Q. I am a FERS employee being considered for the 60/40 disability retirement. When calculating the amount the person receives based on the high-3 average, is locality pay included? Also, if locality pay is included, is the disability payment adjusted if the person moves to a different locality?
A. It makes no difference where you live. When a FERS employee retires on disability, for the first 12 months, he receives 60 percent of his high-3 (which includes locality pay) minus 100 percent of any Social Security disability benefit to which he may be entitled. From that point forward up to age 62, he receives 40 percent of his high-3 minus 60 percent of any Social Security disability benefit. At age 62, that benefit is converted to regular retirement. FERS disability annuities, like Social Security disability benefits, are increased by annual cost-of-living adjustments.