Estimating Your Pension

Your first step in estimating your pension will always be to figure your FAC. Then you use the pension formula to figure your straight life calculation. Once you know your straight life amount, you have a basis for estimating an early reduced, survivor, and equated pension.

It's very important that you understand the concepts presented here before you make irrevocable selections you'll have to live with throughout your retirement. Once you're familiar with these fundamentals you can move on to the next section for step-by-step help in estimating your pension. 

The Pension Formula 

Your annual benefit is based on a formula that multiplies your final average compensation by a pension factor times your years of credited service. 

Note: There are different pension formulas for covered employees and conservation officers. Click here for more information.

• Final average compensation (FAC). Your highest three consecutive years of compensation are averaged to determine your final average compensation, or FAC. Assuming your highest consecutive three years are your final three years, this figure includes gross wages earned; up to 240 hours of annual leave and compensatory time paid at retirement; performance pay; and longevity pay earned during the FAC period. Sick leave payouts, flex plan payments, clothing allowances, and travel compensation are never included in the FAC calculation.
  Note: Your highest three consecutive years of earnings may have occurred earlier in your career. Even though we may use those years rather than your final years to calculate your benefit, we still refer to it as your final average compensation.
• Pension factor. The pension factor for most state employees is 1.5 percent (.015). Conservation officers and covered employeesworking with prisoners use a different factor and formula. 
• Years of service (YOS). Your service credit reflects the years, or fractions of years, you have worked for the state of Michigan or one of its noncentral agencies. You are credited with a full year if you work 2,080 regular hours; however you may earn no more than one year of credit in any given year. 
  
  > Only regular, non-overtime hours are counted. Any work that is less than full-time or intermittent is evaluated using the regular hours worked converted to a fraction of a year. For example, if you work half-time you earn .5 years of service credit for each year of employment. (Exception: You are not considered part-time if you work a shortened schedule due to Voluntary Plan A measures, mandatory furlough hours, or the banked leave time program hours. You'll get full credit.)
  
  You can receive credit for any military leave of absence or workers' compensation leave of absence that occurs during your state employment.
  
  Credited service can also include any additional service purchased or transferred.