Early Retirement

Group I (Employee and Teacher) Members hired prior to July 1, 2011

Members with at least 10 years of Creditable Service may retire between the ages of 50-59.

Members with at least 20 years of Creditable Service may retire before age 50 under the “Rule of 70” if their age plus their Creditable Service adds up to 70 or more. (Example: Age 45 + 25 years service = 70.)

Pension Calculation

• 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 Retirement

Reduced Pension

Group I members who receive an Early Retirement pension will experience a permanent reduction in their 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 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. The permanent reduction is then applied to the Service Retirement pension. Different provisions apply to members with Split Benefits.

Early Retirement 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:

Pre-Age 65 Example

Pension Formula ages 60 – 64:
Average Final Compensation divided by 60 multiplied by Creditable Service
= approximate annual pension amount 

$40,000 divided by 60 multiplied by 25 = $16,667 (approximate annual pension amount prior to Early 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% = $3,333 (permanent reduction per year until age 65)
$16,667 – $3333 = $13,334 (approximate early reduced annual pension amount payable until age 65)

Post-Age 65 Example

Pension Formula ages 65 and older:
Average Final Compensation divided by 66 multiplied by Creditable Service
= approximate annual pension amount 

$40,000 divided by 66 multiplied by 25 = $15,152 (approximate annual pension amount prior to early 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% = $3,030 (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)