How is Ohio PERs Retirement Calculated?
Retirement planning is a crucial aspect of financial security for many individuals, especially for those who have contributed to the Ohio Public Employees Retirement System (PERs). Understanding how Ohio PERs retirement is calculated is essential for current and future retirees to ensure they have a clear picture of their future income. In this article, we will delve into the details of how Ohio PERs retirement benefits are determined.
The Ohio PERs retirement calculation is based on a formula that takes into account an employee’s final average salary, years of service, and the employee’s retirement age. The formula is as follows:
Final Average Salary (FAS) x Years of Service x Benefit Factor = Annual Retirement Benefit
The Final Average Salary (FAS) is calculated by averaging the employee’s salary over the highest three consecutive years of service. It is important to note that the salary used in the calculation is the gross salary, which includes all income, excluding overtime, bonuses, and severance pay.
The Years of Service is the total number of years the employee has contributed to the Ohio PERs system. This includes both credited and non-credited service. Credited service is the time an employee has worked for a PERs-covered employer, while non-credited service is the time an employee has worked for a non-covered employer or during periods of unemployment.
The Benefit Factor is a percentage that determines the amount of the annual retirement benefit. The benefit factor depends on the employee’s retirement age:
– For employees who retired before July 1, 2012, the benefit factor is based on their age at retirement, ranging from 1.6% for those under 55 to 2.3% for those over 65.
– For employees who retired on or after July 1, 2012, the benefit factor is 2% for each year of service, up to a maximum of 2.3% for those over 65.
Once the annual retirement benefit is determined, it is subject to certain adjustments, such as cost-of-living adjustments (COLAs) and survivor benefits. COLAs are designed to protect the purchasing power of the retirement benefit over time, while survivor benefits provide income for the surviving spouse or other designated beneficiaries.
It is important for Ohio PERs members to keep track of their contributions, service time, and salary history to ensure that their retirement benefits are accurately calculated. Employers are responsible for reporting contributions and service time to the Ohio PERs system, but employees should verify this information periodically to ensure accuracy.
In conclusion, understanding how Ohio PERs retirement is calculated is crucial for planning and ensuring a secure retirement. By knowing the formula and the factors that influence the calculation, employees can make informed decisions about their retirement planning and take advantage of any available resources to maximize their benefits.
