Repository: UIHistories Project: Board of Trustees Minutes - 1978 [PAGE 223]

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BOARD OF TRUSTEES

[February 16

limitations on post-retirement salaries as requested by the State Universities Retirement System, 1 to be effective immediately. O n m o t i o n of M r . L i v i n g s t o n , t h i s r e c o m m e n d a t i o n w a s a p p r o v e d . January 3 1 , 1977 Presidents and Heads of Agencies Covered by the State Universities Retirement System Re: Reemployment after retirement Gentlemen: Section 15-139 of the Illinois Pension Code provides that, if a retiree of the State Universities Retirement System returns to employment with an employer covered by this system and receives compensation during any month in excess of his monthly retirement annuity, the portion of the annuity provided by employer contributions shall not be payable. The above-cited provision was incorporated in the pension code at a time when the maximum retirement annuity under the general formula was 50 percent of the average earnings during the highest five consecutive years. Thus, under the initial provision, the pension plus the salary received after retirement could not exceed 100 percent of such average earnings. However, the maximum retirement annuity was subsequently increased to the current 70 to 80 percent range depending on age at retirement. Consequently, under the current provisions of the Illinois Pension Code, it is legally possible for a person to retire and receive a pension of 80 percent of his average earnings during the highest four consecutive years, return to employment 60 days later, and receive a salary of 80 percent of such average earnings. Thus, the total compensation from pension and salary could be as much as 160 percent of the average earnings. Although total payment of pension and salary of 160 percent of average earnings is legally possible under the current provisions of the Illinois Pension Code, the Trustees of the State Universities Retirement System do not believe that the legislature intended that this provision of the pension code be used prior to the compulsory retirement date as a means of enhancing the financial position of the participant or reducing the salary obligation of the employer. T h e Retirement System Trustees, at the quarterly meeting on January 18, 1977, considered proposing to the Illinois Public Employees' Pension Laws Commission, legislation which would prohibit receipt of combined retirement annuity and annual salary in excess of 100 percent of the highest earnings received by the employee during any fiscal year prior to his retirement. However, the Trustees agreed that the interests of the colleges and universities would best be served if the various college and university governing boards would agree to limit annual salary payments to reemployed retirees to that amount which, when added to the annual pension, would equal the retiree's highest earnings (including summer session) during any fiscal year prior to his retirement. For example, if the highest annual earnings of a retiree amounted to $20,000, and he retired with an annual pension of $12,000, the Retirement System Trustees believe that his annual salary upon reemployment after retirement should not exceed $8,000. T h e decision of the Trustees on this question was unanimous. T h e Retirement System Trustees agreed that, if any of the college and university governing boards are unwilling to adopt the suggested limitation on the salary payments to retirees who are reemployed, alterTo:

1 For this purpose, computations should be based on the Illinois Pension Code fiscal year September 1 to August 31.