Section 1540.90  Benefit Offset

a)         Occupational Disability and Occupational Death

Benefits received under Workers' Compensation Act [820 ILCS 305] or Workers' Occupational Diseases Act [820 ILCS 310] with respect to disability or death of a member shall be applied as an offset against any occupational disability or death benefit provided under the Retirement System with respect to the same disability or death. The Workers' Compensation average weekly wage will be converted to a monthly rate for use as an offset to the Retirement System monthly benefit.

1)         If the amount of compensation received is less than the monthly benefit provided under the Pension Code, only the amount of the excess of such monthly benefit over the amount of such compensation shall be payable by the Retirement System, subject, in the case of occupational death, to any minimum benefit provided by Section 14-103.18 and Section 14-121(h) of the Pension Code.  If the amount of compensation received equals or exceeds the monthly benefit provided under the Pension Code, no benefit shall be payable by the Retirement System during the period compensation is paid under the Workers' Compensation Act or Workers' Occupational Diseases Act.

2)         If the compensation for disability or death is received in a commuted lump sum or partly in a commuted lump sum and partly in monthly or weekly sums, the Retirement System shall, for offset purposes, consider the compensation as if it had been paid using the average weekly wage as prescribed under the Workers' Compensation Act or Workers' Occupational Diseases Act.  Salary or wages paid beyond date of disability shall not be considered part of the Workers' Compensation offset.

3)         In the event the whole or any part of the benefits received under the Workers' Compensation Act or Workers' Occupational Diseases Act is commuted into one sum, the aggregate sum of the benefits so commuted and not the commuted value thereof shall be used for purposes of ascertaining the amount of offset.

4)         No such offset or compensation shall be made after retirement of a member of a retirement annuity.

5)         The amount considered for offset purposes shall be reduced by any legal expenses granted in the award.

6)         No offset shall be made with respect to amounts received or paid under the Workers' Compensation Act or Workers' Occupational Diseases Act for medical, hospital, or burial expenses.

7)         That portion of the occupational death benefit consisting of accumulated contributions of a member shall not be subject to any offset mentioned in this section.

8)         The termination of death benefits under the Workers' Compensation Act or Workers' Occupational Diseases Act due to remarriage of the benefit recipient shall cause the offset to the Occupational Death Benefit applicable to the remarried benefit recipient to terminate effective with the last month of eligibility represented in the final benefit payment under the Workers' Compensation Act or Workers' Occupational Diseases Act.

9)         In those cases where the injury or death, for which an occupational disability or death benefit is payable, creates a legal liability for damages on the part of some person other than the employer to pay damages, the Workers' Compensation offset shall be applied as follows:

A)        Any amounts paid under the Workers' Compensation Act or Workers' Occupational Diseases Act are subject to the offset provisions of Article 14 of the Pension Code [40 ILCS 5/Art. 14] and this Part, even though such amounts are recoverable under the subrogation Section 5(b) of the Workers' Compensation Act.

B)        In the event that benefits due under the Workers' Compensation Act or Workers' Occupational Diseases Act are commuted into one sum or waived in lieu of the member seeking recovery against a third party, the System shall use the amount of any judgment, settlement or payment for such injury by the third party as a credit against any benefits paid or payable by the System.

10)         Any periods of disability for which payment under the Workers' Compensation Act is denied due to the failure of the individual to comply with that Act which result in a period of noncompensability under the Workers' Compensation Act will not be considered for Occupational Disability until the entire Workers' Compensation case has been finalized through the Illinois Workers' Compensation Commission.

b)         Nonoccupational Disability and Temporary Disability

1)         The nonoccupational and temporary disability benefit payable to a covered member shall be offset before age 65 by the amount of Social Security disability benefit payable prior to the member attaining age 65 and after age 65 by the amount of the Social Security retirement benefit for which the individual is first eligible on or after attaining age 65 less legal expenses paid by the member to obtain the award up to the maximum allowed by the Social Security Administration.

2)         The Social Security retirement benefit offset will be applied as follows at age 65:

A)        For a disability benefit recipient who received Social Security disability benefits before age 65, the Social Security disability benefit payment applied as the offset prior to age 65 will remain in effect as the Social Security retirement benefit offset on or after age 65.

B)        For a disability benefit recipient who did not receive Social Security disability benefits before age 65, the Social Security disability benefit amount that would have been payable by the Social Security Administration had the disability benefit recipient been disabled for the purpose of Social Security will be used as the Social Security retirement benefit offset at age 65 regardless of acceptance of a Social Security retirement benefit before age 65.

C)        When a Social Security disability benefit amount is not provided by the Social Security Administration because the individual is not eligible for a disability benefit for a reason other than not being disabled, the Social Security retirement benefit determined at the date of disability for which the individual is eligible at age 65 will be used for offset purposes at age 65.

3)         Disability benefits commencing after age 65 will be offset by Social Security retirement benefits for which the individual is eligible on the commencement of disability.

c)         Social Security Benefit Offset to Widow's and Survivor's Annuities

1)         Beginning July 1, 2009, the Social Security survivor benefit offset (offset) shall not apply to any widow's or survivor's annuity of any person who began receiving a retirement annuity or a survivor's or widow's annuity prior to January 1, 1998.

2)         Beginning July 1, 2009, the offset shall not apply to the widow's or survivor's annuity of any person who began receiving a widow's or survivor's annuity on or after January 1, 1998 and prior to July 1, 2009.

3)         If the widow's or survivor's annuity is payable based on a coordinated employee's death in service, the offset shall not be applied to the widow's or survivor's annuity.

4)         Any person who began receiving a retirement annuity after January 1, 1998 and before July 1, 2009 may make a one-time election before July 1, 2009 to reduce the monthly retirement annuity payable by 3.825% in exchange for not having the offset applied to any survivor's annuity payable.

5)         Any employee with a retirement annuity effective date on or later than July 1, 2009 may, at the time of retirement, elect to reduce the monthly retirement annuity payable by 3.825% in exchange for not having the offset applied to any survivor's annuity payable.

6)         For a person on the level income option under Section 14-112 of the Illinois Pension Code who makes an election under subsection (c)(4) or (c)(5) of this Section, the reduction shall be computed based on the reduced amount of the retirement annuity to be paid after the person has become eligible for old age payments under the federal Social Security Act plus any automatic annual increases received as of the date of the election.

7)         For a member whose accrued benefits are payable, in whole or in part to an alternate payee pursuant to a QILDRO, as established by Section 1-119 of the Illinois Pension Code, any reduction due to an election made by the member under subsection (c)(4) or (c)(5) of this Section shall be computed based on the total amount of the member's retirement annuity prior to and without giving effect to any QILDRO reduction for amounts payable to an alternate payee.  However, the actual reduction under subsection (c)(4) or (c)(5) shall be applied exclusively to the member’s retirement annuity and not to any payment to an alternate payee.

8)         If a coordinated employee does not elect to reduce the retirement annuity in exchange for not applying the offset to the SERS survivor's annuity, the survivor's annuity shall be reduced by one-half of any Social Security survivor's benefits for which all beneficiaries included in the widow's or survivor's annuity are eligible.  The offset shall not reduce any survivor's or widow's benefit by more than 50%.  If a coordinated employee does not elect to reduce the retirement annuity in exchange for not applying the offset to the SERS survivor's annuity, the offset will commence on the date the beneficiaries first become eligible to receive any portion of the Social Security benefit, regardless of whether the beneficiaries elect to accept the Social Security benefit on that date or if the beneficiaries' own earnings preclude payment of Social Security survivor's benefits.

9)         If an annuitant who elected to have the retirement annuity reduced 3.825% to prevent an offset from taking place to any survivor benefits payable has a change in marital status due to death or divorce, that annuitant may make an irrevocable election to prospectively discontinue the reduction.  However, no reimbursement of prior reductions will be made.

10)        If, at the time the offset is to be commenced, the survivor is eligible to receive a monthly benefit amount from the Social Security Administration based on his/her own Primary Insurance Amount, that amount shall be deducted from the amount of survivor's benefit payable by Social Security and the offset computed on the difference.  If the survivor is eligible to receive a monthly benefit amount based on his/her own Primary Insurance Amount and a governmental pension offset would have been applied to the Social Security survivor's benefit, that amount shall be deducted from the amount of the survivor's benefit payable by Social Security and the offset computed on the difference.

11)        The Social Security reduction amount once established shall remain constant except for the following conditions:

A)        If a survivor under age 50 previously receiving the survivor's benefit because of minor children becomes a deferred annuitant, the offset amount will be recomputed when he or she first becomes eligible for Social Security survivor's benefits.  The offset amount will be based on the original widow's Social Security survivor's amount, ignoring subsequent increases to the deceased's Primary Insurance Amount.  The recomputed offset amount shall be the balance of the Social Security survivor's benefit minus the governmental pension offset, if any.

B)        The offset amount will be adjusted when a child is removed from consideration for the System's annuity.

C)        The offset amount will be adjusted when any benefit recipients become ineligible for Social Security benefits.

D)        Beginning July 1, 2009, if a survivor under age 62 receiving a survivor's benefit subject to the Social Security offset becomes eligible to receive a monthly benefit amount based on a Primary Insurance Amount on his or her own record, the offset will be recomputed when he or she first becomes eligible to receive his or her own Primary Insurance Amount.  The offset amount will be based on the estimated widow's or widower's Social Security survivor's amount determined at the date of death of the member less the estimated monthly benefit amount based on the Primary Insurance Amount of the survivor determined at the date of death of member, and the government pension offset, if any, ignoring any subsequent increases to the deceased Primary Insurance Amount or the survivor's Primary Insurance Amount.  The monthly benefit amount based on the primary insurance amount of the survivor shall be determined from the Social Security Administration's Personal Earnings and Benefit Estimate Statement, including any adjustment due to the application of the Windfall Elimination Provision.

d)         Retirement Annuity

Pursuant to Section 14-108(f) of the Pension Code, for members under age 65, the primary insurance benefit payable to the member upon attainment of age 65 shall, at the date of acceptance of a retirement annuity, be determined from the Social Security Administration's Personal Earnings and Benefit Estimate Statement, including any adjustments due to the application of the Windfall Elimination Provision.  For members over age 65, the primary insurance benefit shall be the amount of Social Security benefits payable at the date of retirement with the State Employees' Retirement System.

(Source:  Amended at 34 Ill. Reg. 285, effective December 15, 2009)