As a member of the Employees' Retirement System (ERS), your pension payment is determined under a defined benefit plan. The amount of that benefit is based on your years of credited service and your Final Average Salary (FAS).
For members in Tiers 1, 2, 3, 4 and 5, your FAS is the average of the wages you earned during any 36 consecutive months (three years) in public employment when your earnings were highest. For members of the new Tier 6, your FAS is the average of the wages earned during any 60 consecutive months (five years) in public employment when your earnings were highest. For most members, the highest consecutive three- or five-year period is the period of employment right before retirement. However, for some members, the highest-paid period may have occurred earlier.
Your FAS calculation may be subject to certain limitations based on your tier:
For Tier 1 members who joined on or after June 17, 1971, earnings in any one year cannot exceed the earnings of the previous 12 months by more than 20 percent. Tier 1 members who joined prior to that date are not subject to a limitation.
For Tier 2 members, earnings in any year cannot exceed the average of the previous two years by more than 20 percent.
For Tier 3, 4 and 5 members, earnings in any year cannot exceed the average of the previous two years by more than 10 percent.
For Tier 6 members, earnings in any one year cannot exceed the average of the previous four years by more than 10 percent.
Q: What kind of payments cannot be included in the calculation of the FAS?
A: Payment for unused sick leave cannot be included in your FAS calculation. Some other payments excluded from your FAS are any form of termination pay, payments made for time not worked or payments made in anticipation of retirement, including employer-sponsored incentives.
Q: Can overtime be included as part of the calculation of the FAS?
A: While the Retirement & Social Security Law allows us to include OT in your FAS, there is an annual limit or cap on the amount of OT that can be reported for Tier 5 and 6 ERS members.
In calendar year 2012, the OT cap for Tier 5 members is $15,913.50. This cap increases 3 percent each year. In fiscal year 2013, the OT cap for Tier 6 members is $15,000. The limit is annually indexed for inflation based on the Consumer Price Index. Overtime pay that exceeds these limits cannot be used in the FAS calculations.
Q: How can I find out how my FAS is calculated?
A: See how the FAS is calculated for each tier on our website at www.osc.state.ny.us/retire/members/final_average_salary.htm. For more information, contact our Call Center toll-free at 866-805-0990 or 518-474-7736 in the Albany area.