Vermont VSERS Retirement Calculator

The Group F formula: flat 1.67% with a 50% cap

Vermont VSERS Group F uses a flat 1.67% per year of service, applied to a 3-year average final compensation. The maximum benefit is 50% of AFC, which kicks in at about 30 years of service (30 x 1.67% = 50.1%, capped at 50%). Service beyond that doesn't increase the benefit percentage.

All years: 1.67% x AFC x years of service
Maximum benefit: 50% of AFC
AFC = average of best 3 consecutive years

At 20 years: 33.4% of AFC. At 25 years: 41.75%. At 30 years: 50% (the cap). On a $68,000 AFC, each year of service adds $1,136/year in pension. A 25-year member earns $28,390/year. A 30-year member earns $34,000/year (the cap). The simplicity of a flat rate makes projections straightforward.

Rule of 87 and age 65: two paths to unreduced retirement

Group F members have two unreduced retirement paths. The Rule of 87 allows unreduced retirement when age plus years of service totals 87, with a minimum of 5 years of service. Age 65 with 5 or more years is the standard path. Early reduced retirement is available starting at age 55 with 5 or more years.

The Rule of 87 rewards long-tenure members. Someone who starts at 25 hits the Rule of 87 at age 56 (with 31 years: 56 + 31 = 87). At that point the formula produces 51.77%, capped at 50% of AFC. That's the maximum benefit at age 56, with no early reduction. A mid-career entrant who starts at 40 reaches the Rule of 87 at age 64 (with 24 years: 64 + 23.5 rounds up). They'd collect an unreduced benefit one year before the standard age-65 gate.

The 6% early reduction: steep by any measure

Vermont's early retirement reduction is approximately 6% per year before the earliest unreduced age. That's higher than most states. Ohio STRS uses 4%. West Virginia PERS uses 5%. Vermont at 6% per year makes early retirement expensive.

Retiring 3 years early costs 18%. On a $34,000 annual benefit, that's $6,120 per year gone permanently. Over a 25-year retirement, that's $153,000 in cumulative lost income at zero growth. Working those 3 extra years isn't just adding salary to the AFC window, it's preventing a permanent benefit reduction.

Act 74 COLA: up to 5%, but only on the first ~$24,000

Act 74 (2022) changed how the VSERS COLA works. The COLA is still CPI-indexed at up to 5% annually, compounding. But it now only applies to the first approximately $24,000 of annual benefit. Any amount above that threshold receives no adjustment.

For members with benefits under $24,000/year, the COLA works as before. At 3% compounding on the full benefit:

• Year 5: 16% higher than starting benefit
• Year 10: 34% higher
• Year 20: 81% higher

For members with benefits above $24,000/year, the math changes. If your benefit is $36,000/year, only $24,000 gets the COLA. After 20 years at 3% compounding: the $24,000 portion grows to $43,350, but the $12,000 above the cap stays at $12,000. Total: $55,350 vs the $65,117 you'd get if the full benefit received COLA. The higher your benefit, the more the cap matters.

VSERS vs VSTRS: two separate systems

Vermont state employees are covered under VSERS. Vermont teachers are covered under the Vermont State Teachers' Retirement System (VSTRS). These are separate pension systems with different formulas, eligibility rules, and funding levels. If you're a Vermont teacher, VSTRS is your plan. If you work for a state agency, municipality, or county government under a VSERS-covered employer, VSERS is yours.

Vermont's pension funding and small workforce

Vermont is a small state. Its public employee workforce is correspondingly small. VSERS covers fewer members than most comparable state systems, which means the fund's management decisions and actuarial assumptions have an outsized effect on funded status compared to larger states where the law of large numbers smooths things out.

Vermont's funded ratio has been in the 70-80% range in recent years, which is below where it should be but manageable. Act 74's COLA cap on benefits above $24,000 was part of the effort to improve the plan's long-term sustainability by limiting liability growth.

Social Security participation

Vermont VSERS members participate in Social Security. This is the norm for New England state pension plans: Massachusetts is the major exception, where teachers and many state employees are excluded. Vermont, New Hampshire, Maine, Connecticut, and Rhode Island all participate in Social Security.

For Vermont employees, Social Security adds a third income stream in retirement alongside the VSERS pension and any personal savings. The combination of a VSERS pension, Social Security, and the Act 74 COLA (on the first $24,000) creates a reasonable income floor for career state employees.