How is the cost of ARC calculated?
The cost of ARC is calculated using a “present value formula,” which represents the value of the increased retirement income you will receive during retirement, computed in today’s dollars. In other words, the member pays the full actuarial cost of the additional future retirement benefit. By law, ARC cannot place any additional financial burden on the retirement system. The formula factors in your current age, retirement plan, and salary, along with actuarial assumptions for salary increases, age at retirement, and life expectancy.
