Board Finalizes CBBC, Sets Factor
After more than two years of analysis and discussion, at the October 2023 meeting, the SERS Board approved the ‘factor’ that will be used under the Contribution Based Benefit Cap (CBBC) analysis for retirements with an effective date on or after August 1, 2024.
The factor approved by the Board is 6.25.
The purpose of the CBBC analysis is to assure that the pension benefit is sufficiently supported by the contributions made by a member over the course of their working career. The CBBC factor is the multiplier for an annuity based on the member’s contributions that will be compared to the standard formula benefit.
The Board considered extensive data in determining that the factor will be 6.25, including analysis of actual retirements from 2020 to 2021 and 2022 to 2023. The analysis showed that, in the vast majority of cases, the standard formula benefit will continue to be the basis of the retirement allowance. For example, of the nearly 3,000 retirements in the 2022 to 2023 time period, a CBBC with a factor of 6.25 would have impacted only eight retirements.