Furlough & Unpaid Leave
We have recently received several questions concerning the impact of furlough days on a member’s retirement.
– Furlough days are treated as an approved leave that is not illness-related. Pension benefits may be impacted as described below.
A Furlough of One FULL Pay Period or MORE
– If a furlough period lasts one or more full pay periods, the employer should submit a Leave of Absence/Back to Work form indicating the approved leave to MOSERS. Upon a member’s return to work, the employer should submit a new Leave of Absence/Back to Work form to MOSERS.
- A member does not earn service or salary credit during a furlough period that is one FULL pay period or longer.
- This could result in lower credited service towards retirement.
- It could also delay when the member becomes eligible for retirement.
- During the furlough period, the member is responsible for paying any premiums due for life insurance and/or long-term disability coverage directly to MOSERS to continue coverage. MOSERS will work with the member to arrange the direct bill process. Upon a member’s return to work, premiums will revert to being paid via payroll.
A Furlough of LESS than One Pay Period
– If a furlough period lasts less than one pay period, the employer should not submit a leave of absence form to MOSERS.
- A member does earn service credit and salary credit during a furlough period that lasts less than one pay period.
- A member does earn salary credit during a furlough period, but the salary credit is based on actual pay during the period. As a result, if the member receives a reduced salary, this could result in a lower final average pay (FAP) if the leave occurs during the member’s highest 36 consecutive months of pay.
- A lower FAP will reduce the member’s retirement benefit.
Please be aware of the differences in these scenarios if you are being impacted by a furlough and have options concerning how to take your furlough days.
We encourage you to reach out to your employer or contact us to schedule a meeting with one of our benefit counselors for more details.