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) http://www.surs.org/pdfs/mem_guide/Guide-TRD.pdf,
Portable Member Guide (starting on page 14) http://www.surs.org/pdfs/mem_guide/Guide-PRT.pdf, and SMP Member Guide (starting on page
13) http://www.surs.org/pdfs/mem_guide/Guide-SMP.pdf.
“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 http://surs.org/pdfs/MoneyPurchaseFactors.pdf.
To contact SURS, call (800) 275-7877.
—Mary Voelker and William S. Bike
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