Benefits Tip: Final Average Pay (FAP)Oct 14, 2020, 9:30 AM By MOSERS
We often receive questions from members regarding Final Average Pay (FAP), and whether pay earned during the BackDROP period (or after they reach their normal retirement eligibility date) is included in FAP.
Please share this information with your employees:
How is Final Average Pay (FAP) calculated?
Whether or not pay, for a given period, will be considered in determining your Final Average Pay (FAP) depends on if you elect BackDROP* (if eligible); not when you reach normal retirement eligibility.
To calculate your pension benefit, we will use your highest 36 full consecutive months of pay – wherever that occurs in your individual pay history. Most people earn their highest 36 consecutive months of pay in their last three years of state employment, but not always. 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 (and service) during the BackDROP period is excluded when calculating your monthly benefit amount.
If at retirement, you do not elect BackDROP, we will review your entire pay history and find the 36-month period with your highest pay (regardless of whether that is before or after you might hit normal retirement eligibility) and will use that in calculating your monthly benefit. You may elect not to take BackDROP if you want all of your pay and service to count. In most cases, opting not to take BackDROP will increase your monthly benefit amount.
*BackDROP is available only to general state employees who are members of MSEP or MSEP 2000.
Unused Sick and Annual leaveJul 15, 2020, 11:10 AM By MOSERS
We understand that there is often confusion regarding unused leave upon retirement. This is a common concern so we have provided a quick overview below that you can reference when asked by employees.
Unused Annual Leave:
Did you know?
- The amount of your unused annual leave/vacation has no impact on your MOSERS pension benefits.
- Your employer should pay you for at least some of your unused annual leave. The amount of annual leave that you may get paid for is determined by your agency or university, not by MOSERS.
- Your agency or university may have a limit on how much they will pay out. Limits may vary from one agency or university to another. Check your employee policies for details well in advance of your retirement date.
Unused Sick Leave:
Did you know?
- Your monthly pension benefit from MOSERS will be based on your final average pay and your credited service. This can include unused sick leave.
- Each block of 168 hours of unused sick leave is converted into one month of service credit to be used in your pension benefit calculation. (There is no partial credit; any amount less than 168 hours will be equal to zero additional months of credited service.)
- Unused sick leave does not count as service in determining retirement eligibility but it can increase your benefit amount once you have become eligible for retirement.
- If you use sick leave near your retirement date, it may affect previous benefit estimates you have received.
- If you are eligible for BackDROP and elect to take it, you will receive credit for unused sick leave accrued during your BackDROP period.
Questions Regarding Furloughs and LayoffsJun 17, 2020, 2:54 PM By MOSERS
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.
Annual Benefit Statement
Separation of Service