Calculating Benefits

PERS uses three methods to calculate Tier One/Tier Two retirement benefits:

Full Formula
Formula Plus Annuity
Money Match

PERS uses the method (for which a member is eligible) that produces the highest benefit amount.

Full Formula Method

The Full Formula Method uses three factors to compute your retirement benefit:

your final average monthly salary,
your years and months of creditable service Any period of time in which a participating public employer pays an active member a salary and the active member or the employer on the member's behalf pays contributions to PERS. For purposes of computing years of creditable service, full months and major fractions of a month are considered to be one-twelfth of a year and are added to all full years. One month of creditable service is earned for each major fraction of a month served. Creditable service includes all retirement credit received by a member. as of your date of retirement The first day of the month following the last day a member (1) worked, was on vacation, or was paid sick leave, or (2) the first of the month a member files his or her application for benefits, whichever is later., and
a factor set by statute at 1.67 percent for general service employees (2.0 percent for police officers and firefighters).

Multiply your final average monthly salary by your length of PERS creditable service, and then multiply the result by the appropriate percentage factor (1.67 percent or 2.0 percent) to estimate an approximate Refund Annuity A retirement benefit that is paid over the lifetime of the member. When the member dies, any remaining retirement benefits in the member's account are paid in a lump-sum payment to the designated beneficiary(ies).benefit amount.

Both your employer and your member account balances fund this benefit. This amount is reduced if you take an early retirement benefit. In addition, an increase or decrease will be made to the Full Formula calculation if you participated in the Variable Annuity Program after January 1, 1982, and have not made a one-time variable transfer.

Formula Plus Annuity Method

The Formula Plus Annuity Method is available only if you made contributions before August 21, 1981. It uses a formula similar to the Full Formula Method to compute the employer monthly portion of your benefit. Multiply 1 percent of your final average salary (FAS) for general service employees (1.35 percent for legislators, police officers, and firefighters) by your years of creditable service. (Taking early retirement will reduce this total.) Add the total to the monthly annuity payment your member account balance provides, which is based on your balance and your life expectancy.

Money Match Method

Under Money Match, your employer matches the benefit from your account balance by an equal amount. The monthly benefit is the sum annuitized over the estimated life expectancy for persons in your age group. Under a Money Match retirement calculation, PERS does not apply early retirement reduction factors that would apply under the Full Formula calculation . However, if you retire early under the Money Match calculation, there is an actuarial impact because payments will be received for a longer period since disbursements are based on life expectancy. Monthly payments will be less than they would be if you retired at normal retirement age.

If you participate in the Variable Annuity Program, any increase or decrease in your member account due to your participation in the program will result in an increased or decreased retirement benefit when calculating the benefit methods at retirement.