What is the Retirement Systems' Reciprocal Act?

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The Retirement Systems' Reciprocal Act provides that if an employee has at least one year of pension credits established in more than one Retirement System covered under the Reciprocal Act, that service will be considered together at the time of retirement or death of an employee. The purpose of the Act is to ensure full and continuous pension credit for service in public employment in the State of Illinois, and the transfer of employment from one governmental unit to another.

Thirteen Illinois public pension systems are covered under the reciprocal act. When you choose to retire with a reciprocal pension, each system calculates benefits based on your highest final average salary (FAS) and pays a proportion of your pension.

Advantages of RecIprocIty
With reciprocity, your highest FAS from all systems is used to calculate benefits. In most cases, this enhances your final pension. If you do not have enough service to retire, combining service from reciprocal systems may allow you to meet eligibility requirements and receive pensions from all systems.

Who Is Eligible?
To retire under the reciprocal act you must meet the following conditions:
• The service you earned in each reciprocal system must equal one year or more.
• Your combined service must meet the vesting and age requirements of each system.

How Reciprocity Works
Retirement benefits under reciprocity are based on formulas that include:
• A pension percentage
• Years of service
• Final average salary (FAS)

If you retire under reciprocity, the reciprocal systems exchange information regarding service and earnings, as well as other data. Your total combined service and highest FAS are used to calculate your pension. You receive a monthly benefit from each system.

The reciprocal act does not change or override any individual system’s rules. Reciprocity is optional. You may retire independently under each system.

Applying for Reciprocal Benefits Pension Estimates
To determine if you will benefit from a reciprocal pension, request a pension estimate from each system where you earned service and a reciprocal estimate from your final system. If you do not qualify for
a separate pension from each system, you should request a reciprocal pension estimate from your final system.

You will need to provide your approximate retirement date and name all the retirement systems in which you earned service. The systems will exchange information to estimate your benefits under reciprocity.

Requests can be made up to a year in advance and should be made no less than six months prior to your retirement date.

Reciprocal Retirement Process
When you retire under the reciprocal act, you must apply for benefits following the process required by each system. You must declare your intent to retire under reciprocity when you file your retirement applications.

Once you receive a pension, the provisions of each respective retirement system govern eligibility for and determination of survivor and death benefits and the annual pension increase.

Example 1: Without reciprocity, the member does not qualify for a pension
Judith has 8 years of service with System A and 4 years of service with System B. She plans to retire at age 62. System A requires 10 years of service and System B requires 5 years.

Judith does not have enough service to retire under either system. However, Judith’s total combined service with reciprocity equals 12 years, so she qualifies for a pension from both systems.

Judith’s final average annual salary (FAS), as determined by the reciprocal systems, is $70,000. Each system will calculate its portion of her benefit based on the $70,000 FAS.

Step 1
Judith requests a reciprocal estimate from her final system.

Step 2
System A and System B use the same formula to determine a retirement pension:
2.2% * years of service * FAS = annual pension

System A (8 years of service)
2.2% * 8 yrs * $70,000 = $12,320 (monthly $1,027)

System B (4 years of service)
2.2% * 4 yrs * $70,000 = $6,160 (monthly $513)

Total PensIon
$12,320 + $6,160 = $18,480 (monthly $1,540)

Judith will receive a monthly payment of $1,027 from System A and $513 from System B.

Step 3
Judith requests retirement applications from both systems. She completes the paperwork and declares her intent to retire with reciprocity when she files her retirement applications with both systems.

Example 2: Pension enhanced with reciprocity
Sam has 18 years of service with System A and 15 years of service with System B. He plans to retire at age 60. System A requires 8 years of service and System B requires 5 years of service.

Because of his age and service, Sam has two options.
1. Retire with a separate pension from each system.
2. Combine service and retire under reciprocity.

Sam’s FAS in System A was $50,000; his FAS in System B was $75,000. If he retires under reciprocity, both systems will use the higher FAS to calculate his pension benefits.

Step 1
Sam requests pension estimates from both of his retirement systems and a reciprocal estimate from his final system.

Step 2
System A has a step formula of 1.67% for each year of the first 15 years of service and 2% for each year over 15. System B has a flat-rate formula of 2.2% for each year of service.

The pension benefits from System A and System B are calculated as follows (numbers are rounded):

1. Separate PensIons From Each System
System A (18 years of service)
(1.67% * 15 yrs * $50,000) + (2% * 3 yrs * $50,000) = $15,525 (monthly $1,294)

System B (15 years of service)
2.2% * 15 yrs * $75,000 = $24,750 (monthly $2,063)

Total Pension
$15,525 + $24,750 = $40,275 (monthly $3,356)

2. RecIprocal PensIon
System A (18 years of service)
(1.67% *15 years * $75,000) + (2% * 3 yrs * $75,000) = $23,288 (monthly $1,941)

System B (15 years of service)
2.2% * 15 yrs * $75,000 = $24,750 (monthly $2,063)

Total Pension
$23,288 + $24,750 = $48,038 (monthly $4,003)

With reciprocity, Sam’s total combined pensions are $48,038, an increase of $7,763 ($647 monthly). The increase occurs because both systems use the higher FAS in their pension calculations.

Step 3
If Sam decides to retire with a reciprocal pension, he must fill out applications for each system and declare his intent to retire under reciprocity when he files his retirement applications.

Reinstatement of Service
If you accepted a refund from a reciprocal system, you may reinstate service of one year or more by repaying the refund, with interest. Contact the retirement system that paid the refund to determine your eligibility, reinstatement cost, and allowable payment methods.

Concurrent Service
Concurrent service occurs when you earn service in more than one retirement system for the same period of time.

If you plan to retire under reciprocity and have earned service in more than one system for the same period, each system will reduce the credit proportionately. This reduction will be made when reciprocal benefits are calculated.

If you have concurrent service and are considering a reciprocal retirement, contact each system to determine eligibility and how your benefit will be affected.

ARTICLE 20. RETIREMENT SYSTEMS RECIPROCAL ACT: http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=004000050HArt%2E+...

FINANCE FOR TEACHERS: https://financeforteachers.com/get-a-bigger-trs-pension/

The Following Retirement Systems Participate in the Retirement Systems’ Reciprocal Act:

Chicago Teachers' Pension Fund
203 North LaSalle, Suite 2600
Chicago, IL 60601-1210
312-641-4464, Fax 312-641-7185
www.ctpf.org

County Employees' Annuity & Benefit Fund of Cook County
33 North Dearborn Street, Suite 1000
Chicago, IL 60602-3103
312-603-1200, Fax 312-603-9760
Forest Preserve District Employees' Annuity & Benefit Fund of Cook County
www.cookcountypension.com

33 North Dearborn Street, Suite 1000
Chicago, IL 60602-3103
312-603-1200, Fax 312-603-9760
www.cookcountypension.com

General Assembly Retirement System
2101 South Veterans Parkway
P. O. Box 19255
Springfield, IL 62794-9255
217-782-8500, Fax 217-557-5154
www.srs.illinois.gov

Illinois Municipal Retirement Fund
2211 York Road, Suite 500
Oak Brook, IL 60523-2337
800-275-4673, Fax 630-368-5399
www.imrf.org

Judges' Retirement System
2101 South Veterans Parkway
P. O. Box 19255
Springfield, IL 62794-9255
217-782-8500, Fax 217-557-5154
www.srs.illinois.gov

Laborers' Annuity & Benefit Fund of Chicago
321 North Clark Street, Suite 1300
Chicago, IL 60654-4739
312-236-2065, Fax 312-236-0574
www.labfchicago.org

Metropolitan Water Reclamation District Retirement Fund
111 East Erie, Suite 330
Chicago, IL 60611-2898
Phone 312-751-3222, Fax 312-751-5699
Web Address: www.mwrd.org

Municipal Employees' Annuity & Benefit Fund of Chicago
321 North Clark Street, Suite 700
Chicago, IL 60654-4767
312-236-4700, Fax 312-527-0192
www.meabf.org

Park Employees' Annuity & Benefit Fund of Chicago
55 East Monroe, Suite 2720
Chicago, IL 60603
312-553-9265, Fax 312-553-9114
www.chicagoparkpension.org

State Employees' Retirement System
2101 South Veterans Parkway
P. O. Box 19255
Springfield, IL 62794-9255
217-785-7444, Fax 217-785-7019
www.srs.illinois.gov

State Teachers' Retirement System
2815 West Washington Street
P. O. Box 19253
Springfield, IL 62794-9253
800-877-7896, Fax 217-753-0369
www.trs.illinois.gov

State Universities Retirement System
1901 Fox Drive, P. O. Box 2710
Champaign, IL 61825-2710
800-275-7877, Fax 217-378-9800
www.surs.org

Additional Contact Information:

Firemen's Annuity & Benefit Fund of Chicago
20 South Clark, Suite 1400
Chicago, IL 60603
312-726-5823 or 800-782-7425, Fax 312-726-2316
www.fabf.org

Policemen's Annuity & Benefit Fund of Chicago
221 North Lasalle, Suite 1626
Chicago, IL 60601-1206
312-744-3891 or 800-656-6606, Fax 312-726-3216
www.chipabf.org

P.A. 94-0834 changed the Reciprocal Act to allow a former IMRF member who participated as a teacher aide within a school district, and transferred to a position that is covered by TRS to retire under the Reciprocal Act even though the former teacher aide has less than 12 months of IMRF service credit. See Paragraph 5.50 Reciprocity.

Also, if a former teacher aide took a refund of his or her IMRF contributions, he or she can repay the refund, reinstate the service credit, and apply the service toward a Reciprocal pension. See Paragraph 6.40 3. Past Service Credits/Member Account Corrections, Reinstatement.