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The Impact of Reduced Salary on Benefits
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.
You should discuss using annual leave or FMLA leave with your Human Resources staff. If you go on paid leave at your current salary or unpaid FMLA leave due to your own illness, it would have no impact on your pension benefits. Payment for unused annual
leave, unused sick leave or any other one-time payouts are not considered pay for retirement purposes and are not included in an employee’s highest 36-consecutive months of pay.
If you are close to retirement, we encourage you to contact a MOSERS benefit counselor to discuss your individual situation and options.

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Disclaimer
We strive to provide the most accurate information possible in our answers to Rumor Central questions. However, occasionally, laws, policies or provisions change and individual circumstances may vary. Please contact a MOSERS benefit counselor or see the handbooks in our website Library for more detailed information. If there is any difference between the information provided in this blog or on the MOSERS website and the law or policies that govern MOSERS, the law and policies will prevail. See our Privacy, Security & Legal Notices for more information.