Getting an early understanding of the formula that ACERA will use to calculate the retirement allowance you’ll receive every month for the rest of your life will make it much easier for you to plan for retirement.
When you retire, ACERA will perform the following multiplication in order to determine your lifetime monthly retirement allowance:
Age Factor Percentage
Years of Service Credit X Highest Average Monthly Salary
= Monthly Retirement Allowance for Life
In general, the higher these factors, the greater your benefit. Note that the highest average monthly salary calculation and age factors used to calculate your benefit vary based on your membership type and tier.
While you work in a full-time retirement-eligible position for one of ACERA’s participating employers, you earn service credit toward retirement. Service credit is measured in years. In general, you earn a year of service credit for each year you work full-time in an ACERA-covered job. Your service credit earnings are measured to a fraction of week, so for example, if you earned 5 years and 8 weeks of service credit, you will have earned about 5.15 years of service credit.
If you work part time, you get part time service credit. For example, if you work half time for 10 years, you get 5 full-time years of service credit in the formula.
Purchased service will also increase your total service credit. In general, the more retirement service credit you have, the higher your benefit.
ACERA will convert your unused sick leave into service credit, as allowed by your bargaining unit. For most members, upon retirement, 50% of any unused sick leave balance can be converted to service credit and added to total years of service. Limitations can be found in your Memorandum of Understanding (MOU) for your bargaining unit. Many MOUs limit the amount of sick leave that is convertible up to 125 days. Check with your Human Resources department for a copy of your MOU.
In general, the more service credit you have as an ACERA member, the higher your retirement benefit. ACERA may also use service credit to determine when you can retire and receive a benefit. Thus, by purchasing service credit, you can increase your retirement benefit and, in some cases, become eligible to retire at an earlier date.
There are specific periods of employment that may be purchased as service credit:
If you are a tier 2 member who previously withdrew tier 1 contributions, you have the opportunity to redeposit and restore your tier 1 benefits under a Marin County lawsuit known as the Aquilino decision. This decision only affects ACERA tier 2 members who were in tier 1, terminated their membership, withdrew all tier 1 contributions, and later re-entered ACERA on or after July 1, 1983, as tier 2 members.
To have tier 1 benefits reinstated, eligible members must:
Highest Average Monthly Salary, also known as Final Average Salary, is not the same as your employee W-2 wages; it is your highest average monthly compensation you earn during the period determined to be your Final Compensation Period.
Your Unused Vacation Has an Affect on Your Retirement Allowance (Tiers 1, 2, and 3)
When you go to retire, ACERA will use the Retirement Formula to calculate how much your monthly retirement allowance will be, and you’ll get this monthly retirement allowance from us every month for the rest of your life.