MONEY PURCHASE ANNUITY VS. A FORMULA ANNUITY
The Fund often receives inquiries regarding
how Money Purchase Annuities are calculated
and how they differ from Formula Annuities.
The following is a list of frequently
A: Generally, the word “retire” applies to members who have withdrawn from service having accrued a minimum of 20 years of service, becoming eligible for what is referred to as a “Formula Annuity.”
A: Yes, you would be eligible to receive what is referred to as a “Money Purchase Annuity.”
A: The “Formula Annuity” is equal to 2.5% of the average salary for the 4 highest consecutive years of the last 10 years of service for each completed year of service or fraction thereof, not to exceed 75%.
A: No. You must have completed 20 years of service; after all lost time is taken into consideration before becoming eligible for a Formula Annuity*.
A: The amount of the annuity is determined by taking the sum of accumulated Age and Service contributions (7% out of your pensionable salary) plus 10% of the city Age and Service Contributions for each year or partial year of service in excess of 10. The sum of the contributions are divided by a factor at your date of retirement (or age 50 if you terminated prior to that time) and are then converted into an annuity.
A: CURRENTLY, APPROXIMATELY $2,000 PER MONTH ($3,500 vs $1,500) PAYABLE FOR LIFE. In addition, if you are only eligible to receive a Money Purchase Annuity, you will NOT be eligible for future cost of living annual increases. You will, however, receive a refund of the amounts contributed for that purpose, which were ½% of your total pensionable earnings, without interest, contributed during your period of employment.
A: You are guaranteed a minimum of 30% of average salary for the 4 highest consecutive years of the last 10 years of service, plus 2% for each completed year of service or fraction thereof in excess of 10, not to exceed 48% of average salary.