Estimating Your Pension
We recommend these resources for help in estimating your pension:
This handy online estimator lets you key in your age, wage, and service information, and quickly estimates your future monthly pension.Preretirement information meetings:
Attend one of our two-hour retirement seminars, held throughout the state all year long. Experienced ORS representatives
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 pension is based on a formula that multiplies your final average compensation by a pension factor times your years of service. Your pension formula depends on your benefit structure. If you're unsure of your benefit structure, log in to miAccount to find out.
MIP and Basic Pension Formulas
|Benefit Structure||Pension Formula|
|MIP (Graded, Fixed, and Plus) and Basic||FAC x 1.5% x YOS before February 1, 2013*|
|FAC x 1.25% x YOS on or after February 1, 2013*|
|MIP 7% and Basic 4%,
(retained 1.5 percent multiplier for entire career)
|FAC x 1.5% x YOS|
|MIP 7% and Basic 4%,
(retained 1.5 percent multiplier up to 30 years of service)
|FAC x 1.5% x YOS, up to 30 years|
|FAC x 1.25% x YOS above 30 years|
|MIP DC Converted and Basic DC Converted||FAC x 1.5% x YOS as of February 1, 2013*|
Final average compensation (FAC).
For MIP members, the highest three consecutive years of earnings (36 months) in the DB plan are averaged to determine your FAC. For Basic Plan members, the highest five consecutive years of earnings (60 months) in the DB plan are averaged to determine your FAC.
Note: Your highest three or five consecutive years of earnings may have occurred earlier in your career, however we still refer to it as your final average compensation. For more details on the types of compensation used in your FAC, click here.
The pension factor used in your calculation depends on your benefit structure. You will use either a 1.5 percent (0.015) pension factor, or a combination of a 1.5 percent (0.015) and a 1.25 percent (0.0125) pension factor in your calculation. For your pension factor and plan information, log in to miAccount.
Years of service (YOS).
Your years of service used to calculate your pension reflect the years, or fractions of years, you have worked in the DB plan 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, click here.
If you're a MIP DC Converted or Basic DC Converted member, your FAC and years of service (for the purpose of calculating your pension) are determined as of February 1, 2013.*
Credited service can also include any additional service purchased or transferred. For more information see Adding to Your Service.
You Have a Choice of Payment Options
The pension formula calculates your straight life pension. All calculations for pension payment options begin by figuring your straight life amount, which is adjusted depending on which plan or option you are choosing. Click here for more details on pension options.
When you begin receiving your pension, any DB pension contributions you paid into the retirement system are paid out first. For more information about this topic, click here.
Consider your options carefully
You must choose your payment option when you apply for your pension. After your retirement effective date, you will not be able to change your option or your designated survivor pension beneficiary. (However, if you marry after your pension begins, you may be able to name your new spouse as a pension beneficiary under certain conditions. For details, visit our website and navigate to After Retirement, When to Contact ORS, Marriage.)
Read carefully, ask questions, estimate under various scenarios, talk with your family– but do it before you submit your application.
*The date your plan changes took effect was based on your transition date. The exact date depends on your school district's payroll cycle.