Vesting
You must work at least four (4) years or be employed on your normal retirement age in order to receive your benefit. This is known as vesting.
Once you are vested, you will be eligible to receive a benefit when you reach retirement age, even if you leave employment before you retire.
Normal Retirement
Normal Retirement age is age 60 (see change notice in the above resources for more information). Your normal retirement benefit is paid monthly, beginning at your normal retirement age and continuing for the rest of your life. If you continue to work beyond your normal retirement age, you will continue to earn retirement benefits.
How Your Benefit Is Determined at Normal Retirement
Your monthly benefit during retirement is determined using this formula: Final average pay x 2% x Length of Benefit Service
- Your final average pay is the average of your monthly base pay during the three consecutive years out of the last ten years in which it was highest. Normally, these years are the years just before you retire.
- The length of benefit service is expressed as the number of completed years and months of service. The longer you work for the Navajo Nation, the greater your retirement benefits will be.
Early Retirement
You may retire and begin to receive your Plan benefit as early as age 55, provided you have at least four years of service. If you retire and begin your benefit early, before age 60, your benefits are calculated using the normal retirement formula and then reduced by:
- 5% for each year before normal retirement.
- Fewer years of service count toward your benefit, and
- Potentially lower final average pay.
Unused Sick Leave
If you are an active employee who is retiring, your unused sick leave will be converted and added to your benefit service. Every 160- hour increment of unused sick leave equals one month of benefit service.
Disability Benefit
If you become disabled while working for the Navajo Nation, you may receive an early, reduced benefit. To qualify, you must:
- Be vested,
- Demonstrate that you qualify for Social Security disability benefit, and
- Your termination date from the Navajo Nation has to be on or after your Social Security disability date. In other words, you have to have left your employment with Navajo Nation due to your disability.
The plan provides this benefit for participants who have not yet met retirement eligibility. Disability benefits vary depending upon your circumstances.
How Benefits Will Be Paid When You Retire
When you retire, you may elect to receive one of the following forms of benefit payment.
| Payment option |
You receive... |
Your joint annuitant or beneficiary receives... |
| Straight life annuity |
Final Average pay x 2% x your Years of Service, every month for the rest of your life |
Nothing |
| Joint and survivor annuity |
A reduced benefit, every month for the rest of your life |
After you decease, 50%, 75%, or 100% of your benefit, every month for the rest of your beneficiary's life |
| Period certain and life annuity |
A reduced benefit, every month for the rest of your life |
If you decease within 10 to 15 years of your benefit commencement, 100% of your benefit every month through the end of the ten- or fifteen-year period |
Beneficiaries
You do not designate a beneficiary until you are retiring, but you should have your spouse on file for the preretirement death benefit.
You may decide not to designate a beneficiary, or you may decide to designate a beneficiary other than your spouse; however, if you are married, your spouse will need to give his or her consent and sign a waiver.
If you elect a joint and survivor annuity, after you start pension payments:
- You cannot change your election option;
- You cannot change your joint annuitant.
If you elect a period certain and life annuity:
- You may designate more than one beneficiary at retirement;
- If you survive your beneficiary, you can designate a different beneficiary for the remainder of the certain period.
For more information regarding the Defined Benefit Plan, please refer to the Defined Benefit Overview listed above under Resources.