What is FRS credit and how can it benefit my financial situation?

FRS stands for the Florida Retirement System, which allows public employees in Florida to build up service credit for their pension plan.

This service credit can then be used to boost your pension benefit.

For each year of FRS service credit, you earn 1.60% of your average final compensation (AFC) as your monthly pension payment.

So 25 years of service credit equals 40% of your AFC.

You can purchase optional service credit for things like prior military service, out-of-state public employment, and even some types of unpaid leaves of absence.

This can significantly increase your eventual pension payout.

The FRS pension plan uses a formula that takes into account your years of service credit and your AFC, which is the average of your 8 highest paid years.

Maximizing your service credit and AFC can boost your monthly pension.

If you have unused sick/annual leave hours upon retirement, those can be converted into additional service credit, further increasing your pension benefit calculation.

FRS members contribute 3% of their salary into the pension plan.

However, your employer contributes significantly more, making this a very valuable retirement benefit.

You become vested in the FRS pension plan after just 8 years of service.

This means you are eligible for a monthly retirement benefit, even if you leave public service before age 62.

The FRS pension plan offers a guaranteed lifetime monthly benefit payment, unlike 401(k) plans that rely on investment returns.

This provides financial stability in retirement.

FRS members have the option to participate in a defined contribution investment plan instead of the traditional pension.

This offers more investment flexibility but less of a guaranteed benefit.

If you leave public service before retirement age, you can leave your FRS funds in the system and allow them to continue growing, or you can withdraw the balance as a lump sum.

The FRS pension is extremely well-funded, with over $200 billion in assets as of 2024.

This gives members confidence the system will be able to pay promised benefits.

Financial planning is critical to maximizing the FRS pension benefit.

Consulting with a financial advisor can help you make the most of your FRS service credit and retirement options.