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 4 weeks of service credit, you will have earned about 5.15 years of service credit.
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.
ACERA Must Limit How Much Vacation Pay is Included in Your Highest Average Monthly Salary Calculation for Tier 1, 2, and 3 Members
The amount of vacation ACERA will include in your Highest Average Monthly Salary is limited to the amount of vacation that’s “earned and payable” to you during employment in your final compensation period, according to the 2012 California Public Employees Pension Reform Act (PEPRA). PEPRA does not allow inclusion of vacation pay in the salary calculation for Tier 4 members.