GOV
Pension (Retirement) Formula
Your monthly pension is based on three factors: your final average compensation, your years of creditable service, and the benefit compensation base that coordinates with Social Security.
The Formula
[ (1.30% × FAC up to BCB) + (2.05% × FAC above BCB) ]
× Years of creditable service ÷ 12 = monthly pension
Instructions
- Find your final average compensation (FAC)
- Look up the BCB for your birth year & retirement year
- Count your creditable service years and months
- Apply the formula above, divide by 12
Key Definitions
FAC - Final average compensation
One-half the sum of (a) your compensation during the two consecutive years of creditable service with the highest pay, and (b) the value of 25% of your sick leave balance at the time of retirement.
Sick leave cap: For pension purposes, sick leave balances may not exceed your balance as of the pay period ending July 17, 2010 (minus any time used since). Members who joined after July 17, 2010 may not include sick leave in their pension calculation.
Service - Creditable service
The number of years and completed months of eligible service during which you received compensation. Service begins on the first day of the month following your date of employment.
Unused sick leave (in full months only) that was not applied to FAC and not paid out by the employer is converted into additional creditable service at retirement. You may also elect to use your sick leave balance to qualify for retirement eligibility.
Service before April 1, 1960 may count for members employed on that date. If you have more than one period of employment, various ordinances may apply — contact the retirement office for details.
BCB - Benefit compensation base
The BCB is the annual compensation threshold used to coordinate your pension with Social Security benefits. Your FAC is split into the portion below the BCB (taxed at the lower 1.30% rate) and the portion above it (taxed at the higher 2.05% rate).
The BCB amount depends on your year of birth and the year you retire or terminate employment. Contact the retirement office or use the pension calculator to find the BCB that applies to you.
Worked Examples
These examples use a BCB of $43,992 — the value in effect for members reaching normal retirement age in 2005. Use the pension calculator for current BCB values.
Member A
Service period: May 1974 – Jun 2005
Creditable service: 31 yrs, 1 mo (31.08)
FAC: $35,000
FAC vs BCB: Below BCB
Member B
Service period: Jan 1974 – Apr 2005
Creditable service: 31 yrs, 3 mo (31.25)
FAC: $45,000
FAC vs BCB: Straddles BCB
|
Calculation step |
Member A |
Member B |
|---|---|---|
| 1. FAC up to Benefit Compensation Base |
$35,000.00 |
$43,992.00 |
| 2. Multiply by 1.30% |
x .013 |
x .013 |
| 3. Total |
455.00 |
571.90 |
| 4. FAC that is above Benefit Compensation Base |
None |
1,008.00 |
|
5. Multiply by 2.05% |
x .0205 |
x .0205 |
| 6. Total |
None |
20.66 |
| 7. Total Lines 3 and 6 |
455.00 |
592.56 |
| 8. Multiply by years of Creditable Service |
x 31.08 |
x 31.25 |
| 9. Annual Pension |
$14,141.40 |
$18,517.50 |
| 10.Monthly Pension (Line 9 divided by 12) |
$1,178.45 |
$1,543.13 |
Member A's FAC falls entirely below the BCB, so only the 1.30% rate applies. Member B's FAC straddles the BCB, so both rates apply — this is why two rates exist in the formula.
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