NYSLRS Basics: Understanding Your Final Average Salary

As a NYSLRS member, you have a defined benefit pension plan. With a defined benefit plan, you’ll receive a lifetime pension benefit based on a formula set by law that uses service credit and final average salary as part of the pension calculation. You’re probably familiar with service credit – it’s the years of service you earn while working with a participating employer. But what is a final average salary?

When we calculate your pension, we look at a specific set of years when your earnings were highest. We take the average of these earnings to create your final average salary. For most members, your final average salary is based on the years just before you retire. However, the years of earnings we use to calculate your final average salary may not match up to a calendar year or the New York fiscal year. For the purposes of calculating your final average salary, each “year” represents earnings during a time that equals one full-time year of service credit.

Types of Final Average Salary

Your tier and plan determines how we calculate your final average salary:NYSLRS Basics: Understanding your Final Average Salary

  • Three-Year Final Average Salary: for all members in Tier 1, 2, 3, 4, and 5.
  • Five-Year Final Average Salary: for all members in Tier 6.
  • One-Year Final Average Salary: only for members in the Police and Fire Retirement System (PFRS). This benefit must be adopted by your employer. It’s not available to PFRS members covered by Article 14 and generally not available to PFRS Tier 6 members.

Find out more about how the final average salary is calculated and the limits for each membership tier on our website.

Want to read more NYSLRS Basics? Check out our posts on when you can retire and choosing your pension payment option.

27 thoughts on “NYSLRS Basics: Understanding Your Final Average Salary

  1. Leslie Haggstrom

    Is the FAS based on a calendar year? what if you retire part way through a year? is the income annualized? or do you then elect to skip back a year? I plan to retire around 9/1

    Reply
    1. NYSLRS Post author

      You’ve asked a good question.

      Your FAS is calculated on the salary information your employer reports to us all the way up to the day before your date of retirement. (Your chosen date of retirement is generally the first day you do NOT get paid by your employer.)

      If your date of retirement is, for example, 9/1/16, in most cases (assuming you work full time, and assuming your last years of employment are your highest years of earnings), your FAS would go back starting from the day before your retirement date; so from 8/31/16 back to 9/1/15, and then from 8/31/15 to 9/1/14, and so on.

      Reply
    1. NYSLRS Post author

      Your final average salary (FAS) is based on salary reported to us by your employer. Your employer reports your gross earnings to us, before any deductions for health insurance. Your health insurance premiums would not affect your FAS calculation.

      Reply
  2. Lou

    On the OSC website it says that “payment for unused vacation, not to exceed 30 days, may be included in your FAS if the payment was made in the period used for the FAS”. But in other publications it says only if the FAS is included in the 36 months preceding retirement. Can you please clarify this?

    Reply
    1. NYSLRS Post author

      Both of those statements are true. Your Final Average Salary (FAS) is based on the highest average of wages earned during any three consecutive years (five years for Tier 6). Lump sum vacation is paid at the end, and is added into your FAS if your last three years are your highest. But if your FAS was the highest, for example, 10 years prior to your retirement date, your lump sum vacation would not be used because your lump sum vacation will still be paid out at the end when you leave public employment.

      Here is an example:

      10 years ago:
      Year 1: $60,000
      Year 2: $62,000
      Year 3: $64,000
      FAS = $62,000

      Years immediately preceding retirement:
      Year 1: $50,000
      Year 2: $52,000
      Year 3: $56,000 (including $2,000 lump sum vacation)
      FAS = $52,667

      Your benefit would be based on the higher FAS of $62,000, but in this case, your lump sum vacation would not be included.

      Please note that your FAS calculation depends on your tier and retirement plan. For more information, please read our Final Average Salary (FAS) page. It will show you how FAS is calculated for ERS and PFRS members in each of the different tiers.

      Reply
  3. Louis Balfan

    Then perhaps all brochures and handouts should clearly state as follows: “payment for unused vacation, not to exceed 30 days, will be included in your FAS only if the FAS is comprised of the 36 months preceding retirement”. Much simpler and clearer.

    Reply
  4. Ben Gamoran

    How does special payments such as deficit reduction program and deficit reduction program payback and lumpsum union contract settlements affect final average salary?

    Reply
    1. NYSLRS

      Your pension is based, in part, on your service credit and Final Average Salary (FAS). FAS is the average of a member’s three (five for Tier 6) highest consecutive years of earnings, subject to limitations. These are usually your last years of employment prior to retirement.

      When you apply for retirement and NYSLRS calculates your FAS, retroactive payments will be applied to the pay periods when they were earned rather than when they were paid.

      In general, union contract retroactive payments will increase your FAS as long as the time period in which you earned that money is part of your FAS.

      Deficit reduction plans that span several years have little or no effect on pension benefit calculations. Your FAS would not be reduced, because when you are eventually repaid the reduction money, we apply it back to where you earned it.

      If you have specific questions regarding your account, please email our customer service representatives using our secure email form, and one of our representatives can review your account to address your questions. Filling out the secure form allows us to safely contact you about your personal account information. Please allow five to seven business days for a response.

      You can also visit our Deficit Reduction Plans and Your Pension page, which is a good model for how we process retroactive payments in general.

      Reply
  5. John Mateo

    I retired March 28th 2016 here it is 8 – 9 months later and I still have not received my finalized letter. I am owed credit for 1500 hrs sick leave 148.5 hrs vacation. how does it take to make a simple calculation and pension change. Sorry but its getting a little frustrating. PS the phones still don’t work as the should.

    Reply
    1. NYSLRS Post author

      We apologize for the trouble you’re having getting through to the Call Center. Because of the many variables that are often involved in verifying service and salary details with your former employer, finalizing your retirement benefit amount can take some time. The average processing time can vary depending on how many incoming requests we’ve received and the complexity of your own circumstances. If you would like personalized information about the processing of your application and final benefit, please email us using our secure email form. Filling out the secure form allows members to safely provide us with the information needed for us to assist you. Please allow five to seven business days for a response.

      Reply
        1. NYSLRS

          When a member retires, we need to verify service and salary details with the former employer. This can sometimes be a lengthy process, however, in the meantime, eligible retirees receive partial payments, which are usually 90-95% of what the final calculated monthly amount will be. Once we complete a benefit calculation and establish the retiree’s final monthly pension amount, the retiree will receive a retroactive payment for the difference between the partial payments and the final monthly amount.

          Reply
  6. David Stoyell

    I have been working full-time for many years. If I work at 50% of full-time for 12 months before I retire, will that last year count as 1/2 of one of the three years used to calculate my final average salary?

    Reply
    1. NYSLRS Post author

      Your Final Average Salary (FAS) is based on a consecutive set of years where your earnings were the highest. (The period of time used is based on your tier. Please visit our Final Average Salary page for more information.) For Tier 1 – 5 members, it is the highest three full years’ worth of earnings.

      If you plan on working at 50% of full-time for the last year before you retire, and your earnings are highest right before you retire, we would need to look back at 3.5 years’ worth of your earnings in order to equal three full-time years.

      Reply
      1. Nancy

        For a tier 4 member who was full time 7 years ago and is now part time (for the past 7 years) can they use they use their FSA back when they were full time?

        Reply
        1. NYSLRS

          It depends on which time period resulted in the highest earnings.

          Your Final Average Salary (FAS) is based on a consecutive set of years where your earnings were the highest. (The period of time used is based on your tier. Please visit our Final Average Salary page for more information.) For Tier 1 – 5 members, it is the highest three full years’ worth of earnings.

          If you have been working part-time for the last 7 years before you retire, and your earnings are highest right before you retire, we would look at earnings far enough back to equal three full-time years (for example, six half-time years equals three full-time years).

          If the time before you started working part-time is where your earnings were highest, we would look at that time instead.

          Reply
    1. NYSLRS

      To get the details for your specific tier and retirement plan, please email our customer service representatives using our secure email form (see link below). One of our representatives will review your account to address your question. Filling out the secure form allows us to safely contact you about your personal account information. Please allow five to seven business days for a response.

      http://www.emailNYSLRS.com

      Reply
  7. ed

    I expect to retire sept 2017. Last year I took 5 pay periods with 30% vrws. Does this affect service credit for that year? would last year be considered in the last year salary for leave credit?

    Reply
    1. NYSLRS

      Benefit plan calculations can vary by tier and retirement plan. To get the account-specific information you need, please email our customer service representatives using our secure email form (http://www.emailNYSLRS.com). One of our representatives will review your account and address your questions. Filling out the secure form allows us to safely contact you about your personal account information. Please allow five to seven business days for a response.

      Reply
  8. Steve

    If you cannot deviate more than ten percent from the previous year when calculating your FAS, does that percent and subsequent dollar amount continue to compound annually? Or does it base specifically off the calendar year prior? Hypothetically income from Year 1 was 56,000, then year 2 91,000, Year 3 86,000. In a drastic inflation of income, how does that impact?

    Reply
    1. NYSLRS

      The earnings allowed in a retiree’s final average salary (FAS) calculation vary by tier:
      · For Tiers 3, 4 and 5, the earnings in any one year can’t exceed the average earnings of the previous two years by more than 10 percent.
      · For Tier 6, the earnings in any one year can’t exceed the average earnings of the previous four years by more than 10 percent.

      In either case, we calculate each year’s allowed earnings independently; one year’s allowed earnings don’t affect the next. Check out our Final Average Salary page for specific examples of FAS and allowed earnings calculations by tier.

      For account-specific information, you can email our customer service representatives using our secure email form. One of our representatives will review your account and get back to you. Filling out the secure form allows us to safely contact you about your personal account information. Please allow five to seven business days for a response.

      Reply
  9. Janet

    When calculating your FAS. Do you include 3 years of Longevity payments or just one year of Longevity payments when calculating you FAS?

    Reply
    1. NYSLRS

      Your final average salary (FAS) is based on all reportable earnings within the calculation period, including some lump-sums such as longevity payments. If you have a three-year FAS, any longevity payments (not to exceed one per year of your FAS) earned in that three-year window will be included in your FAS.

      For more information, check out our Final Average Salary page. You can also find information specific to your retirement plan on our Publications page.

      For account-specific information, you can email our customer service representatives using our secure email form. One of our representatives will review your account and address your questions. Filling out the secure form allows us to safely contact you about your personal account information. Please allow five to seven business days for a response.

      Reply

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