Updated October 7, 2026. Quick answer: A Tier 1 member of the Municipal Employees’ Annuity and Benefit Fund of Chicago who leaves with 10 years of service at age 60 or later is paid a monthly annuity of 2.4% of final average monthly salary for each year of service, capped at 80%. The handbook describes no menu of joint and survivor options. A spouse annuity of 50% is built in when conditions are met, and a member can reduce the annuity by up to $400 a month to fund a reversionary annuity, which must be elected at or before retirement. A refund of contributions is open to those who leave under age 55, or between 55 and 60 with under 10 years of service, and it forfeits all rights in the Fund.
Chicago police officers, firefighters and laborers belong to separate funds with their own rules: Chicago police PABF retirement decisions, Chicago firefighters FABF retirement decisions and Chicago Laborers’ Fund retirement decisions.
Chicago public school teachers belong to a separate fund with its own rules: Chicago teachers CTPF retirement decisions.
What this page covers and what it does not
This page works from two documents published by the Municipal Employees’ Annuity and Benefit Fund of Chicago (MEABF): its Membership Handbook for Tier I members and its Pension Benefit Overview. The handbook’s cover reads “INCLUDING AMENDATORY PROVISIONS THROUGH NOVEMBER 1, 2013”, so its figures are as of that edit, read on October 7, 2026. The overview is the July 2023 revision and covers all three tiers.
The handbook is written “for Fund members who first began participating in the Fund or an Illinois Reciprocal System (other than the General Assembly or Judges Systems) prior to January 1, 2011”. Members first covered later fall under Tier 2 or Tier 3, and the pages read give an eligibility and benefit comparison for them.
The handbook describes three ways to compute an annuity, a built-in spouse annuity, an optional reversionary annuity, a refund of contributions and a purchase of past service. State tax is covered on Illinois retirement taxes, and the system-by-system view is public pension retirement decisions by system.
Before anything else: request an estimate and apply
The handbook says “Participants considering retirement should request an estimate of benefits before finalizing their resignation from service.” With service to be established or re-established, it adds that the member should “request an estimate at least six months before resignation”.
Nothing is automatic. The overview says: “Upon resignation, refunds and annuity benefits are not automatic; you must apply.” For a member who leaves before the age an annuity can be paid, the handbook says: “Annuity rights will not begin until such application is filed.”
When an annuity can start, by tier
For Tier 1, the handbook lists three minimum formula combinations: “30 years of service, payable no earlier than age 50”; “20 years of service, payable no earlier than age 55”; and “10 years of service, payable no earlier than age 60”. It also sets a floor: “A Participant withdrawing from service at age 60 or over, with at least 10 years of service in the Fund will receive a minimum annuity of $850 per month.”
| Tier | Who it covers | Minimum formula annuity eligibility | Final average salary window |
|---|---|---|---|
| Tier 1 | Before January 1, 2011 | Age 50 with 30 years; age 55 with 25 years; age 55 with 20 years, reduced; age 60 with 10 years | 4 consecutive years within the last 10 |
| Tier 2 | On or after January 1, 2011 and before July 6, 2017 | Age 67 with 10 years; age 62 with 10 years, reduced for each month under 67 | 8 consecutive years within the last 10 |
| Tier 3 | On or after July 6, 2017, or a Tier 2 member who elected Tier 3 | Age 65 with 10 years; age 60 with 10 years, reduced for each month under 65 | 8 consecutive years within the last 10 |
For the reduced Tier 2 and Tier 3 ages, the overview describes a cut of ½ of 1% for each month under the full age, which is 67 for Tier 2 and 65 for Tier 3. For survivors, the Tier 2 and Tier 3 comparison lists a spouse annuity equal to 66 2/3% of the member’s earned annuity at time of death and a child annuity of $220 a month if a spouse annuity is payable or $250 a month if not, payable until the child turns 18. The annual increase is set by statute and not compounded; the footnote gives it as the lesser of 3% or 50% of CPI-U. The pages read give no Tier 2 or Tier 3 refund interest figure.
How the annuity is computed, with an example
On the accrual, the handbook says “The total number of years of service is multiplied by 2.4%. The maximum percentage is 80% of the final average monthly salary.” The final average is defined this way: “Final average monthly salary is the highest average monthly salary for any four consecutive years within the last ten years of service immediately preceding the date of retirement.”
Retiring before 60 can cost money. The handbook says: “There is no reduction in the percentage of final average monthly salary for retirement on or after age 60. For retirement before age 60 with less than 25 years of service there is a discount of .25% for every month or fraction thereof that the Participant is under age 60.”
A computed example from an assumed $4,000 final average monthly salary and 22 years of service, not MEABF figures: 22 years times 2.4% is a computed 52.8%. At 60 or later, the annuity would be $4,000 times 52.8%, a computed $2,112 a month. If the same member retired at an assumed age 57 with under 25 years, the discount would be 3 years, or 36 months, times 0.25%, a computed 9%. The percentage would drop to a computed 48.0% and the annuity to a computed $1,922 a month. The handbook’s Table 1 gives the exact factors, and the Fund’s own estimate is the figure that governs.
The election: what a survivor receives
The pages read describe no menu of single life and joint and survivor options. Survivor protection is partly built in and partly elective.
| Choice | What the member receives | What a survivor receives |
|---|---|---|
| Standard annuity, no election | The member’s own annuity for life | In the minimum formula method, a spouse annuity of 50% of the member’s annuity, when conditions are met |
| Reversionary annuity election | The member’s annuity reduced by the amount the member chooses, up to $400 a month | A lifetime annuity for the designated person, equal to the reduction times a Table 2 factor, with a floor of $50 a month |
| Refund in lieu of annuity | A lump sum of the member’s salary deductions, only if the annuity would be under $800 a month | No annuity or other benefit based on those accumulations |
The built-in annuity is paid to “the surviving spouse of an Annuitant whose death occurs after retirement on annuity, if marriage occurred while the Participant was still in service”. The minimum formula version is “equal to 50% of the annuity the Annuitant was receiving on the date of his or her death provided that the surviving spouse on such date is age 55 or older”. There is also a floor: “The surviving spouse of any Annuitant with at least 10 years of Municipal service who dies after retirement on annuity will receive a minimum annuity of $800 per month for life beginning upon the Annuitant’s death.”
A computed example from the same assumed figures, not MEABF figures: half of the $2,112 annuity is $2,112 times 50%, a computed $1,056 a month for a surviving spouse aged 55 or older, before any floor or ceiling. For the general trade between a single-life pension and a survivor pension, see single-life versus joint-and-survivor pension.
Marital timing matters: the eligibility wording above requires that the marriage occurred while the participant was still in service. Survivor rights can end with a refund: the handbook lists a refund of contributions for annuity purposes among the reasons a spouse gets no annuity when a member with ten or more years of service dies out of service.
The reversionary annuity in detail
The reversionary annuity is the main elective survivor choice the handbook describes. “A reversionary annuity is a reduction of a Participant’s annuity to provide a lifetime annuity for a spouse, parent, child, brother or sister, such annuity to begin upon the death of the Annuitant.” “A Participant must make the election to reduce his or her annuity at or prior to retirement.” The designated person need not be a spouse.
The handbook limits the reduction: “Participants may reduce the retirement annuity by an amount up to a maximum of $400 a month”. The survivor benefit comes from a table, and the handbook’s example reads: “A $100 per month reduction by the Participant would give the reversionary annuitant an amount of $261 per month payable for the lifetime of the reversionary annuitant.”
A computed example, not a MEABF figure: Table 2 shows a factor of 3.44 for a member aged 58 to 60 whose reversionary annuitant is 0 to 4 years younger. An assumed reduction of $200 a month would give the designated person $200 times 3.44, a computed $688 a month for life. The $400 maximum reduction at that factor would give a computed $1,376 a month. The member pays for it with a smaller annuity every month.
One feature protects a member whose designee dies early: “If the designated person dies prior to the Annuitant, the Annuitant’s full annuity before reduction will be restored beginning on the date of the designated person’s death. There would be no retroactive payment of the difference between the full and reduced annuity.”
What is irrevocable, and what can be undone
The handbook allows revocation of a reversionary designation “by a written request by the Participant at any time prior to retirement on annuity”. The pages read state no way for a retired member to change the designation, so confirm with the Fund.
Leaving before an annuity: the refund and what it forfeits
A refund is not open to every member who leaves. The handbook says participants are entitled to one on “withdrawal from service under age 55 with any length of service”; or on “withdrawal from service between the ages of 55 and 60 with less than 10 years of service”. The overview says: “Only contributions that you made to the Fund, in addition to any statutory interest earnings accrued to your account, are refundable.” The handbook adds: “Under no condition is a refund made of Employer contributions.”
On interest, “A Participant receives interest on all contributions (except the 0.5% deduction made for annuity increases after retirement) up until resignation from service. No interest is credited after withdrawal from service.”
The price is stated without softening: “A Participant who receives a full refund forfeits all rights in the Fund for himself or herself and for any other person who might benefit through the Participant for service rendered prior to date of application for refund.” The pages read do not say whether a spouse must consent to a refund, so that is one to confirm. For the general framework, see pension refund versus leaving it.
A member who leaves before the age an annuity starts has another path: the handbook says “he or she may let the contributions remain in the Fund and receive an annuity beginning upon application for such annuity after the attainment of the required age”.
The refund in lieu of a small annuity
The one lump sum at retirement is for small annuities. The handbook says a participant or surviving spouse “may elect to receive a refund of the Participant’s accumulated salary deductions in lieu of a monthly annuity to which he or she would otherwise be entitled if such Participant’s or surviving spouse’s annuity is less than $800 a month”. The consequence: “By withdrawal of the single lump sum, the Participant or surviving spouse forfeits all rights for annuity and any other benefits based on such accumulations.”
A break-even approach is on pension lump sum versus monthly annuity break-even, with inputs that would have to come from the Fund’s own estimate.
Tax on a refund, and rollover
The handbook says “The interest included in the refund, together with the pension contributions which were previously not included as taxable income on the Participant’s W-2’s is subject to Federal Income Tax.” It says the taxable portion of a refund may be rolled over “tax free either directly from plan to plan or by the Participant within 60 days after receiving the refund”. Without a direct rollover, “the eligible rollover distribution is subject to mandatory 20% income tax withholding”.
A computed example from an assumed $4,000 taxable refund paid directly to the member, not an MEABF figure: 20% withholding would be a computed $800, leaving a computed $3,200 in cash. A member who wanted to roll over the full $4,000 would have to replace the withheld $800 from other money. See also 20 percent withholding on a pension lump sum.
On the state side, the handbook says: “Presently, annuities and refunds payable by this Fund are not subject to Illinois State income tax.” That is the handbook’s statement, so confirm it against current law.
Coming back after a refund, and buying past service
A refund is not necessarily final. For a return to a covered job, the handbook says that where a participant “renders at least 90 days of contributing service from date of re-entry, he or she may have all rights restored that were previously forfeited by repaying the refund previously received plus interest to the date of payment”. The handbook then states a firm condition: “Payment to the Fund must be made while the Participant is in service.”
Buying service raises the multiplier in the formula. The handbook says: “Participants can pay for periods of eligible creditable prior service rendered to the Employer and receive credit for all such service for annuity purposes.” The cost is the contributions that would have been paid plus the interest that would have accrued on them.
A computed example from assumed figures, not MEABF figures: 2 purchased years at 2.4% a year are 4.8% of final average monthly salary, which on an assumed $4,000 is a computed $192 a month. If that purchase cost an assumed $18,000, the recovery period would be $18,000 divided by $192, a computed 93.8 months of annuity. The pages read give no interest rate, so the cost has to come from the Fund. The general method is on the pension buyback calculator.
Service in another Illinois system can count: “Pension credits of one year or more in any reciprocal system may be used to determine eligibility for retirement and survivor benefits and the amount of those benefits.” The handbook lists the Illinois Municipal Retirement Fund among the covered systems, so the IMRF side is on Illinois IMRF retirement decisions.
Cost of living adjustments and going back to work
For Tier 1, a participant who retires at 60 or later “is entitled to automatic annual increases equal to 3% of the currently payable gross monthly annuity”. “These automatic annual increases do not apply to annuitants who are receiving a term annuity, survivor annuitants or reversionary annuitants.”
A retiree who returns to covered work has the annuity suspended: “When an Annuitant re-enters service that would require participation in this Fund, any annuity previously granted will be suspended.”
What the IRS adds on tax
A refund or lump sum from a public pension is a distribution, so the IRS rules apply on top of MEABF’s own. On withholding, the IRS says that a taxable eligible rollover distribution paid to you “is subject to mandatory income tax withholding (generally at a rate of 20%), even if you intend to roll it over later”, and that if you roll it over yourself “you’ll have to add funds from other sources equal to the amount withheld”. MEABF’s handbook says the same in its own terms: a refund can be rolled over directly or within 60 days, and mandatory 20% withholding applies when it is not a direct rollover. The rollover clock, if the money is paid to you: “you have 60 days from the date you receive it to roll it over to another eligible retirement plan”.
On early distributions the IRS says “the law imposes a 10% additional tax on certain early distributions from certain retirement plans”. Its list of exceptions includes “Distributions made to you after you separated from service with your employer after attainment of age 55” and “Distributions made to a qualified public safety employee from a governmental plan”. Whether an exception fits a particular refund depends on your own plan and facts, so confirm it with a tax preparer before you take one.
What this page could not settle
- The pages read do not describe a deferred retirement option program, a partial lump sum or any lump sum at retirement other than the refund in lieu of an annuity under $800 a month.
- The pages read do not state whether a spouse must consent to a refund or a reversionary election.
- The pages read do not state the interest rate credited on contributions or charged on repayment, or the cost of any service purchase.
- The handbook is a Tier I document with amendatory provisions through November 1, 2013, so figures such as the $850 minimum annuity, the $800 spouse minimum and the $400 reversionary limit may have changed.
- The pages read give only a short Tier 2 and Tier 3 comparison, so the handbook-level survivor, refund and increase rules for those tiers are not covered here.
Common mistakes
- Treating a refund of contributions as reversible; the handbook says a full refund forfeits all rights for the member and anyone who might benefit through the member.
- Assuming the reversionary election can wait until after retirement; the handbook says it must be made at or before retirement.
- Leaving before the age an annuity can be paid and not filing an application at that age; the handbook says annuity rights will not begin until the application is filed.
- Buying service credit or restoring a refund after resigning; the overview says payments may only be accepted while the member is still an employee.
Related on this site: pension refund versus leaving it, single-life versus joint-and-survivor pension, pension buyback calculator, 20 percent withholding on a pension lump sum, pension lump sum versus monthly annuity break-even, Illinois IMRF retirement decisions and public pension retirement decisions by system.
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Answer againSources
- Municipal Employees’ Annuity and Benefit Fund of Chicago, Membership Handbook on the Laws Governing the Fund, Tier I Members (amendatory provisions through November 1, 2013): https://www.meabf.org/wp-content/uploads/2025/12/MEABF_Tier_I_Handbook_20211019.pdf
- Municipal Employees’ Annuity and Benefit Fund of Chicago, Pension Benefit Overview (rev. July 2023): https://www.meabf.org/wp-content/uploads/2025/12/2023-MEABF-PENSION_BENEFIT_OVERVIEW_rv_2023_07.pdf
- IRS, Topic no. 413, Rollovers from retirement plans (irs.gov): https://www.irs.gov/taxtopics/tc413
- IRS, Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs (irs.gov): https://www.irs.gov/taxtopics/tc558
Sources: the primary documents linked above, read on October 7, 2026. General information from each system’s own published materials, not legal, tax or financial advice. Your own member statement and the system’s current rules decide your benefit, and a pension counsellor at the system or a fee-only adviser is the right place to confirm anything consequential.