What does one more year add to an SDRS pension?
A Foundation member gains 1.55% of final average compensation a year ($775 on $50,000), a Generational member 1.8% ($900). If you'd retire early, the year also shrinks the cut, and reaching the Rule of 85 removes it. Raises add more, because the SDRS formula uses your best five years.
- Each extra year adds 1.55% of FAC (Foundation) or 1.8% of FAC (Generational) to your yearly benefit, and if you are retiring early, starting later also shrinks the reduction.Foundation Handbook (July 2024), pp. 11-12; Generational Handbook (July 2024), p. 11
Foundation: near the Rule of 85
Illustration: a Foundation member aged 58 on July 1, 2026 with 24 years (6 before July 2008) and a $50,000 final average compensation. Pay stays the same. Open this example in the calculator.
| Start | Age / years | Cut | Monthly |
|---|---|---|---|
| NowJuly 1, 2026 | 58 / 24 | 9% | $1,444.63 |
| +1 yrJuly 1, 2027 | 59 / 25 | 3% | $1,602.52 |
| +2 yrJuly 1, 2028 | 60 / 26 | none | $1,716.67 |
| +3 yrJuly 1, 2029 | 61 / 27 | none | $1,781.25 |
| +4 yrJuly 1, 2030 | 62 / 28 | none | $1,845.83 |
At 60 with 26 years this member meets the Rule of 85 (60 + 26 ≥ 85), and the cut is gone. The cuts above follow state law, measured to the Rule of 85 date; see the two readings.
Foundation Handbook (July 2024), p. 11, Normal Retirement Benefits (formula graphics, see source/handbook-image-text.txt); SDCL 3-12C-1106; SDRS Actuarial Valuation (June 30, 2024), pp. 53-54; Foundation Handbook (July 2024), p. 12, Special Early Retirement Benefits (Rule of 85), Requirements to Meet the Rule of 85; SDCL 3-12C-1110(1); SDCL 3-12C-1111 (1/4 of 1% for each full month to the earlier of normal retirement age or reduction age); SDRS Actuarial Valuation (June 30, 2024), p. 56; Foundation Handbook (July 2024), p. 12 (3% a year, prorated for partial years, before age 65)Generational: toward 67
Illustration: a Generational member aged 62 with 9 years and a $50,000 final average compensation. Each year adds $900 a year to the formula and takes 5 points off the cut.
| Start | Age / years | Cut | Monthly |
|---|---|---|---|
| NowJuly 1, 2026 | 62 / 9 | 25% | $506.25 |
| +1 yrJuly 1, 2027 | 63 / 10 | 20% | $600.00 |
| +2 yrJuly 1, 2028 | 64 / 11 | 15% | $701.25 |
| +3 yrJuly 1, 2029 | 65 / 12 | 10% | $810.00 |
| +4 yrJuly 1, 2030 | 66 / 13 | 5% | $926.25 |
| +5 yrJuly 1, 2031 | 67 / 14 | none | $1,050.00 |
Raises would add more: a higher final average compensation lifts every year of service. The calculator shows this comparison for your own numbers.
Related: buying service credit adds years without working them, and working after retirement has its own limits if you retire first and go back.
Questions
What does one more year add to an SDRS pension?
For a Foundation member, 1.55% of final average compensation a year ($775 on $50,000). For a Generational member, 1.8% ($900). If you're retiring early, a year also shrinks or removes the cut.
Why can a year matter so much near the Rule of 85?
Each year of work adds a year of age and a year of service, so you get 2 points closer to 85. Meeting the rule removes the whole early cut.
Source: SDRS Class A Handbooks (Foundation and Generational members), July 2024, Foundation pp. 11-12; Generational p. 11. Also: SDRS Actuarial Valuation (June 30, 2024) pp. 53-54, 56; SDCL §§ 3-12C-1106, 3-12C-1110, 3-12C-1111, 3-12C-1204, 3-12C-1207. Last reviewed .