Ordinary Disability Benefits for employees of the State of Maryland are calculated in a complicated way that often leaves my clients scratching their heads. The best policy is to obtain an estimate of benefits periodically throughout the course of one’s career. This document will not only tell you what your disability retirement benefits are expected to be, but also the value of your estimated service retirement and accidental benefit. This estimate of benefits is formally titled “Your Personal Statement of Benefits” by the Maryland State Retirement and Pension System. However, if you want to know the details of how these calculations are reached the State Benefits Booklets can be a big help.
The first step is to determine what type of employee you are. The most up-to-date handbook for each type of state employee can be found at the links below:
- Reformed, Contributory and Non-Contributory Pension Systems for Employees and Teachers of the State of Maryland
- Retirement System for Employees and Teachers of the State of Maryland
- Retirement System for State Police of the State of Maryland
- Retirement System for Correctional Officers of the State of Maryland
- Retirement System for Judges
- Pension Plan for Legislators of the State of Maryland
- Optional Retirement Plan
How to Calculate Ordinary Disability Benefits for Employees & Teachers of the State of Maryland
We regularly work for employees of the Retirement System for Employees and Teachers of the State of Maryland. Below is a step by step analysis of how to calculate an Ordinary Disability Retirement benefit for that benefit system only. The first step is to determine one’s Average Final Compensation or AFC. This number is reached by averaging the three highest annual salaries during your career. Its important to note here that certain salary increase must be approved by the Board of Trustees in order to be included in the calculation of AFC.
Next, the State Retirement and Pension System guarantees that the benefit will equal 1/55th of the average final compensation for every year of creditable service. What does that mean??? Well, it is easier to figure this out using an example. Let’s consider a 50 year old person with 20 years of creditable service and an AFC of $75,000.00.
20 years x 75,000 / 55 = $27,272.72
27,272.72 / 12 = $2,272.73 = the Basic Monthly Allowance
As you can see above, it’s critical to know what kind of retirement system you qualify for. It’s also important to understand that the value of one’s disability benefit will vary widely based on the other benefits one elects after winning Maryland State Disability. Health insurance, life insurance, and survivor benefits are common benefits that reduce the value of one’s monthly disability annuity. It is critical to understand the interplay of all benefits before making your elections after being approved. For all questions pertaining to Maryland State Disability Retirement, please contact me.
Need Help with a Disability Benefits Claim? Contact Us Today!
The disability lawyers at Andalman & Flynn make it a practice to stay up to date on new regulations and case law to provide the most effective representation to our clients. We normally provide free consultations for clients looking to file for disability insurance benefits or appeal the denial or termination of those benefits, whether the claim is covered by ERISA or not. Please contact Peter Casciano for a free consultation today.
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