1. Illinois SURS Member Guide –Contributions (page 2) –Disability Benefits (pages 7-9) –Disability Retirement Allowance (page 10) –Retirement Benefits (pages 13-19) –Special Police and Firefighters Formula (page 20) –Post-retirement Health Insurance (page 25-28) Annual Report –Introductory and Financial Sections –Actuarial Section –Investment Section

2. Member Guide Contributions Employee Contributions 6.5% Normal Retirement Benefit 0.5%Automatic Annual Increases 1.0%Survivors’ Insurance 8.0%Total Employee Contribution Employer Contributions 9.1% Average (1.4 x 6.5%)

3. Member Guide Disability Benefits Definition - unable to perform your job 60 day waiting period (or accumulated sick leave if longer) Benefit is greater of: –50% of basic compensation on day you were disabled –50% of average earnings for 24 months prior Benefits stop on the earliest of: –Disability benefit payments equal 50% of your total earnings –Sept. 1 of year following your 70th birthday (or 5 years if disabled after 65) –No longer disabled, retirement, or death

4. Example – Disability Benefits 28 year old employee Began work on 1/1/99 Disabled from an accident on 12/31/00 Earnings: 1999$25,000 2000$30,000 ($2500/month) Disability benefit of $1250/month starting after 60 days Payable for 22 months ((1/2)(25,000+30,000)/1250)

5. Member Guide Disability Retirement Allowance Definition - totally disabled and unable to perform any substantially gainful employment Amount - 35% of basic compensation

6. Retirement Benefits General Formula (based on average monthly earnings) –2.2% per year of service –Maximum benefit is 75-80%, depending on starting date and age at retirement

7. Retirement Benefits Early Retirement General formula benefit is reduced 0.5% for each full month under age 60 at retirement Avoiding the Early Retirement Reduction –Employee contribution7% per year under 60 –Employer contribution20% per year under 60 –No Early Retirement Reduction if you have 32 or more years of service (in 2000)

8. Example – Retirement Benefit Employee retires at age 58 with 27 years of service Final average earnings of $50,000 Highest annual salary in FAE = $52,000 Retirement benefit $26,135 (.5227x50,000) Employee payment for Early Retirement Option $7,280 (.14x52,000) Retirement benefit without discount $29,700 (.594x50,000) One time payment of $7,280 provides annual benefit of $2,565

9. Retirement Benefits Money Purchase Formula Start with contributions and interest in your account Multiply by 6.5 and divide by 8.0 (to get retirement component) Multiply by 2.4 (to include employer contribution) to get the money purchase value Money purchase value is divided by actuarial factor (based on age at retirement – see page 18) to get the monthly retirement benefit

10. Example – Money Purchase Formula Same employee as before, but amount of contributions and interest in account is $150,000 Money purchase value is (150,000x6.5/8.0)x2.4=292,500 Monthly benefit is 292,500/119.761=2,442.36 Annual benefit is $29,308.32

11. Retirement Benefits Police and Fire Fighters Employee contributions 9.5% Retirement benefits paid in full –at 50 with 25 years of service –at 55 with 20 years of service Formula –2.25% per year for first 10 years of service –2.50% per year of next 10 years of service –2.75% per year of next 10 years of service –Maximum = 80%

12. Post-retirement Health Insurance Any retiree with 5 or more years of service is eligible to participate State of Illinois pays entire cost of coverage for anyone with 20 or more years of qualified service For those with fewer than 20 years of service, State pays 5% of cost per year of qualified service

13. SURS Comprehensive Annual Financial Report Introductory and Financial Sections Public Act 88-0593 (effective 7/1/95) –Funding appropriation for SURS Public Act 90-448 (effective 1/1/98) –Alternative benefit programs Funding Status –199668.5% –1998 85.8% –199985.3%

14. Actuarial Section Letter of certification Valuation results –Unfunded liability of $1.9 billion (6/30/99) Actuarial assumptions –MortalityRetirement age –InterestAssets –TerminationExpenses –Salary increasesSpouse’s age

15. Investment Section Investment summary –Policy –Objectives –Strategies Investment results