When Tier 6 NYSLRS members think about retirement, their final average salary (FAS) is a significant consideration. In the Employees’ Retirement System (ERS), it’s a five-year FAS, which means the pension is based on the average earnings from the highest five consecutive years. However, the law limits the earnings that are included in the FAS calculation.
First, a year of earnings in the FAS period can’t exceed the average of the previous four year’s earnings by more than 10 percent. Anything beyond that will not be included in the pension calculation.
Additionally, several types of payments will not be part of the FAS calculation for ERS Tier 6 members:
- Lump-sum vacation pay,
- Wages from more than two employers,
- Payment for unused sick leave,
- Payments for working during a vacation,
- Any payments that cause your annual salary to exceed that of the Governor (currently $179,000),
- Termination pay,
- Payments made in anticipation of retirement,
- Lump-sum payments for deferred compensation and
- Any payments made for time not worked.
Generally speaking, here’s what an ERS Tier 6 FAS will include: regular salary, holiday pay, overtime pay (regular and noncompensatory) earned in the FAS period and up to one longevity payment per year, if earned in the FAS period.
While overtime pay generally is part of an ERS Tier 6 FAS, the amount that can be included is limited. The limit is adjusted for inflation each year based on the change in the Consumer Price Index over the one-year period ending September 30 of the previous year. Under a new law, beginning January 1, 2018, the Tier 6 limit will be updated on a calendar year basis instead of on a fiscal year basis.