- Monthly pension = final average compensation x 2.0% x your years before 1997 + final average compensation x 1.85% x your years from 1997 on.Summary Plan Description (2026), p. 23, Figure 1; 29 Del. C. §5527(a)(1)
- Example: $200,000 earned in your three best years gives a monthly FAE of $5,555.56. With 2 years before 1997 and 21 after, the pension is $222.22 + $2,158.33 = $2,380.56 a month.Office of Pensions workshop slides (Aug. 4, 2026), slides 19-20
- Your annual Comprehensive Annual Statement (annual statement) shows your FAE and an estimate in Block 4, using service to date and no early reduction.Summary Plan Description (2026), p. 13, Overview of Your Comprehensive Annual Statement; Office of Pensions workshop slides (Aug. 4, 2026), slide 19
- Final average compensation (FAE) is 1/36 of your pay in your three highest periods of 12 consecutive months. The periods need not be calendar years. Final lag pay is added.Summary Plan Description (2026), p. 22; p. 13, Block 3
- For employees hired in 2012 or later, overtime is not counted as compensation.29 Del. C. §5501(c)
The formula
Monthly pension = FAE × 2% × years before January 1, 1997 + FAE × 1.85% × years from then on
Monthly pension = FAE x 2.0% x service before Jan. 1, 1997 + FAE x 1.85% x service after Dec. 31, 1996. FAE (final average compensation) is a monthly figure. Summary Plan Description (2026), p. 23, Service Pension Calculation, Figure 1
Service is counted to the nearest twelfth of a year. Bought service raises the pension but doesn't count toward when you can retire. 29 Del. C. §5527(a)(1) ('taken to the nearest twelfth of a year'); Summary Plan Description (2026), p. 10, Earned Service; 29 Del. C. §5501(e)(8), (9), (11), (19), (20) (purchased credit 'shall not be used to determine eligibility'); SEPP FAQs (saved Nov. 12, 2026), medical leave and military answers
The law sets a floor of $1 a month for each year of service. 29 Del. C. §5527(f) (minimum $1.00 a month per year of service)
Your final average compensation (FAE)
FAE = 1/36 of the pay in your three highest periods of 12 consecutive months (any 36 consecutive months, or three separate 12-month periods). If you have fewer than 36 months, it is the average monthly pay over your service. Final lag pay is added. For post-2011 employees, overtime is excluded from compensation. Summary Plan Description (2026), p. 22, Calculating Your Pension; p. 13 (highest period 'can be any consecutive 12-month period and is often not a calendar year')
Pay above the IRS limit isn't counted: $360,000 for 2026. Summary Plan Description (2026), p. 22, IRS Maximum Compensation Limit
The Summary Plan Description gives only the 2026 IRS limit on pay that can count. We cap your yearly FAE at that figure; it matters only for very high earners.
What would settle it: Not needed for typical teacher salaries.
The Office of Pensions' calculator example
| Step | Amount |
|---|---|
| Pay in the three highest years | $200,000 |
| ÷ 36 = FAE | $5,555.56 |
| × 2% × 2 years before 1997 | $222.22 |
| × 1.85% × 21 years from 1997 | $2,158.34 |
| Monthly pension, no early cutWorkshop shows $2,380.56 | $2,380.56 |
Office of Pensions workshop slides (Aug. 4, 2026), slides 19-20 (calculator inputs and results) Load this example in the calculator. Retiring at 55, this member's pension is cut; see early retirement.
Your annual statement's version
Your Comprehensive Annual Statement shows an estimate in Block 4 using service to date and no early cut. It rounds each step, so it can differ from the online calculator by a cent or two.
| Step | Statement | Ours |
|---|---|---|
| FAE ($174,633.72 ÷ 36) | $4,850.94 | $4,850.94 |
| 2% of FAE × 0.8333 years | $80.85 | $80.85 |
| 1.85% of FAE × 25 years | $2,243.50 | $2,243.50 |
| Monthly estimate | $2,324.35 | $2,324.35 |
Office of Pensions workshop slides (Aug. 4, 2026), slide 19 ('For Example Only', annual statement Block 4); Summary Plan Description (2026), p. 13, Block 4
Your annual statement rounds every step to cents, while the Office of Pensions' online calculator keeps full precision until the end, so the two can differ by a cent or two. The workshop's buy-in screen adds two rounded amounts and shows a cent more than the formula gives.
Office of Pensions workshop slides (Aug. 4, 2026), slides 19-20See also what one more year adds and how we calculate.
Questions
What is FAE?
Final average compensation: 1/36 of your pay in your three highest periods of 12 consecutive months. The periods don't have to be calendar years or back to back.
Why do years before 1997 count more?
Service before January 1, 1997 earns 2% of FAE a year; service from then on earns 1.85%.
Is there a limit on the pay that counts?
Yes. Only pay up to the IRS limit counts ($360,000 a year for 2026).
Source: State Employees' Pension Plan Summary Plan Description, 2026 edition (PDF dated May 14, 2026), pp. 10, 13, 22-23. Also: Office of Pensions workshop (Aug. 4, 2026), slides 19-20; Office of Pensions SEPP FAQs; 29 Del. C. §§ 2011, 5501, 5527. Last reviewed .