Tier 1 vs. Tier 2 Pensions
Tier 1 vs. Tier 2 Pensions
The Illinois legislature adopted a different set of pension vesting requirements for CTPF members who join on or after January 1, 2011. Members who joined prior to this date are considered Tier 1. Members who join after January 1, 2011, are considered Tier 2.
The pension calculation for both tiers remains the same, but the retirement age and method for calculating the final average salary have been changed. Additionally, the salary used in the calculation of a pension has been capped for Tier 2. These changes do not apply to members who earned service credit before January 1, 2011.
The chart below summarizes the differences in calculating benefits for Tier 1 and Tier 2 employees.
| Benefit | Tier 1: Members who joined CTPF or a qualified reciprocal system before January 1, 2011 | Tier 2: Members who join CTPF on or after January 1, 2011 |
|---|---|---|
|
Retirement age for a pension without a reduction |
|
67 with 10 years of service |
|
Retirement age for a reduced pension |
55 with 20 years of service |
62 with 10 years of service |
|
Final Average Salary calculation |
Average of 4 highest consecutive years in the 10 years preceding retirement |
Average of 8 highest consecutive years in the 10 years preceding retirement |
|
Pensionable Earnings Cap |
None |
Final average salary used to calculate pensions capped at $115,928.92 in 2020. The cap increases by 3% or one-half of the increase in Consumer Price Index (CPI) for the preceding year, whichever is lower. |
|
Annual Pension Increase |
3% of pension compounded annually, beginning 1 year after retirement, or at age 61, whichever occurs later. |
3% or 1/2 of any increase in the CPI for the preceding year, beginning 1 year after retirement or at age 67, whichever occurs later. |
|
Survivor Pensions |
50% of the retired member’s retirement annuity; surviving spouse must be age 50 or have surviving minor children. |
66 2/3% of the retired member’s pension at date of death. |