2018 PENSION LAW

Changes affecting retirees

ANNUAL Cost of living adjustment (COLA)

1/1/2019 – 1/1/2023 = 1.0 percent

1/1/2024 = 1.1 percent

1/1/2025 = 1.2 percent

1/1/2026 = 1.3 percent

1/1/2027 = 1.4 percent

1/1/28 and thereafter = 1.5 percent

COLA Eligibility

Beginning 7/1/2024, eligibility for receipt of first COLA changes to normal retirement age (age 65-66, depending on date of birth). Exempt: members who retire under Rule of 90, and members who retire at least age 62 with at least 30 years of service credit.

COLA Trigger

A trigger that would have increased the COLA if TRA were at least 90 percent funded for two consecutive years was eliminated.

Changes affecting active teachers

Contribution rates

Beginning 7/1/2018: 7.5 percent employee, 7.71 percent employer

Beginning 7/1/2019: 7.5 percent employee, 7.92 percent employer

Beginning 7/1/2020: 7.5 percent employee, 8.13 percent employer

Beginning 7/1/2021: 7.5 percent employee, 8.34 percent employer

Beginning 7/1/2022: 7.5 percent employee, 8.55 percent employer

Beginning 7/1/2023 and after: 7.75 percent employee, 8.75 percent employer

The law provides state funding for the higher employer contribution through a pension adjustment in the school aid formula.

Early retirement benefits

Augmentation in the early retirement reduction factors will be phased out over a five-year period beginning 7/1/2019, completed by 6/30/2024. (This reduces early retirement benefits.) Exempt: members who retire at least age 62 with at least 30 years of service.

Deferred benefits

Augmentation on deferred benefits will be reduced to zero percent beginning 7/1/2019.

Interest payable on refunds to members was reduced from 4 percent to 3 percent effective 7/1/2018.

Interest due on payments and purchases from members, employers was reduced from 8.5 percent to 7.5 percent effective 7/1/2018.