Option 2, 3 and 4 initial-benefits can be less than Option 1 benefits because they may be paid over a longer period of time and provide benefits for two lives, rather than one (i.e., if your spouse survives you, he or she will continue receiving benefits under Options 2, 3 or 4, although the payments under Option 2 will stop after completion of the 10-year certain period). Benefit payments under all four options may provide a cost of living increase each year following retirement (adjustment only applicable to FRS service earned prior to July 1, 2011). If you are initially enrolled in the Pension Plan on or after July 1, 2011 you will not have a cost-of-living increase after retirement.
An example of how to calculate the annual cost of living increase applicable to FRS service earned prior to July 1, 2011:
| Step 1: | 13/30 = 0.433 |
| Step 2: | 0.433 X 3% =1.3% Annual Cost of Living increase. |
| Step 3: | $7,186, Regular Class Annual Option 1 Retirement X 1.3% = $93.42 first year Cost of Living increase |
| Step 4: | $7,186 + $93.42 = $7,279.42 2nd year Annual Option 1 Retirement Benefit (or $606.62 per month) |
Your benefit is determined by your ending account balance, which is:
Your Initial Account Balance
Plus
Monthly Employer and Employee Contributions
Plus
Investment Earnings
Minus
Any Account Expenses