NYSTRS Tier 6 FAS Reform: Chapter 56 of 2024 and the Three-Year Average Change

What Changed for Tier 6 Members

Chapter 56 of the Laws of 2024 (Part QQ) permanently changed the Final Average Salary formula for Tier 6 NYSTRS members. Effective for retirements on or after April 2024, FAS is now calculated using the highest three consecutive school years of reportable salary, matching the formula that Tier 4 members have used for decades.

Before this reform, Tier 6 members had to average five consecutive years. The change can meaningfully increase your pension, especially if your salary grew substantially in your final years of teaching.

The Three-Year Average Explained

A "school year" for NYSTRS FAS purposes runs July 1 to June 30. The system looks at every possible set of three consecutive school years in your career and picks the one that produces the highest average.

For most teachers approaching retirement, the three highest years are the final three — salary tends to peak at the end of a career through step increases, longevity increments, and contractual raises.

Before the reform, averaging five years diluted the effect of late-career salary growth. Dropping the two lowest years from that window boosts your FAS and, by extension, your monthly pension.

The 10% Annual Increase Cap

The three-year calculation comes with a guardrail inherited from Tier 4 rules: no single year's salary used in your FAS can exceed the average of the prior two years by more than 10%. Excess above that threshold is excluded from the FAS calculation.

Here's what that looks like in practice:

In year three, the actual salary of $115,000 exceeds the 10% cap of $103,400. NYSTRS uses $103,400 instead. The FAS would be ($92,000 + $96,000 + $103,400) ÷ 3 = $97,133.

This cap prevents large end-of-career salary spikes — from administrative appointments, excessive overtime, or lump-sum payments — from inflating the pension disproportionately.

What Gets Included in Reportable Salary

Not everything on your paycheck counts toward FAS. Reportable salary includes your base contractual salary and regular compensation from your position. It generally excludes:

• Lump-sum payouts for unused sick leave (except under certain Tier 1 provisions)
• Termination bonuses
• Non-regular taxable fringe benefits
• Extra-duty payments not part of your regular contractual assignment

Coaching stipends, department chair stipends, and summer school pay may or may not be reportable depending on how they're classified in your collective bargaining agreement and reported by your district to NYSTRS. Check your annual Benefit Profile to see what salary NYSTRS has recorded for each year.

Tier 6 Contribution Rate Bracket — Related Reform

Separately, Chapter 55 of the Laws of 2024 (Part KK) extended the exclusion of non-base earnings from the calculation that determines your Tier 6 contribution rate bracket (3% to 6% of salary) through June 30, 2026. During that period, extracurricular stipends, coaching pay, and summer school pay were excluded from the salary figure used to determine which contribution percentage you paid.

This didn't directly change your FAS — it affected payroll deductions during that period, not your retirement benefit.

How Much Does the Reform Add to Your Pension?

The impact varies by salary trajectory. A rough rule: if your salary grew 3–4% per year in your final years, switching from a five-year to a three-year average adds approximately 2–4% to your FAS. Applied to a pension with a 50% pension factor, that's a 1–2% increase in your annual benefit — permanent, for every year of retirement.

For a member with a $95,000 FAS and 30 years of service, a 3% FAS increase under the three-year rule adds roughly $1,430 to the annual pension.

The NYSTRS Retirement Guide includes worked examples of the FAS calculation under the new three-year rule, with the 10% cap applied, for multiple salary trajectories.

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