DRS AFC Calculation Washington: Average Final Compensation Explained

Your Average Final Compensation is one of three numbers that determine your monthly DRS pension, and it is the one most members misunderstand. It is not your final salary. It is not your career average. It is the average of your highest consecutive earning months, and the number of months DRS uses depends on which plan you are in.

The AFC Formula by Plan

Plan 1 (PERS 1, TRS 1): AFC is based on your highest 24 consecutive service credit months of earnable compensation. That is just two years of earnings.

Plan 2 and Plan 3 (PERS, TRS, SERS): AFC is based on your highest 60 consecutive service credit months—five full years.

The word "consecutive" matters. DRS does not cherry-pick your five best years from across your career. It finds the continuous 60-month (or 24-month) window where your total earnable compensation was highest, then divides by the number of months.

What Counts as Earnable Compensation

Earnable compensation includes your base salary, overtime (for positions where overtime is part of regular earnings), and certain types of additional pay negotiated in collective bargaining agreements.

It generally does not include:

• Lump-sum leave cash-outs at separation (these are not spread across months)
• One-time bonuses or stipends not part of your regular salary schedule
• Employer-paid benefits like insurance premiums

The distinction between compensation that counts toward AFC and compensation that does not can shift your highest-60-month window significantly. If you received a large raise three years before retirement, those higher-earning years pull the window forward. If your highest-paying years were a decade ago (perhaps you stepped down from a supervisory role), your AFC might be based on an earlier window.

How Service Credit Months Work

A service credit month is earned when you are compensated for at least 90 hours of work in a calendar month (for hourly employees) or when you work a full month under a salaried contract. Part-time employees and those on reduced schedules may not earn a full service credit month every month, which affects both the AFC window and total service credit.

For K-12 employees in TRS and SERS who work 9- or 10-month contracts, DRS credits work performed during the school year to cover the summer months as well. Teachers who complete a full school year earn service credit through July and August even though they are not actively teaching.

Why AFC Matters More Than You Think

Your monthly pension is calculated as:

Service Credit Years × AFC × Plan Multiplier

The multiplier is fixed (2% for Plans 1 and 2, 1% for Plan 3). Your service credit years are what they are—you cannot retroactively add years you did not work (although you can purchase certain eligible service). That leaves AFC as the one variable that can change based on timing.

If you are a Plan 2 or Plan 3 member considering early retirement, check whether working one or two more years would shift your highest-60-month window to include recent, higher-paid months. The difference might be modest if your salary has been stable, but for someone who received a significant promotion in the last few years, each additional month at the higher salary pushes the AFC upward.

Checking Your AFC

DRS calculates your AFC automatically when you request an official benefit estimate through Online Account Access. The estimate shows the projected monthly benefit under all four options, and the underlying AFC figure is part of that calculation.

If you want to verify the number, pull your pay stubs or W-2s for the relevant 60-month (or 24-month) window, sum your earnable compensation, and divide by 60 (or 24). The result should closely match what DRS shows on your estimate.

For a complete walkthrough of how AFC, service credit, and early retirement factors combine to produce your monthly benefit—plus worksheets for running the calculation yourself—see the Washington DRS Retirement Guide.

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