Regular Compensation
Regular compensation refers to the wages from which a member’s retirement contributions are deducted. It is also used to determine a member’s highest average salary, which helps calculate the retirement allowance. All compensation must meet statutory and regulatory requirements to be considered pensionable.
Included in Regular Compensation*
- The annual rate of compensation in salary schedule
- Educational incentives
- Payments for length of service
- Premiums for working holidays (police and fire) and shift differentials Hazmat pay (police and fire)
- Stipends that are pre-determined, non-discretionary, and guaranteed
Excluded from Regular Compensation*
- Overtime and bonuses
- Vacation and sick leave buybacks
- Severance pay
- Workers’ compensation payments and earned time when used to supplement workers’ compensation payments
- Payments made as a result of giving notice of retirement and early retirement incentives
- Housing, travel, clothing allowances, annuities, expense payments, automobile usage, insurance premiums (this would be all one bullet)
Limits for Members Joining After January 1, 2011
For members establishing or re-establishing membership after January 1, 2011, the maximum pensionable earnings used to calculate the final average salary is 64% of the federal earnings limit under IRC Section 401(a)(17):
- In 2025, the federal limit is $350,000
- Maximum pensionable earnings for these members is $224,000 (64% of $350,000)
- Maximum retirement benefit is $179,200 (80% of $224,000)
How Contributions Are Collected
Contributions are automatically deducted from your paycheck by your employer. The deduction schedule (weekly, biweekly, or monthly) is determined by your employer’s pay period.
Have Questions?
Find answers to common questions about eligibility, contributions, and retirement benefits.