This gross earnings rate is adjusted by the net rate of return. It is not the percentage of increase that will be applied to benefits. The Variable Fund net rate of return determines whether a member s monthly benefit remains the same, increases, or decreases effective January 1 and paid February 1. The amount of change depends on the actuarial factor that was used at the time of retirement. The actuarial factor is the amount it was assumed the member s account balance would earn in the future.
Benefits remain constant if earnings are the same.
If the Fund earns more than the factor, benefits increase in the following year. If it earns less, benefits decrease. The following table shows the factor for specific years and the percentage increase that will be paid in 2001. Members whose effective retirement date was the 1st of February, April, May, June, August, September, or October 2000 will see a decrease in their variable benefit in 2001 because the variable decreased between those months and October 31. Taxes are recalculated following the increase or decrease in the variable portion of the retirement benefit and will be reflected in changes to withholding.