Once a member meets all retirement eligibility requirements, the member’s annual retirement benefit is calculated by using this formula:
Retirement Formula
Your Annual Benefit
=
1.85% of average final compensation
x
years and months of creditable service
Average Final Compensation is the average of the member’s salary during their four highest-paid years (48 consecutive months) in a row. If your four highest-paid years in a row include a final payment for unused vacation leave and/or prorated longevity, the member’s average final compensation may be increased by the extra payment(s). Final payments, if any, for unused sick leave, payments for housing or any other allowance, or reimbursements for expenses are not includable in the average final compensation. Normally, the four consecutive highest-paid years of salary will be the last four; however, they could have been earlier in one’s career.
Creditable Service is the total of all service credit that counts toward retirement. It includes membership service for any period during which the member contributes to LGERS, provided contributions have not been withdrawn. It also includes credit for eligible purchased service and eligible unused sick leave that is converted to creditable service at retirement.
One year of credit is given for 12 months of covered employment (not tied to a calendar year). A member earns credit for each month that he or she makes a retirement contribution. For example, a member contributing for 12 months will earn one full year’s credit. If, however, a member contributes only eight months, he or she will earn credit for 8/12 of one year.
The following table shows how we calculate Mary’s benefit. Use the spaces in the right-hand column to fill in your figures for an estimate of benefit.
| Step 1 | Your Employee | Example | |
| Add the salary during your 4 highest-paid years (48 months in a row) | Year 1 | $____________ | $38,930 |
| Year 2 | $____________ | $38,930 | |
| Year 3 | $____________ | $40,830 | |
| Year 4 | $____________ | $41,734 | |
| Total | $____________ | $161,324 | |
| Then, divide the total by 4 to get the average final compensation (AFC) | divide by 4 | /4 | |
| Average Final Compensation | $____________ | $40,331 | |
| Step 2 | |||
| Step 1 AFC | $____________ | $40,954 | |
| Multiply Step 1 AFC by 1.85% (.0185) to apply the retirement formula* | x .0185 | ||
| Total | $____________ | $746.12 | |
| Step 3 | |||
| Determine the amount of creditable service | ____________ | 32.1667 years | |
| Step 4 | |||
| Calculate the annual benefit* by multiplying Step 2 by Step 3 | Step 2 Total | $____________ | $746.12 |
| Step 3 Years | x ___________ | 32.1667 years | |
| Total Annual Benefit | $____________ | $24,000.22 | |
| Step 5 | |||
| Calculate the monthly benefit* by dividing Step 4 by 12 | Step 4 Total Annual Benefit | $____________ | $24,000.22 |
| divide by 12 | /12 | ||
| Total Monthly Benefit | $____________ | $2,000.02 | |
| (This is an estimate of the payment your employee will receive each month before taxes or any other deductions.) | |||
*Remember, if the employee retires early, these numbers will change.
Because the member in this example has more than 30 years of creditable service at retirement, he or she can receive the maximum annual benefit of $24,000, or about $2,000 each month, which stops when the member dies, unless he or she selected a survivor payment option.
Download a Benefit Calculation Worksheet
Your employee can log in to ORBIT account to Create a Custom Benefit Estimate.
The following chart shows the approximate monthly benefit paid at various salary levels, depending on age and creditable service.
| Monthly Retirement Benefit Under Maximum Allowance | ||||||
| Age ➡️ | 50 | 55 | 60 | N/A | N/A | |
| AFC ⬇️ | Years of Service ➡️ | 20 | 28 | 25 | 30 | 40 |
| $80,000 | $1,233 | $3,108 | $3,083 | $3,700 | $4,933 | |
| $70,000 | $1,079 | $2,719 | $2,697 | $3,237 | $4,316 | |
| $60,000 | $925 | $2,331 | $2,312 | $2,775 | $3,700 | |
| $55,000 | $847 | $2,136 | $2,119 | $2,543 | $3,391 | |
| $50,000 | $770 | $1,942 | $1,927 | $2,312 | $3,083 | |
| $45,000 | $693 | $1,748 | $1,734 | $2,081 | $2,775 | |
| $40,000 | $616 | $1,554 | $1,541 | $1,850 | $2,466 | |
| $35,000 | $539 | $1,359 | $1,348 | $1,618 | $2,158 | |
| $30,000 | $462 | $1,165 | $1,156 | $1,387 | $1,850 | |
| $25,000 | $385 | $971 | $963 | $1,156 | $1,541 | |
Of course, these are only examples. A member’s benefit is calculated individually and depends on age, creditable service and average final compensation.
This page was last modified on 12/03/2024