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Retirement Benefit Formula

Your SDCERA retirement benefit is calculated using three factors: Age Factor x Service Credit x Final Average Compensation

  1. 1. Age at retirement

    Your age at retirement is represented by an age factor—a percentage—that varies with age. Your age factor is based on the age you are on the first day you are retired (to the nearest completed quarter year). The maximum age factor depends on your Membership classification and tier.
     
  2. Membership Classification Tier Maximum Age Factor
    General Tier A
    Tier I and Tier B
    Tier C
    Tier D
    3% at age 60
    2.6% at age 62
    2.5% at age 67
    1.62% at age 65
    Safety Tier A
    Tier B
    Tier C
    3% at age 50
    3% at age 55
    2.7% at age 57


  3. 2. Total service credit at the time of your retirement

    Service credit measures the time earned as a Member of SDCERA while in paid status—in short, how long you have worked at your job following your entry into SDCERA Membership. One year of service credit is earned for each year of full-time employment. Working on a part-time basis results in a proportionate amount of service credit. For example, a Member working 20 hours per week for one year will receive a half year of service credit.

    You may be eligible to purchase service credit, but the purchase must be completed prior to retirement.  

  4. 3. Monthly final average compensation (based on your highest eligible earnings)

    When you retire, SDCERA uses your highest final average compensation (FAC) to calculate your retirement benefit. The number of years used to calculate the average varies based on your tier.

    Tier Years used to calculate FAC
    Tier I and Tier A One year
    (26 consecutive pay periods)
    Tier B, Tier C and Tier D Three years
    (78 consecutive pay periods)

    For most Members, final average compensation is represented by their last year/years of service because most Members earn their highest rate at the end of their career. However, this is not always the case. SDCERA will always use a Member's highest monthly final average compensation (up to the limit allowed by the Internal Revenue Code), whenever that may have occurred.
  5. In addition to base pay, many pay categories count toward a Member’s final average compensation. Refer to the Earnings Categories chart for Tier I, Tier A and Tier B Members or the Earnings Categories chart for Tier C and Tier D Members for a list of included pay categories depending on your tier. Overtime and terminal pay (such as vacation cash out) are excluded when determining final average compensation.

    If you became an SDCERA Member after July 1, 1996, federal or state law limits the amount of compensation that may be used to calculate your benefit. For 2019, the compensation limit Tier 1, Tier A, and Tier B Members is $280,000, General Tier C and Tier D Members is $124,180 and Safety Tier C Members is $149,016.