In our previous article, Know Your Retirement Rights, we explored the retirement eligibility rules for Federal employees facing possible termination. It is your responsibility to know if and when you are eligible for an immediate retirement. It is also important to know how much a Federal retirement benefit will be. This week’s article explains the Federal retirement pension for CSRS and FERS.
First, the Federal pension is a monthly benefit based on the following:

Total length of Federal service
High-3 average salary
CSRS or FERS formula

Total Length of Federal Service
Do you know how much total service you have? Generally, employees count their total service by starting the day they were hired and ending the date they separate. However, throughout your career, your service may be adjusted for a number of reasons, and you may have less service than you think.
Common reasons service may be adjusted are: different types of appointments, breaks in service, failure to pay for deposit/redeposit service, transfers to different Federal retirement systems, and moving to special provisions service to name a few. To verify the total years of service worked, employees need to know their retirement service computation date (RSCD). It may be different from the date you entered Federal service. When possible, verify your retirement SCD with your Human Resources department.
Once you’ve verified the RSCD, subtract this date from the date you are leaving Federal service to get your total service.

Computing Total Length of Service

If an employee has worked long enough to be eligible to retire, unused sick leave will be credited to increase the length of service. Sick leave is converted from hours to months/years.
So, if an employee is retiring with 1100 hours of unused sick leave, the sick leave conversion chart, found at www.opm.gov in the OPM Handbook for CSRS and FERS Retirement, Chapter 50, will be used to determine how many extra months and days of service will be added. Let’s say you have 1100 hours of unused sick leave. 1100 hours converts to 6 months, 10 days of service. This extra service is added to the service the employee has worked to determine total service.

High 3 Average Salary

The high 3 average salary is the 3 consecutive years the employee has been paid at the highest pay rates of their Federal career. During the high 3 average salary period, the types of pay that count will be:

Regular pay
Locality adjusted pay
Environmental differential pay, if part of annual salary
Special pay rate for recruiting/retention if in annual pay

The high 3 average salary will not include the following:

Lump sum payment for accrued and accumulated annual leave
Bonuses
Overtime
Night Differential unless Wage Grade employee
Travel allowances

Many government agencies have self-service platforms that provide employees a portal to manage their benefits and retirement information. Government Retirement Benefits (GRB), MyPay, and EPP are a few such platforms. From here you may print retirement estimates for planning purposes. To understand how OPM calculates retirement benefits, the formulas are listed below.

 Retirement Benefit Formula

The CSRS formula is as follows:
1.50% X high-3 X total service =
1.75% X high-3 X total service =
2.00% X high-3 X total service =
                        Add together for total annual benefit

The FERS formula for employees under age 62 is as follows:
1% X high-3 X total service = Annual FERS benefit

The FERS formula for employees age 62+ with 20+ years of service is:
1.1% X high-3 X total service = Annual FERS benefit

If a FERS employee is age 62 and over with less than 20 years of service, the formula is:
1% X high-3 X total service = Annual FERS benefit

The FERS formula for employees who retire under the MRA+10 retirement will include a permanent reduction in the retirement benefit. The 1% formula will be used to calculate the earned benefit amount before OPM reduces the retirement by 5% a year for each year the employee’s age is under 62.

MRA + 10 Retirement Calculation: Employee age 57 + 18 years svc

Employees may avoid the reduction by postponing the retirement benefit until they are older and their age and service yields the full retirement benefit.

FERS Annuity Supplement
FERS employees eligible for a full, unreduced retirement may possibly qualify for an additional benefit called the FERS Annuity Supplement. This benefit, payable by OPM, is included when a FERS employee retires under age 62 with a Regular or Early retirement option. The “supplement,” based on the amount of the actual Social Security benefit payable at age 62, will be less than the Social Security benefit due at age 62. However, it supplements the FERS benefit until the retiree reaches age 62 when it will end automatically.

Stay Informed:
If you are Law Enforcement, a Firefighter, or an Air Traffic Controller, the retirement eligibility rules and formulas are different and will be covered in the next article.