Getting an early understanding of how you earn credit toward retirement and how ACERA will calculate your lifetime pension allowance will make it much easier for you to plan for retirement.
A Percentage of Your Highest Salary For Each Year Your Work
In retirement, you will receive a percentage of the highest salary your earned while you were working. ACERA uses this formula to calculate that:
Age Factor Percentage
Service Credit (Years)
X Highest Average Monthly Salary
= Monthly Pension Allowance for Life
Let’s break this down a little bit with an example. Let’s say you’re going to get 2% of your highest salary for each year that you work. And let’s say you work exactly 20 full time years and retire.
2%
20 Years
X Highest Average Monthly Salary
= Monthly Pension Allowance for Life
For each one of those 20 years you worked and earned service credit, you’ll get 2% of your highest salary. So 20 years x 2% = 40%. You’re going to get 40% of your highest working salary in retirement.
40%
X Highest Average Monthly Salary
= Monthly Pension Allowance for Life
Now let’s say that the highest salary you earned per month during your career was $5,000.
40%
X $5,000
= Monthly Pension Allowance for Life
40% of $5,000 is $2,000. So you earned a $2,000 per month pension allowance for the rest of your life.
40%
X $5,000
= $2,000
You can see that since this is a multiplication, the higher any of these three factors, the greater your pension allowance will be, in general. These three numbers are going to be particular to you when we calculate your retirement. Let’s talk about how we determine each of these numbers for you.
How We Determine Your Age Factor Percentage at Retirement
Your age factor percentage probably won’t be exactly 2% like the example above. Your age factor percentage will be determined based on your tier and your age at retirement. Each ACERA tier has its own set of age factor percentages. When ACERA calculates your retirement benefit using the formula above, we use the age factor percentage from your tier for the age you retire at. Find your tier below and look at the set of age factor percentages for your tier. You may notice a few things:
The older your retirement age, the higher the age factor percentage, up to a limit for each tier. The limit is denoted by the bold percentage. If you retire at that age or older, you get the maximum age factor percentage for your tier.
Age factor percentages increase with every quarter year you wait to retire, based on your birthday. If your birthday is on January 15, your next quarter age is three months later on April 15, the quarter after that is three months later on July 15, and the next quarter is on October 15. In order to get the next higher age factor percentage, you have to retire on your birthday or on your quarter year dates.
Age Factor Percentages for General Tiers 1, 2A, 3, and 4
| Age at Retirement |
Tier 1 |
Tier 2A |
Tier 3 |
Tier 4 |
| 50 |
1.336% |
1.182% |
2.000% |
|
| 50.25 |
1.355% |
1.197% |
2.025% |
|
| 50.5 |
1.374% |
1.212% |
2.050% |
|
| 50.75 |
1.392% |
1.228% |
2.075% |
|
| 51 |
1.411% |
1.243% |
2.100% |
|
| 51.25 |
1.431% |
1.258% |
2.125% |
|
| 51.5 |
1.451% |
1.273% |
2.150% |
|
| 51.75 |
1.471% |
1.288% |
2.175% |
|
| 52 |
1.491% |
1.303% |
2.200% |
1.000% |
| 52.25 |
1.512% |
1.318% |
2.225% |
1.025% |
| 52.5 |
1.534% |
1.333% |
2.250% |
1.050% |
| 52.75 |
1.555% |
1.348% |
2.275% |
1.075% |
| 53 |
1.576% |
1.364% |
2.300% |
1.100% |
| 53.25 |
1.600% |
1.379% |
2.325% |
1.125% |
| 53.5 |
1.623% |
1.395% |
2.350% |
1.150% |
| 53.75 |
1.646% |
1.410% |
2.375% |
1.175% |
| 54 |
1.669% |
1.426% |
2.400% |
1.200% |
| 54.25 |
1.694% |
1.443% |
2.425% |
1.225% |
| 54.5 |
1.720% |
1.459% |
2.450% |
1.250% |
| 54.75 |
1.745% |
1.476% |
2.475% |
1.275% |
| 55 |
1.770% |
1.492% |
2.500% |
1.300% |
| 55.25 |
1.797% |
1.510% |
2.500% |
1.325% |
| 55.5 |
1.825% |
1.528% |
2.500% |
1.350% |
| 55.75 |
1.852% |
1.546% |
2.500% |
1.375% |
| 56 |
1.880% |
1.564% |
2.500% |
1.400% |
| 56.25 |
1.910% |
1.583% |
2.500% |
1.425% |
| 56.5 |
1.940% |
1.602% |
2.500% |
1.450% |
| 56.75 |
1.970% |
1.622% |
2.500% |
1.475% |
| 57 |
2.000% |
1.641% |
2.500% |
1.500% |
| 57.25 |
2.022% |
1.662% |
2.500% |
1.525% |
| 57.5 |
2.045% |
1.683% |
2.500% |
1.550% |
| 57.75 |
2.067% |
1.704% |
2.500% |
1.575% |
| 58 |
2.089% |
1.725% |
2.500% |
1.600% |
| 58.25 |
2.119% |
1.748% |
2.500% |
1.625% |
| 58.5 |
2.149% |
1.771% |
2.500% |
1.650% |
| 58.75 |
2.180% |
1.794% |
2.500% |
1.675% |
| 59 |
2.210% |
1.817% |
2.500% |
1.700% |
| 59.25 |
2.241% |
1.842% |
2.500% |
1.725% |
| 59.5 |
2.273% |
1.867% |
2.500% |
1.750% |
| 59.75 |
2.305% |
1.892% |
2.500% |
1.775% |
| 60 |
2.337% |
1.917% |
2.500% |
1.800% |
| 60.25 |
2.371% |
1.935% |
2.500% |
1.825% |
| 60.5 |
2.405% |
1.954% |
2.500% |
1.850% |
| 60.75 |
2.439% |
1.973% |
2.500% |
1.875% |
| 61 |
2.473% |
1.991% |
2.500% |
1.900% |
| 61.25 |
2.509% |
2.016% |
2.500% |
1.925% |
| 61.5 |
2.546% |
2.041% |
2.500% |
1.950% |
| 61.75 |
2.582% |
2.066% |
2.500% |
1.975% |
| 62 |
2.619% |
2.091% |
2.500% |
2.000% |
| 62.25 |
2.619% |
2.118% |
2.500% |
2.025% |
| 62.5 |
2.619% |
2.145% |
2.500% |
2.050% |
| 62.75 |
2.619% |
2.171% |
2.500% |
2.075% |
| 63 |
2.619% |
2.198% |
2.500% |
2.100% |
| 63.25 |
2.619% |
2.226% |
2.500% |
2.125% |
| 63.5 |
2.619% |
2.254% |
2.500% |
2.150% |
| 63.75 |
2.619% |
2.283% |
2.500% |
2.175% |
| 64 |
2.619% |
2.311% |
2.500% |
2.200% |
| 64.25 |
2.619% |
2.341% |
2.500% |
2.225% |
| 64.5 |
2.619% |
2.372% |
2.500% |
2.250% |
| 64.75 |
2.619% |
2.402% |
2.500% |
2.275% |
| 65 |
2.619% |
2.432% |
2.500% |
2.300% |
| 65.25 |
2.619% |
2.432% |
2.500% |
2.325% |
| 65.5 |
2.619% |
2.432% |
2.500% |
2.350% |
| 65.75 |
2.619% |
2.432% |
2.500% |
2.375% |
| 66 |
2.619% |
2.432% |
2.500% |
2.400% |
| 66.25 |
2.619% |
2.432% |
2.500% |
2.425% |
| 66.5 |
2.619% |
2.432% |
2.500% |
2.450% |
| 66.75 |
2.619% |
2.432% |
2.500% |
2.475% |
| 67 & Over |
2.619% |
2.432% |
2.500% |
2.500% |
Age Factor Percentages for Safety Tiers 1, 2B, 2C, 2D, and 4
| Age at Retirement |
Tier 1 and Tier 2B |
Tier 2C |
Tier 2D |
Tier 4 |
| 41 |
1.877% |
1.252% |
1.433% |
|
| 41.25 |
1.905% |
1.270% |
1.454% |
|
| 41.5 |
1.933% |
1.288% |
1.475% |
|
| 41.75 |
1.960% |
1.307% |
1.496% |
|
| 42 |
1.988% |
1.325% |
1.517% |
|
| 42.25 |
2.016% |
1.344% |
1.539% |
|
| 42.5 |
2.044% |
1.363% |
1.561% |
|
| 42.75 |
2.073% |
1.382% |
1.582% |
|
| 43 |
2.101% |
1.401% |
1.604% |
|
| 43.25 |
2.131% |
1.420% |
1.627% |
|
| 43.5 |
2.160% |
1.440% |
1.649% |
|
| 43.75 |
2.190% |
1.460% |
1.672% |
|
| 44 |
2.219% |
1.479% |
1.694% |
|
| 44.25 |
2.250% |
1.500% |
1.718% |
|
| 44.5 |
2.280% |
1.520% |
1.741% |
|
| 44.75 |
2.311% |
1.541% |
1.764% |
|
| 45 |
2.342% |
1.561% |
1.787% |
|
| 45.25 |
2.373% |
1.582% |
1.812% |
|
| 45.5 |
2.405% |
1.603% |
1.836% |
|
| 45.75 |
2.436% |
1.624% |
1.860% |
|
| 46 |
2.468% |
1.645% |
1.884% |
|
| 46.25 |
2.502% |
1.668% |
1.910% |
|
| 46.5 |
2.536% |
1.690% |
1.936% |
|
| 46.75 |
2.576% |
1.713% |
1.967% |
|
| 47 |
2.603% |
1.736% |
1.988% |
|
| 47.25 |
2.634% |
1.756% |
2.011% |
|
| 47.5 |
2.665% |
1.776% |
2.034% |
|
| 47.75 |
2.695% |
1.797% |
2.057% |
|
| 48 |
2.726% |
1.817% |
2.081% |
|
| 48.25 |
2.758% |
1.839% |
2.106% |
|
| 48.5 |
2.791% |
1.861% |
2.131% |
|
| 48.75 |
2.824% |
1.883% |
2.156% |
|
| 49 |
2.857% |
1.904% |
2.181% |
|
| 49.25 |
2.892% |
1.928% |
2.208% |
|
| 49.5 |
2.928% |
1.952% |
2.236% |
|
| 49.75 |
2.964% |
1.976% |
2.263% |
|
| 50 |
3.000% |
2.000% |
2.290% |
2.000% |
| 50.25 |
3.000% |
2.026% |
2.320% |
2.025% |
| 50.5 |
3.000% |
2.052% |
2.350% |
2.050% |
| 50.75 |
3.000% |
2.077% |
2.379% |
2.075% |
| 51 |
3.000% |
2.103% |
2.408% |
2.100% |
| 51.25 |
3.000% |
2.131% |
2.441% |
2.125% |
| 51.5 |
3.000% |
2.159% |
2.473% |
2.150% |
| 51.75 |
3.000% |
2.187% |
2.505% |
2.175% |
| 52 |
3.000% |
2.216% |
2.537% |
2.200% |
| 52.25 |
3.000% |
2.246% |
2.572% |
2.225% |
| 52.5 |
3.000% |
2.277% |
2.607% |
2.250% |
| 52.75 |
3.000% |
2.308% |
2.642% |
2.275% |
| 53 |
3.000% |
2.338% |
2.678% |
2.300% |
| 53.25 |
3.000% |
2.372% |
2.716% |
2.325% |
| 53.5 |
3.000% |
2.406% |
2.755% |
2.350% |
| 53.75 |
3.000% |
2.439% |
2.793% |
2.375% |
| 54 |
3.000% |
2.473% |
2.825% |
2.400% |
| 54.25 |
3.000% |
2.509% |
2.874% |
2.425% |
| 54.5 |
3.000% |
2.546% |
2.915% |
2.450% |
| 54.75 |
3.000% |
2.583% |
2.958% |
2.475% |
| 55 |
3.000% |
2.620% |
3.000% |
2.500% |
| 55.25 |
3.000% |
2.620% |
3.000% |
2.525% |
| 55.5 |
3.000% |
2.620% |
3.000% |
2.550% |
| 55.75 |
3.000% |
2.620% |
3.000% |
2.575% |
| 56 |
3.000% |
2.620% |
3.000% |
2.600% |
| 56.25 |
3.000% |
2.620% |
3.000% |
2.625% |
| 56.5 |
3.000% |
2.620% |
3.000% |
2.650% |
| 56.75 |
3.000% |
2.620% |
3.000% |
2.675% |
| 57 & Over |
3.000% |
2.620% |
3.000% |
2.700% |
How Your Highest Average Monthly Salary is Calculated Based on Your Final Compensation Period
Your Highest Average Monthly Salary (also known as Final Average Salary) is the amount of pay you made on average per month during your period of highest pay in your career. This consecutive period of highest pay is know as your Final Compensation Period. The length of that period depends on your tier:
Final Compensation Period
| |
Tiers 1 and 3 |
Tiers 2 and 4 |
| Your highest consecutive pay periods: |
26 biweekly or 12 monthly
(Highest 1 year of pay)
|
78 biweekly or 36 monthly
(Highest 3 years of pay)
|
In order to calculate your Highest Average Monthly Salary, ACERA divides your total pay during your Final Compensation Period by the number of months in the period, either 12 or 36, to determine your average pay. That number goes in the retirement formula.
How does working less than full time during my Final Compensation Period affect my retirement?
If you work less than full time during your Final Compensation Period, ACERA will tack on other consecutive pay periods to get you up to the equivalent of 1 or 3 years worth of full time pay periods, depending on your tier. For example, if you’re in tier 2 and you worked half time your last 6 years, ACERA would use all those pay periods to equivocate 3 full time years of pay (assuming you’re making your highest hourly rate of pay at the end of your career).
However, you will be earning service credit at a slower rate if you work less than full time. For example, if you work half time for 6 years, you’ll earn 3 years of service credit during that time.
What Types of Pay Are Part of Your Highest Average Monthly Salary?
ACERA will include the following gross pay earned during your Final Compensation Period in your Highest Average Monthly Salary:
Your Base Pay
Other Pay Types
Sometimes footnotes or other pay types are included. Find whether your pay codes are included here. Overtime is not included.
Vacation Sales
This is when you sell your earned vacation back to your employer while you’re employed. Does not apply to Tier 4.
Vacation Cash-Out
If you have unused vacation time on the books when you stop working and/or retire, you’ll get compensation for it in your final paycheck. Does not apply to Tier 4.
There are limits to the amount of compensation for Vacation Sales and Vacation Cash-Out that ACERA can include in your Highest Average Monthly salary. See below.
Will stand-by and on-call pay be included in my Highest Average Monthly Salary?
Stand-by and on-call pay will be included or excluded from the highest average monthly salary calculation based on a member-by-member review at the time of retirement. The includable amount will be based on the same amount of compensation earned by other employees in the same position. Amounts beyond those limits may be considered a benefit enhancement and therefore not includable.
Understand How Unused Vacation Leave Affects Your Retirement Allowance (Tier 1 and Tier 2 Only)
If you’re in Tier 1 or Tier 2 and are compensated for unused vacation from Vacation Sales, Vacation Cash-Out, or both during your Final Compensation Period, ACERA must include this compensation (up to a limit) in your salary for calculating your pension. This salary increase will increase your pension.
ACERA must limit vacation pay in your Highest Average Monthly Salary to the lesser of the amount of vacation earned by you and payable (if you sell it back to your employer while working) to you in each 12-month period of your Final Compensation Period.
Even though a 12-month period can include portions of two fiscal years, in this case “payable” means the amount of vacation your employer will allow you to sell in a single fiscal year.
You can find your limit below. Remember that your limit is for the total combined amount of Vacation Sales and Vacation Cash-Out you were paid during your Final Compensation Period.
Alameda County, Courts, Housing Authority Employee Limits
Use the calculator below to find the limit of how many weeks worth of vacation compensation ACERA can include in your Highest Average Monthly Salary calculation. Note that for Tier 2 members, the calculator asks for the number of weeks of vacation you earned in each year of the 3 years that make up your Final Compensation Period.
Notes on the Calculator Tool
This tool works by comparing the amount of vacation earned by you and payable to you in each 12-month period of your Final Compensation Period, and then reports the lesser of the two numbers as your limit for that 12-month period. If you select Tier 2, the calculator also adds the limits from each of the 3 periods together to tell you your combined limit for your entire Final Compensation Period.
If your rate of vacation earning increases during the 12-month period, you can prorate the amount of vacation you earned in each “earned” field so it equals the amount of vacation you actually earned.
The dollar amount of vacation sell back and cash out that you can include is limited to the dollar amount you were able to sell back during your “Final Compensation Period.” Thus, if you receive a higher dollar amount for a week of vacation cash out at termination than you could have received for a week of vacation sell back during your “Final Compensation Period,” a portion of that cash out will be excluded.
Alameda Health System (AHS) Employee Limits
Employees of AHS don’t earn vacation and sick leave; they earn both in one bucket called Paid Time Off (PTO). Limits for PTO pay (through a combination of PTO Sales and PTO Cash-Out) that can be included in the salary calculation are as follows:
AHS Employees Except For UAPD Union
- 1/2 of PTO hours earned during Final Compensation Period
- So 6 months PTO earnings for Tier 1
- And 1.5 years PTO earnings for Tier 2
AHS Employees in UAPD Union
Your limits are different because your Memorandum of Understanding (MOU) limits your sale of PTO to 120 hours per fiscal year.
- 120 hours of PTO for Tier 1
- 360 hours of PTO for Tier 2
Court Employees: Limits for Those Who Can Sell 1 Day Per Year
Since your ability to sell vacation is low, your limit on the amount of vacation compensation that can be included in the salary calculation is low.
Tier 1: 1 days’ vacation pay
Tier 2: 3 days’ vacation pay
Livermore Area Recreation and Park District (LARPD) and Tier 3 Limits
Since you aren’t allowed to sell vacation, no vacation compensation can be included in your salary calculation at retirement.
