Can You Collect a Pension From a Non-Chargeable Employer in Illinois?

The Illinois Department of Employment Security administers the unemployment insurance program for the state. If you receive Social Security or a pension, you may receive reduced unemployment benefits in Illinois. A chargeable employer is in the base period for calculating your benefits and is charged for your unemployment benefits. A non-chargeable employer is outside the base period counted for your unemployment benefits or otherwise isn't charged for your benefits. A pension from a non-chargeable employer doesn't offset your Illinois unemployment benefits.

Base Period Employer

The base period is the 18 months immediately prior to your unemployment, and employers who make payroll tax contributions in this time frame for federal and state unemployment taxes are “chargeable” employers. “Non-chargeable” employers are outside the 18-month base period or did not make payroll tax contributions for federal and state unemployment taxes. Some employers make no payroll tax contributions, as unemployment insurance doesn't cover all employment in Illinois. Exclusions include some agricultural workers, domestic workers, insurance sales and other sales persons who receive commissions. Illinois doesn't always charge unemployment compensation benefits to an employer.

Why It Matters

The federal government regulates some unemployment benefits features, and Public Law 96-364, enacted in 1980, revised the offset requirements for unemployment benefits. Offset requires an unemployment benefits reduction for some pensions. States must offset unemployment benefits if a base period or chargeable employer contributes to the pension. This rule keeps the base-period employer from providing both pension and unemployment benefits without offset.

Social Security and Pension Benefits

Illinois offsets Social Security benefits and pensions with partial contributions by a base-period employer by 50 percent. If you collect Social Security retirement or a pension from a chargeable employer along with unemployment benefits, your unemployment benefits decrease. Illinois calculates the decrease by using your monthly pension or Social Security benefit base divided by 30 to arrive at a daily payment. The daily payment multiplied by 7 gives the weekly Social Security or pension payment. Divide the weekly payment by one-half to get the weekly offset amount.

If you receive $1,000 in Social Security for the month, divide by 30 for $33.33 a day, times 7. Your weekly amount is $233.31, and 50 percent of that figure is $116.65. This is the offset amount for Social Security benefits, or a pension from a chargeable employer who made partial contribution to your pension. A chargeable employer who paid 100 percent of your pension receives a 100 percent offset, or $233.31.

Certification

Each week you collect unemployment benefits in Illinois, you answer questions about your income for the week. Questions include whether you receive Social Security benefits or pension benefits from another source. You must report the income and IDES reviews the source. For the income to be disqualifying or require an offset, the retirement income must be from a base-period employer or a chargeable employer under Illinois Unemployment Compensation Act Section 1502.1. See page G-46 of the Illinois Unemployment Insurance Law Handbook for other examples of disqualifying income.

References

• National Employment Law Project: Unemployment Insurance and Social Security Retirement Offsets
• Almanac of Policy Issues: Unemployment Compensation
• Illinois Department of Employment Security: Illinois Unemployment Insurance Law Handbook
• Illinois Department of Employment Security: Unemployment Insurance Benefits Handbook (CLI105L)