Since most FERS participants accrue unused annual leave and sick leave by the time they retire, it’s important to understand how you’ll be compensated.
The Basics Of Annual Leave Under FERS
Though accrued annual leave does not count toward retirement eligibility or the calculation of your annuity, you can turn it into a sizable lump-sum payment at retirement. For the majority of GS workers, the annual leave you can carry over from one year to the next is 240 hours. Any hours of annual leave above this yearly maximum fall under the “Use It or Lose It” rule. This means hours in excess of the carry-over limit must be used before the end of the leave year.
Maximize Your Lump-Sum Payment For Unused Annual Leave
As long as you plan your retirement date right before the new leave calendar year begins, you won’t lose any annual leave above the carry-over limit. Essentially, if you don’t use any paid leave during the last year of your career, the hours are added to your carry- over hours to maximize the lump sum you receive when you separate from service.
The Basics Of Sick Leave Under FERS
Though unused sick leave cannot be used to make you eligible for an immediate retirement under FERS, it’s counted as creditable service to calculate your annuity (pension). For example – if you’re six months away from retirement eligibility, you cannot apply your unused sick leave to fill in that required time. But the OPM uses 100% of your unused sick leave to determine how much you’ll receive each month when you retire.
“Once you meet the requirements for an immediate annuity, unused sick leave is added to your years of creditable service to calculate the amount of your monthly FERS annuity (pension). “
How Unused Sick Leave Is Calculated At Retirement
For full-time workers, a half-day of sick leave is accrued each pay period. This works out to four hours every two weeks for a total of 13 days (104 hours) every year. Once you meet the requirements for an immediate annuity, unused sick leave is added to your years of creditable service to calculate your monthly FERS annuity (pension).
For retirement credit purposes, sick leave days are approximately 5.8 hours long. Under federal rules, there are 2,087 hours in a full work year. OPM divides this number by 360 because, when calculating for retirement, all 12 months are considered to be 30 days long. Each month of sick leave adds 1/12 of 1% to your annuity calculation which works out to 1% for a full year of sick leave.
To learn more, consider working with an FRC® trained advisor who understands the ins and outs of your federal benefits.
