The Teachers’ Retirement System of the State of Illinois covers public school teachers outside Chicago, who have their own fund. Illinois split its members into two tiers in 2011, and the tier you are in changes almost everything except the multiplier.
Which tier you are in
You are Tier 1 if you first contributed to TRS before January 1, 2011, or had service with a reciprocal Illinois system before that date. You are Tier 2 if you first contributed on or after January 1, 2011. Most teachers hired in the last 15 years are Tier 2.
The formula
Both tiers earn 2.2% of final average salary for each year of service, up to a maximum of 75%. That maximum arrives at 34 years (74.8% is rounded up to 75%), so years beyond 34 add nothing to the formula. A teacher with 30 years and a $75,000 final average gets 66% of $75,000, which is $49,500 a year or $4,125 a month.
Final average salary
Tier 1 uses the average of your four highest consecutive years of pay within your last 10 years. Tier 2 uses your eight highest consecutive years within the last 10, and pensionable salary is capped each year. The cap rises by the lesser of 3% or half of inflation, so for higher earners it grows more slowly than pay does.
Retirement ages
| Tier 1 | Tier 2 | |
|---|---|---|
| Unreduced | 62 with 5 years, 60 with 10, or 55 with 35 | 67 with 10 years |
| Reduced | 55 with 20 years, 6% off per year under 60 | 62 with 10 years, 6% off per year under 67 |
The Tier 2 reduction is large. A Tier 2 teacher who retires at 62 with 30 years loses 30%, so the benefit falls from 66% to 46.2% of final average salary for life. Retiring at 64 cuts it by 18%. The pension estimate calculator shows the gap at every age.
COLA
Tier 1 retirees get a 3% increase every year, compounded, starting at 61 or on the first anniversary of retirement, whichever is later. Tier 2 increases are smaller. They are the lesser of 3% or half of the rise in consumer prices, are not compounded, and do not start until 67 or the first anniversary of retirement.
Contributions
Members contribute 9% of pay to TRS, in both tiers. Because Illinois teachers do not pay Social Security on their teaching pay, the pension and any personal savings are the main sources of retirement income.
Social Security and the Fairness Act
Many Illinois teachers have 10 or more years of covered work from other jobs or a spouse with Social Security. Since the Social Security Fairness Act took effect, those benefits are paid in full alongside the TRS pension, with no WEP or GPO reduction. The pension and Social Security calculator adds the two.