Estimating Your Retirement Benefits
After watching the video below, cursor down to find more information.
Your lifetime monthly benefit will be based on a defined benefit formula. That defined benefit formula is an accrual factor (1.82% for Teachers and State Employees and 1.85% for Local Governmental Employees), multiplied by average final compensation, multiplied by your years and months of creditable service -- this produces the maximum annual allowance. Divide this total by 12 to get the maximum payment option. Keep in mind that reduction factors will be applied for early retirements. See the definitions section for explanations for AFC, accrual rate, creditable service and early retirement factors. The example below walks you through calculating a member's benefit.
Step 1 -- Identify Assumptions
- Age of Member - 49
- Age of Beneficiary -51
- Total Creditable Years of Service - 30 years
- Retirement Factor .0182 (TSERS) or .0185 (LGERS)
- Average Final Compensation - $48,924.15
- Social Security Leveling (optional) $1,100 (estimate)
Step 2 -- Apply the Retirement Formula
- AFC X Retirement Factor X Creditable Service
- AFC $48,924.15 X Factor .0182 (or .0185) X Total Service 30 yrs ÷ 12 = Monthly Maximum $2,226.05
Step 3 -- Results
|Estimate of Retirement Benefits
Results: Maximum and Options
|OPTION||TO YOU||TO ONE BENEFICIARY AFTER
|Option 2 100%||$2,037.73||$2,037.73|
|Option 3 50%||$2,127.66||$1,063.83|
|Option 4 To AGE 62||$2,568.88||$0|
|Option 4 After AGE 62||$1,468.88||$0|
|Option 6-2 Pop-Up||$2,023.03||$2,023.03|
|Option 6-3 Pop-Up||$2,119.87||$1,059.94|
A note about estimates provided by the Retirement Systems: You should not consider any estimate provided to be a representation, contract, or guarantee of any benefit. Any estimate provided is subject to correction for any errors including, but not limited to, data entry or benefit calculations. The availability and amount of a retirement benefit you may be eligible to receive is governed by North Carolina law. Any estimate provided cannot alter, modify, or otherwise change the controlling North Carolina law or governing legal documents in any way, nor can any right accrue to you by reason of any information provided omission of information on the estimate. In the event of a conflict between a benefit estimate and North Carolina law, North Carolina law governs. Any actual retirement benefit will be subject to verification before payment is authorized. This estimate may not reflect the retirement benefit amount that will be payable if the benefit exceeds the IRS section 415(b) annual pension benefit.
Average Final Compensation (AFC): The average of your salary during your four highest-paid years in a row. If your four highest-paid years in a row include a final payment for unused vacation leave and/or prorated longevity, your AFC may be increased by the extra payment(s). Final payments, if any, for unused sick leave or reimbursements for expenses are not includable in your AFC.
Accrual Rate: The accrual rate is determined by the General Assembly, and it represents the percentage of the AFC a member receives for each year of creditable service.
Creditable Years of Service: The total of all service credit that counts toward retirement. It includes membership service for any period you contribute to your retirement system, provided you have not withdrawn your contributions. It also includes credit for eligible purchased service and eligible unused sick leave that is converted to creditable service at retirement.
Early Retirement Factor: Your early retirement benefit is calculated using the same formula as a service retirement benefit multiplied by a reduction percentage based on your age and/or service at early retirement. Because your benefit may be paid over a longer period of time than if you had waited until being eligible for service retirement, your benefit will be reduced. Tables in your Retirement Handbook show the effects these reductions would have on your benefit.
You can use the estimator located on the log in screen of ORBIT, or log in to use the estimator with your information filled in for you. You may also follow the steps below to receive an estimate.