About IPERS
The Rewards of IPERS Membership |
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The Bottom Line – What's the Payout?
The formula used to calculate the annual IPERS benefit for all members except those in public safety positions includes:
- A formula multiplier (based on your years of service).
- Your highest 3-year average salary.
- Your age at retirement (your benefit is reduced if it is received before normal retirement age).
Your annual IPERS benefit is calculated* as follows:
Multiplier
(Based on Your
Years of Service) |
X |
Salary
(Your Highest
3-Year Average) |
*If you receive your benefits before normal retirement age, they will be reduced since you will receive benefits over a longer period. Your benefits are reduced 0.25 percent for each month (or 3 percent per year) that you receive benefits before you would have attained normal retirement age.
To determine the multiplier used in the calculation, refer to the chart below.
View enlarged version of chart in a new window.
Let’s look at some examples of the IPERS benefits a member might receive. Please keep in mind that these examples are for illustrative purposes only. Your benefits may be different depending on your employer, age when you begin receiving your benefits, length of service, covered wages, and the payment option you choose at retirement.
| Example 1 |
| Retirement Benefits Payable at Normal Retirement Age
Scenario A
Jane works for an IPERS-covered employer for 21 years. She retires at age 62, when she qualifies for a normal retirement pension. Her highest 3-year average salary is $51,814. Her annual retirement benefit would be $21,761.88 (42% x $51,814) under Option 2. Depending on the payment option Jane elects, this amount may be adjusted.
42% Multiplier
(Based on Jane’s
Years of Service) |
X |
$51,814 Salary
(Jane’s Highest
3-Year Average) |
= |
$21,761.88 |
Scenario B
If Jane worked another 3 years and retired at age 65 with a highest 3-year average salary of $55,056, her annual retirement benefit would be $26,426.88 (48% x $55,056) under Option 2. Again, depending on the payment option Jane elects, this amount may be adjusted.
48% Multiplier
(Based on Jane’s
Years of Service) |
X |
$55,056 Salary
(Jane’s Highest
3-Year Average) |
= |
$26,426.88 |
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| Example 2 |
Retirement Benefits Payable Before Normal Retirement Age
Steve works for an IPERS-covered employer for 25 years and decides to retire at age 55 before he meets normal retirement age. When he leaves covered employment, his highest 3-year average salary is $64,000. His annual retirement benefit under Option 2 would be $25,280 (50% x $64,000 = $32,000 – $6,720 age reduction [7 years before normal retirement age x 3% per year reduction]).
50%
Multiplier
(Based on
Steve’s Years
of Service) |
X |
$64,000 Salary
(Steve’s
Highest 3-Year
Average) |
– |
$6,720
Reduction
for Early
Retirement
(3% per year) |
= |
$25,280 |
Disability and Death Benefits
Assuming the same years of service, age, and salary, Steve would receive a $32,000 annual benefit under Option 2 if he became eligible for disability benefits at age 55. In the event of his death at age 55 before retiring, a lump-sum benefit of $207,132.16 would be payable to his beneficiary. |
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