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An Important Reminder Regarding Retirement-Eligible Pay

Mar 7, 2023, 08:47 AM by MOSERS

Pay is a key component in calculating an employee's future pension benefit. Part of the pension benefit formula uses an employee's "final average pay," which is the average of an employee's highest consecutive 36 months of pay. Accurate reporting of retirement-eligible pay to MOSERS ensures that member retirement benefit estimates and retirement benefits are calculated correctly.

Retirement-eligible pay includes all salary and wages payable to an employee for work performed. The following are among those payments excluded from retirement-eligible pay and must not be reported as salary and wages:

  • Allowances and reimbursements for items such as phones, meals, uniforms, mileage or commuting, education or tuition, and housing or moving.
  • Nonrecurring single-sum payments (such as a one-time bonus).
  • Payments for unused annual leave or sick leave.
  • Payments made after termination, unless it is for a final installment of salary or wages (such as a comp time payout or contract payout).
  • Pay in excess of IRS compensation limits ($330,000 for 2023).
  • Payments for which employer contributions have not been made.

For SAM II employers, non-retirement-eligible pay codes are automatically excluded from reporting to MOSERS. 

Non-SAM II employers must ensure that payroll files submitted to MOSERS exclude all non-retirement-eligible sources of pay. 

Before making benefit payments, MOSERS must verify the accuracy of service and salary data reported by employers. 

Please don't hesitate to contact the Employer Services team with your MOSERS-related questions by emailing or calling (800) 827-1063 option 2.