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Illinois Retirement System


Illinois state employees may be eligible to take part in the state’s retirement system. A retirement system is a pension plan that a state uses to help public employees save for retirement. Public employees become members in the system and then have to contribute a certain amount of their salary. Those contributions grow to cover employee retirement benefits. Each state has at least one retirement system, but they vary in both size and scope. Illinois has the State Retirement Systems (SRS) of Illinois. Continue reading to learn more about how the SRS works and who it covers. If you want more hands-on help in your own retirement planning, also check out SmartAsset’s free financial advisor matching tool, which can pair you with a financial advisor who serves your area.

How the Illinois Retirement Systems Works

The SRS is the retirement system of Illinois. However, it divides further into three smaller retirement systems. Each system covers employees in specific occupations, but they all work similarly.

First of all, they are all defined contribution plans. This simply means that employees contribute a set amount of their salaries into the system. That money goes into a fund and is invested. The goal is for the contributions to grow enough so that when an employee retires, the fund has enough so that the employee can receive lifetime retirement benefits. (This works similarly to Social Security.) The group administering the whole retirement system is the SRS Board of Trustees.

All employee contributions are pre-tax money. Employees do not pay income tax until they either withdraw the money from the system or until they receive the money as retirement benefits. There’s more below on how the state and federal government tax this money.

As mentioned, SRS breaks down into multiple occupation-specific systems. The following table breaks down the three smaller systems.

Illinois Retirement Systems

System NameDetails
State Employees’ Retirement System (SERS)Covers the majority of state employees, including teachers, policemen and firefighters.
Judges Retirement System (JRS)Includes judges and associate judges of any court
General Assembly Retirement System (GARS)For General Assembly and state officials of the executive branch who are elected by the people of Illinois

Overview of Illinois’ Retirement Systems

illinois retirement system

State Employees’ Retirement System – When you are hired, you will serve a six-month qualifying period. After this period, you become a member of SERS and you must also begin contributing a percentage of your salary to the system. How much you contribute will depend on whether or not the state considers your occupation as “high-risk” and whether or not you also pay into Social Security.

High-risk employees include state policemen, firefighters and security employees with the Department of Corrections or Juvenile Justice.

Regular members who pay SS will contribute 4% of their salaries to SRS. Members without Social Security will pay 8% of their salaries. If you’re a high-risk employee, your contribution levels are 8.5% or 12.5% if you do pay Social Security or not, respectively.

When calculating your monthly retirement benefits, there are a few factors to consider. First of all, there are two tiers of membership. Tier 1 is for members who joined before 2011. Tier 2 is for members who joined in 2011 or later. Which tier you are in determines how old you need to be and how many years of service credit you need in order to retire. Service credit is simply a measure of how long you worked in a SERS position.

  • Tier 1 members can retire with full pension benefits once they are 60 if they have at least eight years of service credit. They may retire between the ages of 55 and 60 with 25-30 years of service credit. The only caveat here is that the amount of yous benefit will decrease by 0.5% for every month you are under 60.
  • Tier 2 members need to work slightly longer and complete more years of service credit. For a Tier 2 member to retire with full benefits, he or she will need to wait until age 62 and have at least 10 years of service credit. At the same time, the member’s pension will decrease by 0.5% for each month under age 67 that the member is when he or she files for retirement. If you wait until you are age 67 or older, your benefit will increase by 3%.

The maximum regular retirement benefit for SERS members is 75% of final average compensation. Final average compensation is the average salary of the highest 48 consecutive months over the last 120 months of service. SERS members in high-risk positions can receive a retirement benefit worth up to 80% of final average compensation.

Judges Retirement System (JRS) – The JRS covers judges and associate judges of any court. It also covers the director of the Office of the Illinois Courts if the director previously was a member in the JRS as a judge.

Members of the JRS can expect to pay 8.5% of their salaries into the system. The earliest age that a judge can retire with full benefits is 55. The amount of your retirement benefit will depend on how many years of service credit you have and your salary. The maximum benefit you can receive is 85% of your final salary.

General Assembly Retirement System (GARS) – This system includes elected officials who served in Illinois’ executive branch or General Assembly. Members of GARS can anticipate that 11.5% of each salary will go to the system. This is the highest contribution rate of all the retirement systems, but GARS members can potentially retire sooner than those in other systems.

Retirement age is 55 with eight years of service credit or age 62 with four years of service credit. The amount of retirement benefits will depend on a member’s final salary and years of service. The benefits maxes out at 85% of your final salary.

Retirement Taxes in Illinois


As mentioned above, contributions that you make to SERS are pre-tax. Taxes are deferred until you withdraw the money (whether that’s in or before retirement). So even though you don’t pay income taxes as you earn the money, you will still need to pay those taxes.

The federal government collects income tax on all of your pension income. When you receive that money as benefits in retirement, you may have the option for the IRS to withhold income tax. This option is the easiest for you but may result in the IRS withholding more than is necessary. If that happens, you will receive a tax refund come tax season.

If you want more control over how much you pay in taxes, you can make estimated tax payments. These are taxes that you pay quarterly based on your income throughout the year.

It’s also worth noting that you may need to remove money from the SRS before you retire. If this happens, consider making a rollover. This is simply when you move money from one retirement account into another In this case, you may want to rollover into a 401(k) or individual retirement account (IRA). These are both tax-deferred accounts and allow you to maintain the tax-deferred status of your money.

If you rollover the money into other types of retirement accounts, you may have to pay taxes when you make the move. For example, a Roth IRA does not take pre-tax money. Roth IRA contributions already have income taxes removed. So if you move pre-tax money into this account, you will need to pay immediately. This could leave you with a hefty bill.


As you’ll see on our Illinois retirement friendliness page, the state is a very friendly place for retirees. Illinois does not require you to pay income tax on any retirement income. That includes Social Security benefits, SERS benefits and any IRA or 401(k) income you may have.

Just keep in mind that other taxes in Illinois may get quite high. The state has one of the highest effective property tax rates in the country. Sales taxes are also high.

Current Financial Health of the Illinois Retirement System

illinois retirement system

The SRS had about 90,575 participants in 2021 (most recent report). SRS paid benefits of more than $2.8 billion in 2021.While the system continues to pay more in benefits, it is struggling to cover that liability.

In 2021, the system was 41.91% funded and was short $33.1 billion in pension funds. As per its own annual report, “The System is significantly underfunded – raising concerns about its future financial solvency, should there be a significant market downturn.”

Tips to Help Your Retirement Planning

  • A pension is nice because you can expect to receive a certain payment each month. But with the SRS being so underfunded, it’s still vital for employees to take control of their own savings. If you want to put yourself in a position for a comfortable retirement, consider working with a financial advisor. An advisor is an expert who can look at your whole financial situation with you and then help you make the best decisions.
  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Not sure how you’re tracking for retirement? Our free retirement calculator will help you by showing how your current savings may grow between now and your retirement. You can also see how long that money will last after you retire.

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