- Tiers 1, 2 and 3: annual benefit = final average salary x service credit x 2.35%. Thirty years on a $60,000 final average salary gives $42,300 a year ($3,525 a month).Member Handbook 2025, p. 16, Calculating Retirement Benefits
- Tier 4 uses a graduated multiplier: 1.35% for each of the first 10 years, 2.35% for years 10 to 20, 3.35% for years 20 to 30 and 2.4% for each year after 30. Fifteen years gives 25.25% of final average salary. Thirty-two years gives 75.3%.Member Handbook 2025, pp. 14-15, New Tiered Multipliers
- The benefit has no cap: the longer you work, the larger your monthly benefit.Member Handbook 2025, p. 15, When to Retire
Tiers 1, 2 and 3
Which rate you earn depends on your tier. Retire before your full-benefit age and an early cut comes off this amount.
Final average salary × years of service × 2.35% = your yearly benefit, paid in twelve monthly checks. Earned and allowed (bought) service both count. Member Handbook 2025, p. 6, Defined Benefit Plan; p. 16, Calculating Retirement Benefits
For example, 30 years × 2.35% = 70.5%. On a $60,000 final average salary (our illustration) that's $42,300 a year, or $3,525 a month.
Tier 4: the stepped multiplier
Members hired on or after July 1, 2019, or who refunded all contributions before July 1, 2019 and repurchased service credit on or after July 1, 2019. Member Handbook 2025, p. 14, New Tiered Multipliers; p. 15
| Years of service | Each year earns |
|---|---|
| First 10 years | 1.35% |
| Years 10 to 20 | 2.35% |
| Years 20 to 30 | 3.35% |
| More than 30 years | 2.4% |
The handbook's examples
| Service | % of salary | At $60,000 |
|---|---|---|
| 15 yearsMember Handbook 2025, p. 15, For example (15 years) | 25.25%handbook: 25.25% | $15,150$1,263/mo |
| 32 yearsMember Handbook 2025, p. 15, Another example (32 years) | 75.3%handbook: 75.3% | $45,180$3,765/mo |
Tier 4 against Tiers 1-3
Tier 4 pays less for a short career and catches up between 20 and 30 years, when each year earns the top rate of 3.35%.
| Service | Tier 4 | Tiers 1-3 |
|---|---|---|
| 5 years | 6.75% | 11.75% |
| 10 years | 13.5% | 23.5% |
| 15 years | 25.25% | 35.25% |
| 20 years | 37% | 47% |
| 25 years | 53.75% | 58.75% |
| 30 years | 70.5% | 70.5% |
| 32 years | 75.3% | 75.2% |
| 35 years | 82.5% | 82.25% |
Percent of final average salary, from our engine on the handbook's rates. Member Handbook 2025, p. 14, New Tiered Multipliers; p. 15; Member Handbook 2025, p. 6, Defined Benefit Plan; p. 16, Calculating Retirement Benefits
Your final average salary
- Your final average salary is the higher of two averages: your last 20 calendar quarters (five years) before retirement, or your best 20 consecutive quarters. Lump-sum payouts of sick or annual leave made after July 1, 2010 are left out.Member Handbook 2025, p. 16, Final Average Salary; NMSA 1978, §22-11-30(K)
- Anti-spiking rule: if your final average salary is above an indexed limit, any raise over 30% from one year to the next is ignored. The limit was $60,000 in 2019 and is $76,975 from July 1, 2026. It applies only to salary earned after July 1, 2019.Member Handbook 2025, p. 16, Anti-spiking; 2026 COLA and Anti-Spiking Threshold letter (Jan. 19, 2026), p. 3
Final average salary is the greater of the average fiscal annual earnings for the last 20 calendar service quarters (60 months) before retirement and the highest average for any 20 consecutive calendar quarters. Member Handbook 2025, p. 16, Final Average Salary Lump-sum payments of accrued sick or annual leave made after July 1, 2010 are excluded. NMSA 1978, §22-11-30(K)(2)
The anti-spiking limit
Applies only when the FAS is greater than the threshold ($60,000 as of July 1, 2019, indexed to CPI each July 1) and only to the parts of the FAS earned after July 1, 2019. A year-to-year salary increase above 30% is ignored in the FAS. Member Handbook 2025, p. 16, Anti-spiking
| From | Limit |
|---|---|
| July 1, 2019Member Handbook 2025, p. 16, Anti-spiking | $60,000 |
| July 1, 20252026 COLA and Anti-Spiking Threshold letter (Jan. 19, 2026), p. 3 | $74,953 |
| July 1, 20262026 COLA and Anti-Spiking Threshold letter (Jan. 19, 2026), p. 3 | $76,975 |
What you pay in
Members earning over $24,000 pay 10.7% of salary; at or below, 7.9%. Employers pay 18.15%. Member contributions are picked up by the employer under IRC 414(h): taken pre-tax, with federal and state income tax deferred until benefits or refunds are paid. NMERB Schedule of Contribution Rates (FY27), rows 2024-2027 (7/1/2023 - 6/30/2027)
The NMERB DBP pension has no earnings cap; the longer you work the larger your monthly benefit. Member Handbook 2025, p. 15, When to Retire See what a year adds on one more year, or run your numbers.
Questions
What is the NMERB formula?
Final Average Salary (FAS) x service credit x .0235 = annual benefit (Tiers 1, 2 and 3). Tier 4: FAS x service credit x tiered multiplier = annual benefit.
How does the Tier 4 multiplier work?
Each band of years earns its own rate: first 10 years 1.35%, years 10 to 20 2.35%, years 20 to 30 3.35%, more than 30 years 2.4%. The handbook's examples: 15 years = 25.25% of final average salary; 32 years = 75.3% of final average salary.
Is there a cap on an NMERB pension?
The NMERB DBP pension has no earnings cap; the longer you work the larger your monthly benefit.
Source: NMERB Member Handbook, 2025 edition, pp. 6, 14, 14-15, 15, 16. Also: NMERB 2026 COLA and Anti-Spiking Threshold letter p. 3; NMERB Schedule of Contribution Rates (FY27); NMSA 1978 § 22-11-30. Last reviewed .