By Reg Jones
Q. I am a Defense Department employee with 39 years of service under CSRS.
How will sequestration, specifically the potential for 20 percent reduction in pay, affect calculation of my high-3? Will it be based on my salary per the GS tables or actual pay? If it is on actual pay, it seems as though it would be better for me to retire now rather than later.
A. It’s based on actual basic pay received. Whether you should retire now or later is a decision you’ll have to make. You might want to stick around and see what happens. If nothing else, you can make a more rational decision about when to retire.
Steve Scherr Says:
April 17th, 2013 at 11:22 am
It’s my understanding that high-3 is based on your official salary per SF-50 (your rate of pay), rather than on your actual pay. So short periods of furlough or LWOP don’t affect the computation.
In any case, you don’t get a high-3 advantage by retiring now rather than later–it is based on your high-3 years, not your last-3 years. If your current high-3 amount is bigger than your salary from your last 3 years, then the bigger one gets used.
George Burdell Says:
April 18th, 2013 at 9:38 am
Mr. Scherr is correct. Per OPM FAQ guidance on the impact of furloughs on high-3:
“The high-3 average salary used to compute CSRS and FERS annuities is the largest annual rate resulting from averaging an employee’s rates of basic pay in effect over any period of 3 consecutive years of creditable civilian service, with each rate weighted by the length of time it was in effect. If a period of nonpay status (such as a furlough) that is creditable for retirement occurs during the 3-year period used to compute the high-3 average salary, the loss of actual pay during that nonpay status period generally would have no effect on the high-3 computation. The basic pay rate in effect during that nonpay status period would be used in the high-3 average salary calculation…”