Contribution Stabilization Program

Calculating the Maximum Amount Eligible for Amortization

Contribution Stabilization Program

First, the System’s Actuary determines the System’s average and graded rates.

For fiscal year end 2022:

  • The average rate is 16.2 percent for ERS (including 0.4 percent GLIP) and 28.3 percent for PFRS (including 0.0 percent GLIP).
  • The graded rate is 15.1 percent for ERS and 25.4 percent for PFRS.

For fiscal year end 2023:

  • The average rate is 11.6 percent for ERS (including 0.2 percent GLIP) and 27.0 percent for PFRS (including 0.0 percent GLIP).
  • The graded rate is 14.1 percent for ERS and 26.4 percent for PFRS.

Then, the Actuary:

  1. Determines the employer’s normal contribution

    Subtracts the value of Group Term Life Insurance (GTLI) from employer’s invoiced contribution (not including payments for deficiency, previous amortizations, incentive costs or prior year’s adjustments).

  2. Determines the employer’s average rate

    Divides the normal contribution by the billable salary.

  3. Determines the employer’s graded rate

    Multiplies the System graded rate by the ratio of the employer’s average rate divided by the System’s average rate (not to exceed the System graded rate).

  4. Determines the employer’s graded contribution

    Multiplies the employer’s billable salary by the employer’s graded rate.

  5. Determines the maximum amortization amount

    Subtracts the employer’s graded contribution from the normal contribution.

 


Example of Amortization Calculation for an ERS employer (For Fiscal Year End 2022)

Employer’s billable salary $100,000,000
Employer’s normal annual contribution*
(invoiced contribution based on retirement plans offered and normal contribution rates minus the value of GTLI)
15,100,000
Employer’s average rate
(employer’s normal annual contribution divided by employer’s billable salary)
15.1%
Employer’s graded rate
(System graded rate multiplied by the ratio of the employer’s average rate divided by the System’s average rate, not to exceed the System graded rate)
15.1%
Employer’s graded contribution
(employer’s billable salary multiplied by employer’s graded rate)
15,100,000
Maximum amortization amount
(difference between the employer’s normal contribution and graded contribution)
0

*Does not include payments for deficiencies, previous amortizations, incentive costs and prior year’s adjustments.

 


(Rev. 10/21)