Calculating Your Benefit Estimate
There are three ways you can get an estimate of your future pension benefit from MOSERS:
- Log in to myMOSERS (instructions below) and generate an estimate on your own.
- Attend a Ready to Retire session and get an estimate in your packet.
- Contact a MOSERS benefit counselor and request that they produce an estimate for you.
It’s important to remember that a benefit estimate is just that, an estimate, not a guarantee. They are as accurate as the assumptions used to produce them. An estimate includes several assumptions including those about how long you will continue to work and what your pay will be going forward. The further you are away from retirement, the higher the likelihood that some of those assumptions may be off.
Also, if you tend to have significant fluctuations in your pay (some months it is a lot higher and some months it is a lot lower than normal), that can decrease the accuracy of an estimate. This is because our current system uses your most recent pay period as an assumption of what you will earn each pay period going forward until you retire. We are building a new pension administration system, which will use your standard rate of pay (such as $18 per hour, for example) rather than your most recent pay period. This approach will decrease the likelihood of overly inflated estimates. We anticipate our new system will be implemented in 2023. Keep reading to learn more about how to use your benefit estimate now.
The Process Behind Benefit Estimates
As noted above, our current system assumes that the gross amount of your last paycheck will be the exact same amount of income that you will receive from this point going forward through your retirement date. This is used to estimate your Final Average Pay (FAP). Your FAP is the first part of the formula used to calculate your monthly base benefit at retirement.
Benefit estimates help you get a better idea of your future benefit payments. For someone who is not retiring immediately, FAP is only a projection of the income you will receive in the future. When you reach retirement, we will be able to look back and use your actual earnings, rather than a projection, in the calculation.
How your FAP can Inflate Your Estimate
Until the new system is in place, we encourage you to follow all the tips listed in this article, to get the most accurate estimate possible.
If you are running the estimate yourself, you should not run it immediately following a pay period when your earnings were unusually high or low. To ensure your estimate is as accurate as possible, wait for your pay to return to its most typical or normal amount. If you run a benefit estimate shortly after an abnormal pay period, your (FAP) may be inflated and skew your future estimated pension amount. The best time to run an estimate is after a full month of gross salary at your most typical rate of pay.
For example, if your typical level of pay is approximately $3,300 per month, then you should expect to see the “Projected FAP” on your estimate at around $3,300. However, if you run an estimate and see that your “Projected FAP” on your estimate is $5,000, then you likely have an inflated (and inaccurate) estimate.
The Importance of Benefit Estimates
When you officially retire, your file goes through two separate and very thorough audits. This ensures everything has been accounted for and calculated accurately. Your benefits will be paid appropriately, according to the law, at retirement. Getting a benefit estimate is not required, however, planning for retirement and understanding your expected monthly pension benefit is a critical piece of the retirement puzzle that helps you budget and transition smoothly from full-time state employment into your new phase of life.
We understand that, for some members, fluctuations in pay are common. Our benefit counselors are happy to help you get a more accurate estimate and answer any questions regarding pay fluctuation. Ultimately, keep in mind that an estimate is only an estimate.
Leading up to your retirement, it is important to run accurate estimates, attend one or more Ready to Retire sessions and meet with a MOSERS benefit counselor to get the most accurate information about your pension benefits. Contact us if you would like to schedule an appointment!
How to get a Benefit Estimate
Creating your own estimate is as easy as 1, 2, 3!
Step 1: Log in to myMOSERS and click on Estimates, then Estimate Your Retirement Benefit.
Step 2: Enter your planned retirement date, your spouse’s date of birth, estimated unused sick leave hours, and any outside service, if applicable. Then, click Submit.
Step 3: And that’s it! Since your estimate is built using your available information, you’ll need to select Build a New Estimate to calculate a new estimate based on different factors.