IMRF) is not included.
The goal of the newly created Tier III is to address some of the issues with Tier II. Although an effective date is yet to be determined, Tier III will give Tier II members and all new hires an option:
- Elect to be part of Tier II, or
- Elect to be in a new hybrid benefit known as Tier III
This new Tier III hybrid benefit will combine features of a defined benefit and a defined contribution plan. Learn more about this newly created pension benefit with the IEA’s Tier III FAQ.