PERS uses three methods to calculate a Tier One monthly pension benefit amount and two methods
to calculate a Tier Two monthly pension benefit amount. The calculation methods are:
-
Tier One — Full Formula, Formula Plus Annuity (only for eligible Tier One
members) and Money Match
- Tier Two — Full Formula and Money Match
The highest amount produced by these calculations is what you will receive as your monthly
pension benefit.
Here is how the calculations work:
Full Formula
(Tier One and Tier Two)
Your years of service are multiplied by your final average salary and a set percentage. The
percentage depends on your service type.
General service:
1.67% × years of service credit × monthly final average salary = monthly pension benefit
Police and firefighters:
2% × years of service credit × monthly final average salary = monthly pension benefit
Money Match
(Tier One and Tier Two)
Your member account balance is matched by your employer, and the result is multiplied by a
variable representing the estimated life expectancy for people in your age group (aka your
“age factor”).
Age factor × account balance × 2
Formula Plus Annuity
(only Tier One members who made contributions before August 21, 1981)
This method has two parts, the first of which is similar to Full Formula but uses a different
set percentage.
Your total from this first part is then added to an annuity payment, which is calculated by
multiplying your member account balance by a variable representing the estimated life
expectancy for people in your age group (aka your “age factor”). This second part looks
similar to the Money Match formula.
General service:
1% × years of service credit × final average salary + Age factor × account balance
Legislators, police, and firefighters:
1.35% × years of service credit × final average salary + Age factor × account balance
Notes:
-
Most Tier One/Tier Two members now retire under the Full Formula method. Tier Two members
are unlikely to have Money Match result in their highest calculated benefit because their
account balances are generally low (due to having fewer years of contributions into the
member account before 2004, when contributions were diverted to the IAP).
-
In general, your final average salary is the greater of these amounts:
-
The average gross monthly salary that results from the three years in which you earned
your highest total salaries from one or more PERS-participating employers, even if one
of those years was less than a full calendar year.
-
1/36 of the total salary you received from one or more PERS-participating employers in
the last 36 months of active membership.