(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, 2019, the minimum benefit was increased to $1,957.15. 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.
A member retired in July 1999 with 25 years of service credit and an Average Final Compensation (AFC) of $2,000. They selected a 50% survivor benefit option. The retirement benefit was determined as follows:
2% x $2,000 AFC x 25 years of service credit x .94 (reduction factor for survivor benefit option) = $940
Since retirement, they have received COLAs totaling $606.19, increasing the current benefit to $1,546.19 ($940 + $606.19).
They have been retired for 20 years, making them eligible for the adjusted minimum benefit in July 2019. To determine if the adjusted minimum benefit exceeds the current benefit, DRS will multiply the base benefit of $1,957.15 by the reduction factor for their selection of a 50% survivor benefit option (.94), as follows:
$1,957.15 x .94 = $1,839.72
Since the current benefit of $1,546.19 is less than $1,839.72, the monthly benefit will increase to $1,839.72.
Here’s how the 50% survivor benefit option is calculated:
$1,957.15 x .94 = $1,839.72 x 50% benefit option choice = $919.86.
The retiree’s survivor will receive the adjusted minimum benefit of $919.86.