|
Member Early Retirement
NHRS is a defined benefit plan, which offers its eligible members a lifetime pension. Retirement benefits are determined by a formula which considers two variables: a member’s salary credit (“average final compensation”) and a member’s service credit (“creditable service”). Although members and their employers make regular contributions to NHRS, those contributions are not variables in determining the actual defined benefit.
Group I members (employees and teachers) may be eligible to receive an Early Service Retirement pension prior to age 60. Early Service Retirement does not apply to Group II members (firefighters and police officers). Different provisions apply to members with Split Benefits.
Eligibility – Early Service Retirement
- Active Group I member ages 50 – 59
- Minimum of 10 years of creditable service
OR
- Active Group I member younger than age 50
- Minimum of 20 years of creditable service
- Member’s years of service, when added to member’s age, equal 70 or more
- Example: Active Group I member age 48 with 22 years of creditable service is eligible for Early Service Retirement (48 + 22 = 70)
Pension Calculation – Early Service Retirement
- Calculate the pension payable under Service Retirement using the Age 60-64 formula. The Age 65 formula will be used when the member attains age 65
- Apply the appropriate permanent reduction to determine the early reduced pension amount payable under Early Service Retirement
Reduced Pension – Early Service Retirement
Group I members who receive an Early Service Retirement pension (a Service Retirement pension prior to age 60) will experience a permanent reduction in the pension amount, separate from and in addition to the reduction at age 65 based on the pension formula used to calculate Group I Service Retirement pensions.
The reduction applied to an Early Service Retirement pension is based on the member’s age at the time of retirement, the number of years and months prior to age 60 that the member will begin to receive a pension, and the reduction factor, which is determined by the number of years and months of creditable service that the member has at the time of retirement.
The applicable reduction factor is multiplied by the years and months of early retirement (“before age 60 retirement”). The permanent reduction is then applied to the Service Retirement pension.
Reduction Factors
Years of Creditable Service
35 or more years
30-34 years
25-29 years
20-24 years
Fewer than 20 years
|
Reduction Factor
1 ½ %
3%
4%
5%
6 2/3%
|
Pension Calculation Example:
A Group I member retires with 25 years of creditable service at age 55 with an average final compensation of $40,000:
Example
$40,000 divided by 60 multiplied by 25 = $16,667 (approximate annual pension amount prior to Early Service Retirement reduction)
- 25 years of creditable service results in a 4% reduction factor for each year of early retirement
- Age 55 is five years before age 60 (five years of early retirement)
- 4% (reduction factor) x 5 (years of early retirement) = 20% permanent reduction
$16,667 x 20% = $3333 (permanent reduction per year until age 65)
$16,667 – $3333 = $13,334 (approximate early reduced annual pension amount payable until age 65)
Example
$40,000 divided by 66 multiplied by 25 = $15,152 (approximate annual pension amount prior to Early Service Retirement reduction)
- 25 years of creditable service results in a 4% reduction factor for each year of early retirement
- Age 55 is five years before age 60 (five years of early retirement)
- 4% (reduction factor) x 5 (years of early retirement) = 20% permanent reduction
$15,152 x 20% = $3030 (permanent reduction per year at age 65 and older)
$15,152 – $3030 = $12,122 (approximate early reduced annual pension amount payable at age 65 and older)
Benefits for Beneficiaries after a Retiree’s Death
Benefit Payments
COLAs
Electronic Direct Deposit
Filing for Retirement
Health Insurance after Retirement
On-line Benefit Calculator
 Pension Chart
Pension Checks
Tax Implications
Working after Retirement
 Download Adobe Acrobat Reader
|