If a member has concurrent reciprocal service at the time of retirement, that concurrent service can be used to meet the one-year minimum service credit requirement for a reciprocal pension.
However, how the concurrent service is treated in the calculation of a reciprocal pension depends on the amount of concurrent service. In all cases, the member earns only one month of service for each calendar month.
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If a member has concurrent reciprocal service, the member should request a pension estimate from each of his or her reciprocal systems. |
Member has six months or less of concurrent reciprocal service
The system under which the member has either earned the most service or will receive the largest pension includes the concurrent reciprocal service in its pension calculation. The member’s other system(s) removes the concurrent service from its pension calculation.
Example:
Member’s service credit:
12 years with System A (includes 4 months concurrent service)
2 years with System B (includes 4 months concurrent service)
The member will receive the larger pension from System A. Therefore, System A includes the four concurrent months in its pension calculation; System B does not.
For pension calculation purposes:
Member’s service with System A remains at 12 years
Member’s service with System B is reduced to 1 year, 8 months
Each retirement system computes a proportional retirement annuity based upon its own pension formula and the highest average earnings in any of the systems in which the member has participated.
Member has more than six months of concurrent reciprocal service
The concurrent service credit will be divided between/among the member’s reciprocal retirement systems. Each system will use part of the concurrent service in its pension calculation.
Each system reduces the concurrent service based upon a formula that includes the member’s final rate of earnings under the system, the member’s combined final rate of earnings from all systems, and the total amount of concurrent service:
Member’s final rate of earnings in the system
times
Member’s concurrent service
divided by
Member’s combined final rate of earnings
equals
The concurrent service used by the system in its pension calculation
Example:
Member has 6 years of concurrent service
System A:
$50,000 final rate of earnings
14 years of service (includes 6 years concurrent service)
System B:
$30,000 final rate of earnings
8 years of service (includes 6 years concurrent service)
Using the formula above:
|
|
Final rate of earnings |
|
Total Concurrent Service |
|
|
|
Combined final rate of earnings |
|
Reduced concurrent service used in pension calculation |
|
System A |
$50,000 |
x |
6.00 years |
= |
$300,000 |
÷ |
$80,000 |
= |
3.750 years |
|
System B |
$30,000 |
x |
6.00 years |
= |
$180,000 |
÷ |
$80,000 |
= |
2.250 years |
For pension calculation purposes:
Member’s service with System A is reduced to 11.750 years
Member’s service with System B is reduced to 4.250 years
Each retirement system computes a proportional retirement annuity based upon its own pension formula and the highest average earnings in any of the systems in which the member has participated.