If you teach in an Illinois public school outside Chicago, your pension comes from the Teachers’ Retirement System of the State of Illinois (TRS), a defined benefit plan governed by Article 16 of the Illinois Pension Code.1Justia. 2025 Illinois Compiled Statutes Chapter 40 – PENSIONS 40 ILCS 5 – Illinois Pension Code, Article 16 When you retire, TRS pays you a monthly benefit for life based on your final average salary and years of service. What that benefit actually looks like depends almost entirely on one question: when you first started contributing.
Which Tier You’re In
Every TRS member is either Tier 1 or Tier 2. If you began contributing to TRS or to a qualifying reciprocal Illinois retirement system before January 1, 2011, you are Tier 1.2Teachers’ Retirement System of the State of Illinois. Tier 1 If your first contribution came on or after that date, you are Tier 2. The 2011 pension reform law created the split to reduce long-term state costs. Tier 2 members retire later, average more years of salary, face a cap on how much of that salary counts, and receive a smaller annual increase in retirement. Every other decision you make about your pension flows from this.
When You Can Retire
Both tiers require at least five years of creditable service before you have any right to a future benefit. From there the tiers split sharply.
Tier 1
Tier 1 members can retire with an unreduced annuity at any of these combinations:3Teachers’ Retirement System of the State of Illinois. Chapter 9 – Retirement Benefits
- Age 62 with 5 years of service
- Age 60 with 10 years of service
- Age 55 with 35 years of service (if the calculated benefit reaches at least 74.6% of final average salary, TRS rounds it up to the 75% maximum)
You can also take a reduced annuity as early as age 55 with 20 years of service. The reduction is 6% for each year you are under 60, and it is permanent. Retiring at 55 with 20 years produces a 30% cut that stays with you for life.
TRS also references a “Rule of 85” where age plus years of service equal 85, but the provision applies to members employed by a state of Illinois agency rather than to most classroom teachers. Contact TRS directly if you think you may qualify.
Tier 2
Tier 2 members face later dates and higher service minimums:
- Age 67 with 10 years of service for an unreduced annuity
- Age 62 with 10 years of service for a reduced annuity
The move from age 62 to age 67 for full benefits is the largest single practical difference between the tiers. A Tier 1 member with 10 years of service reaches full benefits seven years earlier than a Tier 2 member with the same record.
How Your Pension Is Calculated
The formula is the same for both tiers: final average salary multiplied by 2.2% per year of creditable service, capped at 75% of final average salary.3Teachers’ Retirement System of the State of Illinois. Chapter 9 – Retirement Benefits With all your service in TRS, you reach the 75% cap at 34 years.
The tiers diverge on how final average salary (FAS) is measured. Tier 1 averages your four highest consecutive years of earnings within your last ten years of service. Tier 2 averages your eight highest consecutive years, which smooths salary spikes and almost always produces a lower number. Tier 2 also applies an annual cap on pensionable earnings, set at approximately $145,650 for 2026. Any salary above that cap is excluded from the pension calculation entirely.4Teachers’ Retirement System of the State of Illinois. Contribution Rates and Earnings Limitations
A worked example: a Tier 1 teacher with 30 years of service and a $90,000 FAS receives 66% of that salary (2.2% × 30), which is $59,400 a year. A Tier 2 teacher with 30 years and identical pay history would land lower, because the eight-year averaging window pulls in earlier, smaller salaries and any pay above the annual cap drops out of the calculation.
Annual Increases After You Retire
Once you begin drawing your pension, it grows each year, but the two tiers grow differently.
Tier 1 retirees receive a 3% compounded increase every year, beginning one year after retirement or at age 61, whichever comes later. Compounding is the key word. Over a 25- or 30-year retirement, a 3% compounded increase roughly doubles the annual pension.
Tier 2 retirees receive the lesser of 3% or half the increase in the Consumer Price Index, and the increase is not compounded. It also does not begin until the later of one year after retirement or age 67. In a low-inflation stretch, the Tier 2 annual increase can fall well below 1%. This gap, layered on top of the eight-year FAS window and the salary cap, is what makes the Tier 2 pension meaningfully smaller than the Tier 1 pension over a full retirement.
What You Contribute
Every active TRS member contributes 9% of creditable earnings, deducted automatically from each paycheck.4Teachers’ Retirement System of the State of Illinois. Contribution Rates and Earnings Limitations The rate is fixed. In some districts the employer pays all or part of the employee share as a negotiated benefit, but the 9% itself does not change.
The Supplemental Savings Plan
Separate from the pension, TRS offers an optional 457(b) deferred compensation plan called the Supplemental Savings Plan (SSP), launched in 2022 and administered by Voya Financial.5Teachers’ Retirement System of the State of Illinois. Chapter 8 – Supplemental Savings Plan You contribute a portion of each paycheck into an individual investment account, choosing from target-date funds or core index funds covering U.S. stocks, international stocks, and bonds. The SSP does not change your defined benefit in any way. Tier 2 members whose pension will be squeezed by the salary cap and the smaller annual increase should look at the SSP seriously as a way to close that gap.
Adding Service Credit
Gaps in your TRS record can sometimes be filled by purchasing optional service credit, which increases your years of service in the pension formula. Categories eligible for purchase include out-of-state public school teaching, up to five years of military service if the service immediately followed Illinois teaching (or up to two years otherwise), approved leaves of absence, private school teaching in a recognized Illinois school (with applications accepted through June 30, 2028), paid student teaching on or after August 7, 2019, and certain older service categories.6Teachers’ Retirement System of the State of Illinois. Chapter 6 – Optional Service Credit The cost rises the longer you wait, so request an estimate from TRS as soon as you think you may qualify. Added years can flip a reduced annuity into an unreduced one, which is a permanent monthly difference.
Illinois also has a Reciprocal Act that lets you combine service earned across qualifying state retirement systems (TRS, SURS, IMRF, SERS, and others) to meet eligibility rules you could not meet under any one system alone. When you combine service this way, you must meet the highest minimum vesting requirement among the systems involved.
Working After You Retire
Retired teachers often return to substitute or part-time work, and TRS allows it within firm limits. Through June 30, 2026, a retiree can work up to 120 days or 600 hours in a TRS-covered position during a school year without affecting the pension. On July 1, 2026, those limits drop to 100 days or 500 hours.7Teachers’ Retirement System of the State of Illinois. Post-Retirement Limitations
Only work requiring teacher licensure counts, including substitute teaching and summer school. A day of five or more hours counts as a full day (five hours); shorter days count at actual hours. Paid sick, personal, and vacation days all count against the cap. Exceed the limit and TRS suspends your annuity and re-enrolls you as an active member. For Tier 2 members who first joined on or after January 1, 2012, taking a contractual position from your former employer without notifying TRS and the employer of your retirement status is a Class A misdemeanor carrying a $1,000 fine.8Teachers’ Retirement System of the State of Illinois. Chapter 12 – Post-Retirement Matters Track your hours through the year.
Leaving Teaching Before You Retire
If you leave a TRS-covered position, you can ask for a refund of your retirement contributions. Think hard first, because accepting the refund forfeits every future right to a TRS benefit, including any pension you would have earned from the service already on the books.9Teachers’ Retirement System of the State of Illinois. Refund of Retirement Contributions
The refund is 7% of creditable earnings for service before July 1, 1998, and 8% for earnings after that date. No interest is paid. Contributions toward the Teachers’ Retirement Insurance Program and the 1% survivor benefit are not refundable.
If you later return and want the forfeited service credit back, you first have to complete at least one year of TRS-covered employment (or two years in a reciprocal system), then repay the refund with interest from the date it was issued. The longer you wait, the more it costs. If you are unsure whether you will return to teaching, leaving your contributions with TRS is the safer default. Even with fewer than five years of service, your contributions will eventually generate a lump-sum benefit at age 65.
Social Security and the Fairness Act
TRS-covered teaching is not part of the Social Security system. For years, Illinois teachers who also earned Social Security credits through other jobs (or through a spouse) saw those Social Security benefits reduced under the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). The Social Security Fairness Act, signed on January 5, 2025, eliminated both provisions for benefits payable from January 2024 onward.10Social Security Administration. Social Security Fairness Act – Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) Update If you or your spouse have Social Security credits from non-teaching work, you may now be entitled to higher payments than earlier estimates showed. Months before January 2024 are still calculated under the old WEP and GPO rules.
How Protected Is Your Pension
Article XIII, Section 5 of the Illinois Constitution states that membership in any state pension or retirement system is an enforceable contractual relationship whose benefits cannot be diminished or impaired.11FindLaw. Constitution of the State of Illinois Art. XIII, Sect. 5 – Pension and Retirement Rights In 2015, the Illinois Supreme Court struck down a reform law that had tried to reduce benefits for current employees and retirees, holding in In re Pension Reform Litigation that the constitutional language means what it says. The state can change terms for future hires, as it did when it created Tier 2, but the structure in place when you joined cannot be weakened retroactively.