Retirement Systems Reciprocal Act

What is System Reciprocity?

The Illinois Retirement Systems Reciprocal Act gives retiring Illinois public employees the option to use service credit earned within the public retirement systems listed benefit calculated based upon combined pension service between funds.

To use the provisions of the Reciprocal Act, the systems will exchange information regarding service credits, earnings and other important information to determine payable benefits.

Earning Service Credits

Service credits are earned based on the amount of time you participate in a retirement system. Service credit established in all retirement systems is considered under the Reciprocal Act, with the exception of the following:

• credit of less than one year (12 months) of participation in any system, except credit earned by teacher’s aides in IMRF (check with your IMRF representative for specific provisions on this rule);
• credits that have been forfeited by accepting a refund, but have not been repaid; and
• credits that have already been applied toward a retirement pension.

Benefits of Reciprocity

You can decide if you want to combine your service credits or retire independently under each individual system. In both scenarios, you must meet the qualifications of each individual retirement system before you are eligible to earn a pension, but combining service credits can potentially give you enough total service credits to qualify in a system that you might not have enough credits for otherwise (Example 1).

Because of the ability to use your service credits among reciprocal systems, you could have a larger combined pension and/or begin drawing benefits earlier than if you retire from each system independently.

If you choose to combine your service credits using reciprocity, you must meet the highest minimum qualification of all systems involved. Each system looks at combined service credits and earnings, paying their share of the pension accordingly. The highest final average salary from all systems is used to calculate your benefit, but each system uses its own formula to determine the amount you’ll receive from them, including annual increases (Example 2).

Concurrent Service

If a member is granted service credit by multiple funds for a given period of time, adjustments are made to ensure the member does not receive service credit from both systems for the same period of time.

If you contribute to multiple systems in the same month, it’s not legally permitted to earn more than one-month’s service credit during that time.

Reinstating Service Credits

If you previously participated in a reciprocal system and took a refund when you separated service, you will need to reinstate your service credit in order to include it in your reciprocal benefit.

You can do this by repaying the refunded amount after a minimum of two years with another retirement system, but it must be reinstated while you’re still a contributing member under the Reciprocal Act.

Pension Estimates

You can receive an estimate of your benefit by submitting a request to the most recent system with which you’re employed. Include information about all systems you participated in, as well as your estimated retirement date.

The following illustrations are over-simplified to show basic advantages to reciprocity. Each member’s circumstances will vary, so you should speak with your most recent system to get an accurate pension estimate based on your eligibility.

Example 1: The benefit of time

If a member has 7 out of 8 years needed to be eligible to retire in System A, and has 4 out of the 10 years needed to retire in System B, this member wouldn’t have enough service credit to retire independently in either system.

However, under reciprocity the member’s combined service credit is 11 years, which qualifies the member for a proportional pension from each system (assuming the member meets all other system requirements for eligibility).

Example 2: The potential of a higher benefit

A member has 12 years of service with a final average salary of $1,600 per month with System A, and 20 years of service with a FAC of $2,400 per month with System B.

System A has a flat rate formula of 1.67% for each year of service.
1.67% x 12 = 20.04%
20.04% x $1,600 (FAC) = $320.64/month

System B has a step-rate formula of 1.67% for each year of the first 15 years and 2% for each year after.
1.67% x 15 = 25.05%
2% x 5 = 10.00%
Total= 35.05%

35.05% x $2,400 (FAC) = $841.20/month
Total combined benefit of $1,161.84

Now let’s see what the benefit would be when calculated with reciprocity:
1.67% x 12 = 20.04%
20.04% x $2,400 (highest FAC for both systems) = $480.96/ month

1.67% x 3 = 5.01%
2% x 17 = 34.00%
Total = 39.01%

39.01% x $2,400 (FAC) = $936.24/month
Total combined benefit of $1,417.20 with reciprocity

Applying for Benefits

If you’d like to apply for benefits under the Reciprocal Act, you should:

• request an application from each system you participated in a minimum of 60 days before your planned retirement date; and
• return the completed forms to each system, requesting reciprocity provisions.

Returning to Work

If you have started receiving retirement benefits but return to work with one of the reciprocal systems paying a pension to you, all systems may suspend payments based on direction from the employing system.

Once your employment ends, the pension payments will be reinstated. Each system will determine if your benefit needs to be recalculated to add the additional service credits earned.