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Calculating a PERA Retirement Benefit

Your PERA benefit is based on your years of service credit and your age at retirement. It is calculated using a percentage of your Highest Average Salary (HAS).

HAS is one-twelfth of the average of the highest annual salaries on which PERA contributions were paid that are associated with three periods of 12 consecutive months of service credit. A 15 percent annual limit in salary increases applies if any salary used in the HAS calculation is from the three years prior to retirement. The three 12-month periods do not have to be consecutive or the last three years of employment.

As a result of legislation enacted in 2006, beginning January 1, 2009, HAS will be determined using a different method if you began PERA membership on or before December 31, 2006. If you began membership on or after January 1, 2007, the new method for calculating HAS is effective as of January 1, 2007. While few members will be impacted by the new calcualtion method, if you plan to retire in the next year and your anticipated retirement dates are both before and after January 1, 2009, request an estimate of benefit prior to January 2009 to determine how the new HAS calculation will affect your benefit. For sample calculations, see the Highest Average Salary Calculation Change as a Result of Senate Bill 06-235 fact sheet.

Any money placed in a Section 125 flexible spending account is not considered salary. So, if you contribute to a Section 125 plan to reduce your salary during one or more of the periods used in the HAS calculation, your HAS will be reduced. Subsequently, the amount of your PERA benefit will be lower. For more information, refer to the PERA & Section 125 Plans brochure.

If you receive a cash payment based on unused annual leave, vacation time, or personal leave at termination of PERA-covered employment, it will be included as PERA-covered salary with member and employer contributions reported on it. Note: If you use the PERA Highest Average Salary Calculator to estimate your HAS and you receive this type of cash payment, your HAS will be inflated. For service credit, such a payment will be projected forward at your regular monthly rate of pay. See Colorado PERA's Accrued Leave Policy fact sheet for more information.

PERA has three Highest Average Salary Percentages tables based on the date you were hired. State Troopers and CBI Agents have one Highest Average Salary Percentages table. See the HAS Percentages Tables page for more information.

Calculating Your Benefit

The following calculation is based on a retiree, age 60, with 20 years of service credit. The cobeneficiary in the example is age 55. The percentages table effective June 1, 2000, was used in the example below.

1. Calculate HAS

For sample HAS calculations using the new method effective January 1, 2009, see the Highest Average Salary Calculation Change as a Result of Senate Bill 06-235  fact sheet.

2. Calculate Option 1. Multiply the HAS in number 1 above by the benefit percentage on the Highest Average Salary Percentages table. See the HAS Percentages Tables page. Note: Years of service in the Highest Average Salary Percentages table show full years only; you receive credit for each month that you work.

Retiree

$2,021 X 50.0% =

$1,011*

*Up to the maximum allowed by law, see Federal Limits on Benefits below.

3. Calculate Option 2. Multiply the Option 1 amount by the percentage from the Current Option Percentages table Option 2 below. (The cobeneficiary receives half the benefit amount the retiree received before death.)

Retiree	$1,011 X .910% =	$920
Cobeneficiary	$920 ÷ 2 =	$460

Current Option Percentages Effective January 1, 2006
(Rounded to 3 decimals; actuals are 6 decimals)
Tables are revised periodically to account for changes in life expectancies and other factors

Option 2	Cobeneficiary's Age
Retiree's Age	48	50	53	55	57	59	61	63
50	.946	.950	.956	.960	.963	.966	.969	.972
55	.922	.927	.935	.940	.945	.950	.954	.958
60	.888	.894	.903	.910	.916	.923	.929	.935
65	.840	.847	.859	.867	.875	.883	.891	.899

4. Calculate Option 3. Multiply the Option 1 amount by the percentage from the Current Option Percentages table Option 3 below. (The cobeneficiary receives the same amount the retiree received before death.)

Retiree	$1,011 X .835%=	$844
Cobeneficiary		$844

Current Option Percentages Effective January 1, 2006
(Rounded to 3 decimals; actuals are 6 decimals)
Tables are revised periodically to account for changes in life expectancies and other factors

Option 3	Cobeneficiary's Age
Retiree's Age	48	50	53	55	57	59	61	63
50	.898	.905	.915	.922	.929	.935	.941	.946
55	.856	.864	.878	.887	.895	.904	.912	.920
60	.798	.808	.824	.835	.846	.857	.868	.878
65	.724	.734	.752	.765	.777	.790	.804	.817

Conversion of Leave

Unused annual leave, vacation time, or personal leave converted to a cash payment at termination of PERA-covered employment is includable as PERA salary with member and employer contributions reported on it. Generally, this payment is made in a lump sum to you in your last month of pay. (A cash payment based on unused sick leave is not includable as PERA salary.)

Because the cash payment is not compensation for services rendered in the last month of employment, PERA projects this payment out into future months using your monthly rate of pay. For example, a cash payment of $3,400 is made to you in January (the terminating month) and your monthly rate of pay is $2,500; $2,500 of the payment would be projected into February and the remaining $900 would be projected into March. You would earn two more months of service credit and, for most retiring members, the HAS would increase slightly.

Federal Limits on Benefits

An Option 1 benefit can never exceed 100 percent of HAS and federal law places other limits on the annual amount of retirement benefits that PERA retirees may receive under Internal Revenue Code (IRC) Section 415.

If your annual benefit is expected to exceed $79,422 in 2008, federal law may limit what PERA can pay you. The calculation of benefit limits is complicated and depends upon your age, any tax-paid PERA contributions, any service credit purchased with tax-paid money, and other factors.

In order to plan for this limit, you should request a benefit estimate from PERA at least one year before your retirement date, if you anticipate your annual benefit will be $79,422 or higher.

PERA has developed a process called a Replacement Benefit Arrangement that provides for your employer to pay you the amount you are not being paid by PERA because of the federal tax limit. This is done at little or no cost to the employer.

For more information on PERA retirement benefits view, print or order the PERA Retirement Process booklet.

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	HAS Percentages Tables
	PERA's Benefit Calculators

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