Estimating Your Pension

Your first step in estimating your pension will always be to figure your FAC. Then you use the pension formula to figure your straight life calculation. Once you know your straight life amount, you have a basis for estimating an early reduced, survivor, and equated pension.

It's very important that you understand the concepts presented here before you make irrevocable selections you'll have to live with throughout your retirement. Once you're familiar with these fundamentals you can move on to the next section for step-by-step help in estimating your pension.

The Pension Formula 

Your annual benefit is based on a formula that multiplies your final average compensation by a pension factor times your years of credited service. 

• Final average compensation (FAC). For MIP members, the highest three consecutive years of earnings (36 months) are averaged to determine your final average compensation, or FAC. If you are a Basic Plan member, your highest five consecutive years of earnings (60 months) are averaged to determine your FAC. 
  
  Your highest three or five consecutive years of earnings may have occurred earlier in your career. Even though we may use those years rather than your final years to calculate your benefit, we still refer to it as your final average compensation.
  
  For more details on the types of compensation used in your FAC, click here.

• Pension factor. The pension factor is 1.5 percent (.015). 
• Years of service (YOS). Your service credit reflects the years, or fractions of years, you have worked for a Michigan public school. In general, you earn one year of service when you work 1,020 hours in a school fiscal year. No more than 30 hours can be credited in a one-week period if you're on a weekly payroll, or 60 hours if you're paid biweekly.  For more information on how you earn service credit, click here.
  
  Credited service can also include any additional service purchased or transferred. For more information see Adding to Your Service Credit .