*Calculations assume a 2.2% multiplier. Maximum benefit is capped at 75% of FAS. Tier 2 salary cap for 2024 is approximately $125,773.73.
Understanding the Illinois Tier 2 Pension System
The Illinois Tier 2 Pension system applies to employees who first became members of a state-funded retirement system (such as TRS, SURS, SERS, or IMRF) on or after January 1, 2011. Unlike Tier 1, Tier 2 has different requirements for vesting, retirement age, and benefit calculations.
Key Components of the Tier 2 Formula
Final Average Salary (FAS): Under Tier 2, your pension is based on the average of your highest 8 consecutive years of service within the last 10 years.
Pensionable Salary Cap: Tier 2 has a maximum salary that can be used for pension calculations. This cap increases annually based on 50% of the Consumer Price Index (CPI-U).
Retirement Age: The normal retirement age for a full, unreduced pension is 67 years old with at least 10 years of service.
Early Retirement: You can retire as early as age 62 with 10 years of service, but your benefit will be reduced by 0.5% for every month (6% per year) you are under age 67.
Service Multiplier: Most Tier 2 systems use a 2.2% multiplier per year of service.
Maximum Benefit: The maximum pension benefit you can receive is 75% of your Final Average Salary.
Example Calculation
If an employee retires at age 67 with 30 years of service and a Final Average Salary of $100,000:
Calculation: 30 years × 2.2% = 66%
Annual Pension: $100,000 × 0.66 = $66,000 per year.
If that same employee retired at age 64 (3 years early), the benefit would be reduced by 18% (6% per year × 3 years).
function calculateTier2Pension() {
var fas = parseFloat(document.getElementById('fasInput').value);
var years = parseFloat(document.getElementById('serviceYears').value);
var age = parseFloat(document.getElementById('retirementAge').value);
// Tier 2 2024 Salary Cap (Approximate)
var tier2Cap = 125773.73;
if (isNaN(fas) || isNaN(years) || isNaN(age)) {
alert("Please enter valid numbers for all fields.");
return;
}
// Adjust FAS if it exceeds the cap
if (fas > tier2Cap) {
fas = tier2Cap;
}
// 1. Calculate Multiplier (Max 75%)
var multiplier = years * 0.022;
if (multiplier > 0.75) {
multiplier = 0.75;
}
// 2. Calculate Unreduced Pension
var unreducedPension = fas * multiplier;
// 3. Calculate Age Reduction
// Reduction is 0.5% per month (6% per year) under age 67
var reductionPercent = 0;
if (age 1) reductionPercent = 1; // Cannot reduce below zero
}
var reductionAmount = unreducedPension * reductionPercent;
var finalPension = unreducedPension – reductionAmount;
if (finalPension < 0) finalPension = 0;
// 4. Update UI
document.getElementById('unreducedValue').innerText = '$' + unreducedPension.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('reductionValue').innerText = (reductionPercent * 100).toFixed(1) + '%';
document.getElementById('finalPensionValue').innerText = '$' + finalPension.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('monthlyValue').innerText = '$' + (finalPension / 12).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('percentageValue').innerText = ((finalPension / fas) * 100).toFixed(2) + '%';
document.getElementById('pensionResults').style.display = 'block';
}