Retirement Shrinkflation? How the High-5 to High-8 Pension Change Impacts FRS Members

When people hear the word “shrinkflation,” they usually think of grocery store packages getting smaller while prices stay the same. But the concept applies in other places too — even in retirement planning.

Over the years, the Florida Retirement System (FRS) has seen a number of subtle changes to benefits. One of the most under-the-radar adjustments? The shift from calculating pensions based on your highest 5 years of salary to your highest 8 years — a change that impacts the Average Final Compensation (AFC) used in your pension formula.

Let’s break down why this matters and how it might affect your future income.

What Changed: From High-5 to High-8

Previously, the FRS pension plan calculated your retirement income using the average of your highest 5 consecutive years of earnings. That allowed retirees to maximize their pension by concentrating on their peak earning years — often the final few years before retirement.

However, for members hired on or after July 1, 2011, the rules changed. The AFC is now calculated using the average of the highest 8 years of salary.

This might seem like a small change — but it has a meaningful effect.

Why It Matters: Lower Average = Lower Pension

The pension formula for FRS looks like this:

AFC × Years of Service × Multiplier = Annual Pension

So when the AFC goes down, the pension goes down too.

For example:

• If your top 5 years averaged $80,000, and your top 8 years averaged $75,000, that’s a $5,000 difference in the number used to calculate your pension.

• Over a 25-year retirement, that could amount to a six-figure difference in cumulative retirement income.

This change doesn’t affect current retirees or those hired before July 2011 — but for newer members, it’s a structural shift that quietly reduces projected benefits.

*The example in this article is hypothetical and for illustrative purposes only.  

Shrinkflation in Disguise?

Calling this a “benefit cut” may not be technically accurate — no one is taking away your pension. But the method used to calculate that benefit has changed, and the result is a lower amount for many FRS members compared to the old rules.

It’s a form of retirement shrinkflation: the same job, the same years of service, but potentially less retirement income because the formula has shifted over time.

This is one of several adjustments made to FRS since 2011, including:

• Increased employee contribution requirements

• Changes to DROP interest rates

• The freeze of the COLA (cost-of-living adjustment)

Each on its own might seem minor, but taken together they represent a trend worth paying attention to.

What You Can Do

If you’re in the group affected by the high-8 rule, here are a few steps you might consider:

• Get a projection of your pension under current rules to see the real numbers.

• Explore the Investment Plan option to compare long-term growth potential.

• Consider supplementing your pension with other savings vehicles like IRAs, 457(b)s, or DROP planning.

• Review your retirement date strategy — working a little longer or earning more over time may help offset the formula change.

Final Thoughts

Understanding how these changes affect you is key to confident retirement planning. While the FRS pension is still a valuable benefit, today’s members are operating in a different environment than previous generations. Being proactive — and informed — helps ensure you’re making the most of the benefits available to you.

If you’d like a personalized review of how this rule change may affect your retirement income, we’re here to help.