Benefit estimates & final average compensation (FAC)
When your employees are nearing retirement, they are likely to have questions regarding their TRSL retirement benefit. We recommend all employers advise their employees to contact us directly for a benefit estimate calculated by a TRSL retirement benefit analyst. Our analysts know the “ins and outs” of benefit estimates, and are knowledgeable about legislative changes that may affect benefits.
A key part of a benefit estimate is the final average compensation (FAC). Here are some fast facts on the FAC:
The years of salary used in calculation of the FAC are based on when an employee obtained membership in a state retirement system.
- Membership in a state retirement system prior to January 1, 2011: Based on 3 highest consecutive years of salary
- Membership in a state retirement system on or after January 1, 2011: Based on 5 highest consecutive years of salary.
State law places a cap on salary increases in each year of salary used in the FAC.
EXAMPLE: If one year of salary in a 3 year FAC is $45,000, the salary increase in the following year is limited to 10% for FAC purposes and cannot exceed $49,500.
NOTE: Salary cap doesn’t apply to increases given by legislative acts (state raises) or city/parish/college/university system-wide increases.
To test for a cap on salary increases in the first year of earnings, TRSL requires a base year of salary.
- 3-year FAC: total of 4 consecutive years of salary
- 5-year FAC: total of 6 consecutive years of salary
When members submit a benefit estimate request directly to TRSL, our analysts will review the member’s records for any of the following:
- part-time employment at any time during their career that may make them eligible for retirement or DROP sooner
- effect of the 10% or 15% cap laws
- possibility of reaching 100% accrual
An analyst can also answer any questions related to the calculation of their retirement benefits, including how specific state laws may affect their retirement benefit calculations.
