On April 14, 2010, the Illinois governor signed Senate Bill 1946 (Public Act 96-0889). The legislation created a “Second Tier” of pension benefits applicable to public employees who first participated in LABF or an Illinois reciprocal retirement system on or after January 1, 2011.
Please be advised that if a member participated in LABF or in an Illinois reciprocal retirement system (with the exception of the Judges’ Retirement System and the General Assembly Retirement System) before January 1, 2011, and participates in LABF after January 1, 2011, then the member will participate in the First Tier.
The following details are highlights of the “Second Tier” pension benefits:
Eligibility - The Second Tier includes employees hired for the first time on or after January 1, 2011.
Pension Benefits (Age and Service) - An employee is eligible for a reduced benefit at age 62 with at least ten years of service. The benefit is reduced by ½ percent each month that the employee is under age 67. An employee can receive a benefit at age 62 with at least ten years of service.
Final Average Salary - Pension benefits will be based on the final average salary using the highest eight consecutive years within the last ten years of service preceding retirement.
Average Salary Limit - The annual salary used to calculate a pension benefit is limited to $111,571.63 in 2015. A member does not pay contributions on wages above this limit. The limit is also applied when the Fund calculates a member’s benefit. The limit is automatically increased annually by 3% or by ½ of the increase in the Consumer Price Index-urban (CPI-u), whichever is lower.
Automatic Increase - The Automatic Increase is either ½ the rate of the CPI-u or 3%, whichever is lower, and is applied to the original annuity amount. In years where the percentage change in the CPI-u is negative, the Automatic Increase will be zero. The automatic Increase begins on the January 1 following the year the member reaches age 65 or after the member receives one year of pension payments, whichever occurs later.
Spousal Annuity - The Spousal Annuity is 66 2/3% of the pension the member had earned at the date of death.
Spousal’s Automatic Increase - The spouse’s automatic Increase is either ½ the rate of the CPI-u or 3%, whichever is lower, and is applied to the original annuity amount. If the CPI-u decreases or is zero, no automatic Increase is paid. A spouse is eligible for an annual automatic Increase (1) on each January 1 occurring on or after the commencement of the member’s annuity or (2) occurring after the first anniversary of the commencement of the spousal annuity.
Child’s Annuity - The Child’s Annuity is $220 a month when there is an eligible surviving spouse or $250 a month when there is no eligible surviving spouse
Refund - A member may take a refund if he or she withdraws from service before the age of 60 (with any length of service) or withdraws with less than 10 years of service regardless of age.