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Illinois Tier 2 Pension Formula:
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The Illinois Tier 2 Pension is a retirement benefit calculation method for public employees in Illinois who began service after January 1, 2011. It uses a formula based on years of service and final average compensation to determine retirement benefits.
The calculator uses the Illinois Tier 2 pension formula:
Where:
Explanation: The formula calculates the annual pension amount by multiplying 2.5% times the years of service times the final average compensation.
Details: Accurate pension calculation is essential for retirement planning, understanding future income, and making informed decisions about retirement timing and financial preparation.
Tips: Enter years of service as a decimal (e.g., 25.5 years) and final average compensation in USD. Both values must be positive numbers.
Q1: Who qualifies for Illinois Tier 2 Pension?
A: Public employees in Illinois who began service after January 1, 2011, typically including state workers, teachers, and university employees.
Q2: What is included in Final Average Compensation?
A: FAC generally includes the average of the highest consecutive salaries during the final years of employment, typically the last 4-8 years depending on the specific pension system.
Q3: Are there any caps or limitations?
A: Yes, Tier 2 pensions may have salary caps and other limitations. The maximum pensionable salary is often tied to Social Security wage base limits.
Q4: When can I retire with full benefits?
A: Full retirement age for Tier 2 is typically 67, though early retirement options may be available with reduced benefits.
Q5: How does Tier 2 differ from Tier 1?
A: Tier 2 generally has lower benefit accrual rates, higher retirement ages, and different salary calculation methods compared to Tier 1.