Average final compensation × years of service × 2% = your yearly Full Benefit.
Handbook pp. 16-17, How MainePERS Determines Your Service Retirement BenefitAverage final compensation (AFC) x years of service credit x accrual rate (2%) = annual service retirement benefit under the Full Benefit option at normal retirement age. 5 M.R.S. §17852(1)(A)
With 10 or more years of creditable service, the Full Benefit is not less than $100 a month. Handbook p. 23, Your Minimum Benefit; 5 M.R.S. §17854
Average final compensation (AFC)
The average of your three highest years of earnable compensation (not necessarily consecutive). If total service is under 3 years, the average annualized rate over the whole period. Handbook p. 16, (1) Average Final Compensation (AFC)
Retirement incentives (a significant payment or award to induce you to retire) are not included in AFC. Handbook p. 22, Retirement Incentives
Members with 10+ years of service on July 1, 1993 (or who reached 60 before July 1, 1993 with a year of service) may include up to 30 days of unused sick and/or vacation pay (a day = normal working day up to 8 hours) in AFC, counted in the final year's earnings for the cap test. Payments made as a retirement incentive are not included. Handbook p. 23, Unused Sick and Vacation Leave; Ready to Retire (2023) slide 8
The 5% and 10% caps
Two caps: earnings increases greater than (1) 5% a year over the prior year and (2) 10% over the highest three years are left out of AFC unless the employer pays the cost. For retirements effective October 1, 2019 and after, the limits do not apply to increases from promotions or collectively bargained wage increases. Handbook p. 22, Cap on Earnable Compensation Used in Calculating Average Final Compensation (AFC)
| Year | Earnings | Counted | Left out |
|---|---|---|---|
| 2019-2020 | $45,000 | $45,000 | $0 |
| 2020-2021 | $48,000 | $47,250 | $750 |
| 2021-2022 | $50,500 | $49,500 | $1,000 |
| AFC | $47,250 |
The second year is held to 5% over the first ($45,000 × 1.05 = $47,250). The third is held to 10% over the first year ($45,000 × 1.10 = $49,500), which is lower than 5% over the second. Total $141,750 ÷ 3 = $47,250. Ready to Retire (2023) slide 7, AFC Cap Provisions
Raises above 5% a year, or above 10% over the three AFC years, are left out of AFC (except promotions and collectively bargained raises for retirements since Oct. 1, 2019). The calculator uses the AFC you enter, so it can't apply the caps unless you give your yearly pay.
What we do: We use the average you enter; our helper can apply the caps to yearly pay.
What would settle it: The member's last four years of earnable compensation and whether any raise was a promotion or bargained increase.Years of service
A full-time employee earns one year of service credit for a year of work, never more than a year in a year. Part-time work earns the ratio of time worked to full time (half-time for a full year = 0.5). Per-diem staff (e.g. substitutes) earn days worked / days in the school year (45 of 180 days = 0.25). Hourly staff (tutors, ed techs II/III) earn hours / 900 (900+ hours = 1 year; 450 = 0.5). A co-curricular or athletic stipend position held in a year with less than full-time credit earns 2 months 20 days (0.222) each, up to a year in total. Handbook pp. 5-6, How Service Credit Accumulates
- A substitute who works 45 of 180 days: 0.25 of a year. Handbook p. 5, Example (substitute, 45 of 180 days)
- A tutor with 900 hours: 1 year; with 450 hours: 0.5. Handbook p. 5, Example (tutor, 450 hours)
- A half-time teacher who also coaches: 0.722. Handbook pp. 5-6, Example (half-time teacher who coaches: .50 + .222)
Up to 5 years of military service if you left to serve and return within 90 days of discharge; up to 30 days a year for an unpaid leave of absence; up to 90 days of unused, unpaid sick and/or vacation leave at final termination; sabbatical credit at twice the fraction of salary paid. Handbook p. 7, Receiving Additional Service Credit Buying service credit
Members contribute 7.65% of earnable compensation, credited with interest at a rate set by the Board of Trustees. The employer contributes a percentage of total earnable compensation that varies from year to year. Handbook p. 2, Membership
From the sources
- Yearly benefit = average final compensation x years of service x 2%. MainePERS's example: pay of $35,000, $36,000 and $37,000 averages $36,000; with 25 years that's $18,000 a year, or $1,500 a month, at normal retirement age.Handbook pp. 16-17
- In MainePERS's sample estimate, a teacher with 27 years and an average final compensation of $47,250 gets a Full Benefit of $2,126.25 a month.Ready to Retire (2023) slides 6, 9
- With 10 or more years of service, your Full Benefit is at least $100 a month.Handbook p. 23, Your Minimum Benefit
- Average final compensation (AFC) is the average of your three highest years of earnable compensation. They don't have to be in a row.Handbook p. 16; 5 M.R.S. §17001(4)
- Raises above 5% over the year before, or above 10% across the three AFC years, are left out of your AFC unless your employer pays the cost. For retirements from October 1, 2019, raises from promotions or union contracts don't count against these caps.Handbook p. 22, Cap on Earnable Compensation
- MainePERS's example: earnings of $45,000, $48,000 and $50,500 are capped to $45,000, $47,250 and $49,500, for an AFC of $47,250. $1,750 is left out.Ready to Retire (2023) slide 7, AFC Cap Provisions
- Payments to get you to retire (retirement incentives) are not part of AFC. Members with 10 years by July 1, 1993 may count up to 30 days of unused sick or vacation pay.Handbook pp. 22-23
- You contribute 7.65% of your earnable compensation; it earns interest set by the MainePERS board. Your employer's rate changes from year to year.Handbook p. 2
Questions
How is a MainePERS pension calculated?
Average final compensation × years of service credit × 2% = the yearly Full Benefit at your normal retirement age. Divide by 12 for the monthly check.
What is average final compensation?
The average of your three highest years of earnable compensation (not necessarily consecutive). If total service is under 3 years, the average annualized rate over the whole period.
Do big raises at the end count?
Not all of them. Raises over 5% over the year before, or over 10% across your three highest years, are left out unless your employer pays the cost. Promotions and collectively bargained raises don't count against the caps for retirements from October 1, 2019.
Is there a minimum benefit?
With 10 or more years of creditable service, the Full Benefit is not less than $100 a month.
Source: MainePERS Benefits for Teachers: Teacher Member Handbook, 2026, pp. 2, 5-6, 16-17, 22-23. Also: Ready to Retire (2023); 5 M.R.S. §§ 17001, 17852, 17854. Last reviewed .