Ask The Experts: Retirement

By Reg Jones

Hazard pay and annuity computation

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Q. I have been told by different people that environmental [hazard] pay is figured into your retirement. Can you explain this for me?

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Disability compensation and annuity

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Q. I’m a 100 percent disabled veteran, effective April 2008, with war-incurred injuries.

In 2010, I applied for disability retirement while working for the Postal Service with 14 years of service and did not buy back my military time.

The Office of Personnel Management calculated my high-3 on my postal salary alone. Should they not have calculated my Veterans Affairs Department compensation income from 2008, since it was a war-incurred injury that led me to retire? Is there a statue that protects vets who have war-incurred injuries? And does OPM allow special compensation for this matter?

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Unused sick leave

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Q. I plan to retire after 20 years of service at age 64 in 2015. I understand that I will be paid for unused annual leave. Will I be paid for unused sick leave?

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Reduced hours and high-3

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Q. I am a full-time Postal Service employee covered under CSRS. I have more than 30 years of service (active Postal Service + military buyback). I am still too young to retire, and will probably work another seven to 10 years. Recently, I changed to a nontraditional full-time position (NTFT) of 35 hours per week. Can you tell me how this reduction in weekly hours will effect the calculation of my high-3 in regards to my retirement? How far out from my retirement date would I need to change back to a full-time (40 hours per week) position to regain any benefit lost by the reduced hourly position?

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Post-1956 deposit

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Q. The following statement was made in an answer to a question ask about post-1956 deposit: “You can’t get a refund of the deposit you made for your active-duty service. What’s done is done. If you retire at age 62 and aren’t eligible for a Social Security benefit at that time, you’ll never have to worry about losing those years and having your annuity recomputed.”

I will retire at age 60 and have paid in a post-1956 deposit. I am in CSRS and will have 41 years and eight months with the post-56 deposit (eight years, six months of military service). I have worked for 40 quarters and am eligible for Social Security (military service and work prior to the military). However, due to the windfall elimination provision, I do not plan to ask for Social Security benefits until I am 65 or older. Will my annuity be recomputed after I reach 62 even though I have no intention of requesting my Social Security benefit until 65 or 70? Can I expect some kind of reduction in my annuity? I understand my Social Security benefit will be reduced by two-thirds once I apply for it.

A. Because you made a deposit for your active-duty service, you’ll not only get credit for that time in your annuity computation but your CSRS annuity won’t be affected no matter when you apply for a Social Security benefit. However, as you noted, your Social Security benefit will be reduced because of the windfall elimination provision. That’s because you will be receiving an annuity from a retirement system where you didn’t pay Social Security taxes and have fewer than 30 years of substantial earnings under Social Security.

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Military buyback

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Q. I will have 39 years of total service as of May 12, of which four years are military service and 35 years civilian service. I have my 40 quarters paid in. Will I have to buy back my military time to achieve my 80 percent at retirement (41 years, 11 months)?

A. Yes, you will. Otherwise, when you retire, those years of active-duty service for which you haven’t made a deposit will be eliminated and your annuity recomputed without them. That will happen at age 62, if you are retired, or when you retire if it’s after that.

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Leftover sick leave

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Q. FERS annuity computation includes only whole years and whole months worked in calculating longevity service time. But unless you retire on an exact date — completing a whole year or a whole month worked on the specific date of retirement — you will be left with some workdays not credited for longevity service time purposes. But can these few uncredited days — not amounting to a whole month — be added to your sick leave balance and have those non-whole month days PLUS your sick leave hour balance combined and added to your total service time for longevity?

A. Yes. All leftover days of actual service are added to any unused sick leave days and used in the computation of an annuity. However, because an annuity year is treated as if it was made up of 12 30-day months, those days have to be converted into months. To do that, 360 (12 x 30) is divided into 2,087 (the number of hours in a work year). Therefore, on average, a month equals 174 hours. Once the number of additional months is determined, all remaining hours are discarded.

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Deferred retirement eligibility

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Q. I have 26 years of federal service under FERS. I am 51 years old.  I would like to leave federal government.  Am I eligible to apply for a deferred retirement? If so, how is my penalty calculated?

A. Because you have at least 20 years of service, you could resign and apply for a deferred retirement at age 60. Your annuity would be calculated using the standard formula: 0.01 x your high-3 x your years and full months of service. Your high-3 would be determined by your highest three consecutive years of average salary on the day you left.

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Military buyback

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Q. I receive military retirement pay for 21 years of service in the Air Force. I started working as a federal civilian employee (GS 9 step 1) two months ago. I have not bought back my military time. I am 41. If I continue to work as a federal civilian for another 20 years and buy back my military service, which would give me 40 years total, does my combined retirement/annuity add up to more than if I wouldn’t buy back my military time, keeping my separate military retirement check and my separate FERS annuity check?

A. You are asking me to do your homework. I can’t do that. What I can tell you is the formula for calculating a FERS annuity: .01 x your highest three consecutive years of average basic pay x your years and full months of service. That period of service can either be pure FERS or FERS plus active-duty military service for which you’ve made a deposit. If you make a deposit for your active-duty military service, you’ll have to waive your military retired pay when you retire from your civilian job.

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Unused sick leave

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Q. I’ve worked for the U.S. government as a Department of Defense Dependents Schools teacher for 40 years. I am under CSRS and have 230 days of accumulated sick leave. What would this be converted to should I elect to retire this year at age 65? Also can I, should I wish, work as a substitute teacher once retired, even should I be granted Voluntary Separation Incentive Pay?

A. Because unused sick leave is added to hours of actual service that weren’t included in the initial annuity computation, you’ll have to do the arithmetic. Go to www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c050.pdf and scroll to Section 50A2.1-3

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VERAs and sick leave

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Q. If I have met the requirements for a Voluntary Early Retirement Authority being offered in 2014 (over 25 years and any age — in my case, 27 years and age 46), would I get credit in my retirement benefit calculation for sick leave. I know after Dec. 31, 2013, the full amount can be used. However, I wasn’t sure if you have to retire under “normal” circumstances and whether it was still applicable in a VERA situation. After meeting the requirement for a VERA, I know you can collect your retirement annuity immediately. Does the same hold true for the Thrift Savings Plan? Are there penalties for being under the minimum retirement age?

A. Yes, any unused sick leave would be used in your annuity computation.

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Postponed annuity and unused sick leave

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Q. I work for the Postal Service. If I retire at 56 with 20 years of service after Jan. 1, 2014, and decide to postpone my annuity, what happens to my sick leave? Will I be credited with 100 percent, 50 percent or 0? If it does not count, is there any reimbursement?

A. You’ll receive full credit for your unused sick leave in the computation of your annuity. That’s true regardless of when you begin receiving your annuity. Because you’d be retiring under the MRA+10 provision, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62. You can, of course, defer the receipt of your annuity to a later date to reduce or eliminate the age penalty.

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Step increase, retirement and high-3

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Q. In February 2014, I will have 33 years of government service. If I receive a step increase in February 2014 and retire in March 2014, will the step increase be factored into my high-3?

A. Assuming that it is part of your highest three consecutive years of average pay, it will be included in the 78 pay periods used to calculate your high-3.

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Annuity computation

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Q. I am a registered nurse and I am considering taking a job at a Veterans Affairs Department outpatient clinic. If I work 20 years, what would my monthly pension include? I would like to know a monthly dollar amount.

A. While I can’t give you a dollar amount, I can give you the formula that would be used to determine your annuity. Here it is: .01 x your highest three consecutive years of average basic pay x your years and full months of service. To be eligible to retire, you’d have to meet one of the following age and service combinations: 62 with five, 60 with 20, your minimum retirement age with 30 or your MRA+10 (at least 10 years but fewer than 30). In the latter case, your annuity would be reduced by 5 percent for every year you were under age 62. Note: MRAs range between 55 and 57, depending on your year of birth.

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VERA/VSIP and part-time work

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Q. Our installation is offering a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay. My service computation date is in November 1988, and I will be 52 this May. I have 15 years of part-time employment. A majority of these years were at 40 hours, biweekly. Approximately three to four years were 48 hours, biweekly. How can/do I calculate my estimated retirement pay, other than contacting ABC and requesting calculation? I’m afraid they will not be able to provide info before the deadline to apply for the VERA/VSIP.

A. You’ll find out how to do that by going to www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c055.pdf and scrolling to Subchapter 55B.

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Annuity computation

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Q. Could you show the math in calculating how much I could expect to receive every month? I want to retire at 56 because I was born in 1958. I’ll have 15 years of service at that time. I earn approximately $50,000 a year.

A. Because you were born in 1958, your minimum retirement age is 56. If you retired with 15 years of service, the formula for computing your annuity would be: .01 x your highest three consecutive years of average basic pay x all your years and full months of service. However, because you’d be retiring under the MRA+10 provision, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62.

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Medical retirement

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Q. I left Veterans Affairs Department service and withdrew my money from CSRS. When I came back after less than a year, I asked human resources to make sure I was under the same retirement system but only part time since I was in school. He told me not to come back part time, changed me to intermittent and said that since I came back after less than a year, it would not change anything. I found out that it threw me into the offset. I became eligible for retirement June 25, 2012, but have some ongoing medical issues and have still been working. A new problem came up that will probably necessitate my taking a medical retirement. When the medical retirement is figured, will my annuity still be decreased like it would if I took a regular retirement?

A. Because you have at least 22 years of service, there wouldn’t be any difference between the amount you’d receive in a disability retirement or a regular retirement.

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Sick leave

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Q. I am eligible for retirement in July. I started under CSRS and transferred to FERS. I know that after Jan. 1, 2014, I will get time of service for all of my sick leave. How is that figured? Do 2,080 hours add one year of service?

A. No, 2,087 hours equals one year. Therefore, a month of additional credit is roughly 174 hours. Be aware that unused sick leave isn’t treated separately. It’s added to any hours that weren’t used in the computation of your annuity. There are usually some hours left over because your annuity is based on years and full months of service.

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Unused sick leave

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Q. I have 17 days of unused sick leave. I do not want to give it back when I retire. Is that calculated as 17 working days or 17 calendar days?

A. Neither. Unused sick leave days (and days of actual service that don’t add up to a full month) are converted to annuity days. That’s done by dividing 2,087 (the number of hours in a work year) by 360 (12 30-day months). As a result, an annuity day is about 5.79 hours long, and an annuity month about 174 hours long.  Only full months are used in an annuity computation. Any leftover hours are dropped.

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Annuity computation

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Q. I am a 57-year-old FERS employee with 29 years and 11 months of civilian federal service, five years of active-duty military service and 31 years of military reserve service (I plan to retire from reserve duty at 60).  I want to know how my retirement from civilian federal service will be computed. I bought back the active-duty military service.

A. Your FERS annuity will be computed using the standard formula: .01 x your high-3 x your years and full months of service (including actual service and active duty service for which you’ve made a deposit).

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