How It Works

The MERS Hybrid Plan offers two plans in one — the stability and security of a defined benefit plan (Hybrid Part I), combined with the flexibility and investment choice of a defined contribution plan (Hybrid Part II).


An employee’s benefit at retirement is based on a Hybrid Part I formula combined with a Hybrid Part II formula.

View Formula Details

Hybrid Formula
Part 1 is Final average compensation x service credit x benefit multiplier = annual benefit with Part 2 is employer contributions + employee contributions + earnings or losses in the market – fees = account balance. Both together = Total Retirement Benefit.

Understanding Part I:
The DB formula is determined by multiplying an employee’s final average compensation (FAC) by years and months of service (service credit) by a benefit plan multiplier (established by the employer). Then that number is divided by 12 to determine the monthly (Straight Life) benefit amount.

Final average compensation (FAC) 
The average of participant’s highest consecutive three years of earnings. We review participant’s entire work history and pull the highest consecutive 36 months of wages, even if they are not the most current ones.

Service credit
This is the total amount of all qualified periods of work for the participant. They earn service credit for each month of work that meets employer’s requirement. Employers may define requirements for a “month of service” but the standard definition of a qualified month is 10 full-time days. Your employer can adopt a different standard month of service, such as 10 six-hour days per month or 80 hours per month. A day of work is determined by your employer, but it is typically considered eight working hours. View information on Service Credit Purchases.

Benefit multiplier

The benefit multiplier is the specific percentage that the employer adopts (1.0%, 1.25%, 1.5%, 1.75%* or 2.0%*). The benefit multiplier of your plan does not change, helping provide a more predictable monthly benefit in retirement.

*1.75% and 2.0% multipliers available only for divisions that do not participate in Social Security

Understanding Part II:
For more information on Employer Contributions and Employee Contributions, see page 4 of the Hybrid Plan Handbook.

Funding The Plan

The MERS Hybrid Plan is funded by a combination of employer contributions and employee contributions.

  • Part 1 – Defined Benefit is funded by the employer. An employee contribution provision is available for adoption by eligible employers.
  • Part II – Defined Contribution, both employer and employee contributions are permissible and the employer determines the contribution structure.

Plan Advantages

There are many benefits of the MERS Hybrid Plan.

 Expert Guidance
An expert team of staff covering areas such as legal services, investments, employee education, customers service and finance

Regional teams that are available to assist you with planning and administering your MERS plans

 Streamlined Services
Online access to forms, statements, investments, and financial calculators to aid employees in retirement planning

Integrated reporting and administration for all MERS plans

Fiduciary Responsibility

shield icon As the sole fiduciary for our retirement plans, MERS takes on the liability for selecting the investment options, monitoring fund performance, and ensuring fees are reasonable. Learn more about fiduciary responsibility.

Disclaimer: The information contained in this Web site is being made available as a public service. The information is not intended to constitute legal, tax, accounting or investment advice, or to replace official versions of that information. Benefit Estimates or Service Credit Purchase estimates requested through this Web site are not official descriptions of any benefits, and do not represent a promise by MERS to provide any benefit(s) to any person(s). No one can detrimentally rely upon the information provided in, or requested through this Web site. MERS reserves the right to correct any errors, and presents this information without warranties, express or implied, regarding the information's accuracy, timeliness or completeness. If you believe the information is inaccurate, out-of-date, or incomplete, or if you have problems accessing or reading the information, please call MERS at 800.767.6377.