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Your IPERS retirement benefit is guaranteed because it is calculated with a formula that includes your age, average salary and years of work in IPERS-covered employment. The longer you work in IPERS-covered employment, the larger your retirement benefit.
This page explains how retirement benefit payments are calculated. Log in to My Account to create estimates of your approximate payments.
Regular Members
Your IPERS retirement benefit is calculated using this formula:
YOUR AVERAGE SALARY is the average of your highest five years’ salaries. These don’t have to be the five years that immediately precede your retirement.
THE MULTIPLIER increases two percentage points each year you work in IPERS-covered employment up to year 30. From year 31 to 35, the multiplier increases one percentage point each year. The maximum multiplier is 65% at 35 years in covered employment.
At retirement, you may “purchase service” — or buy work time — to increase your multiplier.
A REDUCTION is applied if you retire before you reach a normal retirement age. IPERS will reduce your retirement benefit by 0.5% for each month (or 6% annually) that you receive retirement benefits before age 65.
Protection Occupations Members
Your IPERS retirement benefit is calculated using this formula:
Average Salary
The salaries used in the calculation are the IPERS-covered wages reported for your over a calendar year (January 1 – December 31). Your average salary is the average of your highest three years’ wages. These don’t have to be the three years that immediately precede your retirement.
Multiplier
The multiplier increases each year you work in IPERS-covered employment. For Protection Occupation members, the multiplier increases approximately 2.7272% a year for the first 22 years of IPERS-covered work and 1.5% a year for years 23-30. The maximum multiplier is 72%. If you work longer than 30 years, the multiplier remains at 72%.
At retirement, you may “purchase service” — or buy work time — to increase your multiplier.
Computing Wages
When calculating your average salary, IPERS tests for wage spiking to prevent overpaying your benefits. Your average salary will be decreased if wage spiking has occurred.
To test your highest three-year average salary for wage spiking, IPERS compares it to a “control-year salary” (your highest calendar year’s salary outside of the three-year average.) If your highest three-year average salary is more than 121% of your control-year salary, your salary in the benefit formula will be reduced to 121% of your control-year salary. Additional rules apply when your fourth-highest salary does not represent a full year of salary.
IPERS will review your wages if you stop working before the end of the calendar year. To calculate your wages, we will:
- Look at the wages you earned in each quarter of your last year of employment.
- Look at your highest calendar year wage not used in the highest average salary calculation and calculate the average quarterly wage for that year.
- Use the amount calculated in step 2 for the quarters you did not work in your last year and add up the amounts for all four quarters. This is called your computed-year wage.
If the computed-year wage is more than your third-highest calendar year wage, then the computed-year wage is used as your final year’s wage. (The computed-year wage is limited to 103% of your highest calendar year wage. This calculation will not result in additional service credits.)
Early Retirement
If all your IPERS-covered jobs are considered Special Service, you benefit is not reduced for early retirement. If you work in a Regular IPERS-covered position at any point in your career, a hybrid formula may be used to calculate your benefit, in which case your benefit may be reduced for early retirement. Learn more about hybrid calculations in IPERS’ Member Handbook.
Sheriffs/Deputy Sheriffs Members
Your IPERS retirement benefit is calculated using this formula:
Average Salary
The salaries used in the calculation are the IPERS-covered wages reported for your over a calendar year (January 1 – December 31). Your average salary is the average of your highest three years’ wages. These don’t have to be the three years that immediately precede your retirement.
Multiplier
The multiplier increases each year you work in IPERS-covered employment. For Sheriffs/Deputy Sheriffs members, the multiplier increases approximately 2.7272% a year for the first 22 years of IPERS-covered work and 2.5% a year for years 23-30. The maximum multiplier is 80%. If you work longer than 30 years, the multiplier remains at 80%.
At retirement, you may “purchase service” — or buy work time — to increase your multiplier.
Computing Wages
When calculating your average salary, IPERS tests for wage spiking to prevent overpaying your benefits. Your average salary will be decreased if wage spiking has occurred.
To test your highest three-year average salary for wage spiking, IPERS compares it to a “control-year salary” (your highest calendar year’s salary outside of the three-year average.) If your highest three-year average salary is more than 121% of your control-year salary, your salary in the benefit formula will be reduced to 121% of your control-year salary. Additional rules apply when your fourth-highest salary does not represent a full year of salary.
IPERS will review your wages if you stop working before the end of the calendar year. To calculate your wages, we will:
- Look at the wages you earned in each quarter of your last year of employment.
- Look at your highest calendar year wage not used in the highest average salary calculation and calculate the average quarterly wage for that year.
- Use the amount calculated in step 2 for the quarters you did not work in your last year and add up the amounts for all four quarters. This is called your computed-year wage.
If the computed-year wage is more than your third-highest calendar year wage, then the computed-year wage is used as your final year’s wage. (The computed-year wage is limited to 103% of your highest calendar year wage. This calculation will not result in additional service credits.)
Early Retirement
If all your IPERS-covered jobs are considered Special Service, you benefit is not reduced for early retirement. If you work in a Regular IPERS-covered position at any point in your career, a hybrid formula may be used to calculate your benefit, in which case your benefit may be reduced for early retirement. Learn more about hybrid calculations in IPERS’ Member Handbook.
Cost-of-Living Adjustment
Sheriffs/Deputy Sheriffs members who retire on or after July 1, 2024, will annually receive a 1.5% cost-of-living adjustment. Members who have worked as a Sheriffs/Deputy Sheriffs member but whose benefits are calculated using the hybrid formula are not eligible for a cost-of-living adjustment. Full eligibility requirements are on the Dividends page.