As employees of Washington State, plan 2 members earn a pension or “paycheck” in retirement. This is calculated using the formula found below, taking years of service multiplied by 2% which gives a percentage. That is the percentage members will receive of their average highest, consecutive five years of salary including stipends.
Years of Service x 2% x Average Five Year Highest Compensation
20 years x 2% x $50,000 = 40% of $50,000 or $20,000/ year (pension)
Members with 30 years of service or more, who were employed before May 2013 can collect their pensions in full at Age 62 with no penalty. Members without 30 years of service or those employed after May 2013 can collect their pensions at Age 65 with no penalty. All plan 2 members contribute a portion of their salary into the pooled pension, and receive their share once they retire. Other characteristics of the plan include survivorship options which may be elected at the time of collection.
To find out more about how your plan fits into your retirement picture, please feel free to reach out for a complimentary review!