TRS Early Retirement Option (ERO) Sunsets
Jul 8, 2016
On July 1, 2016, the TRS Early Retirement Option (ERO) provision expired. The TRS ERO provision had been in place since July 1, 2005.
The ERO allowed qualified TRS members the option to retire early without reduction in their pension benefits. To qualify for the ERO, a TRS member was required to be at least 55 years old and have at least 20, but not more than 35 years of service. The ERO was funded in part by requiring active TRS members to contribute an additional 0.4 percent of their creditable earnings. In addition, upon early retirement, both the TRS member and their employing school district were required to make a one-time monetary contribution to TRS.
In June of 2013, the General Assembly passed Public Act 98-0042, which extended the ERO for TRS employees through June 30, 2016, and allowed a local school district to adopt eligibility criteria for ERO applicants retiring after June 30, 2013. The General Assembly failed to extend the ERO provision before its expiration on July 1, 2016. Therefore, effective July 1, 2016, TRS members will no longer be able to retire early without accepting a reduction in their pension benefits. Presently, TRS members who retire with less than 35 years of total creditable service will have their retirement annuities reduced by .5% for each month they are under the age of 60.
TRS has stated that most TRS members will be eligible to receive a refund of their 0.4 percent ERO contributions accumulated between 2005 and 2016, called the ERO Sunset Refund. TRS has announced that it will notify eligible members about the procedure to apply for the Sunset Refund in December 2016. School districts have been advised by TRS to eliminate the 0.4 percent ERO contribution from their payroll systems effective July 1, 2016.
TRS has issued Employer Bulletin 17-01 (http://trs.illinois.gov/employers/bulletins/1701.pdf) concerning the ERO sunset and also addressed certain aspects of the sunset in its Spring, 2016 Topics & Report (https://trs.illinois.gov/pubs/topics/spring16.pdf). We will continue to notify you as TRS provides additional guidance.