CBBC Explained

This scenario reflects three members with different salaries, but they all received the same 3% salary increase annually over their 25-30 years of service.

Members with normal salary increases adequately contribute toward their formula benefit. However, members should consider their age at retirement when planning for retirement, as younger retirement ages can lead to incremental increases in their CBBC factor.

In this scenario, we have three members of the same age with various years of service. Peter’s salary history reflects a 30-year career with varying changes in salary including periods of steady increases, no increases, various bonuses, and above market salary increases near the end of his career. Paul’s salary history reflects a 38-year career with steady salary increases. Mary’s career, while shorter, also reflects steady salary increases.

Peter’s above market salary increases near the end of his career would result in his benefit being capped with a CBBC factor of 5; however, it would not have been capped with a CBBC factor of 6.

In this scenario, we have one member, Susie P-T, who worked part time while her children were in school. Once they graduated, she switched to full-time hours. Larry F-T worked full time his entire career, receiving normal salaries increases.

Susie’s switch to full-time work during her final 10 years would result in her benefit being capped with a CBBC factor of 5; however, it would not have been capped with a CBBC factor of 6.

In this scenario we have one member, Sally, who started her career at 35. Harry started his career at 22. They both work the same number of years with similar salaries. While they both worked 31 years, Harry retired at 52, as he was grandfathered under the previous retirement eligibility rules.

Given Harry’s young retirement, he is expected to receive retirement benefits longer than Sally. The annual benefit based on his accumulated contributions would be paid out over more years resulting in a smaller annual benefit and a higher CBBC factor. Harry’s scenario would result in his benefit being capped with a CBBC factor of 5; however, it would not have been capped with a CBBC factor of 6.

Max contributes on a salary in the lower to mid-20’s his first 27 years, but Max’s salary increases drastically during his last three years of service to a quarter-million dollars. This results in a Formula Benefit for Max that exceeds his accumulated contributions in one year. The CBBC ensures Max’s benefit is more consistent with his earnings history.

A member’s CBBC factor at retirement can be influenced by a variety of elements such as the timing of bonuses, above market salary increases, part-time work, and/or career changes. All these scenarios individually or combined have the potential to impact a member’s Formula Benefit. While Peter, Susie PT, and Harry’s salary scenarios exceeded a CBBC of 5, none of them exceed a CBBC of 6. Only the egregious salary increases included in the Late Career Salary Boost scenario produced a CBBC factor greater than 6 for the scenarios included in this analysis.

For your most up-to-date accumulated contributions, you can log in to your Account Login at any time. Just navigate to the “Member Account” screen and you can find your accumulated contributions under the bolded “Total Account Balance.”

If you want to determine your own CBBC factor, divide your formula benefit by the annuity amount. In the above example, the CBBC factor would be $32,966 ÷ $6,511 = 5.06.