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Pension Plan |
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CERF Pension Plan
Targeted Replacement Ratio Formula
The Targeted Replacement Ratio, or TRR, method seeks to provide a
pension benefit that, when added to Social Security and other
benefits, is a percentage of the income you earned before you
retired. If you have the full 29 years of service, the TRR formula
is designed to approximate your after-tax spendable income in
retirement by replacing that income with all available resources.
The plan’s targeted replacement ratios are based on average final
compensation as follows:
Targeted Replacement
Ratios
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The formula for calculating your benefit using the Targeted
Replacement Ratio is shown below. This formula uses your average
final compensation, which is the average of your two highest years
of compensation from the county. Compensation includes your regular
wages or salary, overtime and bonuses.
(TRR x Average Final Compensation) – Primary Social Security Benefit
x
Years of Service (up to 25) ÷ 25 Years + (1% x Average Final
Compensation x Years of Service greater than 25 but no more than 29) = Annual CERF Pension
Benefit
Note: Formula uses a Primary Social Security benefit at age 62,
which is based on a projection and regression of county-related income.
To illustrate how your benefit is calculated, assume you are a
non-LAGERS participant who is near retirement with 27 years of
service and $35,000 as average final compensation. Under the TRR
formula, your benefit is calculated as follows:
([80% x $35,000 - $12,000] x 25 ÷ 25) + (1% x $35,000 x 2) = $16,700 (Annual Benefit)
If you are a LAGERS participant, you will receive two-thirds of this
amount, or:
$16,700 x 2/3 = $11,133.34 (Annual Benefit)
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