Record number seek retirement advice as pension deadline nears
As the June 1 effective date for the new pension law draws closer, requests for retirement counseling sessions are at an all-time high and retirement applications have doubled, according to the State Universities Retirement System.
“We are working as hard as we can to provide members with the facts on the provisions so they can make informed decisions,” said Beth Spencer, SURS communications manager.
More than 1,400 SURS members across the state have filed applications stating their intent to retire in May or June, Spencer said.
At the same time last year, 657 state university employees turned in retirement applications, Spencer said.
“Retirement applications have basically doubled from last year,” she said.
The university has received notification from SURS that 123 employees from all three U of I campuses have filed retirement applications for May and 286 have turned in applications for June, said Maureen Parks, associate vice president for human resources. The influx is similar to an increase in in 2012, when changes to the money purchase formula reduced employee retirement benefits.
“Our numbers, looking ahead to May and June — we believe that they have a good chance of increasing, maybe even dramatically, but there’s really no way to tell,” Parks said.
SURS has seen a 173 percent increase in retirement counseling appointments over previous years and the group estimates that 4,700 members will attend one-on-one or group counseling sessions by July 1, Spencer said. SURS took more than 12,000 calls to its call center in March, a 48 percent increase from last year.
About 8,500 members have attended on-campus pension reform presentations hosted by SURS that provide an overview of the impact of the new law, Spencer said.
Two upcoming pension presentations are scheduled at UIC:
• 10 to 11:30 a.m. Friday, 106 College of Medicine West
• 10 to 11:30 a.m. May 20, Moss Auditorium, College of Medicine Research Building
Register for the sessions through NESSIE at nessie.uihr.uillinois.edu
Group counseling sessions are still available for members eligible to retire before July 1. Call SURS at 800-275-7877 to register.
“Our online webinars and pension reform videos are receiving unprecedented hits — 3,000 members have attended our pension reform webinars,” Spencer said. “So we know members are becoming informed.”
The sudden wave of retirements results from the new pension law passed in December. The law’s constitutionality is being challenged in court, but it will take effect in June unless a judicial stay is granted.
The new law reduces cost-of-living adjustments, increases the retirement age for some employees and puts a cap on pensionable earnings.
An unexpected glitch in the pension law is prompting action by some employees who were not considering retirement this year.
A drafting error in the law impacts a retirement benefit option known as money purchase, one of two pension options available to employees hired before Jan. 1, 2011. The law reduces the interest rate used to calculate the annuity from 7.75 percent to 4.5 percent.
A clause would guarantee that employees eligible to retire June 30 would be locked in under the old formula, but the language of the bill incorrectly states “June 30, 2013.”
“That eliminates a year of pension contributions and interest, and reduces benefits,” University President Robert Easter wrote in an April 24 email to the campus community. “For eligible employees it may be an incentive to retire even if they had not intended or wished to do so.
“We have been in contact with the legislature to address this problem and I am hopeful a remedy will be approved in time to protect the benefits that our retirement-eligible faculty and staff have earned.”
University administrators discussed the glitch at a special meeting of the Board of Trustees April 18. Trustees encouraged administrators, employees, students and alumni to voice support for correcting the law.
“Every day that passes, we face the very real threat of losing more of the faculty and staff who are the foundation of our standing as one of the world’s premier universities,” Easter said.
For more information, visit the Illinois Connection website, http://bit.ly/1iwvitJ
The university is also exploring supplemental retirement benefit options. The Academic Professional Advisory Committee has put together a petition to ask state legislators to support the university’s efforts in securing supplemental retirement options. It is available to view or sign through 5 p.m. Friday at http://bit.ly/1ha2dip
“If legislators do not support our current efforts, we may not be able to secure the supplemental retirement benefits under consideration,” said Michael Moss, chair of the Academic Professional Advisory Committee. “It would also set a precedent, making any subsequent effort by the university to secure supplemental retirement benefits that much more difficult.”