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- Your Retirement Benefit
- Your Retirement Benefit: If You Were First Employed Before July 1, 1989
- Your Retirement Benefit: If You Were First Employed On or After July 1, 1989
- Combined Service Annuity
- Retirement Annuity Options
- Deferred Retirement
- Refund of Contributions
Your Retirement Benefit
You are participating in a defined benefit plan.
The factors used to calculate your retirement benefit are:
- Final Average Salary (FAS) – the average of the highest five successive years of salary.
- Years of Service (YOS) – allowable retirement service credit earned while contributing to the SPTRFA.
- Percentage Multiplier
Your benefit amount is not based on the amount of money you or your employer have contributed. Your eligibility for a monthly benefit occurs when you are:
- Age 55 with three years of service
- Any age with 30 years of service
Your first date of employment determines your benefit formula method.
- First Employed Before July 1, 1989
- First Employed On or After July 1, 1989
Your Retirement Benefit:
If You Were First Employed Before July 1, 1989
You will receive the higher of the Tier I or Tier II benefit amounts.
The Rule of 90 applies only to Tier I benefits.
Tier I Formula (Includes Rule of 90)
The Tier I formula is:
Unreduced Annual Benefit =
(FAS x First 10 YOS x 1.2%)
+
(FAS x YOS greater than 10 x 1.7%)
If you retire prior to your normal retirement age, unless you qualify for the Rule of 90, an early retirement reduction may be applied. The Rule of 90 waives the early retirement reduction when your age plus years of service are equal to or greater than 90.
Normal retirement age is age 65 if you have fewer than 30 years of service. If you have 30 or more years of service, normal retirement age is 62.
Tier II Formula
The Tier II formula is:
Normal Annual Benefit = FAS x YOS x 1.7%
The Rule of 90 does not apply.
If you retire prior to age 65, Tier II normal retirement age, an actuarial early retirement reduction will apply.
Example of Plan Benefit Calculations
In this example, all benefit values are rounded to the nearest whole dollar.
| Years of Service: | 25 |
| Final Average Salary: | $50,000 |
| Age: | 61 |
| Normal Retirement Age: | 65 |
Tier I Example:
Normal Annual Benefit
($50,000 x 10 x 1.2%) + ($50,000 x 15 x 1.7%) = $18,750Early Retirement Reduction
This member is four years, or 48 months, from normal retirement age.
0.25% x 48 = 12% (88% of unreduced benefit)Annual Retirement Benefit
$18,750 x 88% = $16,500Monthly Retirement Benefit
$16,500 ÷ 12 = $1,375
Tier II Example:
Normal Benefit
$50,000 x 25 x 1.7% = $21,250Early Retirement Actuarial Factor for Age 61
= 0.8058 (80.58% of unreduced benefit)Annual Retirement Benefit
$21,250 x 0.8058 = $17,123Monthly Retirement Benefit
$17,123 ÷ 12 = $1,427
Your
Retirement Benefit:
If You Were First Employed On or After July 1, 1989
Tier II Formula
The Tier II formula is:
Normal Annual Benefit = FAS x YOS x 1.7%
The Rule of 90 does not apply.
To qualify for an unreduced benefit, you must reach your normal retirement age based on your birth year (as shown in chart below).
| Birth Year | Normal Retirement Age |
| Prior to 1938 | 65 |
| 1938 | 65 and 2 months |
| 1939 | 65 and 4 months |
| 1940 | 65 and 6 months |
| 1941 | 65 and 8 months |
| 1942 | 65 and 10 months |
| After 1942 | 66 |
If you retire prior to your normal retirement age, an actuarial early retirement reduction will apply.
Example of Plan Benefit Calculations
In this example, all benefit values are rounded to the nearest whole dollar.
| Years of Service: | 25 |
| Final Average Salary: | $50,000 |
| Age: | 61 |
| Normal Retirement Age: | 65 |
| Birth Year: | 1937 |
Tier II Example:
Normal Benefit
$50,000 x 25 x 1.7% = $21,250Early Retirement Actuarial Factor for Age 61
= 0.8058 (80.58% of unreduced benefit)Annual Retirement Benefit
$21,250 x 0.8058 = $17,123Monthly Retirement Benefit
$17,123 ÷ 12 = $1,427
Combined Service Annuity
The Combined Service program is a special form of portability under Minnesota law for individuals having allowable retirement service credit with more than one covered Minnesota public pension fund (Minn. Stat. § 356.30).
The program allows benefits to be calculated by all plans as if all years of service were earned under the last plan. Note that these remain separate benefits, however, and the assets cannot be rolled or combined.
Participating Minnesota public pension funds are:
- St. Paul Teachers’ Retirement Fund Association
- Minnesota Teachers Retirement Association
- Minneapolis Teachers’ Retirement Fund Association
- Duluth Teachers’ Retirement Fund Association
- Public Employees’ Retirement Association
- Minnesota State Retirement System
- Minneapolis Employees’ Retirement Fund
All combined years of allowable retirement service credit are used to determine your benefit eligibility.
Minimum allowable retirement service credit requirements are:
- At least three years of combined credit within the Minnesota public pension funds.
- At least one-half year of credit within a fund to receive combined service credit from that fund.
Refunds from the public pension funds may be repaid, allowing your retirement benefit calculation to include that retirement service credit. Contact the fund you took a refund from to evaluate your options.
Your FAS is the average of your highest five successive years of salary from whatever fund(s) they occur in, even if it is not your last pension fund. The pension funds will all use the same FAS to calculate your benefit payable from each fund.
Retirement Annuity Options
The SPTRFA offers you one of five lifetime annuity options – each actuarially equivalent to the C-1 Life Plan option. Each option provides different protections for your survivors and beneficiaries, thus affecting your monthly benefit amount.
- C-1 Life Plan – No Refund
Monthly benefit for your lifetime with no refund payable. - C-2 Life Plan – Guaranteed Refund
If your death occurs before you “use up” the balance of the money you contributed to the SPTRFA, your designated beneficiary (or if none, your estate) receives a refund of the remaining balance. - C-3 Life Plan – 15-Year Term Certain
If your death occurs before the end of the term, an equivalent benefit is paid to your designated beneficiary (or if none, your estate). - C-4 Life Plan – 100% Joint & Survivor
Upon your death, your spouse will receive a lifetime benefit equal to your annuity. If your spouse predeceases you, your payments increase to the C-1 Life Plan option amount for the remainder of your life. - C-5 Life Plan – 50% Joint & Survivor
Upon your death, your spouse will receive a lifetime benefit equal to 50% of your annuity. If your spouse predeceases you, your payments increase to the C-1 Life Plan option amount for the remainder of your life.
Accelerated Retirement Annuity
In addition to selecting your retirement option, you may elect to receive an accelerated monthly retirement benefit in lieu of your regular lifetime monthly retirement benefit. This pension provides a greater benefit from the SPTRFA prior to the age of 65. The benefit is then reduced when you reach age 65. This option attempts to provide a more level lifetime retirement income before and after age 65, when Social Security usually takes effect.
Deferred Retirement
A deferred benefit is available if your employment is terminated and you have at least three years of allowable retirement service credit. A deferred benefit may begin as early as age 55.
The benefit is computed by applying the retirement formula in effect at the time of termination. If you begin to receive the benefit before the normal retirement age, applicable discounts will apply. This benefit will augment, or increase, by 3% each year until January 1 after age 55 and then by 5% each year until you begin to receive the benefit.
See Summary of Retirement Benefits.
Refund of Contributions
In lieu of a monthly benefit, you may request a refund of your contributions.