Tier 1 vs. Tier 2 Pensions
On January 1, 2011, the Illinois legislature established two sets of pension eligibility requirements. Members who joined CTPF or a qualified reciprocal system prior to January 1, 2011, are Tier 1. Members who joined CTPF on or after January 1, 2011, are Tier 2.
The pension calculation for both tiers is the same, but the retirement age and method for calculating the final average salary are different. Additionally, the salary used in the calculation of a pension is capped for Tier 2. The Tier 2 salary cap does not limit how much can be earned; it limits the amount for which pension contributions are made.
The chart below summarizes the differences in calculating benefits for Tier 1 and Tier 2 employees.
| Benefit | Tier 1: Members who joined CTPF or a qualified reciprocal system before January 1, 2011 | Tier 2: Members who join CTPF on or after January 1, 2011 |
|---|---|---|
| Retirement age for a pension without a reduction |
| 67 with 10 years of service |
| Retirement age for a reduced pension | 55 with 20 years of service | 62 with 10 years of service |
| Retirement Effective Date | The first day after resignation, unless the resignation date falls within the last payroll period worked, then the effective date becomes the day following the close of that payroll period, or the time the person resigning or retiring attains retirement age, or on a date elected by the teacher, whichever shall be latest. | The first day after resignation, unless the resignation date falls within the last payroll period worked, then the effective date becomes the day following the close of that payroll period, or the time the person resigning or retiring attains retirement age, or on a date elected by the teacher, or on the application submission date, whichever shall be latest. |
| Final Average Salary calculation | Average of 4 highest consecutive years in the 10 years preceding retirement | Average of 8 highest consecutive years in the 10 years preceding retirement |
| Pensionable Earnings Cap | The annual salaries used in the calculation of the final average salary are capped from year-to-year at 120% of previous year's salary.* | Final average salary used to calculate pensions capped at $127,283.01 in 2025. The cap increases by 3% or one-half of the increase in Consumer Price Index (CPI) for the preceding year, whichever is lower. |
| Annual Pension Increase | 3% of pension compounded annually, beginning 1 year after retirement, or at age 61, whichever occurs later. | 3% or 1/2 of any increase in the CPI for the preceding year, beginning 1 year after retirement or at age 67, whichever occurs later. |
| Survivor Pensions | 50% of the retired member's retirement annuity; surviving spouse must be age 50 or have surviving minor children. | Surviving spouse: 66 2/3% of the retired member's pension at date of death. The surviving spouse must be age 50 or have surviving minor children. Minor child: 50% of the retired member's retirement annuity |
* Applies to members who began employment on or after September 1, 1983.