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.
In general, deficit reduction plans that span several years have little or no effect on pension benefit calculations. When you apply for retirement and the Retirement System calculates your FAS, retroactive payments will be applied to the pay periods when they were earned rather than when they were paid.
Below we have provided details about one recent deficit reduction plan and its impact on pension benefit calculations for some of the larger affected unions. If your union is not listed, or if you have specific questions about the withholding and repayment of deficit reduction plan payments, please speak to your employer.
Civil Service Employees Association (CSEA) Members
Fiscal Year (FY) 2011–12 Deficit Reduction Plan
Reduced earnings and five fewer days worked will be reported to us for fiscal year 2011–2012. If this year falls within an FAS calculation, we will take five days and the equivalent salary from the prior year so we have an entire year of salary and days worked. There will be little or no impact on the FAS. If you work full time, there will also be no impact to your service credit; however, there may be a slight reduction in service credit if you work part-time.
FY 2012–13 Deficit Reduction Plan
Since the salary reduction in fiscal year 2012–2013 will be repaid beginning in 2016 or upon separation, days worked will not be reduced when reported and there will be no impact on service credit. If an FAS falls within this year, the reduction will have no impact.
Public Employees Federation (PEF) and Management/Confidential (M/C) Members
FY 2011–12 and FY 2012–13 Deficit Reduction Plans
Since the salary reduction for fiscal years 2011–2012 and 2012–2013 will be repaid beginning in 2015 or upon separation, days worked will not be reduced when reported and there will be no impact on service credit. If the reduction or repayment periods fall within an FAS calculation, we will apply the repaid salary to the appropriate time period, and there will also be no impact on the FAS.