How Your PERA Benefit is Calculated
With the PERA Defined Benefit (DB) Plan, you’ll receive income in retirement that you can’t outlive. The amount you’ll receive each month depends on three important factors: Your highest average salary, the amount of service credit you have accrued, and your age at retirement.
How do we calculate your benefit? The basic formula for a full service, single-life retirement benefit is: your highest average salary x 2.5% x your years of service = your monthly lifetime benefit amount.
Highest Average Salary (HAS)
Your highest average salary (HAS) is an average of your highest years of earnings while working for a PERA employer. It is a monthly average, calculated using periods of 12 consecutive months of service credit during which you made contributions to PERA. The 12-month periods do not have to be consecutive or your last years of employment.
The number of years we use for your HAS calculation depends on when you became a member.
- Three years of your highest salaries are used if you had five years of service credit as of Jan. 1, 2020.
- Five years of your highest salaries are used if you did not have five years of service credit as of Jan. 1, 2020.
HAS is calculated differently for DPS benefit structure members who were eligible for retirement on Jan. 1, 2011 and judges; see the Your PERA Benefits booklet for details.
When you retire, you’ll earn a percentage of your HAS as your monthly benefit. The percentage will depend on your service credit and age at retirement. PERA’s HAS tables can give you an idea of the percentage of HAS you can earn with different combinations of age and service.
Log in to your member account to see your current HAS or to use the HAS calculator.
Annual Limit on Salary Increases
In calculating your HAS, PERA applies a limit on salary increases. PERA determines the highest annual salaries associated with four or six periods of 12 consecutive months. The 12-month periods do not have to be consecutive or your last years of employment. The lowest of the 12-month periods becomes the base year used as a starting point for the annual limit on salary increases. The remaining 12-month periods are placed in chronological order from oldest to newest.
The annual limit will apply regardless of when the annual salaries used in the HAS occurred. The percentage applied is based on when you are eligible to retire:
- If you began membership on or before December 31, 2006, and you were eligible to retire on January 1, 2011, your annual limit is 15%.
- If you began membership on or before December 31, 2006, and you were not eligible to retire on January 1, 2011, your annual limit is 8%.
- If you began membership on or after January 1, 2007, your annual limit is 8%.
Service Credit
Your service credit is how long you’ve been working for a PERA employer and making contributions to your account.
In most cases, you earn a month of service credit for each month of employment when your salary is at least 80 times the federal minimum wage (currently $7.25 per hour). For salary that is less than that, service credit is prorated. Service credit can accrue differently for employees in the School and Denver Public Schools (DPS) divisions. See the School and DPS Divisions Service Credit fact sheet for details.
You may be able to purchase service credit based on a refunded/rolled over PERA account or other employment. Purchasing service credit may allow you to retire earlier or receive a larger benefit.
Age
Your service credit and age determine your eligibility for benefits. Your age will be calculated at the time you apply for a retirement benefit, which means you can leave your account at PERA if you are no longer working for a PERA employer and receive a benefit when you become eligible.
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Calculate Your Retirement Benefit
