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How Your Retirement Benefit is Calculated

At Early Retirement

If you are vested and retire on or after age 55 (and before age 65), your annual retirement benefit is subject to reduction and calculated as follows:

Highest Average Compensation x 1.5% x Credited Service
= Your Total Annual Normal Retirement Benefit
Less
5% x each year (approximately 0.4167% per month) your early retirement date is short of age 65, with a maximum total reduction of 50%
= Your Total Annual Early Retirement Benefit

Special Transition Rule for Grandfathered Members: If you were age 50 or older as of December 31, 2017, you will be grandfathered under the early retirement reduction factors that were in effect prior to January 1, 2018:

  • If you retire on or after age 55 and before age 60, your benefit will be reduced according to a schedule (ranging from 0.2% to 0.6% per month) that your early retirement date occurs prior to age 65, with a maximum total reduction of approximately 40%. 
  • If you retire on or after age 60 and before age 65, your benefit will be reduced by 2.4% per year (or 0.2% per month) that your early retirement date occurs prior to age 65, with a maximum total reduction of 12%.

At Early Retirement

At Normal (or Late) Retirement

Here is how your annual retirement benefit is calculated if you are vested and retire at or after the normal retirement age of 65:

Highest Average Compensation x 1.5% x Credited Service
= Your Total Annual Normal Retirement Benefit

For example:

John has decided to retire at age 65. He has 10 years of Credited Service and his highest Earnings for seven highest-paid, non-overlapping 12-month periods are:

$28,000
$30,000
$30,000
$32,000
$33,000
$35,000
$38,000

John’s Highest Average Compensation = $32,286

John’s annual normal retirement benefit equals:

Highest Average Compensation x 1.5% x Credited Service
$32,286 x 1.5% x 10 =
Total annual normal retirement benefit
$4,842.90
(or $403.58 per month)

At Normal (or Late) Retirement