When you retire at your Normal Retirement Age (65), your annual normal retirement benefit is equal to:

1.25% of your average final compensation
Times
Your years of credited service up to 20;
Plus
1.66% of your average final compensation;
Times
Your years of credited service over 20

Your benefit is calculated on an annual basis; however, it is paid monthly. . The formula above shows how much you would receive if payments start at your Normal Retirement Date and continue for your lifetime only. If payments start earlier or if you choose a payment option with a benefit continuing to someone after your death, your benefit will be reduced.

Average Final Compensation

Average final compensation is the average of your annual earnings in your highest-paid five consecutive fiscal years during your last 10 fiscal years of credited service before retirement. Annual earnings means your regular earnings, including overtime. Any contributions you make to the Duke Faculty and Staff Retirement Plan or other pre-tax deductions are included.

Credited Service

Credited service is used to determine your eligibility for early retirement and the amount of any plan benefit. Credited service includes all of your continuous service after you become a Plan member.

If you have fewer than 1,000 hours of service from your membership date to the end of the fiscal year in which you become a member, you will receive partial credited service for that year. If you are no longer an employee eligible to participate in the Plan, but you are still an employee of Duke, you stop accruing credited service when you are no longer an eligible employee, except for purpose of determining eligibility for early retirement.

Payment Options

There are several payment options available for receiving your benefit.

  • A single life annuity is a monthly payment amount you will receive every month for the rest of your lifetime. All payments stop at your death. There is no beneficiary under this payment option.
  • The Joint and Survivor payment option is designed so that you will receive a payment amount every month for the rest of your life, and at your death your beneficiary would then begin to receive either 50%, 75%, or 100% of what you were receiving. If you choose a beneficiary that is much younger than you, such as a child, there is a larger age gap between you and your beneficiary that may significantly impact the benefit amount you receive. Also, if your beneficiary passes away before you, your benefit will continue every month for the rest of your lifetime only.
  • The level income option at age 62 or 65 is designed so that you receive a higher amount every month until age 62 or age 65, depending on which option you choose. This payment option might appeal to those who are retiring early and may not be starting Social Security, or would like to have the higher payment amount each month prior to turning age 62 or 65. There is no beneficiary under this payment option.
  • A lump sum payment may be available if the total lump sum value is $10,000 or less. An example in this scenario might be someone who worked bi-weekly for a very short period of time, and then transferred to a monthly position at Duke or worked at Duke long enough to be vested, but did not have much service beyond that point.

Examples

Example I: John (Normal Retirement)

Age at retirement: 65
Years of credited service: 40
Average final compensation: $52,000

Here is how John’s benefit is calculated:
1.25% x $52,000 x 20 = $13,000
plus
1.66% x $52,000 x 20 = $17,264 

Annual benefit: $30,264

John would receive $2,522 per month ($30,264 ÷ 12) from the Plan for the remainder of his life. If he wanted payments to continue to someone else after his death, his benefit would be reduced.

Example II: Sue (Normal Retirement)

Age at retirement: 65
Years of credited service: 30
Average final compensation: $56,000

Here is how Sue’s benefit is calculated:
1.25% x $56,000 x 20 = $14,000
plus
1.66% x $56,000 x 10 = $9,296

Annual benefit: $23,296

Sue would receive $1,941.33 per month ($23,296 ÷12) from the Plan for the remainder of her life. If she wanted payments to continue to someone else after her death, her benefit would be reduced.

Example III: Catherine (Early Retirement)

Age at termination: 55
Years of credited service: 20
Average final compensation: $56,000

Here is how Catherine’s benefit is calculated:
1.25% x $56,000 x 20 = $14,000

This is the annual amount payable at Catherine’s Normal Retirement Date (age 65). If she wanted to begin payments immediately, her benefit would be reduced using the early retirement factor:
$14,000 x .700 = $9,800.

Catherine would receive $816.67 per month ($9,800÷ 12) from the Plan for the remainder of her life. If she wanted payments to continue to someone else after her death, her benefit would be reduced.

Example IV: Sam (Early Retirement)

Age at termination: 58
Years of credited service: 18
Average final compensation: $52,000

Here is how Sam’s benefit is calculated:
1.25% x $52,000 x 18 = $11,700

This is the annual amount payable at Sam’s Normal Retirement Date (age 65). If he wanted to begin payments immediately, his benefit would be reduced using the early retirement factor:
$11,700 x .562 = $6,575.40.

Sam would receive $547.95 per month ($6,575.40 ÷ 12) from the Plan for the remainder of his life. If he wanted payments to continue to someone else after his death, his benefit would be reduced.