When you become eligible for the State Universities Retirement System, you have six months to make one of the most consequential financial decisions of your career. You will choose between three retirement plans: the Traditional Pension Plan, the Portable Pension Plan, and the Retirement Savings Plan. Once you choose, that decision is permanent.
Most new faculty and staff receive a packet of information and are expected to navigate this decision largely on their own. That is a problem, because the right answer depends on factors that are unique to your situation: how long you plan to stay at a SURS-covered institution, your salary trajectory, your spouse's retirement picture, and your broader financial goals.
This article breaks down how each plan works, who each is best suited for, and how to think through the decision before your window closes.
If you do not make an election within six months of becoming eligible, you are automatically and permanently enrolled in the Traditional Pension Plan. That default may or may not be the right choice for your situation.
The Three Plans at a Glance
Two of the three SURS plans are defined benefit plans, meaning your retirement income is calculated by a formula based on your salary and years of service. The third is a defined contribution plan, where your retirement savings depend on contributions and investment performance.
The Traditional Pension Plan
What it is
The Traditional Pension Plan is the original SURS plan and the system default. It provides a guaranteed lifetime monthly retirement benefit calculated based on your final average salary and years of creditable service. It also includes a survivor benefit at no additional cost to your retirement income.
The separation refund
If you leave SURS-covered employment before retirement, you may be eligible for a separation refund of your employee contributions. Under the Traditional plan, this refund is smaller than what the Portable plan would provide in the same scenario. This is the primary tradeoff between the two defined benefit plans.
Who it is best suited for
The Portable Pension Plan
What it is
The Portable Pension Plan is also a defined benefit plan with a formula similar to the Traditional plan. The key difference is in what happens if you leave SURS before retirement. The Portable plan provides a significantly more generous separation refund, which is why it is called "portable" because it is designed for members who may not complete a full career at a SURS-covered institution.
The tradeoff
The more generous separation refund comes at a cost. Survivor benefits under the Portable plan require a reduction to your retirement and death benefits, unlike the Traditional plan where survivor benefits are included at no cost. Members who choose Portable and remain until retirement may find this tradeoff less favorable than they expected at the time of election.
Who it is best suited for
The Retirement Savings Plan (RSP)
What it is
The RSP is a defined contribution plan, similar in structure to a 403(b) or 401(k). Rather than receiving a formula-based benefit at retirement, you accumulate an account balance based on contributions and investment returns. The State of Illinois contributes 7.6% of your salary to the plan, and you control how those funds are invested from SURS core fund options or the SURS Lifetime Income Strategy, a professionally managed target-date portfolio.
The IRS earnings cap
The RSP is subject to an IRS annual compensation limit under Section 401(a)(17), which is adjusted each year. For faculty whose salary approaches or exceeds this limit, the RSP may be advantageous because the defined benefit plans cap the salary used in the retirement formula at that same limit, while the RSP continues to accept contributions based on your actual compensation up to the limit.
Who it is best suited for
The RSP shifts market risk to you rather than the state. Your retirement income will depend on contributions and investment performance, not a guaranteed formula. This is appropriate for some members and inappropriate for others; it depends entirely on your broader financial picture.
The Questions That Matter Most
Rather than comparing the plans in the abstract, the most useful framework is to work through the questions that will actually determine the right choice for your situation.
How long do you plan to stay at a SURS-covered institution?
If you are confident you will complete a full career within the SURS system, the Traditional plan is likely your strongest option. If there is meaningful uncertainty about your long-term tenure, the Portable plan's more generous separation refund becomes more valuable.
What is your salary trajectory?
The defined benefit formula is based on your final average salary. If you expect significant salary growth over your career, the defined benefit plans reward that growth directly. If your salary is already near the IRS compensation limit, the RSP deserves a closer look.
What does your spouse's retirement picture look like?
The survivor benefit difference between the Traditional and Portable plans matters most when your spouse would depend on your SURS income if you pass away before them. If your spouse has substantial independent retirement income, that difference carries less weight.
What is your risk tolerance?
The defined benefit plans provide a guaranteed income regardless of market performance. The RSP ties your retirement income to investment returns. This is neither inherently good nor bad, but it requires an honest assessment of your comfort with investment risk and your ability to absorb a poor sequence of returns near retirement.
What About the Social Security Fairness Act?
As of January 5, 2025, the Social Security Fairness Act repealed both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). For SURS members who have Social Security earnings from outside employment, this is a significant change: those benefits are no longer reduced because of your SURS pension.
This repeal affects the retirement income picture for many SURS members and should be factored into your overall planning, particularly if you or your spouse have substantial Social Security earnings from prior employment. Not associated with or endorsed by the Social Security Administration or any other government agency.
The Bottom Line
There is no universally correct SURS plan choice. The right answer depends on your career intentions, your salary level, your family situation, and your broader financial goals. What is certain is that the decision is irrevocable, and the six-month window moves faster than most new employees expect.
If you are approaching your SURS election window, the most important thing you can do is get a complete picture of your situation before you decide, not after.
Plan information sourced from the State Universities Retirement System of Illinois. For complete plan details, contribution rates, and benefit calculations, visit surs.org. Social Security Fairness Act information sourced from the Social Security Administration. This article is for educational purposes only and does not constitute personalized financial advice. Consult a qualified financial advisor for guidance specific to your situation.
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