The formula
Average Final Salary × Years and Months of Service × Benefit Factor ÷ 12 = Maximum Monthly Benefit Handbook pp. 21-22, Retirement Formula for Maximum Monthly Benefit
- Benefit factor: 2.0125% for Tier 1, 1.65% for Tier 2. Handbook p. 21, Retirement Benefit Factor ('2.0125%'); Ala. Code § 16-25-14(c)(1) ('Two and one-eightieth percent'); Handbook p. 22, Retirement Benefit Factor ('1.65%'); Ala. Code § 16-25-14(d)
- Average final salary: Average of the highest three years (July-June) out of the last 10 years the member made contributions. Partial years are included if they benefit the member. (Tier 1) For Tier 2, the highest 5. Handbook p. 21, Average Final Salary; Ala. Code § 16-25-1(18); Handbook p. 22, Average Final Salary; Ala. Code § 16-25-1(18)
- Service: Creditable service = membership, prior, purchased and transferred service, in years and months. No more than one year of credit per scholastic year (July 1-June 30). Part-time service is prorated. No credit for leave without pay or workers' compensation pay. Handbook p. 9, Types of Creditable Service Unused sick leave can add months at retirement; see service credit.
- Pay that counts is capped at 120% of base pay for Tier 1 and 125% for Tier 2. Ala. Code § 16-25-1(17) (Tier II: includes overtime, excludes subsistence pay, capped at 125% of annual base compensation); Handbook p. 8, Tier 2 Member Contributions
The handbook's examples
- Tier 1: $42,000 × 27.5 × 0.020125 ÷ 12 = $1,937.03 a month (27 years 6 months). Handbook p. 21, Example
- Tier 2: $42,000 × 27.5 × 0.0165 ÷ 12 = $1,588.13 a month. Handbook p. 22, Example; Tier 2 Handbook (2019) p. 16 (age 62)
Tier 2: the 80% cap
A Tier 2 benefit can't be more than 80% of your average final salary. At 1.65% a year, you'd hit that at about 48.5 years of service. Ala. Code § 16-25-14(d) ('shall not exceed eighty percent (80%) of the member's average final compensation'); Handbook p. 22
Tier 2 benefits by salary and service
Monthly Maximum Benefit, rounded to the dollar, as in the 2019 Tier 2 handbook's table (a selection; we recompute every cell and test it against the printed table).
| Average final salary | 10 yrs | 20 yrs | 25 yrs | 30 yrs | 34 yrs | 38 yrs |
|---|---|---|---|---|---|---|
| $30,000 | $413 | $825 | $1,031 | $1,238 | $1,403 | $1,568 |
| $40,000 | $550 | $1,100 | $1,375 | $1,650 | $1,870 | $2,090 |
| $50,000 | $688 | $1,375 | $1,719 | $2,063 | $2,338 | $2,613 |
| $60,000 | $825 | $1,650 | $2,063 | $2,475 | $2,805 | $3,135 |
| $75,000 | $1,031 | $2,063 | $2,578 | $3,094 | $3,506 | $3,919 |
| $90,000 | $1,238 | $2,475 | $3,094 | $3,713 | $4,208 | $4,703 |
Before any Tier 2 early-retirement cut. For Tier 1, multiply by 1.2197.
How the law builds it
By statute the allowance is an annuity (actuarial equivalent of the member's accumulated contributions) plus a pension, and the total is not less than the formula amount (Tier 1) or equals it (Tier 2). Ala. Code § 16-25-14(b)-(d)
From the sources
- Maximum monthly benefit = average final salary x years and months of service x benefit factor / 12. The factor is 2.0125% for Tier 1 and 1.65% for Tier 2.Handbook pp. 21-22
- Handbook examples, $42,000 average salary and 27 years 6 months: Tier 1 $1,937.03 a month; Tier 2 $1,588.13 a month.Handbook pp. 21-22, Example
- A Tier 2 benefit can't be more than 80% of your average final salary. At 1.65% a year, that limit is reached at about 48.5 years of service.Ala. Code § 16-25-14(d); Handbook p. 22
- Tier 1: average of your highest 3 years (July-June) out of your last 10 years of contributions. Tier 2: highest 5 of the last 10. Partial years count if they help you.Handbook pp. 21-22; Ala. Code § 16-25-1(18)
- Pay that counts is capped at 120% of base pay for Tier 1 and 125% for Tier 2. Tier 2 counts overtime but not subsistence pay.Ala. Code § 16-25-1(17); Handbook p. 8
Questions
What is the TRS of Alabama benefit factor?
2.0125% for Tier 1 and 1.65% for Tier 2, for each year (and month) of service.
What counts as average final salary?
Tier 1: the average of your highest 3 years (July-June) out of your last 10. Tier 2: the highest 5 out of the last 10. Partial years count if they help.
Is there a cap?
Tier 2 benefits can't be more than 80% of your average final salary, reached at about 48.5 years. The handbook states no cap for Tier 1.
Source: TRS Member Handbook, July 2026 edition (back cover "7-2026"), pp. 8, 9, 21-22, 21, 22. Also: Code of Alabama Title 16, Ch. 25 and 25A; Tier 2 Member Handbook. Last reviewed .