SPEC Kit 320: Core Benefits · 31
When calculating a normal age monthly standard annuity, TRS uses the following formula: (1) Average of Highest Five
Annual Salaries (based on creditable compensation) =Average Salary (2) Total Years of Service Credit X 2.3% =Total
%(3) Total %X Average Salary =Annual Annuity (4) Annual Annuity ÷ 12 =Monthly Standard Annuity.
Years of benefit service multiplied by average compensation multiplied by a multiplier of 1.25% divided by 12 months.
Average compensation =average of 5 highest plan years of compensation during the previous 10 plan years.
Years of contributory service, highest 36 months average wage, and average Canadian Pension Plan Earnings Ceiling.
Years of creditable service x percentage value (value received for each year of creditable service based upon membership
class for that period) x average final compensation (5 highest fiscal years).
Years of service/55 x average of highest 3 years base salary.
Final Pay Formula
2.2% of final average salary times years of creditable service.
Factors include annual salary for last five years worked, years of service (whole and fractional), and age at retirement.
The formula for calculating pension payments is as follows: Determine the highest annual rate of pay during the final
five years of employment. Multiply such rate by 1.5% for up to $38,000, by 1.4% for $38,001–$70,000, by 1.3% for
over $70,000. Multiply the sum of these factors by the number of years (whole and fractional) of service. Divide the
product by 12 to establish monthly pension. Employees are eligible for “normal retirement” at age 65 or after with 5
years of service and will receive their full pension without reduction for early retirement. An employee is eligible for Early
Retirement upon the attainment of 55 provided their age and service equals 75. Such “early retirement” may require
a 4% “discount” of payment for each year before age 65 (to offset the actuarially extended life expectancy during
which benefits will be paid). Pensions for employees who retire on or after age 55 with at least 30 years of service are
discounted 2% per year. Pensions for employees who retire at age 60 or later with at least 25 years of service are not
discounted for early retirement.
Final average salary times .75 times years of service up to 33 years. Before April 2010, the formula for average
retirement benefit was 1.5% times years of service up to 33 years of service. In other words, the formula has changed
beginning 2010 for those hired after April 2010.
Final pay -there is a formula calculator that takes into consideration years of service, military service, age, average of
three highest earning years. Calculation is also done as a money purchase -how much annuity would your retirement
contributions buy -whichever method provides the greater amount is selected.
Formula =years of service x final average salary x 1.67%.
Percentage of average final compensation, years of credited service. When you retire at normal retirement age (65),
your annual normal retirement benefit is equal to: 1.25% of your average final compensation times Your years of
credited service up to 20 plus 1.66% of your average final compensation times Your years of credited service over
20. Your benefit is figured on an annual basis. You receive 1/12 of your annual benefit each month. The formula above
shows how much you would receive if payments start at your normal retirement date and continue for your lifetime only.
If payments start earlier or if you choose a payment option with benefits continuing to someone after your death, your
benefit will be reduced.
Three factors have a direct bearing on the amount of retirement benefit for which you are eligible. These are service
credit, final average salary (FAS), and age at retirement. While each factor is important, the more service credit you
have, the higher your monthly benefit will be. Each year of creditable service, up to 30, adds 2.2 percent of final average
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