Your final average salary (FAS) is an important factor in the calculation of your retirement benefit. It is the average of the wages you earned during any 36 consecutive months of service when your earnings were highest. When you retire, we will calculate your FAS using this three-year FAS calculation method.
If your employer has elected to provide the optional benefit of a one-year FAS, we will calculate an FAS using that method as well.We will compare the two final average salaries and use the one that provides you with the greater benefit. In most instances, this will be the one-year FAS.
This brochure answers the most frequently asked questions about final average salary calculations.
Three-year FAS
What is a three-year FAS?
A three-year FAS is the average of your earnings during your three highest, consecutive years of credited service (subject to limitations based on your date on membership). It usually represents the 36 months of employment immediately preceding your retirement, but we will use an earlier 36 consecutive month-period if your earnings were higher during that time.
Are there any salary limitations in the three-year FAS calculation for Tier 1 members?
If your date of membership is June 17, 1971 or later, the wages in any 12-month period used in your three-year FAS calculation cannot exceed the earnings in any preceding 12-month period by more than 20 percent.
Example:
| Actual Earnings | Limit | Earnings Allowed |
|---|---|---|
| *In this example, the earnings used to calculate the FAS in years 2 and 3 are less than the actual earnings because the actual earnings exceed the 20 percent limit. | ||
| Year 1: $60,000 | $57,000 × 1.2 = 68,400 | $60,000 |
| Year 2: $57,000 | $47,000 × 1.2 = 56,400 | $56,400* |
| Year 3: $47,000 | $35,000 × 1.2 = 42,000 | $42,000* |
| Year 4: $35,000 | n/a | n/a |
| $158,400 ÷ 3 = $52,800 FAS | ||
If your date of membership is before June 17, 1971, there are no earnings limitations from one year to the next.
Are there any salary limitations in the three-year FAS calculation for Tier 2 and 5 members and Tier 3 members covered by Article 11?
The earnings used in your three-year FAS cannot exceed the average of the previous two years by more than 20 percent.
Example:
| Actual Earnings | Limit | Earnings Allowed |
|---|---|---|
| *In this example, the earnings used to calculate the FAS in years 2 and 3 are less than the actual earnings because the actual earnings exceed the 20 percent limit. | ||
| Year 1: $60,000 | [($57,000 + $47,000) ÷ 2] × 1.2 = $62,400 | $60,000 |
| Year 2: $57,000 | [($47,000 + $35,000) ÷ 2] × 1.2 = $49,200 | $49,200* |
| Year 3: $47,000 | [($35,000 + $32,000) ÷ 2] × 1.2 = $40,200 | $40,200* |
| Year 4: $35,000 | n/a | n/a |
| Year 5: $32,000 | n/a | n/a |
| $149,400 ÷ 3 = $49,800 FAS | ||
One-year FAS
What is a one-year FAS?
A one-year FAS is the regular compensation you earned during the 12 months of actual service immediately preceding your retirement date. These earnings may be limited.
What are the eligibility requirements for the one-year FAS?
You must be an active member of the New York State and Local Police and Fire Retirement System and, prior to your retirement, your employer must adopt Section 302(9)[d] (for Tier 1 members) or Section 443[f] (for Tier 2 and 5 members and Tier 3 members covered by Article 11) of the Retirement and Social Security Law. Tier 3 members covered by Article 14 are not eligible for a one-year FAS.
Are there any salary limitations in a one-year FAS calculation?
Current year earnings (the 12 months immediately preceding your retirement date) used in the calculation of the one-year FAS cannot exceed the earnings in the previous year of employment by more than 20 percent.
Example:
| Actual Earnings | Limit | Earnings Allowed |
|---|---|---|
| *In this example, the earnings used in the FAS are less than the actual earnings because the actual earnings exceed the 20 percent limit. | ||
| Year 1: $63,000 | $52,000 × 1.2 = 62,400 | $62,400* |
| Year 2: $52,000 | n/a | n/a |
| $62,400 FAS | ||
General FAS Questions
What types of compensation can be included in an FAS calculation?
The calculation of an FAS can include, but is not limited to, the following types of payments earned during the FAS period:
- Regular salary;
- Overtime;
- Holiday pay;
- Noncompensatory overtime; and
- Longevity payment.
If you are a Tier 1 member with a date of membership prior to April 1, 1972, we can include a lump sum payment for up to 30 days vacation in the calculation of your three-year FAS. This lump sum payment is added to your last 12 months of earnings. We cannot include lump sum vacation payments in the calculation of a one-year FAS.
If you are a Tier 5 member, the total amount of overtime and noncompensatory overtime we can use in your FAS calculation is limited to 15 percent of your salary.
What types of compensation cannot be included in an FAS calculation?
The following are examples of payments that cannot be included in an FAS calculation:
- Payments made for unused sick leave;*
- Payments made for a clothing allowance;
- Termination payments;
- Payments made in anticipation of retirement;
- Retroactive payments earned outside of the time period used in the FAS calculation;
- Payments made as a result of working during your vacation; or
- Payments for unused vacation.**
* except for New York State Police.
** Up to 30 vacation days may be used in a three-year FAS calculation if your date of membership is before April 1, 1972.
More Information
Contact Us
If you have any questions, contact our Call Center toll-free at 1-866-805-0990 or 1-518-474-7736 in the Albany, New York area, email us via our website, fax us at 1-518-402-4433, or write to us at: New York State and Local Retirement System 110 State Street Albany, NY 12244-0001.
You can also make an appointment to meet with an Information Representative at any of our locations around the State. A list of our consultation sites is available from your employer, our website or from our Call Center. Please contact our Call Center to schedule an appointment.
Helpful Links
Partial Lump Sum Payments:
Certain Police and Fire Retirement System members may receive a partial lump sum distribution of their retirement benefit in exchange for a reduced continuing lifetime monthly benefit (Chapter 735, Laws of 2006).
- Partial Lump Sum Payment at Retirement — Chapter 735 (Laws of 2006)
- Partial Lump Sum Payment at Retirement (VO1750)
VO1879 (Rev. 4/11) © 2011, New York State and Local Police and Fire Retirement System
This publication is a general summary of membership benefits, rights and responsibilities, and is not a substitute for any New York State or federal law. For specific information about your benefits, please contact us.
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