Retirement

How is my retirement benefit calculated?
The benefit amount is determined by a formula. The formula includes your average salary. If you retire before July 1, 2012, your average salary is the average of your salary from the three years when you earned the most. If you retire after June 30, 2012, your average salary is the average of your salary from the five years when you earned the most. If you are thinking of retiring soon after June 30, 2012, read about the transition rule described on page 5 protecting your highest three-year average salary earned as of that date.

Your average salary is multiplied by a multiplier based on your years of service. The multiplier for Regular members is 2 percent a year for the first 30 years of service and 1 percent a year for the next 5 years, up to a maximum of 65 percent. The multiplier for Special service members is approximately 2.7272 percent a year for the first 22 years and then 1.5 percent for years 23–30, up to a maximum of 72 percent.

See below for information on the early-retirement reduction, which is applied to your benefit if you are a Regular member and do not meet normal retirement age when you retire.

What are the Rule of 88 and the Rule of 62/20?
The Rule of 88 is when a member is age 55 or older, and the sum of the member’s age at the last birthday and years of service equals or exceeds 88. The Rule of 62/20 is when a member is age 62 and has at least 20 years of service. A member can reach normal retirement age by meeting either of these rules, or by reaching age 65. A member who retires before normal retirement age has an early-retirement reduction applied to his or her benefit.

Must I meet the Rule of 88 or the Rule of 62/20 to start receiving retirement benefits?
No. If you are vested, you may start collecting a retirement benefit as early as age 55 if you are no longer employed with an IPERS-covered employer. However, if you are younger than age 65 but do not meet the Rule of 88 or the Rule of 62/20, and you are not retiring because of a disability, your monthly benefit will be reduced. (Sheriffs and deputies may qualify to retire before age 55.)

When am I eligible to start receiving monthly retirement benefits?
Vested Regular-class members can start drawing monthly payments as early as age 55 (earlier if vested and receiving Social Security disability or Railroad Retirement disability payments). You must terminate employment with all IPERS-covered employers, unless you are over age 70, and apply. Some Special service members can start receiving benefits at an earlier age. Read more about the retirement rules for sheriffs/deputies and members in protection occupations.

What should I do when I’m ready to retire?
Before choosing a retirement date, contact IPERS and provide your full name, address, telephone number, member ID number, birthdate, the birthdate of your beneficiary, and possible retirement date(s). An estimate of benefits under the various payment options and an application form will be prepared and sent to you. IPERS also has a publication that explains the retirement process for regular members, sheriffs/deputies, and members in protection occupations.

When does IPERS consider me “retired”?
IPERS’ definition of retirement means you have applied for and begun receiving IPERS retirement benefits. You must live into your first month of entitlement to receive benefits regardless of your age. To qualify for IPERS benefits you must terminate all employment with all covered employers (you do not need to stop working if you are age 70 or older) and file a properly completed application for benefits, which IPERS must approve.

When can I expect my first retirement payment?
Retirement benefits may start the first month following the month in which you terminate employment with all IPERS-covered employers, provided you have filed an application and are 55 years of age or older. (Benefits may begin before age 55 if you qualify for disability benefits or if you are a sheriff or deputy.)

If you have chosen to have your monthly retirement benefit direct deposited, IPERS pays your benefit on the last business day of each month. If you have chosen to receive a paper check each month, the checks are mailed the evening before the last business day of the month.