Your Final Average Compensation (FAC)

Your FAC period will end on your last date of employment in the DB plan if this period represents your highest consecutive earnings. We will count earnings from your last day of employment in the DB plan back three or five years. If your highest three or five years are not your final years, we review your earnings record and capture the highest three- or five-year period under the DB plan for your FAC. During this review, we will verify your final wages with your employer. If one year's wages are significantly higher than the previous year, ORS will make sure the compensation is in accordance with the normal salary schedule for your job classification.

It doesn't matter if you retire during the school year or at the end, or if you receive some of your wages during the summer months after you retire. We will capture all that you earned during your FAC period. We will also review any contract settlement that occurs after you retire.

Types of compensation included in your FAC.

The types of pay used to calculate your final average compensation can include:

  • Wages. Gross wages earned while performing the duties of your position, including compensation for extra work assignments such as coaching. 
  • Longevity pay.
  • Vacation or holiday pay while absent from work.
  • Sick leave pay (including weekly workers' compensation) while absent from work.
  • Overtime pay.   
  • Merit pay for achieving specific performance objectives.

The following payments are NOT included in your FAC:

Important Information

Active duty military service will not have a negative effect on your FAC.

  • Unused sick or vacation time.
  • Bonus payments. 
  • Retirement incentive payments. 
  • Health and life insurance premiums.
  • Long-term disability payments.
  • Fringe benefits.
  • In-kind compensation.
  • Sabbatical leave stipends.
  • Service credit purchased by your employer on your behalf.
  • Termination pay.
  • Expense payments.
  • Payments in lieu of health insurance
  • Payments for the specific purpose of increasing your final average compensation.
  • Reimbursement for MIP or FICA contributions

Note: Section 401(a)(17) of the IRS code can affect the FAC, and therefore the pension payments, of certain highly compensated individuals who were hired after October 1, 1996. The rule places a limit on the maximum compensation allowed for retirement benefit computations. Any wages you earn above this limit, which is set by IRS each year, may not be included in your pension calculation. In 2017 the limit is $270,000.