Tag Archives: Earnings

Calculating Your Final Average Earnings

As a NYSLRS member, you have a defined benefit plan that provides a lifetime pension when you retire. Your NYSLRS pension benefit amount will be determined by several factors, including your tier, service credit, and final average earnings (FAE).

When we calculate your pension, we find the consecutive years when your earnings were highest. These are usually your years of employment immediately before retirement, but they can be anytime in your career and do not need to match up with calendar years or fiscal years.

Update: Tier 6 Final Average Earnings Based on Highest Three Years

A new law improves the pension benefits of NYSLRS Tier 6 members. When you retire, your FAE will be based on the average of your three highest consecutive years of earnings, the same as members in other tiers.

These improvements apply to members who retire on or after:

  • April 1, 2024, for Police and Fire Retirement System (PFRS) Tier 6.
  • April 20, 2024, for Employees’ Retirement System (ERS) Tier 6.

Previously, your FAE was the average of your highest five consecutive years of earnings.

If you recently retired and the change applies to you, we will automatically update your pension calculation — you don’t need to contact us. The new law does not apply to members who retired before the dates above.

Understanding Final Average Earnings Limits

If your earnings increase significantly through the years used in your FAE, some of those earnings may not be used toward your pension.

Your limit depends on whether you’re an ERS or PFRS member and your tier. For most members, if the earnings in any 12-month period in your FAE exceed the average of the previous two years by more than 10 percent, the amount above 10 percent will not be included in your FAE calculation.

Calculating Your Final Average Earnings

For more information, including limits for other tiers, visit our Final Average Earnings page.

Types of Earnings Included in Your FAE

The specific types of earnings included in your FAE calculation depend on your retirement plan and tier. Please check your plan publication for details.

In most cases, your FAE will include the payments listed below, if they are earned in the FAE period. (In some cases, restrictions may apply.)

In most cases, the following payments will not be included in your FAE calculation:

  • Unused sick leave;
  • Payments made as a result of working your vacation;
  • Any form of termination pay;
  • Payments made in anticipation of retirement; and
  • Any payments made for time not worked.

How Your Tier 6 Contribution Rate Can Change

Most NYSLRS members contribute a percentage of their earnings to help fund pension benefits. For Tier 6 members (those who joined NYSLRS on or after April 1, 2012), that percentage, or contribution rate, can change from year to year based on your earnings. The minimum rate is 3 percent of your earnings, and the maximum is 6 percent.

Overtime Pay Temporarily Excluded from Tier 6 Contribution Rates

The 2024–25 State budget included a new law which temporarily excludes overtime pay from the calculation of Tier 6 contribution rates. This may lower contribution rates for some Tier 6 members from April 1, 2024 through March 31, 2026.

For more information, read our blog post, Overtime Pay Temporarily Excluded from Tier 6 Contribution Rates.

Tier 6 contribution rates

When Tier 6 Contribution Rates are Determined

A Tier 6 member’s contribution rate is calculated annually. New rates become effective on April 1, the beginning of the state’s fiscal year. Once your rate is determined for a given fiscal year, it doesn’t change for the rest of that fiscal year. We provide rates to your employer in March, a few weeks before they need to apply any rate changes.

How Your Tier 6 Contribution Rate is Calculated

If you are a new NYSLRS member, during your first three years of membership your contribution rate is based on an estimated annual wage that your employer provided when you were enrolled as a new member.

If you have been a member for three or more years, NYSLRS calculates your rate using the earnings reported to us by your employer from the last completed fiscal year, April 1, 2022 through March 31, 2023.

Rates are calculated using your base pay, which includes:

This video will help explain how your contribution rate is determined:

How Your NYSLRS Pension Works

The amount you contribute to the Retirement System does not affect the amount of your pension. A NYSLRS pension is a defined-benefit plan. Under this type of plan, once you are eligible for a pension and apply for retirement, you will receive a monthly payment for the rest of your life. The amount of your pension will be calculated using a formula based on your retirement plan, years of service and final average earnings.

You can learn more about how your pension will be calculated by reading your retirement plan publication. Use our Find Your NYSLRS Retirement Plan Publication tool to find yours.