High-Five Average Monthly Salary (AMS)
Your highest five years of salary is used to determine your retirement benefit. For most employees, the highest five salary is the last five years of your employment. However, this isn't always the case. For example, you may decide to work fewer hours as you get closer to retirement, or maybe you had several years where you earned overtime which will generate a higher average monthly salary.
Your average monthly salary is based on your gross salary. Contributions to your Minnesota Deferred Compensation Plan (MNDCP), Health Care Savings Plan (HCSP), Social Security, etc. do not lower your high-five average monthly salary.
How to calculate your high-five average monthly salary
When calculating your high-five average monthly salary, we use the highest five years rather than a calendar or fiscal year salary. For example, your high-five average salary could start on March 1 and run through February. It is important to note that the five years do not have to be consecutive. However, each year of your high-five needs to have the same start and end date.
Your employer reports your salary along with your retirement deduction each pay period to MSRS. This allows us to accurately calculate your high-five average monthly salary.
Example of the calculation to determine your average monthly salary:
$300,000 (total total high-five salary)
÷ 60 months
$5,000 (average monthly salary)
Sick/vacation leave pay
Sick and vacation leave you use before you end your employment is included in your high-five average salary.
We do not take retirement deductions on unused sick or vacation leave paid in a lump sum after you end your employment; therefore, unused leave payoffs are not included in your high-five average salary.