August 24, 2015

Change in SURS ‘Money Purchase’ Formula May Spur 2015 Retirements

IF YOU are planning to retire and the State Universities Retirement System (SURS) “Money Purchase” formula offers you the highest benefit, it may be in your best interest to retire before Jan. 4, 2016.

WHEN SURS calculates a retirement benefit, payments are based on the calculation that provides the highest benefit. For most defined-benefit members, this is a comparison between the “General Formula” and the “Money Purchase” calculation. Approximately 65 percent of SURS retirements are highest using the Money Purchase calculation.

WHILE THE General Formula is based on a member’s age, years of service, and earnings averages, the Money Purchase utilizes the member’s age, normal retirement contributions, interest at retirement, and an actuarial factor based on economic and demographic assumptions to determine the benefit amount.

STATE STATUTES require an “experience study” every three years to examine the factors.

THE NEW factors will result in a lower monthly benefit payment for those retiring on or after Jan. 4, 2016, if their benefit is calculated to be highest using the Money Purchase calculation.

SURS ESTIMATES that the monthly benefit paid using the Money Purchase formula will be reduced on average by six to seven percent on or after Jan. 4. It also estimates that active participants can recover this monthly reduction by delaying retirement for approximately nine months into 2016, due to additional contributions and interest that would be added.

“SURS OFFERS three retirement plans,” explained Beth Spencer, Communications Manager for SURS. Those are “the Traditional Plan, a defined-benefit plan; the Portable Plan, another defined-benefit plan; and the Self-Managed Plan, a defined-contribution plan.”

TO LEARN more about the plans and different methods of calculating benefits, see the Traditional Member Guide (starting on page 16), Portable Member Guide (starting on page 14),  and SMP Member Guide (starting on page 13)

“THE UNIVERSITY of Illinois at Chicago currently has 14,173 members in SURS,” Spencer noted.

FOR MORE information on the Money Purchase Factor change, see To contact SURS, call (800) 275-7877.

—Mary Voelker and William S. Bike

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