Retirees lose pension fight over installment leave payouts in Illinois

One retiree’s case anchored the appeal. He retired on December 31, 2011, after 32 years. By triggering the accelerated plan around January 2009, he liquidated 75 vacation days and 58.6 sick days – adding roughly $1,250 a month to his salary. SERS estimated the resulting pension overpayment at $80,000 over a decade. 

The problem surfaced in late 2021 when SERS found ISBE had been reporting the accelerated payments as “base pay.” SERS recalculated pensions, cut annuities, and demanded repayment of overpayments. 

The retirees had dictionary definitions on their side. A “lump sum” means one payment, they argued, and theirs came in seventy-two. The court acknowledged the point – then moved past it. What matters under the Pension Code, it held, is the source of the payment, not the delivery method. 

The court called the retirees’ reading an invitation to “absurd results.” Two identical employees – same role, same pay, same stockpiled leave – would receive different lifetime pensions depending on whether unused days were cashed out once or spread across several paychecks. Folding years of accumulated leave into the final salary window would create a thirteen-month year, inflating the average the pension is built on. That, the court said, is pension spiking – regardless of how many envelopes it arrives in. 

The retirees’ fallback – that ambiguous pension statutes must be read in their favor – did not land. The court held their reading was unreasonable when the statute was read whole.