Showing posts with label FAP. Show all posts
Showing posts with label FAP. Show all posts

Calculating Final Average Pay

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Does MOSERS use the pay period end date or the check issue date when calculating the highest 36 consecutive months?
In our calculation of final average pay, we credit you based on when the payroll was earned, rather than the month it was actually paid. To calculate your pension benefit, we will use your highest 36 full consecutive months of pay –wherever that occurs in your individual pay history. Practically speaking, most people earn their highest 36 consecutive months of pay in their last three years of state employment, but not always*.

*Note: If you become eligible for and elect the BackDROP upon retirement, your FAP will be calculated using your MOSERS-covered work history prior to your BackDROP date. In other words, pay during the BackDROP period is excluded when calculating your monthly benefit amount.

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Final Average Pay and BackDROP Period

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MY PENSION IS BASED ON MY BEST 36 MONTHS EARNINGS. WAGES DURING MY 5 YEAR BACKDROP PERIOD ARE EXCLUDED. WHAT IF MY BEST 36 MONTHS ARE AFTER I COMPLETE MY 5 YEAR BACKDROP PERIOD?

Any pay earned after your BackDROP date (the beginning of your BackDROP period) does not count - it is excluded when we calculate your monthly retirement benefit. We will look at your entire pay history in your MOSERS-covered employment prior to your BackDROP period to find your highest 36 consecutive months of pay and use that to calculate your monthly benefit.

Remember, your BackDROP period, whether it is a 2-year or 5-year period, will always be immediately prior to your retirement date. That means, you wouldn’t continue to be employed in a MOSERS benefit-eligible position after your BackDROP period.

This is one of the factors to consider when making your elections about BackDROP. You can contact a MOSERS benefit counselor who can assist you in evaluating your options. You can also get benefit estimates based on different scenarios and use our Comparison Calculator to compare the long-term impact of different options. (Watch our Comparison Calculator video and our Creating a Benefit Estimate video for help getting started.)

For more information, see our recent post on Final Average Pay and on the 3-part formula we use to calculate retirement benefits.

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How is Final Average Pay Calculated?

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I thought retirement payments were based on last 3 years' salary of employment at the state. I heard over the weekend that retirement payment is actually based on 36 months of your highest paid salary throughout a state employment history. Would appreciate clarification. Thanks.
To calculate your pension benefit, we will use your highest 36 full consecutive months of paywherever that occurs in your individual pay history. Practically speaking, most people earn their highest 36 consecutive months of pay in their last three years of state employment, but not always.

Read below for more information. 

We calculate benefits for general state employees using this formula: 
Final Average Pay (FAP) x Credited Service x Multiplier = Monthly Base Benefit

•         FAP is the average of your highest 36 full consecutive months of gross pay no matter where in your work history that may fall. Practically speaking, for most, it is during their last three years, but not always. (Note: If you become eligible for and elect the BackDROP upon retirement, your FAP will be calculated using your MOSERS-covered work history prior to your BackDROP date. In other words, pay during the BackDROP period is excluded when calculating your monthly benefit amount.) 
•         Credited Service is the amount of time (in years & months) that you have worked in a MOSERS benefit-eligible position (added to any 
service credit that you may have purchased or transferred).
•         Multiplier – The multiplier for
MSEP is 1.6% (0.016); for MSEP 2000 & MSEP 2011 it is 1.7% (0.017).


As an example, let’s use the following assumptions:
•         Final Average Pay - $2,600.00     
•         Credited Service - 25 Years 3 Months      
•         MSEP Multiplier - 1.6% (.016)

$2,600.00 x 25.25 x .016 = $1,050.40 in monthly pension benefits from MOSERS

See Which Plan Am I In? to determine if you are a member of the MSEP, MSEP 2000, or MSEP 2011 and to find summaries of benefits, brochures, handbooks, videos and more. Use the Member Login to access your own individual information, see when you are eligible to retire, print a benefit estimate, and retire online when you are Ready to Retire.
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