Due to the COVID-19 pandemic, we have received questions from members about the possibility of state employee layoffs and furloughs and how it could affect their benefits. 

We encourage you to remind your employees that the impact of a salary reduction or furlough/layoff without pay on retirement benefits depends on the employee’s individual pay history and their service credit relative to retirement eligibility.

FAP refers to final average pay and it is one part of the 3-part formula used in calculating retirement benefits:

FAP x Multiplier x Credited Service = Monthly pension benefit payment. 

FAP is calculated from the employee’s highest 36-consecutive months of pay, not necessarily their last 36 months of pay. See some FAP calculation examples that illustrate the impact of a salary reduction or a furlough/layoff without pay on FAP and monthly pension benefits. A furlough/layoff without pay may also delay eligibility for retirement since the employee would not be earning service credit.

Departments and benefit providers may use different terms. However, for MOSERS' purposes, a "layoff" occurs when a department lays off an employee by reason of a shortage of work or funds, the abolition of the position, or other material change in the duties or the organization, or for other related reasons, which are outside the employee's control.

• This definition is intended to include any instance where the employer eliminates a position due to the above reasons, regardless of the term (i.e. layoff, furlough, reduction in workforce, etc., which are all considered a leave of absence).
• Employers should submit a leave of absence form to MOSERS indicating layoff status.
• An employee does not earn service or salary credit during a layoff period. However, an employee in their BackDROP period can continue to work toward BackDROP eligibility while on an approved leave of absence.
• After twelve months on layoff status, the employee is automatically terminated and MOSERS group life and long-term disability insurance coverage ends.

 As always, please encourage employees to contact a MOSERS benefit counselor to discuss their individual situation and options and to see our PDF on the Impact of a Layoff on Your MOSERS Benefit for more information.