Updated October 21, 2026. Quick answer: The Montana PERS handbook says a disability retirement needs a disability that occurred during active membership, a vested member with at least five years of membership service, and a disability that is permanent or of extended and uncertain duration and totally prevents the member from doing the essential functions of the job. A member should apply while still active or within 120 days after PERS employment ends, and the benefit is reduced if other income plus the benefit exceeds the monthly amount earned when the member became disabled.
What this covers
The handbook’s Disability Retirement section begins “To qualify for a disability retirement, you must meet the following requirements:” This page follows that section and quotes it. The wider set of choices is on Montana PERS retirement decisions and public pension retirement decisions.
The eligibility tests
Each right-hand cell is a sentence from the handbook.
| Test | What the handbook says |
|---|---|
| When it must occur | “Your disability must occur during your active membership.” |
| Vesting | “You must be a vested member (have at least five years of membership service).” |
| Duration | “Your disability must be permanent, or of extended and uncertain duration.” |
| Effect on the job | “Your disability must totally prevent you from doing the essential functions of your job even with reasonable accommodation.” |
| Employer record | “Your employer has defined the essential elements of your job and shown reasonable accommodation was attempted for the disabling condition(s) in compliance with the Americans with Disabilities Act.” |
When to apply and when the benefit starts
The handbook says “You should apply for the disability retirement benefit while you are still an active member, or within 120 days after termination of your PERS employment.” “If you are approved for a disability retirement benefit, it will go into effect the day after you terminate your employment.” “To receive disability retirement benefits, you will need to terminate all current PERS-covered employment.”
It adds “If you terminate your employment and apply for the disability retirement benefit after four months have passed, you will need to prove your disability occurred before you terminated and that it has been continuous from when you terminated.”
How the benefit is calculated
The handbook says “Note: This is the same formula used to calculate your service retirement benefit except there is no reduction in the benefit amount for early retirement.” The rows below are the formula lines it prints for each group.
| Group | What the handbook says |
|---|---|
| Hired before July 1, 2011, fewer than 25 years | “1.7857% x Years of Service Credit x HAC” |
| Hired before July 1, 2011, 25 years or more | “2% x Years of Service Credit x HAC” |
| Averaging period, hired before July 1, 2011 | “The PERS disability retirement benefit is based on your highest consecutive 36 months of compensation.” |
| Averaging period, hired on or after July 1, 2011 | “The PERS disability retirement benefit is based on your highest consecutive 60 months of compensation.” |
| Hired on or after July 1, 2011, 30 years or more | “2% x Years of Service Credit x HAC” For a member covered by 19-3-1002(4), section 19-3-1008(4) sets three levels: “more than 5 but less than 10 years of membership service is a retirement benefit equal to 1.5% of the member’s highest average compensation multiplied by the member’s years of service credit”; “10 or more but less than 30 years of membership service is a retirement benefit equal to one fifty-sixth of the member’s highest average compensation multiplied by the member’s years of service credit”; and 30 or more years is the 2% level. |
It also says “A disability retiree may elect any of the four benefit payment options available to service retirees.”
The earnings limit
The handbook says “While receiving a disability benefit, you can earn income (other than from PERS-covered employment), but your benefit will be reduced if the amount of your benefit plus your income together exceeds the monthly amount you were earning when you became disabled.” The statute states the ceiling differently. Section 19-3-1103(1)(b) says the benefit “must be reduced annually to an amount that, when added to the compensation earned by the recipient in that occupation, does not exceed the highest average compensation at the time of the recipient’s retirement”. “After receiving a disability retirement benefit for 36 months, the Board will annually adjust your limit for inflation.” “If you accept a PERS-covered job, we will reinstate you to active service and cancel your disability retirement benefit.”
Reviews, cancellation and conversion
The handbook says “At its discretion, the Board may review the medical condition of any member receiving a disability benefit.” It lists the cases in which the Board cancels the benefit: “You are no longer disabled; or” “You accept another PERS-covered job; or” “You refuse a medical examination or to provide updated medical records.”
It also says “If you are still disabled when you reach normal retirement age, we will convert your disability retirement to a service retirement.” “The benefit amount will not be recalculated.” The statute makes the conversion a board decision. Section 19-3-1015(2) says: “If the board determines that a disabled member should no longer be subject to medical review, the board may grant service retirement status to the member without recalculating the monthly benefit.”
What to do and where to look
The handbook says “Contact us for complete details about disability benefits and how to apply.” Disability benefits from a private plan end under different rules, covered on what happens when long-term disability ends at 65. The tax treatment of the pension is on whether Montana taxes pensions.
Edition
This page reads Montana Public Employee Retirement Administration (MPERA), Public Employees’ Retirement System (PERS) Member Handbook, the current file MPERA served on 2026-10-21. Check the edition, your hire date and your own membership record with MPERA; the handbook’s text controls over this summary.
Common mistakes
- Waiting to apply after leaving the job. The handbook says to apply “while you are still an active member, or within 120 days after termination of your PERS employment.”
- Taking a PERS-covered job while on disability. The handbook says “we will reinstate you to active service and cancel your disability retirement benefit.”
- Assuming a disability benefit is recalculated at normal retirement age. The handbook says “The benefit amount will not be recalculated.”
Related: Montana PERS retirement decisions, what happens when long-term disability ends at 65, public pension retirement decisions, and whether Montana taxes pensions.
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Answer againSources
- Montana Public Employee Retirement Administration (MPERA), Public Employees’ Retirement System (PERS) Member Handbook: mpera.mt.gov
- Related official page (not quoted): Montana Public Employee Retirement Administration home page: mpera.mt.gov
Read from the pension system handbooks linked above on October 21, 2026. General information, not tax advice. Your own facts decide the outcome, and a pension system or a qualified professional is the right place to confirm anything consequential.