If you’re thinking of retiring in 2023, you may want to consider waiting until the new year. That is because beginning January 1, 2024, a member who retires on or after that date will have their initial HCRA benefit calculated using a new formula that will most likely yield a bigger benefit.
The Trustees are not able to extend this calculation retroactively prior to 2024 due to legal constraints, so waiting until 2024 could be beneficial to you.
What’s the current formula?
Currently, the calculation of both your Severance and HCRA at retirement takes into account the contributions paid over your career by your Employers, the unemployment/underemployment, welfare and other benefits you have taken as an active member, and your years of service.
The existing calculation multiplied the contributions that were paid by a percentage based on your years of Future Service Credit and Past Service Credit. This percentage could be as low as 20% or as high as 150%. From this calculated contribution value, 100% of benefits taken is subtracted to determine Severance and HCRA.
The Trustees have determined that for all eligible participants the calculation of an eligible participant’s HCRA should be based on no less than 100% of the contributions received from the participant’s employers. This means that a consistent, higher multiplier applied to your service credits could yield a bigger benefit. The initial HCRA benefit will still subtract all the active benefits paid to you through SASMI, except for non-deduct benefits like the Work Boots program.
For details, review this Summary of Material Modification that includes details on the new calculation formula.