Your monthly defined benefit is calculated using the following formula:
1 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 (384 months). Your average final compensation is $3,200. Your monthly retirement benefit will be $1,024.
1% x 32 years x $3,200 = $1,024
This calculation results in the standard benefit. It will be lower if you choose to continue benefits to a survivor upon your death.
If your monthly benefit under Option 1 would be less than the indexed amount (as of 2006, the indexed amount is $134.39) payment may be made in a lump sum at the discretion of the member. Anyone receiving such a payment is considered retired from TRS. This provision is likely to apply only to members who retire early due to disability or with minimal service credit. The indexed amount changes each January.
The service retirement benefit for dual members is the sum of the benefits they have earned separately from each system.
Dual members will receive a benefit based on the highest base salary from any system, whichever produces the better benefit. 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 TRS Plan 3 and 13 service credit years with PERS Plan 1. Without dual membership, your TRS service would be too short to earn a TRS benefit. With dual membership, you will receive a benefit from each plan, calculated according to the rules of each system as follows:
1% x 3 years TRS service credit x average final compensation = TRS benefit
2% x 13 years PERS service credit x average final compensation = PERS benefit
If you accumulate 20 or more years of service credit, then leave TRS-covered employment, the value of your defined benefit will increase by approximately three percent annually (0.25 percent per month) from your date of separation until you begin drawing a benefit.