Several new Illinois state agencies were created in the early to mid-1940s, with one of them being the State Employees’ Retirement System (SERS). On January 1, 1944, 17,237 state employees elect to become members of SERS, while 5,307 waived their membership. All new members have to serve a 12-month qualifying period. Also that year, the first SERS financial statement is prepared, with assets totaling $1.6 million, liabilities of $.4 million, and a reserve of $1.2 million.
The following benefits are provided at SERS’ inception:
• Service Retirement Allowance
• Reversionary Annuity
• Ordinary Disability Benefit
• Death Benefit
• Accidental Disability Benefit
• Accidental Death Benefit
• Death Benefit during Retirement
• Refund of Contributions
After World War II, SERS membership increases 12% due to employees returning home from service in the armed forces. By 1952, the average annual salary of a state employee is $3,354, while the average retirement benefit amounts to $946.
During the 1960s, legislation passes allowing a survivor benefit to all SERS members, the assets of SERS reach the $100 million mark, and federal Social Security benefits are offered to all state employees who elect to participate.
The Illinois State Board of Investments (ISBI) is created in 1970. All investment functions of SERS are transferred to the ISBI. On July 1, 1971, Social Security numbers are used to identify SERS members and their accounts. By the late-70s, SERS develops the semi-annual newsletter “The SERS-O-GRAM,” and creates a preretirement workshop program to start in FY80.
The SERS total return on investments is 44.1% in 1983. A year later, that rate plummets to 5.2%, clearly reflecting the volatility of the marketplace.
In 1990, SERS builds and takes possession of its new office building at 2101 South Veterans Parkway. The following year, the first Early Retirement Incentive passes the General Assembly. The program is an overwhelming success, with over 4,600 employees retiring under this provision.
The first pension enhancement for state employees since 1971 becomes law on January 1, 1998. The new law increases benefits for employees with Social Security to a flat rate formula of 1.67% for each year of service. Employees without Social Security receive a flat rate of 2.2% for each year of service. As a concession, SERS members no longer receive 1/2 of their pay for unused sick time after January 1, 1998.
The Rule of 85 takes effect on January 1, 2001. This provision allows employees to retire without a reduction in their pension when any combination of age and service credit equals 85. Previously, employees had to have 35 years of service or be age 60 to retire without penalty.
The second ERI passes the General Assembly effective August 1, 2002. It allows SERS members to purchase up to five years of age and service enhancement. A total of 11,039 participate in the ERI, more than double the members who took the first ERI.
In April, 2010 legislation passed which created a two-tier system of benefits and retirement rules for new SERS members hired after December 31, 2010.
At the end of FY10, SERS has 64,143 active members, and 45,659 retirees. Estimated total net assets amount to $10.962 billion, with an actuarial accrued liability of $29.309 billion. In comparison, at the end of FY09, SERS had 65,599 active members, and 44,566 retirees. Total net assets amounted to $11.000 billion, with an estimated actuarial liability of $25.298 billion.
