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The number that decides your pension

Final Average Salary

Most people estimate their pension using their final salary. Almost no plan uses that figure. The averaging period has quietly lengthened in system after system, and it is a benefit cut that never gets called one.

Why this is the number that matters

Every defined benefit formula on this site multiplies three things: years of service, a percentage, and a salary figure. You know your years. The percentage is published. The salary figure is the one people get wrong, and because it multiplies everything else, a 5% error in it is a 5% error in the pension.

Using your final salary instead of the average of your highest several years typically overstates the pension by 5% to 15%, depending on how fast your pay rose at the end. On a $50,000 pension that is $2,500 to $7,500 a year of imaginary income.

How each system defines it

Averaging periods across the eight systems
SystemDefinition
TRS Texas5 highest annual salaries, not necessarily consecutive (3 for grandfathered Tiers 1, 4 and 6)
CalSTRS 2% at 62Highest average over 36 consecutive months. Only compensation paid in cash each pay period counts
CalSTRS 2% at 6036 consecutive months, or 12 consecutive months with 25+ years of service credit
NYSTRS Tier 6Highest 3 consecutive school years, reduced from 5 in April 2024
PSERS Pennsylvania T-G5 highest school-year salaries (3 for older classes T-C, T-E and T-F)
STRS Ohio5 highest years
MSERS MassachusettsHighest 60 consecutive months if hired on or after April 2, 2012; 36 months if before. Base salary only
Florida FRS8 highest fiscal years if enrolled on or after July 1, 2011; 5 highest if before
FERSHighest average basic pay over any 3 consecutive years. Basic pay only

Consecutive versus highest

Texas is unusual: it takes your five highest annual salaries and they do not have to be consecutive. Nearly every other plan requires a consecutive block.

That distinction is worth real money to anyone whose pay did not rise monotonically. A teacher who takes an administrative role for six years at higher pay, then returns to the classroom for the last four years of their career, is treated very differently under the two rules. In Texas the high-paid administrative years count. Under a consecutive rule, the final block captures the lower classroom salary.

Lengthening the period is a benefit cut

Salaries generally rise across a career, so averaging more years always produces a lower number. Extending the averaging period is therefore a reduction in benefits, and it is a politically easy one because it never appears as a change to the multiplier.

A career ending at $80,000, with 3% annual raises

Final salary
$80,000
Average of highest 3 years
$77,700
Average of highest 5 years
$75,400
Average of highest 8 years
$72,000
3-year vs 8-year gap, at a 1.6% multiplier over 30 years
about $2,740 a year

Recent moves in both directions:

What actually counts as salary

This is the second place people go wrong. The averaging period is only half the definition; the other half is which pay is included.

SystemWhat is included
CalSTRSCompensation paid in cash each pay period. Lump sums and one-off payments generally do not count
MSERS MassachusettsAnnual regular compensation, meaning base salary. Bonuses and other additions are excluded
FERSBasic pay only. Overtime, bonuses and most premium pay are excluded
NYSTRSPensionable earnings, but capped: limited to the two highest-grossing positions per year, and salary above the NYS Governor's salary is excluded

Overtime usually does not count

Federal employees who work substantial overtime in their final years often assume it lifts the high-3. It does not — FERS counts basic pay only. The same trap catches public safety workers in several systems, where overtime can be a large share of gross pay and none of it is pensionable.

Anti-spiking rules

Because final average salary drives the benefit, a large raise in the last years used to be an effective way to inflate a pension far beyond what the contributions supported. Most systems now restrict it.

These rules are aimed at genuine abuse, but they catch ordinary people too. A legitimate promotion in your final year may be partly excluded from your final average salary even though you paid contributions on all of it.

What to do with this

Find your own plan’s exact definition before assuming a late raise will lift your pension. Three questions answer most of it: how many years are averaged, must they be consecutive, and which categories of pay are included. Your member handbook states all three, and an official estimate will apply them to your actual record.

Frequently asked questions

Is final average salary the same as my final salary?+

No, and the difference is usually 5% to 15%. Nearly every plan averages several of your highest years. Florida averages eight fiscal years for members enrolled since July 2011; Texas, Ohio and PSERS Class T-G use five; CalSTRS, NYSTRS and FERS use three.

Do my highest years have to be consecutive?+

In most systems yes. TRS Texas is the notable exception — it takes your five highest annual salaries wherever they fall. That helps anyone whose pay peaked before their final years, such as someone who moved from administration back to the classroom.

Does overtime count toward my pension?+

Usually not. FERS counts basic pay only and excludes overtime, bonuses and most premium pay. MSERS counts regular compensation, meaning base salary. CalSTRS counts compensation paid in cash each pay period. Check your own plan rather than assuming.

Why did my state increase the averaging period?+

Because it reduces benefits without changing the multiplier, which makes it politically easier than an explicit cut. Florida moved from five years to eight in 2011, Massachusetts from three to five in 2012, and Pennsylvania from three to five for Class T-G in 2019.

Will a raise in my last year increase my pension?+

Partly, and less than you might expect. It is averaged with several other years, so its effect is diluted. Anti-spiking rules may exclude part of it outright — NYSTRS trims anything more than 10% above the average of the previous two years.

Sources

Every figure on this page comes from one of the following. Where a plan does not publish a number we needed, the page says so rather than guessing.

Plan data on this page was last checked against the system’s own published material on September 19, 2026. Retirement systems change their rules; if you spot something out of date, tell us.