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High-5 Formula

Under the high-five formula, your annual retirement benefit is a percentage of your highest average annual salary over five successive years of formula service credit.

One year of formula service credit is a full year of teaching service during which the maximum deductions are withheld. Formula service credit is measured each fiscal year (July 1 - June 30). You may not earn more than one year of formula service credit in a fiscal year. In years where you did not perform a full year of teaching service or did not pay the maximum deductions as prescribed by TRA law, the formula service credit is prorated.

High-5 Average
Annual Salary
X
% Factor based on
years of service
and age
=
Annual Lifetime Benefit
(Life No Refund Plan)

Tier I

If you were first employed before July 1, 1989, and earned service credit, and your age plus allowable service credit equals 90 or more, you may retire under the Rule of 90. Eligible members retiring under the Rule of 90 receive benefits without any reduction for early retirement.

Tier I and Tier II formulas

If you were employed before July 1, 1989, and earned service credit, your retirement benefit will be calculated under both Tier I and Tier II formulas. No election is necessary, because at retirement you automatically receive the greater of these two benefits. If you were first employed after June 30, 1989, your retirement benefit will be calculated under Tier II only.

Tier I formula

With these provisions:

OR

Tier II formula

Early retirement reduction factors are applied if you retire prior to normal retirement age. These reduction factors average approximately 4 percent to 5.5 percent per year. Rule of 90 is not available under the Tier II formula.

Normal retirement age for Tier II members is the same as for Social Security benefits, up to a maximum age of 66. In 2000, the Social Security Administration (SSA) gradually increased the definition of normal retirement age (NRA).

Year of birth
NRA
1937 and prior
65
1938
65 and 2 months
1939
65 and 4 months
1940
65 and 6 months
1941
65 and 8 months
1942
65 and 10 months
1943 and later
66

Tier I Example

First employed on or before June 30, 1989

Member eligible for Rule of 90 and High-5 Average Salary = $50,000

Rule of 90       With Early Retirement Discount
Age of Member =
57.5
  Age of Member =
57.0
Years of Service =
32.5
  Years of Service =
32.5
   Total  
90.0
     Total  
89.5
         
Tier I Formula     Early Retirement Discount
First 10.0 years x 1.2% =
12.00%
  0.25% for each month
under age 62
=
15%
18.5 years x 1.7% =
31.45%
       
4 years x 1.9% =
7.60%
       
   
51.05%
       
51.05% x $50,000 =
$25,525 ÷ 12
=
$2,127
  $2,127 - 15% discount ($320) =
$1,807
   
No Refund Plan monthly benefit
No
Refund
Plan
monthly benefit

Tier II Example

First employed after June 30, 1989

Member High-5 Average Salary = $50,000

Age of Member =
57.67
       
Years of Service =
32.50
       
   Total  
90.17
       
             
Tier II Formula        
18.5 years x 1.7% =
31.45%
       
14 years x 1.9% =
26.60%
       
   
58.05%
       
58.05% x $50,000 =
$29,029 ÷ 12
=
$2,418
-
$902* =
$1,516
   
monthly benefit
early retirement discount
No Refund Plan
monthly benefit

*Discount approximately 4.9% per year under age 66; or a 37.30% discount applied above.

 

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