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SURS ruling negates pension-reform typo

May 8, 2014


SURS LogoThe Executive Committee of the Board of Trustees of the State Universities Retirement System (SURS) approved an Emergency Administrative Rule using June 30, 2014, as the deemed retirement date for calculating the Minimum Money Purchase Annuity (MMPA), a provision contained in the 2013 pension reform law. The unanimous vote by the executive committee means that the equivalent of a typo in the law will not sharply cut pensions as originally believed.

“We’re happy to be able to go this route to help our members,” SURS spokeswoman Beth Spencer told the Associated Press.

The State Universities Retirement System’s interpretation of a 2013 state-pension reform law is based on a state Supreme Court decision from 1986 that requires that when pension-related law is ambiguous, it “must be liberally construed in favor of the rights of the pensioner.”

“We are pleased with the SURS interpretation and hope it provides some assurance to our employees,” said Bill Nicklas, NIU Vice President of Operations and Community Relations.

However, the potential effects of the pension reform law are already driving many university employees to retire early.  According to information obtained from the SURS, retirement applications with an effective date of May or June are up sharply at Northern Illinois University as compared to the same period last year.

Data obtained through a May 5 DeKalb Daily Chronicle Freedom of Information Act request shows 111 applications have been received with effective dates of May or June, 2014, as compared with 33  applications for the same period last year. SURS data indicates that 77 retirements have already been set up, including those with a June effective date. The SURS indicates that the total number of retirements from NIU employees during the 2013 calendar year was 100.

NIU had been preparing for the possibility of losing as many as 800 employees—or 20 percent—to retirement because of the pension-reform law, which cut cost-of-living increases for retirees and capped the amount of earnings that can be applied toward pensions. Current estimates appear to be in the area of 10 percent of NIU employees.

“The picture will become clear in June, following the May 31 deadline to file for retirement before the pension changes take effect,” Nicklas added. “NIU will continue to align our human resources in a way that best supports our academic mission as it relates to student career success in advance of the coming academic year.”

Members who have received retirement benefit estimates in the last four months should have received an estimate for a June 2014 date. These June estimates will provide a very close, if not exact, estimate of their MMPA amount.  Members may also go to the SURS member website and use the interim benefit calculator to estimate their benefit using the 2014 date. It should be noted that vacation earnings and unpaid sick leave are ineligible for use in the MMPA calculation.

The language glitch that threatened to create a surge in retirements has been recognized by state lawmakers as a mistake as well, and at least two pieces of legislation were filed last week to change the language in the law. NIU supports making this correction.