Updated October 7, 2026. Quick answer: A Chicago Teachers’ Pension Fund member who leaves employment can retire with a pension, defer it, or take a refund of contributions. The documents read describe a lifetime pension of 2.2% of final average salary per year of service, up to 75%, and a survivor pension for an eligible spouse as a plan benefit. A reversionary pension is the one elective survivor feature, paid for by a reduced pension. A refund pays contributions without interest, forfeits the right to a pension, and carries 20% federal withholding if paid to the member.
What this page covers and what it does not
This page works from documents published by the Chicago Teachers’ Pension Fund (CTPF): its Refund of Contributions, Your CTPF Pension, Survivor & Death Benefits, Leaving Employment and Maximizing Your Pension sheets, three service purchase forms, and a retirement steps web page. These documents use the name Chicago Teachers’ Pension Fund throughout. Figures are the system’s own or labeled computed examples.
The plan itself is described this way: the fund “is a defined benefit retirement plan”. Members sort into two tiers: “Members who joined CTPF or a qualified reciprocal system prior to January 1, 2011, are in Tier 1”, and “Members who joined CTPF on or after January 1, 2011, are in Tier 2”. State tax questions are on Illinois retirement taxes and does Illinois tax pensions.
The decision when leaving: retire, defer or take a refund
CTPF frames the choice as three options. “Retire. You may retire with a pension, if you meet age and vesting requirements.” “Defer your pension. You may leave your pension assets at CTPF until you reach retirement age.” “Accept a refund of contributions. Contributions may be rolled over into another qualified retirement plan or paid to you. When you accept a refund you forfeit all future benefits.”
| Choice | What it pays | What it does for a survivor |
|---|---|---|
| Retire with a pension | A lifetime pension, at an age and service level set by tier | A survivor pension for an eligible spouse (Tier 1: 50% of the pension earned at death; Tier 2: 66 2/3% of the retired member’s pension) |
| Defer the pension | The pension later, at retirement age, if vested; service credit is kept | Survivor pension needs at least 10 years of CTPF service for an inactive or deferred member |
| Take a refund | All contributions, without interest; a rollover or a payment to the member | The right to a survivor pension and a lump-sum death benefit is waived |
| Reversionary pension (elective) | A reduced retirement pension | A lifetime pension to any designated individual |
A detailed look at the trade-off is on pension refund versus leaving it.
When a pension can start, and what it pays
Eligibility depends on tier, and the final average salary and cost of living rules differ too.
| Tier | Unreduced pension | Reduced pension | Final average salary | Cost of living increase |
|---|---|---|---|---|
| Tier 1 | 62 with 5 years of service; 60 with at least 20 years; 55 with at least 33.91 years | 55 with 20 years of service | Average of 4 highest years in the 10 preceding retirement | 3% of pension compounded annually, beginning one year after retirement, or at age 61, whichever occurs later |
| Tier 2 | 67 with 10 years of service | 62 with 10 years of service | Average of 8 highest years in the 10 preceding retirement | 3% or one-half the increase in the CPI, for the preceding year, beginning one year after retirement or at age 67, whichever occurs later |
The formula: “service credit x final average salary x pension multiplier (2.2%) = annual pension” The sheet adds: “2.2% applies to service earned after July 1, 1998. The maximum benefit amount is 75% of final average salary”. The Refund of Contributions sheet says that for Tier 2, “Final average salary used to calculate pensions capped at $125,773.73 in 2024”.
On early retirement: “If you retire early, your benefit is reduced by ½ of 1% percent for each month under the age required for an unreduced pension.”
A computed example from assumed figures, not CTPF figures: an assumed 30 years of service at 2.2% each is 66% of final average salary, and on an assumed $80,000 final average salary that is a computed $52,800 a year, or a computed $4,400 a month, assuming all of the service earns 2.2%. For the early reduction, an assumed Tier 2 member retiring 24 months under the unreduced age takes 24 times one-half of 1%, a computed 12% reduction, so an assumed $4,000 monthly pension becomes a computed $3,520 a month.
Survivors: a plan benefit, plus one elective feature
The Your CTPF Pension sheet lists the surviving spouse annuity as part of the plan, for Tier 1 “50% of the pension the member had earned at the date of death”. The Survivor & Death Benefits sheet gives the retired-member rules: “The member must have been married or in a civil union for at least one year prior to the date of death”, and “The earliest a survivor’s pension is payable to a spouse is at age 50 unless the member’s child(ren) are minors and in the spouse’s custody”. It states the Tier 2 spouse amount as “Tier II Spouse: 66 2/3% of member’s retirement pension”. The Tier 1 spouse amount for a retired member is not separately printed on that sheet.
A computed example from an assumed $3,000 monthly pension, not a CTPF figure: 66 2/3% of $3,000 is a computed $2,000 a month for a Tier 2 spouse.
For members who die before retiring: “The deceased member must have had at least 1½ years of CTPF service for active members and 10 years of CTPF service for members with inactive or deferred status.” The designation of beneficiary is separate: “The designation does not affect or determine survivor pension benefits, which are only payable to an eligible spouse or minor child.” More on how survivor features compare is on survivor benefit with a government pension and single-life versus joint-and-survivor pension.
The reversionary pension: the one elective survivor choice
“A reversionary pension offers a member the option of providing a lifetime pension for any designated individual.” “A reversionary pension is funded through a reduction in the amount of the member’s retirement pension and is paid upon the member’s death.” Two rules attach to the designation: “If the member dies within 730 days from the date that the designation is filed at CTPF, no reversionary pension shall be paid”, and “If the reversionary beneficiary does not survive the retired member, the member’s reduced pension shall be restored to the full service pension, on a prospective basis”. The documents read give no table of reduction percentages, so confirm the size of the cut with CTPF before filing.
Single, divorced or widowed retirees face a related choice about survivor contributions: “If you are single, divorced or widowed when you retire and you do not have minor children, CTPF will refund your survivor pension contributions to you without interest.” Later: “If you marry or enter a civil union after retirement, you or your spouse or party to a civil union may re-establish a survivor pension by repaying the contributions with 5% compounded interest.”
Applying, timing and what is irrevocable
“Before you resign from your employer(s), arrange to meet with a CTPF Member Services specialist to review your record and explore the options available to you.” “It can take up to 60 days (sometimes longer if you are retiring under reciprocity) to process your retirement application and issue your first pension payment.”
The retirement steps page adds: “Request an estimate six months to a year before your planned retirement date. It can take up to 30 days to obtain an estimate”. It says “The Retirement Application Packet should be submitted three months before benefit commencement”. For reciprocity: “you must file a retirement application with each system”.
The pages read do not use the word irrevocable for a retirement election. What they describe as consequential is the refund (forfeiture of benefits), the reversionary designation (a reduced pension, with a 730 day rule), and a service purchase, which must be completed before the first pension check.
Lump sums: what the documents describe
In the documents read, lump sums appear as a refund of contributions at leaving and as death benefits. For retirees: “Designated beneficiaries of retirees may receive a taxable benefit between $5,000 and $10,000 depending on the number of years the member was retired.” The pages read describe no lump-sum retirement option, partial lump sum or deferred retirement option plan. The cash-or-annuity framework is on pension lump sum versus monthly annuity break-even.
Leaving contributions in the fund or taking a refund
Leaving the money in keeps the service credit. The Refund of Contributions sheet puts it as “If you leave your contributions at CTPF, you keep your service credit”. The Leaving Employment sheet says “If you are a vested CTPF member, but have not reached the required age for retirement, you may defer your pension until you reach retirement age”, and for a member not yet vested, “If you have not yet vested, you can leave your assets with CTPF when you leave employment. If you return to work at a later date for a CTPF or reciprocal employer, your service can be combined”.
A refund gives up the pension. “If you accept a refund of contributions, you forfeit your right to a pension for that employment period.” “A refund includes all contributions in your account including those made by your employer. Your contributions do not include interest.” The Leaving Employment sheet lists the waived benefits as “a survivor pension for your eligible dependents”, “a lump-sum death benefit for your designated beneficiaries”, and “access to CTPF’s post-retirement health insurance programs”.
Two sheets differ on timing. The Leaving Employment sheet says “You may request a refund at any time following your resignation”, while the Refund of Contributions sheet says “Illinois Statues requires a 60-day waiting period from the date of termination from your Employer. Once the waiting period is completed, please allow up to twelve weeks for processing of a complete application”. The sheets read do not reconcile these, so confirm the date with CTPF. See also pension refund versus leaving it.
How a refund is paid, and what is withheld
The sheets list three forms of payment: “Full distribution. The distribution is paid directly to you, less required withholding”; “Full rollover. The distribution is sent to a qualified retirement plan of your choice”; and “Partial rollover and distribution. The refund may be divided”. On a payment to the member, the Refund of Contributions sheet says “The distribution is paid directly to you, less mandatory 20% federal income tax withholding of taxable amount”. The application: “Complete an Application for Refund of Contributions”. The pages read do not state in terms whether a partial refund of contributions is allowed.
A computed example from an assumed $10,000 taxable refund paid to the member, not a CTPF figure: 20% mandatory federal withholding is a computed $2,000, leaving $8,000 paid out. A member under age 59½ with no exception who did not roll the money over could also face the 10% additional tax, a computed $1,000 on $10,000. See 20% withholding on a pension lump sum.
Reciprocity with other Illinois systems
“Combining service from reciprocal systems may allow you to meet eligibility requirements and receive pensions from all systems. The service earned must be one year or more and your combined service must meet the vesting and age requirements of each system.” The participating systems printed on the sheets include the Municipal Employees’ Annuity and Benefit Fund of Chicago and the State Universities Retirement System of Illinois, covered at Chicago MEABF retirement decisions and Illinois SURS retirement decisions.
Buying service credit and the 2.2 upgrade
“Increasing service credit may increase your retirement pension or allow you to retire sooner. If a purchase increases your service to 30 years or more, you may receive the 2.2 upgrade at no cost.” “The cost of a service purchase is determined on an individual basis, but generally includes the contributions you would have made during the period you wish to purchase plus interest. Interest accrues each month, so the longer you wait to make a service purchase, the more it will cost.”
Refunded service: “You may repay the refund to have that service reinstated, provided you meet the requirements listed below.” The repayment is all of the refund: “you must pay for the entire refund, plus interest. You cannot establish partial refunds”. The price: “Cost to purchase refunded service credit is equal to the total amount of the refund received plus 5% interest, compounded annually from the date of the refund to the date of repayment.” Timing: “Payment must be completed before you receive your first pension check from CTPF or a retirement system covered by the Illinois Retirement Systems Reciprocal Act (if retiring under reciprocity).” Payment can be a single payment (“applicant pays the total cost with a single payment”), installments (“applicant pays a series of installment payments directly to CTPF”), or both. The pension buyback calculator covers the general break-even question.
A computed example from an assumed $10,000 refund, not a CTPF figure: repaid six full years later, $10,000 times 1.05 to the sixth power is a computed $13,401, using 5% compounded annually.
The 2.2 upgrade: “The cost to purchase the upgrade is based on your highest annual salary in the 4 years prior to the year in which you apply for the upgrade, multiplied by 1% for each year of service. You must upgrade all of your service before July 1, 1998, including any optional service purchased.” “Eligible members who retire with 30 or more years of CTPF service credit receive the upgrade at no cost.” Unused sick days also count: “CTPF will give service credit for any unused sick days reported to us by your employer. A maximum of 244 unused sick days can be used for service credit.” “Seventeen days equals one month of service credit.” A computed example: the 244 day maximum divided by 17 days a month is a computed 14.35 months of service credit.
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 CTPF’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”. CTPF’s refund sheets describe the same three forms of payment: a full distribution, a full rollover, or a split. 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 state the system’s statutory name; they use Chicago Teachers’ Pension Fund throughout.
- The pages read do not list a menu of payment options such as single-life or joint-and-survivor, and do not give reduction percentages for a reversionary pension.
- The Survivor & Death Benefits sheet prints the Tier 1 spouse amount for a retired member nowhere, and the Your CTPF Pension sheet’s Tier 1 figure (50% of the pension earned at death) is not labeled by member status.
- The Leaving Employment sheet allows a refund request at any time after resignation while the Refund of Contributions sheet cites a 60-day waiting period; the two are not reconciled.
- The pages read do not state whether a partial refund of contributions is allowed, and do not state a vesting rule in one sentence.
- The pages read do not state the Tier 2 cost-of-living percentage actually paid in 2026, which depends on the CPI figure for the preceding year.
- The pages read do not state how the lump-sum death benefit for retirees is set within its range.
- The service purchase forms read are 2019 and 2023 editions; current costs come from the contract CTPF mails after processing an application.
Common mistakes
- Taking a refund without weighing what it ends; the Leaving Employment sheet says a refund forfeits the right to a pension for that employment period and waives survivor and health benefits.
- Expecting interest on a refund; the Leaving Employment sheet says contributions do not include interest.
- Rolling a refund over by hand after a check is issued; mandatory 20% federal withholding applies when the money is paid to the member.
- Missing the service purchase deadline; payment must be completed before the first pension check.
- Assuming the beneficiary form sets the survivor pension; the Survivor & Death Benefits sheet says the designation does not determine survivor pension benefits.
Related on this site: Illinois retirement taxes, does Illinois tax pensions, Chicago MEABF retirement decisions, Illinois SURS retirement decisions, pension refund versus leaving it, single-life versus joint-and-survivor pension, pension buyback calculator, 20% withholding on a pension lump sum, pension lump sum versus monthly annuity break-even, survivor benefit with a government pension and public pension retirement decisions by system.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Compare vetted advisors for public pension decisions
If your portfolio is $250,000 or more, this connects you (free, with no obligation to hire anyone) with 2 to 3 vetted advisors.
Before you start, what actually happens. The matching service is run by WiserAdvisor, an independent advisor-matching company. It opens on their site, asks for your ZIP code and a few questions, and matches you with 2 to 3 vetted advisors. It is free to you.
WiserAdvisor states the service is built for portfolios of $250,000 and above. By submitting, you consent to emails, phone calls and text messages from WiserAdvisor and up to three advisors, so expect to be contacted. Clear Money Guide may earn a referral payment for a qualifying completed form, whether or not you ever hire anyone.
Opens on WiserAdvisor’s site in a new tab.
See how an advisor weighs a pension election
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment through this service, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- Chicago Teachers’ Pension Fund (CTPF), Refund of Contributions (V8/1.2026): https://www.ctpf.org/sites/files/2026-03/Refund%20of%20Contributions__FINAL_vk3.pdf
- Chicago Teachers’ Pension Fund (CTPF), Your CTPF Pension: Retirement Info (V8/2025): https://www.ctpf.org/sites/files/2025-03/Your%20CTPF%20Pension%20Retirement%20Info_FINAL.pdf
- Chicago Teachers’ Pension Fund (CTPF), Survivor & Death Benefits (V6/2025): https://www.ctpf.org/sites/files/2025-06/Survivor%20Death%20Benefits_FINAL_vk3.pdf
- Chicago Teachers’ Pension Fund (CTPF), Leaving Employment (V7/2024): https://www.ctpf.org/sites/files/2025-02/Leaving%20Employment_vk1_FINAL.pdf
- Chicago Teachers’ Pension Fund (CTPF), Maximizing Your Pension, Optional Service Enhancements (V6/2024): https://www.ctpf.org/sites/files/2024-10/Maximizing%20Your%20Pension%20Sheet_FINAL.pdf
- Chicago Teachers’ Pension Fund (CTPF), Form 655, Application to Purchase Public Teaching Service (rev. 8/2023): https://www.ctpf.org/sites/files/2023-08/form_655_purchase_of_public_teaching_service.pdf
- Chicago Teachers’ Pension Fund (CTPF), Form 645, Application for Purchase of Optional Leave Service Credit (rev. 8/2023): https://www.ctpf.org/sites/files/2023-08/form_645_optional_leave_service.pdf
- Chicago Teachers’ Pension Fund (CTPF), Form 635, Application for Refunded Service Credit (rev. 11/2019): https://www.ctpf.org/sites/files/2020-10/form_635_refunded_service_credit_temp_post_0.pdf
- Chicago Teachers’ Pension Fund (CTPF), Initiating Pension Payment (web page, read October 2026): https://www.ctpf.org/member-resources/retired-members/initiating-pension-payment
- 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.