The Value of SERS Benefits: A Three-Year FAS

For nearly 90 years, SERS has been an important foundation in retirement for the hardworking members who serve our schools.

Our utmost priority is providing you – our members and retirees – with a secure retirement while keeping the pension fund on solid footing for generations to come. Any benefit changes made through the years have come following months of thoughtful discussion and actuarial analyses, never losing sight of the impact on our membership and employers.

One element that has not changed is the final average salary (FAS) calculation. The FAS is the average of your three highest years of salary, and it is one of three factors used in calculating your pension.

While many retirement systems have changed to a five-year final average salary (FAS) calculation, which decreases a retiree’s pension amount, SERS has not changed its FAS calculation. SERS continues to use the average of your three highest years of salary.

Take, for example, a new retiree, who consistently received 3% annual increases throughout their working career, resulting in an FAS of $40,730 based on the three-year calculation. Using the five-year calculation, their FAS would have been $39,567 – a 2.9% decrease. While a seemingly small percentage, this could cause many to reconsider their financial goals and retirement plans.

By managing a plan design that is sustainable and adaptive to the needs of our membership, we are pleased to be one of the few retirement systems that still utilizes a three-year FAS calculation. This is just one of the many values you benefit from as a SERS member.

 

Throughout the next couple months, join us here – on our website – and on our Facebook page as we discuss more benefits of contributing to SERS and how we are working for you.