Hey, Illinois Tier 2 Teachers! Don’t Forget You Are Subsidizing Everyone Else
“…The Tier 2 system… covers all employees hired after 2010. The precise details of the Tier 2 benefit program differ for each of the 5 state retirement systems (for teachers, state employees, university employees, judges, and legislators), and variations exist for the retirement programs for City of Chicago employees, and other public employees in Illinois, but there were three key changes in the Tier 2 benefits:
· Retirement age and minimum vesting service were increased;
· The Cost-of-Living adjustment was reduced from a fixed 3% per year to half the rate of inflation, and is additive rather than compounded (that is, if CPI is 3% for four years, your original benefit is increased by 4 times 1.5% rather than 1.03 x 1.03 x 1.03 x 1.03); and
· Pensionable pay is capped at a level that sits at $113,645 in 2018, but increase at a rate of half the rate of inflation. (The legislators, not surprisingly, chose to apply neither this provision nor the COLA reduction to themselves or the judges.)
“For the teachers, the impact of these provisions is harshest, especially bearing in mind that Illinois teachers (unlike those of 35 other states) do not participate in Social Security. Illinois teachers do not vest in their benefits until reaching 10 years of service. Their normal retirement benefit is not available until age 67; while they are eligible to retire at age 62, their benefit is reduced by 6% per year prior to age 67. They contribute 9% of pay towards their benefits (though, roughly half the time, their local school CONTINUE READING: glen brown: Hey, Illinois Tier 2 Teachers! Don’t Forget You Are Subsidizing Everyone Else
