Your monthly retirement benefit is calculated using the following formula:
2 percent x Service Credit Years x AFC
AFC is the monthly average of your 60 consecutive highest-paid service credit months. AFC does not include payments for any type of severance pay, such as lump-sum payments for deferred sick leave, vacation or annual leave.
Suppose you retire at age 65 with 32 service credit years. Your average final compensation is $3,200. Your monthly retirement benefit, rounded to the nearest dollar, will be $2,048.
2% x 32 years x $3,200 = monthly benefit
2% x 32 years = .64
.64 x $3,200 = $2,048
This calculation results in the standard benefit. It will be lower if you choose to continue benefits to a survivor upon your death. See additional information for a description of benefit options.
If your monthly benefit will be less than $50, you may choose to take payment in a lump sum. To determine the lump sum, the projected value of your lifetime benefit will be compared to the total of your contributions plus interest. The greater amount will be paid to you. Anyone receiving such a payment is considered retired from PERS. Only members who retire early for disability, have minimal service credit, or retire as dual members are likely to receive this payment.
If you have at least 20 service credit years, you may retire at or after age 55. However, your benefit will be reduced to reflect the fact that you are likely to be receiving your benefit over a longer period of time. Reductions are prorated based on the length of time before age 65 that your benefits begin. If you have 30 or more years of service credit, the benefit reduction is set at 3 percent for each year you are under age 65.
Following are the approximate annual reductions in 2005. Your benefit is determined by the percentage in effect at the time your benefits begin.
| Age at retirement | 20-29 years of service | 30+ years of service |
|---|---|---|
| 55 | 37% | 70% |
| 56 | 40% | 73% |
| 57 | 43% | 76% |
| 58 | 49% | 79% |
| 59 | 55% | 82% |
| 60 | 61% | 85% |
| 61 | 67% | 88% |
| 62 | 73% | 91% |
| 63 | 82% | 94% |
| 64 | 91% | 97% |
| 65 | 100% | 100% |
Actuarial figures in the middle column are updated periodically. The figures for members with at least 30 years of service are set in statute.
Suppose you retire at age 55 with 25 years of service credit and an average final compensation of $3,500. Because you are retiring early, your benefit is 37 percent of what it would be if you were 65 when you retired, with the same service credit and average final compensation. Your monthly benefit of $647.50 is calculated as follows:
2% x 25 years x $3,500 x 37% = monthly benefit
2% x 25 years = .50
.50 x $3,500 = $1,750.00
$1,750 x 37% = $647.50
Suppose you work another five years rather than retiring at age 55. At age 60, you will have 30 service credit years. Assuming you have the same average final compensation, your benefit would be calculated as follows:
2% x 30 years x $3,500 x 85% = monthly benefit
2% x 30 years = .60
.60 x $3,500 = $2,100.00
$2,100 x 85% = $1,785.00
The service retirement benefit for dual members is the sum of the benefits they have earned separately from each system. Dual members with a total of five or more service credit years from all eligible systems are entitled to a benefit from each system, even if they have less than five service credit years in any of the systems.
In most cases, dual members will receive a benefit based on the highest base salary from any system, whichever produces the better benefit. Base salary is the salary or wages earned, excluding lump-sum cashouts and severance pay. For details, refer to the DRS publication, What Is Dual Membership and How Does It Affect Me?
Suppose you are 65 years old and have three service credit years with PERS Plan 2 and 13 service credit years with TRS Plan 1. Without dual membership, your PERS service would be too short to earn a PERS benefit. With dual membership, you will receive a benefit from each plan, calculated according to the rules of each system as follows:
2% x 3 years PERS service credit x average final compensation = PERS benefit
2% x 13 years TRS service credit x average final compensation = TRS benefit