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 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 (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
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 Credit.
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.
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.