MPSERS Pension Formula: FAC × 1.5% × Years, With Examples

FAC × 1.5% × years of service

Annual straight life pension = final average compensation (FAC) x pension factor x years of service. Planning Your Retirement (R0613C, 5/26), p. 10, Calculating your pension ('FAC x Pension factor x YOS'); MPSERS annual report FY2025, p. 25, Regular Retirement; MCL 38.1384(1)

The pension factor: 1.5% or 1.25%

Basic and MIP: 1.5% for service before the transition date; 1.25% after, unless the 2012 reform choice kept 1.5% (see reform2012). Planning Your Retirement (R0613C, 5/26), p. 11, Your pension factor; MPSERS annual report FY2025, pp. 25-26, Options 1-4; MCL 38.1384b
Pension Plus: Credited service x 1.5% x FAC (60 months). Pension Plus members are not 2012 'qualified members', so the 1.25% split does not apply. MPSERS annual report FY2025, p. 94, Annual Amount, Pension Plus and Pension Plus 2 Plans ('Credited service x 1.5% x FAC'); MCL 38.1381c(1); MCL 38.1359(9)(b)(i)
Pension Plus 2: Credited service x 1.5% x FAC (60 months). MPSERS annual report FY2025, p. 94, Annual Amount, Pension Plus and Pension Plus 2 Plans; Choosing Your Retirement Plan (R2053C Rev. 9/24), p. 7
DC Converted: For MIP/Basic DC Converted members, FAC and service are fixed as of the transition date. MPSERS annual report FY2025, p. 94 ('FAC is calculated at the Transition Date' for option 4); MCL 38.1384b(3)-(4)

Not settled in the sources Check with MPSERS

The 2012 changes started on your own 'transition date', the first pay period on or after Feb. 1, 2013, so it differs a little by district.

If you don't enter your years at 1.5%, we count full-time service from Feb. 1, 2013 at 1.25%. miAccount shows your exact split.

Defined as the first day of the pay period beginning on or after Feb. 1, 2013 (ACFR p. 29), so it differs by payroll. If the user doesn't enter service before it, the engine assumes full-time service from Feb. 1, 2013 to retirement counts at 1.25%.

ORS example: Carl, one factor

$29,240 × 1.5% × 30.2354 years = $13,261.25 a year, or $1,105.10 a month.

Planning Your Retirement (R0613C, 5/26), pp. 12-13, Carl's straight life pension

ORS example: Sherri, two factors

$64,716.56 × 1.5% × 24.5623 years = $23,843.81
$64,716.56 × 1.25% × 6.1256 years = $4,955.35

Total $28,799.16 a year, or $2,399.93 a month straight life.

Planning Your Retirement (R0613C, 5/26), pp. 12-13, Sherri's straight life pension

Final average compensation (FAC)

MIP uses your highest 3 consecutive years (36 months). Basic, Pension Plus and Pension Plus 2 use your highest 5 (60 months). Planning Your Retirement (R0613C, 5/26), p. 10 (5-year average); MPSERS annual report FY2025, p. 25 (60 consecutive months); MCL 38.1304(12) The highest consecutive period may fall anywhere in the career. Planning Your Retirement (R0613C, 5/26), p. 10, Calculating your FAC

Pay that counts: gross wages, longevity pay, used vacation or holiday pay, used sick leave pay (or weekly workers' compensation), overtime pay, merit pay. Planning Your Retirement (R0613C, 5/26), p. 11, Types Of Compensation Included In Your FAC

ORS appendix example

A Basic member's five highest years averaged to $76,755.18 (29.824 years of service: 23.6912 at 1.5% and 6.1328 at 1.25%). Retiring early at 56 years, 9 months, 12 days, the pension was cut 19.5% to $2,224.52 a month.

ORS divides total pay by exact service credit in the averaging period, so a plain average of the five years can differ by a cent. Our engine gives $2,224.51.

Planning Your Retirement (R0613C, 5/26), pp. 50-51, Appendix, Pension estimate summary example

Years of service

One year = 1,020 hours in a July 1 - June 30 school year, at most 1 year per year. Hours above a cap in each pay period don't count:

Years of service (Michigan MPSERS)
Pay period	Hours that count	Service
Weekly	30	0.0294 yr
Biweekly	60	0.0588 yr
Semimonthly	72	0.0706 yr
Monthly	138	0.1353 yr
Quarterly	396	0.3882 yr
Annually	1,020	1 yr

Planning Your Retirement (R0613C, 5/26), p. 13, Your YOS (1,020 hours; 30 hours a week weekly, 60 biweekly); Your Retirement Plan (R0611C, May 2017; dated), pp. 16-17 (other pay-period caps and part-time examples)

ORS example: MasonMason works 2,080 hours a year but is limited to 1 year of credited service (annual cap 1,020 hours). Service: 1 year. Planning Your Retirement (R0613C, 5/26), p. 13, Mason's YOS

Putting it together

The formula gives your straight life pension: the most you can get each month, for your life only. Choosing a survivor option lowers it, and retiring early brings an early-retirement cut. Which factor and pay average apply depends on which plan you're in. Each extra year adds one more year to the formula, which One more year? puts in dollars.

What the sources say

Yearly pension = final average compensation x pension factor x years of service. The factor is 1.5%, or 1.25% for some service depending on your 2012 reform choice.MCL 38.1384(1); MCL 38.1384b; Your Retirement Plan (R0611C, May 2017; dated), p. 20
Example: $35,000 x 1.5% x 30 years = $15,750 a year, about $1,313 a month.Your Retirement Plan (R0611C, May 2017; dated), p. 23
Example with two factors: $64,716.56 x 1.5% x 24.5623 years = $23,843.81, plus $64,716.56 x 1.25% x 6.1256 years = $4,955.35; total $28,799.16 a year, $2,399.93 a month.Planning Your Retirement (R0613C, 5/26), pp. 12-13, Sherri's Straight Life Pension
Pension Plus and Pension Plus 2 use 1.5% for all service.MPSERS annual report FY2025, p. 94 ('Credited service x 1.5% x FAC'); Choosing Your Retirement Plan (R2053C Rev. 9/24), p. 7
If you froze your pension and moved to DC in 2012 (DC Converted), your pension uses your salary average and service as of the transition date at 1.5%. Later service still counts toward when you can retire.MCL 38.1384b(3)-(4), (7); Your Retirement Plan (R0611C, May 2017; dated), pp. 19-21
One year of service = 1,020 hours in a July-June school year; you can't earn more than one year per year, and no more than 60 hours count per biweekly pay period.Planning Your Retirement (R0613C, 5/26), p. 13, Your YOS; Your Retirement Plan (R0611C, May 2017; dated), pp. 16-17
MIP: your highest 3 consecutive years (36 months) of pay. Basic, Pension Plus and Pension Plus 2: your highest 5 consecutive years (60 months).Planning Your Retirement (R0613C, 5/26), p. 10; MPSERS annual report FY2025, pp. 25, 94; MCL 38.1304(12)
The highest years can be anywhere in your career, not just at the end.Planning Your Retirement (R0613C, 5/26), p. 10
Counted pay includes gross wages, longevity pay, used vacation, holiday and sick pay, overtime and merit pay.Planning Your Retirement (R0613C, 5/26), p. 11
Example: $42,464.42 + $41,244.40 + $41,917.28 = $125,626.10, divided by 3 = $41,875.37.Retirement Readiness (Dec. 2017, dated), p. 17

Questions

What is the MPSERS pension formula?

Yearly pension = final average compensation (FAC) × pension factor × years of service. The pension factor is 1.5%, or 1.25% for Basic and MIP service after the 2012 transition date if you kept your old contribution rate.

What is final average compensation?

The average of your highest 3 consecutive years of pay in MIP, or your highest 5 in the Basic Plan, Pension Plus and Pension Plus 2. The highest years can come anywhere in your career.

How much service do I earn in a year?

One year of service is 1,020 hours in a July-June school year. You can't earn more than 1 year of service in a school year.

Run your own numbers →

Unofficial guide. MPSERS and the Office of Retirement Services decide your pension.

Source: Planning Your Retirement (R0613C), Michigan Office of Retirement Services, Rev. 5/26, pp. 10, 11, 12-13, 13, 50-51. MPSERS Annual Comprehensive Financial Report, FY ended Sept. 30, 2025, pp. 25, 25-26, 29, 94. Michigan law, 1980 PA 300: MCL 38.1384; MCL 38.1384b; MCL 38.1381c; MCL 38.1359; MCL 38.1304. Choosing Your Retirement Plan (R2053C), Rev. 9/24, pp. 7. Retirement Readiness (R0613C), Dec. 2017 (dated), pp. 17, 19. Your Retirement Plan (R0611C), May 2017 (dated). Last reviewed Nov. 12, 2026.