PERS uses three methods to calculate a Tier One monthly benefit amount and two methods to calculate a Tier Two monthly benefit amount; members receive the highest monthly benefit that results from these calculations.
For Tier One and Tier Two members, the calculation methods are:
Full Formula Method
For general service members:
1.67 percent × years of accrued service time × final average salary
For police and firefighter members:
2 percent × years of accrued service time × final average salary
Formula Plus Annuity Method (Tier One only, available to those who made contributions before August 21, 1981)
This benefit uses a formula similar to the Full Formula Method to compute the employer portion of your benefit. For general service members, multiply 1 percent of your final average salary by your years of accrued service time. Legislators, police, and firefighters should multiply 1.35 percent of final average salary by years of accrued service time. The total of the calculation will be added to an annuity payment based on your member account balance and life expectancy of people your age.
Your employer matches your member account balance by an equal amount. From that total, a monthly payment amount is then calculated based on life expectancy for people of your age.
Notes and definitions:
Most Tier One/Tier Two members 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).
Accrued service time (also called creditable service, retirement credit, or service credit) is the number of months and years you have worked in a PERS-qualifying position. A “qualifying” position is a position in which an employee performs 600 or more hours of service in a calendar year for a PERS-participating employer or employers. Hours worked with different participating employers in the same calendar year are combined to determine if the 600-hour standard has been met for that year. Under certain circumstances, if you are not employed for the full calendar year, you may earn service time for a partial year with fewer than 600 hours of employment.
One month of service time is earned for each major fraction of a month worked.
Your final average salary is the greater of these amounts:
- your average gross salary earned over the three calendar years in which you received the largest total salary from one or more PERS-participating employers, even if one of those years was less than a full calendar year; or
- one-third of the total salary you received from one or more PERS-participating employers in the last 36 months of active membership.