If you're in the FRS Pension Plan, your monthly benefit comes down to three numbers multiplied together. Average Final Compensation — AFC — is one of them, and it's the one most tied to the choices you make in the back half of your career. Here's how it actually works, what counts toward it, and what doesn't.
This article covers the FRS Pension Plan (the defined benefit side). If you're in the FRS Investment Plan, there's a note near the end about why AFC doesn't apply to you.
Where AFC fits in the formula
The FRS Pension Plan calculates your annual benefit like this:
AFC × Years of Creditable Service × Multiplier = Annual Benefit
Your multiplier depends on your class — 3% per year for Special Risk, a base of 1.6% for Regular Class. Years of service is exactly what it sounds like. AFC is the salary figure the whole thing scales from. Raise any one of the three and the benefit goes up; AFC is the lever that tracks what you earn.
Because the formula multiplies AFC by everything else, a difference in AFC isn't a small difference. It carries through every year of service and every year of retirement.
How AFC is calculated
AFC is the average of your highest fiscal years of salary during covered FRS employment. How many years go into that average depends on when you were first enrolled:
- Enrolled before July 1, 2011: the highest 5 fiscal years.
- Enrolled on or after July 1, 2011: the highest 8 fiscal years.
Two details people get wrong:
It's by fiscal year, not calendar year. FRS keeps salary records July 1 through June 30. Your "years" for AFC are measured on that calendar, not January-to-December.
It's your highest years, not necessarily your last years. The statute averages your highest-paid fiscal years. For most members with steady raises, the highest years are the final years before retirement — but the rule is "highest," so a high-earning stretch earlier in your career can land in the average if it beats a later year.
What counts toward AFC
This is where it gets relevant for first responders, because so much of the job's pay isn't base salary.
For FRS members, compensation that feeds AFC includes:
- Regular salary — your base pay.
- Overtime paid through payroll. Overtime paid from a salary fund counts as compensation. Unlike some municipal pension plans, the FRS Pension Plan does not put a 300-hour annual cap on includable overtime. Overtime you're paid for in your regular checks counts toward your AFC.
- Accumulated annual leave payments, up to 500 hours. A lump-sum annual leave payout counts, but only the first 500 hours of it.
- Certain formal supplemental payments paid under a written policy that applies to all eligible employees and meets the statute's conditions.
- Pre-tax deferrals to deferred comp or tax-sheltered annuity plans (the money still counts as your compensation for retirement purposes).
For Special Risk members in particular, that overtime treatment matters: overtime worked in your highest years is part of the average the pension scales from, with no FRS hour cap trimming it.
What does not count toward AFC
Just as important is what gets left out:
- Bonuses. Payments on top of regular or overtime pay that are nonrecurring and don't raise your base rate are bonuses, and bonuses are not compensation for retirement.
- Sick leave payouts at retirement or termination. Cashed-out sick leave does not count.
- Annual leave over 500 hours. Anything past the 500-hour cap is excluded.
- Fringe benefits — car allowances, housing allowances, and the like.
- Third-party payments made on or after July 1, 1990.
The timing catch on banked overtime
There's one nuance worth understanding clearly. Routine overtime paid in your normal pay cycle counts. But a lump-sum payout of accumulated overtime, comp time, reserve time, or holiday time is treated as a bonus — and excluded from AFC — if it isn't paid within 11 months of the month the work was performed.
In plain terms: overtime and comp time you're paid for as you earn it counts toward your pension. Banked time you sit on for years and cash out at the very end can fall outside AFC, because by then it's no longer being paid close to when it was worked. The mechanics reward pay that flows through while you're working, not time parked in a bank and paid out at separation.
An illustrative example
Say a Special Risk member enrolled after July 1, 2011, so AFC uses their highest 8 fiscal years. Suppose those 8 years of total compensation (base plus overtime paid through payroll) look like this:
| Fiscal Year | Base | Overtime | Total |
|---|---|---|---|
| 1 | $72,000 | $9,000 | $81,000 |
| 2 | $74,000 | $11,000 | $85,000 |
| 3 | $76,000 | $8,000 | $84,000 |
| 4 | $78,000 | $12,000 | $90,000 |
| 5 | $80,000 | $10,000 | $90,000 |
| 6 | $82,000 | $13,000 | $95,000 |
| 7 | $84,000 | $9,000 | $93,000 |
| 8 | $86,000 | $14,000 | $100,000 |
The average of those eight totals is $89,750 — that's the AFC. Notice the overtime: strip it out and the base-only average is about $79,000. The overtime paid through payroll across those years lifts the AFC by roughly $10,750, and that difference then flows through the rest of the formula.
(These numbers are illustrative, meant to show the mechanics — not a projection of any real benefit.)
If you're in the Investment Plan
AFC is a Pension Plan concept. The FRS Investment Plan is a defined contribution plan — your benefit is the balance of your account, built from contributions and investment returns, not a salary-averaging formula. There's no AFC, no "highest years," and no multiplier. If you're weighing the two plans, that's one of the core structural differences between them.
Knowing the AFC you're building
Because AFC leans on your highest years, the pay you log along the way — base and overtime both — is the raw material your eventual AFC is averaged from. Members who keep an eye on their actual pay across years tend to have a clearer picture of where their AFC is heading than those who only look at base salary. (Tracking your shifts and pay as you go is part of why we built DutyPay, a free companion app — but a notebook or your own spreadsheet works just as well.)
You can also run your own numbers in PensionForge's AFC and pension calculators to see how different compensation assumptions move the average and the benefit.
A note on scope
This covers the Florida Retirement System Pension Plan, governed by Chapter 121, Florida Statutes. Some Florida firefighters and police officers are instead in municipal pension plans under Chapter 175 or Chapter 185 — those are separate systems with their own rules, including the 300-hour overtime cap that does not apply to FRS. If your pension is run by your city rather than the state, your plan documents are the authority.
PensionForge explains the mechanics so you can see how the math works; it doesn't tell you what to do with it. For an official benefit estimate, your FRS member record and the Division of Retirement are the sources of record.