TIER 2 MEMBER GUIDE July 2020 TEACHERS’ RETIREMENT SYSTEM OF THE STATE OF ILLINOIS Foreword July 2020 The new pension law does not apply to anyone who The Member Guide provides an overview of your has TRS service prior to Jan. 1, 2011. These members TRS benefits. You are a member of Tier 2 in the remain participants of Tier 1, not Tier 2. Teachers’ Retirement System of the State of Illinois This guide has been prepared to answer general ques- (TRS) because you first contributed to TRS on or tions that you have about us, the services we offer, after Jan. 1, 2011 and you have no pre-existing credit- and your responsibilities as a member or an annui- able service with a reciprocal pension system prior to tant. We make every effort to provide you with the Jan. 1, 2011. most current information, including rule changes A member first contributes to TRS on his or her first enacted by our Board of Trustees and benefit changes day of paid service. resulting from legislation. This guide includes legisla- tive changes signed into law as of July 1, 2020. Public Act 96-0889, which was signed into law in spring 2010, added a new section to the Pension Code Effective June 1, 2011, Illinois law entitles a party that applied different benefits to anyone who first to a civil union to the same legal obligations, contributed to TRS on or after Jan. 1, 2011 and did not responsibilities, protections, and benefits as are have any previous service credit with a pension sys- afforded or recognized by the law of Illinois to tem that has reciprocal rights with TRS. These mem- spouses. For information about changes that have bers are referred to as “Tier 2” members. Changes occurred since the publication of this guide, see from the “Tier 1” pension law include raising the min- our Topics & Report newsletter by visiting the imum eligibility to draw a retirement benefit to age TRS website (http://www.trsil.org). 67 with 10 years of service, initiating a cap on the sal- It is our policy to comply with all applicable federal aries used to calculate retirement benefits, and limit- and state laws, rules, and regulations. If there is a con- ing cost-of-living annuity adjustments to the lesser of flict between information contained in this guide and 3 percent or ½ of the annual increase in the Consumer the applicable law, rule or regulation, the law, rule or Price Index, not compounded. The retirement for- regulation takes precedence. mula is unchanged. 2 Chapter 1: Introduction Created by the Illinois General Assembly in 1939, TRS has grown to be one of the largest teachers’ retirement systems in the United States with more than 420,000 active members, annuitants and benefit recipients. We provide retirement benefits for teachers who are Retirement Insurance Program (TRIP). Federal employed by all Illinois public common and charter law prohibits TRS monies from being placed in the school districts located outside the city of Chicago. THIS Fund. The Illinois Pension Code contains the laws relating to our creation, benefits, and administration. Qualified pension plan status TRS operates a qualified pension plan under provi- Administration sions of the Internal Revenue Code, Section 401(a). TRS is governed by a 15-member Board of Trustees. The advantages of being a qualified plan include: Trustees include the state superintendent of educa- • tax-sheltering of mandatory retirement contribu- tion, seven trustees appointed by the governor, five tions in the year that they are made to TRS; trustees elected by contributing TRS members, and • deferral of income taxes on con tributions until two trustees elected by TRS annuitants. your retirement, at which time your effective tax The Board of Trustees appoints an executive direc- rate may be lower; and tor who also serves as the secretary of the Board of • tax-free accumulation of interest credited to you Trustees. The executive director is responsible for by TRS. daily operations at TRS. To maintain our qualified pension status, we must Funding meet certain Internal Revenue Service requirements, We have several sources of funding: including: • member contributions, • annual benefit, salary, and contribution • investment income, limitations; • employer contributions, and • compensation that may be reported for benefit calculation purposes; • appropriations from Illinois state government. • benefit eligibility provisions; As an active member, you contribute 9 percent of your salary toward retirement each year. We invest • benefit distribution limitations; and these assets to create diversified investment income. • rollover restrictions. Our investment portfolio, which is managed by exter- We are dedicated to complying with all requirements nal investment management firms and monitored by for qualified plans. our investment staff and consultant, includes stocks, bonds, real estate, cash and equivalents, and private Confidentiality markets. Employer contributions and appropriations All information contained in a member’s record is con- from Illinois state government make up the remaining fidential. We provide such information to the mem- funding sources. ber, to others at the member’s written request, As a remittance agent for the State of Illinois to other retirement systems subject to the Illinois Department of Central Management Services (CMS), Retirement Systems Reciprocal Act, to the state we collect additional contributions from active of Illinois for annuitant health insurance purposes, members and employers to help fund the Teachers’ and to the Social Security Administration for gov- Health Insurance Security (THIS) Fund. Revenues ernment pension offset determination and wind- from the THIS Fund are used to finance the Teachers’ fall elimination purposes. Member information also 3 may be given pursuant to a subpoena issued during of an application or enrollment process, to estab- court proceedings. lish, amend, or terminate your TRS account, or to con- firm the accuracy of your SSN. For information about Social Security SSNs and Qualified Illinois Domestic Relations Orders TRS requires Social Security numbers (SSNs) for tax (QILDROs), please consult our QILDRO publication. reporting obligations associated with payment of ben- efits and refunds and for internal verification and Administrative review administrative purposes. You may rest assured that Any members, annuitants, beneficiaries, or employ- TRS understands identity protection concerns, com- ers may appeal a staff determination or interpretation plies with all applicable identity protection laws, and of the Illinois Pension Code or the TRS rules which spe- has policies and procedures in place to protect your cifically affects them to the Board of Trustees Claims SSN. We will never require you to transmit your SSN Hearing Committee. A written request must be filed over the internet unless the connection is secure or for an administrative review with the executive direc- the SSN is encrypted. We will redact your SSN from tor no later than six months after a TRS staff disposi- information or documents before release as part of tion or interpretation is given. The TRS Board does not a public records request. We will only print your SSN provide advisory opinions. on documents and forms that we mail to you as part 4 Chapter 2: Membership TRS is the retirement system for educators in positions requiring licensure under the Illinois School Code and employed in public schools outside the city of Chicago. Covered positions • a buildings and grounds manager, You qualify for TRS membership if you are employed • a bus driver, as: • a cafeteria worker, • an assistant regional superintendent of education, • a clerical worker, • a chief school business official, • a construction manager, • a classroom teacher, • a contract speech pathologist under section 5/14-6.04 of the School Code, • a driver education teacher, • a custodian, • an employee of a regional superintendent in an educational program that serves two or more dis- • a graduate general administrator intern, tricts and in a position that requires licensure, • a home educator/parent educator, • a regional superintendent of education, • an individual aide, • a retired teacher if post-retirement employment • a mobility instructor, limitations are exceeded, • a non-licensed school administrator, • a school administrator requiring licensure, • an occupational therapist, • a school librarian, • a paraprofessional/teacher’s aide, • a school nurse, • a physical therapist, • a school psychologist, • a physical therapist assistant, • a school social worker, • a psychologist intern, • a substitute or part-time teacher, or • a retired teacher who complies with post- • a teacher of homebound students. retirement employment limitations, You also may be a member of TRS if you are employed • a secretary, in a position requiring teacher licensure in cer- • a security guard, tain state government agencies or in certain posi- tions with the Illinois State Board of Education (ISBE) • a social worker intern, or TRS. • a speech and language pathologist assistant, Noncovered positions • a student teacher or worker, You do not qualify for TRS membership if you are • an ROTC instructor, employed as: • a tutor, • an adult education teacher, • a technology director not requiring licensure,* or • an assistant athletic director or athletic director • a transportation director. not requiring licensure,* Positions that do not qualify for TRS membership • an athletic official with IHSA or similar contract, may be covered by the Illinois Municipal