| Tier 1 | Tier 2 | |
|---|---|---|
| How much | 3% a year | Lesser of 3% or half of the CPI increase |
| Figured on | Your current pension (compounded) | Your original pension (not compounded) |
| First raise | Later of the Jan. 1 after 1 year retired or the Jan. 1 after age 61 | Jan. 1 on or after the later of age 67 or 1 year retired |
| Source | Tier 1 Guide p. 23, Annual increases in annuity | Tier 2 Guide p. 22, Annual increases in annuity |
The first increase = number of years elapsed between the annuity start and the effective date of the initial increase x 3%. After that, 3% of the current benefit each Jan. 1 (reflected in the February payment). Tier 1 Guide p. 23, Annual increases in annuity
Ten years of raises on $56,100 a year
Start with $56,100 a year, the pension in TRS Illinois's Tier 2 example. TRS Illinois Tier 2 slides, slide 17 Tier 1 retires at 62; Tier 2 retires at 67 with inflation of 6% or more, so it gets the full 3% every year. That's the best case for Tier 2. Our illustration.
| Raise | Tier 1 a year | Tier 2 a year (at most) |
|---|---|---|
| Start | $56,100 | $56,100 |
| 2028 | $58,625 (+4.5%) | $57,783 |
| 2029 | $60,383 (+3%) | $59,466 |
| 2030 | $62,195 (+3%) | $61,149 |
| 2031 | $64,061 (+3%) | $62,832 |
| 2032 | $65,982 (+3%) | $64,515 |
| 2033 | $67,962 (+3%) | $66,198 |
| 2034 | $70,001 (+3%) | $67,881 |
| 2035 | $72,101 (+3%) | $69,564 |
| 2036 | $74,264 (+3%) | $71,247 |
| 2037 | $76,492 (+3%) | $72,930 |
After ten raises, Tier 1 pays $3,562 a year more than the best Tier 2 case, from the same starting pension.
Try your own inflation figure (Tier 2)
The Tier 2 guide says member raises use the CPI 'as of the preceding September', but survivor raises use the 'preceding calendar year'.
What we use: We let you enter an inflation figure and apply the half-of-CPI, 3%-cap rule to it.
Tier 1's first raise covers all the years since you retired (years x 3%). The guide doesn't say how part-years are counted.
What we use: We count complete months, so 18 months is 1.5 years, a 4.5% first raise.
Tier 1 can trade the 3% for cash
Through the AAI buyout, a Tier 1 member can take a one-time payment and a 1.5% simple raise instead of 3% compounded. Tier 1 Guide p. 21, Optional Tier 1 Accelerated Annual Increase (AAI) Program Decision See Buyout programs.
Survivor pensions
Survivor or reversionary annuities: 3% compounded each Jan. 1 after the annuity begins; if the member elected the AAI program, 1.5% noncompounded of the original survivor benefit beginning the Jan. 1 on or after the first anniversary. Tier 1 Guide p. 34, Annual increases in benefits
Lesser of 3% or 1/2 of the CPI increase (preceding calendar year) of the originally granted survivor annuity. Beneficiaries of annuitants: Jan. 1 after the survivor benefit is granted; others: Jan. 1 after the first anniversary. Tier 2 Guide p. 33, Annual increases in benefits
What the guides say
- Tier 1: your pension grows 3% a year, compounded. Increases start on the later of the Jan. 1 after your first year of retirement or the Jan. 1 after you turn 61.Tier 1 Guide p. 23, Annual increases in annuity
- Tier 1: the first increase covers all the time since you retired: years elapsed times 3%.Tier 1 Guide p. 23
- Tier 2: each year's increase is the lesser of 3% or half of the CPI increase, figured on your original pension (not compounded). No increase if the CPI is flat or down.Tier 2 Guide p. 22, Annual increases in annuity
- Tier 2 increases start on the Jan. 1 on or after the later of turning 67 or your first year of retirement.Tier 2 Guide p. 22; TRS Illinois Tier 2 slides, slide 21
- Increases take effect each January and show up in the February payment.Tier 1 Guide p. 23; Tier 2 Guide p. 22
Questions
How much is the Tier 1 yearly increase?
3% a year, compounded: each raise is 3% of your current pension.
How much is the Tier 2 yearly increase?
The lesser of 3% or half of the rise in the Consumer Price Index, figured on your original pension. It is not compounded, and it is zero in a year prices don't rise.
When does my first increase come?
Tier 1: the later of the Jan. 1 after your first year retired or the Jan. 1 after you turn 61. Tier 2: the Jan. 1 on or after the later of turning 67 or your first year retired.
Source: TRS Tier 1 and Tier 2 Member Guides, September 2026, Tier 1 Guide pp. 23, 34; Tier 2 Guide pp. 22, 33; Tier 2 meeting slides 17, 21. Last reviewed .