Your service retirement benefit depends on your average final compensation and your service credit years when you retire. You are eligible to retire if you:
If you retire before age 65 and/or choose a survivor option, your benefit will be “actuarially reduced.”
“Actuarially reduced” means benefit payments are reduced based on factors provided by the Office of the State Actuary. These factors are derived from statistics about life expectancy and projections about the plan’s investment earnings. An actuarial reduction is necessary when benefits are scheduled or guaranteed to be paid over a longer period of time than would normally be the case.
Your monthly service retirement benefit is calculated using the following formula:
2 % × service credit years
× average final compensation (AFC)
(Monthly)
“Average final compensation” (AFC) is your average earnable compensation for the highest 60 consecutive service credit months. Any type of severance pay, such as lump-sum payments for deferred sick leave, vacation or annual leave is not included in your AFC. There is no limit on the number of service credit years included in the benefit calculation.
Suppose you retire at age 65 with 35 service credit years. Your average final compensation is $4,300. Your monthly retirement benefit will be $3,010. Here is how it is calculated:
2 % × 35 years × $4,300 = $3,010
This calculation results in the standard benefit. Your benefit will be lower if you choose to continue benefits to a survivor upon your death.
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 systems are entitled to a benefit from each system, even if they have less than five service credit years in any of the systems. If they are not old enough to retire under the rules of the retirement system, a reduction in the benefit amount may be necessary.
If you retire under the provisions of dual membership, the AFC used in your benefit calculation (see “Dual Member Benefits” example below) will be based on the following (whichever produces the better benefit):
Base salary is the salary or wages you earned, excluding lump-sum cashouts and severance pay. See “Dual member benefits” example below.
Suppose you are 65 years of age and have three service credit years from PERS Plan 1 and 13 service credit years with TRS Plan 2. Without dual membership, your PERS service would be too short to earn you a PERS benefit. With your TRS service, however, you have more than the five-year minimum needed for vesting, and you receive credit for your PERS service. You will receive a benefit from each system, as follows:
2 % × 3 PERS service credit years
× average final compensation
= PERS benefit
(plus)
2 % × 13 TRS service credit years
× average final compensation
= TRS benefit