A Defined Benefit (DB) pension pays eligible retirees a fixed monthly benefit for rest of their life. The benefit amount is based on their years of service and salary – not their account balance.
In a DB pension, both the member and employer contribute a percentage of the member's compensation to the retirement system. The member's contributions are deposited into their TRS member account, where they earn interest each month. Employer contributions are not attributed to individual member accounts but are pooled and invested by the Montana Board of Investments for long-term growth.
A TRS member's contributions continue to accumulate in their member account for as long as they remain employed in a position reportable to the retirement system.
Vested members (those with at least five full years of creditable service with TRS) who have terminated all TRS-reportable employment and who have attained retirement age may apply for a lifetime benefit. In almost every case, the value of their lifetime benefit will far exceed their member account balance (contributions plus interest) at the time of retirement.
Generally speaking, TRS retirement replaces only a portion of the member's pre-retirement salary. For example, the annual gross benefit amount for a member who retires with 30 years of creditable service is equal to one-half of their average final compensation, paid out in 12 equal monthly payments. Combined with Social Security and/or other resources, their TRS benefit represents a modest but reliable source of income that is guaranteed for their lifetime.
After a retired TRS member receives 36 or more monthly payments, a small GABA increase will take effect the following January, and each January thereafter.
When a retired member passes away, a continuing benefit or other amount may be payable to one or more survivors after the retiree's death, depending upon the type of allowance elected by the member at retirement.
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