Taking early retirement is good if it means drawing a comfortable salary while no longer working for it. But for many state employees, early retirement means looking for another job or standing in line at the unemployment office.
“A lady who took early retirement about four months ago came to see me,” says State Senator Larry Bomke. “She left her job in October and wouldn’t start drawing her pension for another year and couldn’t find employment.”
She’s not alone. Larry Green, a supervisor for the Illinois Department of Employment Security’s Springfield office, estimates that within the past few months 25 to 50 state workers have walked through the door seeking unemployment benefits after taking early retirement.
Bomke says the call he received was a rare one. Most people who contact him about the early retirement program–offered last year to trim the state workforce and cut costs–did not take it, but wished they had. So far, 11,063 state employees have opted for early retirement, according to the Illinois State Retirement Systems (SRS).
Of that number, about 742 are not old enough to receive their pensions immediately upon retiring. Some might have to wait up to 15 years before seeing their first pension check, says Bob Knox, executive secretary for SRS.
These people chose a retirement package called Option 2. Previous early retirement programs allowed people to spend several thousand dollars to buy their full benefits early or to start receiving a slightly reduced pension. Either way, checks started coming to people shortly after they left the job. This is the first time the state offered an option for those too young to get benefits and with too little invested in the pension system to qualify for buying themselves up to retirement age. Many people purchased five more years of service to secure a bigger pension, Knox says.
“Someone in our office took Option 2 because her husband was moving to Florida and this was a way for her to secure a larger pension down the road. But many people took it because they thought they weren’t going to have a job and this was a way for them to buy five more years of service,” Knox says. Option 2, in other words, was offered to those who were on the wrong side of the budget cuts and November elections.
Generally, IDES allows someone who has accepted early retirement from an employer to receive unemployment benefits if “the individual knows or reasonably believes that, within the proximate future, his employment will be terminated.”
But Option 2 retirees might find that the state will challenge their unemployment claims if they took early retirement to avoid the axe. (Exceptions have been made for early retirees from facilities that were shut down, because their leaving is not considered to be voluntary.)
Former state employees who have taken early retirement are encouraged to file for unemployment benefits, Green says. “Each case is looked at differently. But as far as I know, 99.9 percent of them are not eligible for benefits because their leaving was voluntary,” he says. Some former state workers are receiving unemployment compensation after taking early retirement, but their checks usually amount to about $50 a week.
As for those who think they’ve missed out on early retirement, they might get another chance, Bomke says. The governor and the state legislature are considering extending the offer for another round of budget trimming.
This article appears in Apr 24-30, 2003.
