If your employer has adopted this benefit, your retirement will be calculated based on a one-year FAS unless the three-year calculation provides a higher FAS. (Note: This benefit is generally not available to Tier 6 members.)
The one-year FAS includes only the regular compensation earned during the last 12 months preceding retirement. The calculation of a one-year FAS can include, but is not limited to, the following types of payments:
- Regular salary;
- Holiday pay;
- Noncompensatory overtime;* and
- Longevity payment.
All payments must be earned in the 12 months immediately preceding retirement.
*For Tier 5 members, the total amount of overtime and noncompensatory overtime is limited to 15 percent of your salary.
The following types of payments are not considered regular compensation and, in most cases, will not be included in your FAS calculation:
- Unused sick leave;
- Unused vacation;
- Payments made as a result of working your vacation;
- Any form of termination pay;
- Payments made in anticipation of retirement;
- Lump sum payments for deferred compensation; and
- Any payments made for time not worked.
The earnings used in the calculation of the one-year FAS cannot exceed the wages in the previous 12-month period by more than 20 percent. Any amount over the 20 percent will be excluded from the calculation.