Monthly Retirement Annuity
Tier 2 participants who have withdrawn from service, reached age 50 or more, and have 10 or more years of service, shall receive a Tier 2 Monthly Retirement Annuity. The calculation of a Monthly Retirement Annuity is equal to 2.5% of average salary for each year of service, subject to an annuity reduction factor of one-half of 1% for each month that the participant’s age at retirement is under age 55. The average salary is the highest 8 consecutive years of salary of the last 10 years of service. This service is reduced by any lost time at date of withdrawal. Monthly retirement annuities shall not exceed 75% of average salary.
For Tier 2 participants, the annual salary starting January 1, 2011 shall not exceed $106,800; however, that amount shall be increased annually by the lesser of 3% including all previous adjustments or 1⁄2 of the annual unadjusted percentage increase (but not less than zero) in the Consumer Price Index-All Urban Customers (CPI-U) for the 12 months ending with the September preceding each November 1st including all previous adjustments. The annual salary cap for 2021 is $116,740.42.
Automatic Annual Increase
The monthly annuity of a Tier 2 participant shall be increased on the January 1st occurring on or after the participant reaches age 60, or the 1st anniversary of the annuity start date. This annuity shall be increased each January 1st thereafter. Each annual increase shall be calculated at 3% or one-half of the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12-month period ending with the September preceding each November 1, whichever is less, of the originally granted retirement annuity. If the annual unadjusted percentage change in the consumer price index-u decreases, then the annuity shall not be increased.