How Do I Calculate My South Carolina Pension Payout?

How to Calculate Your South Carolina Pension

If you’re a teacher, state employee, or public worker in South Carolina, the South Carolina Retirement System (SCRS) provides a structured, predictable pension for your retirement. Knowing how to calculate your expected pension can help you plan ahead and make informed decisions about your career and retirement. The first thing you need to know is if you are a Class Two or Class Three member of SCRS. If you have creditable service prior to July 1, 2012, you are a Class Two member. If you do not have any creditable service prior to July 1, 2012, you are a Class Three member. This will affect how your Average Final Compensation (AFC) is calculated, as well as the requirements to receive an unreduced retirement benefit. Here’s a breakdown of how to determine what your monthly pension benefit might look like.

1. Understand the Pension Formula
The SCRS uses a formula to calculate your annual benefit based on three main factors:
• Average Final Compensation (AFC): This is the average of your highest 12 (Class Two) or 20 (Class Three) consecutive quarters of salary, usually the last years of your career if those were your highest earning years.
• Years of Service: The total years you have worked in a position covered by SCRS. Every additional year increases your benefit.
• Multiplier: SCRS uses a multiplier of 1.82% for each year of service. This percentage ensures that your benefit is based on a consistent portion of your salary. The multiplier is higher for PORS (Police Officers).

2. Calculate Your Monthly Benefit

Using the formula, let’s walk through a hypothetical example. Suppose you’re a South Carolina teacher with an AFC of $50,000 and 30 years of service:

1. Multiply your AFC by your Years of Service: $50,000 x 30 = $1,500,000

2. Multiply by the 1.82% Multiplier: $1,500,000 x 1.82% = $27,300

Your annual pension benefit would be $27,300, which translates to a monthly benefit of $2,275.

3. Consider Early Retirement Reductions

If you retire before meeting full retirement eligibility, your benefit may be reduced. SCRS requires either 28 years of service or reaching age 65 for full benefits for Class Two members, rule of 90 (years of service plus age) or age 65 for Class Three members. Retiring early can reduce your payout, so it’s essential to consider the timing of your retirement.

4. Consider Beneficiary Payout Options

There are three different payout options: Option A, Option B, and Option C. Option A offers payments to the retiree only. This gives the “full” payout based on the calculation above. Options B and C allow for either 100% or 50% payment to a beneficiary in the event of the death of the retiree. These two options reduce the payment from the Option A payment in order to accommodate the beneficiary payment.

Final Takeaways

Understanding these calculations can help you make informed career decisions, like working additional years or boosting your salary in your final years. By familiarizing yourself with the formula, you’ll be better equipped to plan a financially secure retirement in South Carolina.