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 24 consecutive highest-paid service credit months. Your benefit can be no higher than 60 percent of your AFC.
Suppose you retire at age 60 with 29.5 years of service credit and an average final compensation of $2,500 per month. Your monthly retirement benefit will be $1,475.00, calculated as follows:
2% x 29.5 years x $2,500
2% x 29.5 years = .59
.59 x $2,500 = $1,475.00
Your benefit will be “actuarially reduced” if:
“Actuarially reduced” means the benefit is reduced based on factors provided by the Office of the State Actuary. These factors are derived from statistics about life expectancy and projections of the plan’s investment earnings. An actuarial reduction is typically necessary when benefits are going to be paid over a longer period of time or to more than one person.
If you cash out leave (annual, sick, etc.), you may be eligible to use all or part of the cash out value in your AFC calculation. However, if your 24 consecutive highest-paid service credit months do not include the dates in which you earned the leave you are cashing out, that leave cannot be used in your AFC calculation.
School district employees may use up to 45 days of accumulated sick leave to retire early. For example, if you have 45 days of sick leave and are age 60 or older, you may retire with at least four years and 10 months of service credit. Cashed out sick leave may not be used for this purpose.
Sick leave cannot be used to meet the age requirement or as service credit in determining the amount of your retirement benefit. If you plan to use sick leave to advance your retirement date, contact DRS before separating from employment.
Members who are elected or appointed to office in accordance with Articles II or III of the state Constitution receive an annual retirement benefit of three percent of their average final compensation for such service. For more information, see the PERS Plan 1 Rules for State Elected Officials.
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 years of service credit 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 53 years old and have 26 years of service credit from PERS Plan 1 and four years of service credit from TRS Plan 1. Without dual membership, your service in either plan would be too short to provide a benefit. With dual membership, however, you have enough to retire. You will receive a benefit from each plan, calculated according to the rules of each system as follows:
2% x 26 years of PERS service credit x average final compensation
= PERS benefit
2% x 4 years of TRS service credit x average final compensation
= TRS benefit
If you retire as a dual member, your total benefit cannot exceed the amount you would receive if all your service had been in a single system.