Final Average Salary

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

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.

Recent moves in both directions:

• Florida FRS went from 5 years to 8 for anyone enrolled on or after July 1, 2011 — the largest single change of this kind among these systems.
• MSERS Massachusetts went from 36 months to 60 for members hired on or after April 2, 2012.
• PSERS Pennsylvania went from 3 years to 5 for Class T-G, the default class for anyone hired since July 2019.
• NYSTRS went the other way in April 2024, from 5 consecutive years to 3 — a rare improvement, and one that materially raised benefits for Tier 6 members.

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.

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.

• NYSTRS excludes any year-over-year increase above 10% of the average of the previous two years. The lookback was rebased from four years to two in 2024, which tightened it.
• MSERS restricts post-2012 retirements where compensation rose more than 100% year over year, or more than 10% above the prior two-year average.
• CalSTRS limits what counts to cash paid each pay period, which excludes many of the lump-sum mechanisms once used to spike.

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.

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.