SURS Facts – Part-time Adjunct Faculty Bill

Public Act 103-0548 – effective 9/1/2024

Summary

Public Act 103-0548 was signed into law on August 11, 2023.  This legislation amends the SURS Article of the Illinois Pension Code to change the method in which service credit is granted and eliminate the part-time adjustment for participants of SURS on or after September 1, 2024. 

Change Method of Granting Service Credit

Service credit is granted on a quarterly basis depending on the number of months worked in the year, according to the following schedule:

Currently, a participant must work a minimum of 15 days each month to earn service credit for that month.  Public Act 103-0548 lowers this requirement from 15 days to one day per month for participants on or after September 1, 2024.  Effective September 1, 2024, participants will be granted one month of service credit for each month in which they receive earnings and make employee contributions to SURS.  The quarterly service credit schedule noted above is not changing. 

This new method of granting service credit will be applied to previously earned service (except for service credit purchases where any portion of the quoted purchase has been paid) for participants of SURS on September 1, 2024.  Persons who retire, receive a benefit, or take a refund prior to September 1, 2024, are not eligible for the benefits under Public Act 103-0548 unless they return to employment.  In that situation, only the service credit earned after September 1, 2024, will accrue according to the provisions of Public Act 103-0548. 

Eliminate Part-Time Adjustment

Currently, participants who work 50% or less for three or more years have a part-time adjustment applied to their retirement calculation.   Public Act 103-0548 eliminates the part-time adjustment for retirement calculations with a retirement date on or after September 2, 2024.  The part-time adjustment is also eliminated for survivor benefit calculations for participants who died on or after September 1, 2024. 

 The changes made through Public Act 103-0548 are fundamental to many SURS processes and calculations.  SURS has begun working on significant programming changes that are required by September 1, 2024.  Understanding how these changes may affect you is especially important if you are planning to retire or take a lump-sum distribution prior to the effective date.   When planning, keep the following in mind: 

• If you are inactive (not currently contributing through SURS-covered employment) and you are considering a lump-sum distribution because you are not vested, it may be beneficial to wait until after September 1, 2024. Depending on your dates of service, you could be entitled to more service credit under the new service credit granting rules.  Additional service credit could potentially qualify you for a lifetime monthly benefit and possibly health insurance.  In the case of a lump sum, additional service credit could help you reach the five-year vesting requirement for a Portable or RSP lump sum that would include employer-matching contributions.
• If you are not planning to terminate your SURS-covered employment and take a distribution (refund or retire) prior to September 1, 2024, there is nothing you need to do. The new provisions of the legislation will be in effect and applied to all applicable calculations after September 1, 2024. 
• If you are planning to retire and you have three or more years of service at 50% time or less, it may be beneficial to retire on or after September 2, 2024, when the part-time adjustment is eliminated from the retirement calculation of the Traditional and Portable plans.
• If your employment has been full-time and regular for your entire career, you are most likely not significantly affected by these changes.  If you work part-time or on an adjunct basis, you are more likely to be affected.
• If you have more than three years of part-time service and have received retirement estimates with a projected retirement date on or after September 2, 2024, they likely included a part-time adjustment and therefore could now be understated.

Frequently Asked Questions

Who is affected by this legislation?  This legislation mostly affects participants who are part-time or who have previous part-time service, or those who work on an adjunct basis.  Current and future employees who meet the definition of “participant” on or after September 1, 2024, may be affected.

Who is a participant?  An employee who becomes a participant of SURS continues to be a participant until he or she retires, takes a refund of contributions, or dies.

Who is not affected by this legislation? Retirees with a retirement effective date on or before September 1, 2024 or individuals who have received a refund of contributions from SURS prior to September 2, 2024 are not affected by this legislation.

Can I retire on September 1, 2024, and take advantage of these changes?  No.  To have your retirement calculation based on the provisions of Public Act 103-0548, you must be a participant on September 1, 2024.  If your retirement effective date is September 1, you will not be considered a participant on that date.  The earliest retirement effective date to be eligible for the benefits under Public Act 103-0548 is September 2, 2024.  Keep in mind that SURS does not pay partial months of retirement benefits.  With a September 2, 2024, retirement effective date, the monthly payment and health insurance (if applicable) would start October 1, 2024.  Therefore, it may be beneficial to retire effective October 1, 2024, to avoid a potential income and insurance coverage gap.

With the elimination of the part-time adjustment, can I now purchase Prior Service that was verified at less than 50%?  No, Public Act 103-0548 does not affect any requirements or criteria for service credit purchases. To qualify as purchase-eligible Prior Service, the time worked must have been at least 50%. The cost to purchase eligible service credit is still based on a full-time equivalent rate calculation.

What if I have received previous quotes for service credit purchases.  Are they still valid?  If you have received a service credit purchase cost quote but you have not purchased any portion of the service credit, you may request a review or recalculation (after the effective date of September 1, 2024).  Depending on the dates of service, the verified period may be worth additional service credit.

After September 1, 2024, any future requested service credit purchase quotes or cost updates will be calculated under the provisions of Public Act 103-0548.

Can previous purchases of service credit be recalculated under the new provisions?  No.  If you have completed any portion of a service credit purchase, that purchase is considered final and not eligible for further review.  This includes a quoted purchase with multiple years of service credit, and you have purchased any portion of the available service.  This also includes service credit purchases currently in progress via installment contract through payroll deductions.

If I am eligible to repay a refund of contributions to restore my service credit, will the service be restored under the provisions of Public Act 103-0548?  Yes.  Assuming you meet the criteria for repaying a refund, the service credit will be re-established under the provisions of Public Act 103-0548, if payment is received for a cost that is effective on or after September 1, 2024.

I am a participant in the Retirement Savings Plan (RSP).  Am I affected by this legislation? Service credit is granted the same among all three retirement plans (Traditional, Portable, or RSP).  RSP participants are not affected by the elimination of the part-time adjustment.  However, RSP participant benefits may be affected, depending on the participant’s dates of service, because vested status may be reached sooner due to the elimination of the 15-day per month requirement. In the RSP, reaching vested status after attaining five years of service credit qualifies participants for a lifetime monthly benefit (including health insurance eligibility, if applicable) upon reaching retirement age, or a lump-sum distribution including state matching contributions.

If I’m required to take a Required Minimum Distribution (RMD) before September 1, 2024, can I defer my benefit to take advantage of the new provisions?
No.  You must begin receiving benefits by the RMD deadline established by IRS regulations.  You may not defer your benefit past the RMD deadline to take advantage of this law.

Where can I find more information?

• If you have part-time service and you are considering a retirement date on or after September 2, 2024, you can access the online benefit estimator to calculate a retirement estimate.  The online estimator does not perform part-time adjustments, regardless of retirement effective date.  Therefore, this tool should not be used for calculating estimates with part-time service and retirement effective dates prior to September 2, 2024. 
• As of November 30, 2023, the required programming changes to SURS’ estimator program are complete.  If you are within 10 years of retirement eligibility, you may request a retirement counseling appointment or a written retirement estimate through the SURS member website.  Visit surs.org and click on Member Login. 
• If you have questions regarding how you might be affected by the provisions of Public Act 103-0548, please contact SURS Call Center at (800) 275-7877. 
• If you received retirement estimates from SURS prior to November 30, 2023, please keep in mind that they do not include the provisions of Public Act 103-0548 discussed on this page.