SURS 6% Informational Job Aid
What is SURS 6% Billing?
Public Acts 094-0004 and 094-1057, also known as the SURS 6% Legislation, require the State Universities Retirement System (SURS) to bill the University of Illinois when they believe an employee (or employees) had earnings in an academic year utilized to determine his/her Final Rate of Earnings (FRE) that exceeded the amount of earnings for the previous year by more than 6%. When this occurs, the University is billed for the present value of the increased benefit.
https://www.hr.uillinois.edu/cms/one.aspx?portalId=4292&pageId=5604
When does SURS send a bill?
Whenever an employee retires and their pensionable earnings in one academic year within their Final Rate of Earnings (FRE) period exceeds the amount of pensionable earnings for the previous year by more than 6%.
Pensionable earnings include a variety of pay such as basic regular pay but also may include pay for summer teaching, overtime, or stipends (and other pay).
The 6% bill only is applicable to those in the Traditional or Portable plans. We will not receive a bill for employees in the Retirement Savings Plan (formerly the Self-Managed Plan).
How does SURS determine the Final Rate of Earnings?
SURS looks at the applicable earnings to determine the employee’s Final Rate of Earnings:
There is more than one way that the final rate of earnings is determined. It depends on what tier the employee is along with whether it is academic or staff. Per the bill, the employee falls under the Traditional plan, and per the Traditional plan handbook (page 14), this is how timeframe is considered:
If you first began participation prior to Jan. 1, 2011:
For an employee who is paid on an hourly basis or who receives an annual salary in installments during 12 months of each aca[1]demic year, it is the average annual earnings during the 48 consecutive calendar month period ending with the last day of final termination of employment or the four consecutive academic years of service in which the employee’s earnings were the highest, whichever is greater.
For any other employee, it is the average annual earnings during the four consecutive academic years of service in which his or her earnings were the highest.
If you work at least six months in the academic year in which you terminate employment, SURS will use your annual salary (not including summer session, vacation or overtime) to determine your average earnings under the high four consecutive academic years, if that rate exceeds your actual earnings for the year
Total earnings from 9/1 to 8/31 (regardless of if they are Academic or staff).
When SURS looks at earnings, they may use either the Highest 4 (highest four academic years) or the Final 48 (last 48 months of the member’s employment), and that is only if they are eligible for both.
To be eligible for the Final 48, the member must be paid as 12-over-12 or essentially paid as earned. If a member is an Academic paid 9-over-12, they are only eligible for highest four academic earnings (there is no limit to how far SURS will look at earnings when a member is an academic paid 9-over-12).
Was employee on disability, or any kind of leave, at any time during the Final Rate of Earnings timeframe.
Tier 2 members are different in that their Final Rate of Earnings is calculated using the highest 8 consecutive years in the last 10 years or 96 consecutive months in the final 120 months.
Per SURS, earnings are applied to the academic year they are earned and not paid.
The SURS academic year runs from 9/1 through 8/31 while our academic year runs from 8/16 through 8/15. SURS will always use the academic year of 9/1 – 8/31 UNLESS the employee was an academic employee (paid monthly).
Please note this is all pensionable earnings (overload, overtime, retro pay, etc.)
Why can’t Compensation calculate the 6% bill?
SURS looks at the applicable earnings used to determine the employee’s Final Rate of Earnings.
When SURS looks at earnings, they may use either the Highest 4 (highest four academic years) or the Final 48 (last 48 months of the member’s employment), and that is only if they are eligible for both.
To be eligible for the Final 48, the member must be paid as 12-over-12 or essentially paid as earned. If a member is an Academic paid 9-over-12, they are only eligible for highest four academic earnings (there is no limit to how far SURS will look at earnings when a member is an academic paid 9-over-12).
Was at any time the employee working less than 100%. If so, those earnings will be converted to a full-time equivalent.
Was employee on disability, or any kind of leave, at any time during the Final Rate of Earnings timeframe. If the employee was on disability during the Final Rate of Earnings timeframe earnings are assumed to be equal to the basic compensation on the date disability occurs or the average earnings during the 24-month period immediately preceding the month in which disability occurs, whichever is greater (earnings are assumed as if employee has not been off work).
If the employee had unpaid FMLA time and it was for their own health we could appeal, however if the employee had unpaid FMLA time and it was for their family we have no basis to appeal. If it is for their own health then we will need to document the pay periods with missed pay, number of hours missed each pay period, and the dollars missed for that pay period. You should include the hourly rate of pay.
Tier 2 members are different in that their Final Rate of Earnings is calculated using the highest 8 consecutive years in the last 10 years or 96 consecutive months in the final 120 months.
Some employees will have their benefits calculated under the General Formula or Money Purchase (SURS does both options to see which is advantageous for the employee).
6% bills are not calculated until the participant begins to take a benefit. An employee may leave employment but may not take the benefit right away.
A list of some of the information needed to determine retirement benefits and potential liability:
what retirement plan is the employee enrolled (Traditional or Portable)
what tier is the employee (this may have been determined at a previous SURS employer) what type of annuity benefits the employee would take (single life, joint & survivorship option and at what percentage)
years of service (this may be multiple SURS employers)
employee’s gender
employee’s age when retirement benefit is to start
marital status
spouse’s age (if providing benefit for the spouse)
spouse’s gender
What are the statutory exclusions that allow us to appeal the SURS bill?
Season layoffs are not an eligible exclusion
Unpaid FMLA time for their family is not an eligible exclusion
SURS 6% bills are sent to the area that is listed as the employee’s home department
If upon review, you see grounds to share some of the bill with another department you are welcome to reach out to that department and work with them on a resolution.
Example of email sent to the departments:
The State Universities Retirement System (SURS) believes Emp had earnings in an academic year used to determine their Final Rate of Earnings (FRE) that has exceeded the amount of earnings for the previous year by more than 6%. Public Acts 094-0004 and 094-1057 require SURS to issue a bill for the present value of the increased benefit.
System Human Resource Services has forwarded to Compensation a SURS 6% bill for Emp, UIN, Title, Dept#/ who retired on XX/XX/XXXX. Attached are a copy of the bill from SURS and an internal spreadsheet that provides the following information to help aid in your analysis of the bill:
- Tab One - TOTALS: A list of detailed earnings from the academic years in question, including earnings you may not have access to in Banner payroll, such as employee awards (this report contains all earnings; therefore, it may contain earnings that are not included in the earnings totals listed on the SURS bills).
- Tab Two - BY PPD: A report, by person, which lists out each pay period for the academic years in question (this report contains all earnings; therefore, it may contain earnings that are not included in the earnings totals listed on the SURS bills).
- Tab Three - SURS CONTRIB: A report, by person, which lists SURS Applicable Gross earnings and SURS deduction amount by pay period. This information can also be found by accessing the PHICHEK form in Banner.
Based on Compensations analysis there does not appear to be justification to appeal this bill. After your analysis, please let us know via email if you intend to pay or if you intend to contest this bill by DEADLINE DATE.
Summary of Bill
Emp received an increase in earnings in AY XXXX that resulted in an increase of more than 6%. I understand by looking at the employees’ records, the employee had an increase in earnings due to REASON which resulted in an increase of more than 6%. Additional information regarding SURS 6% bills can be found at https://hr.uillinois.edu/PolicyCompliance/Toolkit/GuidanceRes/SURS6Percent.cfm.
Deadlines
If you are contesting this bill, please send written justification and supporting documentation to (IHR-Compensation@illinois.edu) by SAME AS ABOVE.
If you are not contesting, please respond to this email with the departmental contact for payment processing including Lori Jones (lmjone@uillinois.edu) and Compensation (IHR-Compensation@illinois.edu) by SAME AS ABOVE.
Process for paying this bill
Although the payment is not due to SURS until DUE DATE, please go ahead and submit the Chrome River request:
To speed up processing, under Special Handling, check the box “Expedited Payment Request”.
To aid in processing the Chrome River request, below is the payment information:
Under Header Information:
Vendor Name: State Universities Retirement System
Invoice Number: SURS 6% Employer Cost – EMP NAME
Vendor Address Type: BR1
Invoice Date: Date of the bill
Invoice Amount: $ See invoice
Under Invoice Detail:
Check Request: Pickup Check UIUC
Business Purpose: Payment to SURS – 6% Employer Cost EMP NAME
Under Special Handling Section:
Special Handling Section: Check the box “Expedited Payment Request”. (This is a “Pay Today” code.)
Special Handling Instructions: DO NOT MAIL – Call or email Lori Jones in System HR (217-244-2039 or lmjone@uillinois.edu) to pick up the check from the Urbana’s Cashier’s Office.
Under Expense:
Use Account Code 219180
Not allowed to use State funds for this payment