MSRS - Level Formula

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Last Updated: 09/30/2011

Home >> General Plan >> Level Formula

Level Formula

Years and months of service are converted to a percent through one of two formulas. Members hired before July 1, 1989 may use the Step or Level formula. Members hired on or after July 1, 1989 must use the Level formula.

Under the level formula, you receive 1.7 percent for each year of service. For example, if you have 20 years of service, you would receive 34 percent of your high-five average salary. If you retire at age 66, the age of full retirement, there is no reduction in monthly benefits.

However, if you begin to collect monthly benefits before age 66, your monthly benefits will be reduced because you will be collecting monthly benefits for a longer period of time. The reduction is designed to generate the same value regardless of your age at retirement.

Examples of Benefits Calculations Using the Level Formula:

To understand how retirement benefits are calculated, it is sometimes best to show an example. Below is an example of an unreduced benefit .

Unreduced Benefit

High-five average salary:

$36,000 ($3,000 per month)

Years of service:

25 years

Age at retirement:

66 years

$3,000	Monthly average salary
x 42.5%	25 years of service at 1.7%
$1,275	Monthly Retirement Benefit