Which multiplier is used in the High-3 retirement formula?

Which multiplier is used in the High-3 retirement formula?

• A. 3.0 percent
• B. 1.5 percent
• C. 2.0 percent
• D. 2.5 percent

Answer: (D)

In the High-3 retirement formula, the pension is built from three parts: the High-3 average pay, the years of service, and a fixed yearly multiplier. The multiplier used is 2.5 percent for each year of service. So the annual pension is calculated as: High-3 average pay × years of service × 0.025. The High-3 is the average of your highest three consecutive years of basic pay, which smooths out pay fluctuations and focuses on your peak earning period. For example, if your High-3 average is $100,000 and you have 30 years of service, your annual pension would be $100,000 × 30 × 0.025 = $75,000 (about $6,250 per month). The other numbers listed aren’t the standard multiplier for this formula, which is what makes 2.5% the correct choice.

In the High-3 retirement formula, the pension is built from three parts: the High-3 average pay, the years of service, and a fixed yearly multiplier. The multiplier used is 2.5 percent for each year of service. So the annual pension is calculated as: High-3 average pay × years of service × 0.025. The High-3 is the average of your highest three consecutive years of basic pay, which smooths out pay fluctuations and focuses on your peak earning period. For example, if your High-3 average is $100,000 and you have 30 years of service, your annual pension would be $100,000 × 30 × 0.025 = $75,000 (about $6,250 per month). The other numbers listed aren’t the standard multiplier for this formula, which is what makes 2.5% the correct choice.