Ask The Experts: Retirement

By Reg Jones

FERS annuity computation

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Q. What is the formula for calculating the FERS annuity percentage? I work for the Postal Service and have 28 years of service at age 53 (minimum retirement age 56). I heard the FERS annuity percentage was 1 percent x (high-3 average wages) x years of service. However, I also heard unused sick leave changes the percentage, and if you have over 2,080 hours saved and returned, it changes the percentage from 1 percent to 2 percent. I thought the unused sick leave only increased your years of service, but others tell me it increases the percentage.

A. You are right; they are wrong. It only increases the amount of creditable service, not the annuity computation formula. And while I’m at it, let me clear up another misunderstanding. For pay, leave and annuity purposes, a year is 2,087 hours long, not 2,080. Further, when an annuity is computed, any hours of service that don’t add up to a full month are added to any unused sick leave hours. These are converted into annuity hours by dividing 2,087 by 360. So, a month for retirement computation purposes is about 174 hours long.

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