Voluntary Separation Clarification

Some are under the impression that the City of DeKalb’s Voluntary Separation Program (VSP) for Public Works and management employees allows for early retirement under Illinois Municipal Retirement Fund (IMRF) rules. That is not the case.

IMRF does have an Early Retirement Incentive (ERI) and it’s a pretty good deal — so good, in fact, that municipalities can adopt the program only once every 10 years, according to Assistant City Manager Rudy Espiritu in response to an e-mail inquiry. DeKalb adopted the program in 2003 so is not now eligible, Espiritu says.

In the regular IMRF retirement program, an employee participating in IMRF can retire with full pension benefits at age 60 if s/he has at least 8 years of service credit or at age 55 with 35 years of service credit AND s/he cannot be working in any IMRF position upon retirement (there is a conditional exception for elected persons). Under ERI, the minimum age is 50, with 20 years of service.

A fully vested person separating from an IMRF employer voluntarily is not ejected from the IMRF retirement program; and in fact, normally has three options: retaining the retirement account, cashing it out, or rolling it over into another approved retirement account. There’s even a provision for those who take the refund and later return to an IMRF employer to buy back service credits.

Because DeKalb does not currently qualify to adopt ERI, it had to make up an incentive program, which maxes out at $20,000 per eligible employee. This theoretically might appeal most to someone who is close to hitting the minimum IMRF retirement age or someone who has other prospects.

Still, the scenario presented in the previous post about VSP applies: If a union employee has 20 years of service with the city but does not yet qualify for retirement benefits, there is nothing in the agreement stopping that person from separating, collecting $20,000, and being rehired by the city, say, a couple months later. Ditto for the management employee with 10 years’ service.