(Also referred to as the "Minimum Monthly Benefit" for PERS Plan 1 and TRS Plan 1)
Legislation passed in 2004 and expanded in 2006 and 2011 establishes a minimum benefit level for qualifying Public Employees' Retirement System (PERS) Plan 1 and Teacher's Retirement System (TRS) Plan 1 retirees. The 2006 legislation also established a 3% cost of living adjustment effective July 1, 2006 and each July 1 thereafter.
Effective July 1, 2006, the minimum benefit was $1,030. Effective July 1, 2011 the minimum benefit was increased to $1,545. Any adjustments (such as a survivor option choice, early retirement or an annuity withdrawal, etc.) made to your original benefit will reduce this amount. That is why the minimum benefit is referred to as an adjusted minimum benefit.
PERS Plan 1 and TRS Plan 1 retirees (and survivors of retirees) whose current gross monthly benefit is less than the adjusted minimum benefit level and who:
Your benefit will be re-evaluated using the July 1, 2011 minimum benefit of $1,545 ($1,500 plus the 3% increase). If your benefit is below the adjusted minimum benefit level and you meet the requirements above, you will have your monthly benefit adjusted beginning in July 2011.
We began with a base benefit of $1,030 (as of July 1, 2006) and then applied any adjustments made to the account (for instance, survivor options, early retirement or an annuity withdrawal) to determine the adjusted minimum benefit. As of July 2011, the base benefit amount became $1,545 prior to the adjustments. That amount is then compared to your current benefit. You will receive the greater of the two benefits.
Mary retired in July 1986 with 25 years of service credit and an Average Final Compensation (AFC) of $925. She selected a 50 percent survivor benefit option. Her retirement benefit was determined as follows:
2% x $925 AFC x 25 years of service credit x .87 (reduction factor for survivor benefit option) = $402.38
Since she retired, Mary has received COLAs totaling $606.19, increasing her current benefit to $1,008.57 ($402.38 + $606.19).
Mary is eligible for the adjusted minimum benefit in July 2011. To determine if the adjusted minimum benefit exceeds her current benefit, DRS will multiply the base benefit of $1,545.00 by the reduction factor for Mary's choice of a 50 percent survivor benefit option (.87), as follows:
$1,545 x .87 = $1344.15
Since her current benefit of $1,008.57 is less than $1,344.15, Mary's monthly benefit will increase to $1,344.15.
To determine if Mary's survivor qualifies for the adjusted minimum benefit, DRS will multiply the base benefit of $1,545.00 by the reduction factor for Mary's choice of a 50 percent survivor benefit option (.87). Mary's survivor would then receive 50% of the benefit Mary would have received.
Here's how the 50% survivor benefit option is calculated:
$1,545.00 x .87 = $1,344.15 x 50% benefit option choice = $672.08.
Mary's survivor will receive the adjusted minimum benefit of $672.08.