There’s a lot of confusion about what happens to your unused sick leave when you retire. In short, the more sick leave you have, the bigger your annuity will be. But before I get into how much bigger and how that’s done, I want to share a little history with you.
Once upon a time, Civil Service Retirement System employees didn’t get any credit for their unused sick leave when they retired. When the Congress discovered that employees nearing retirement were burning off that leave at bonfire levels, the law was changed so that they could. However, when Federal Employees Retirement System was created, a forgetful Congress decided FERS employees shouldn’t get any credit for their unused sick leave when they retired. You know what happened next. Another bonfire. So, in 2009, Public Law 111-84 allowed retiring FERS employees to get credit for their unused sick leave. However, they only got half credit until 2014 when full credit was at last given, putting them on a par with their CSRS counterparts.
What sick leave can’t do
However, sick leave can’t be added to your actual service to make you eligible to retire. It can only be added after you have met the age and service requirements to do that. Also, if you are a FERS employee, it can’t be used in determining the amount of your special retirement supplement. The supplement is based solely on your actual years and full months of FERS service.
What sick leave does
If you’ve met the age and service requirements to retire, you’ll get credit in your annuity computation for every year and full month of actual service, including service for which you’ve made a deposit or redeposit. At that point, any hours of actual service that don’t add up to a full month will be combined with any hours of unused sick leave. The total will then be converted into additional months and used in the computation of your annuity.
Here’s how that’s done: Because annuities are paid on a monthly basis, a year is divided into 12 equal parts. The end result is 12 30-day months and a 360 day-long year. To create additional months of service credit, 2,087, the legislated number of hours in a work year, is divided by 360. The product is an annuity day that is 5.797+ hours long, and a month that is, on average, 174 hours long. For any hours over 2.087—one year—just start at the top and add those months to the total. That’s because there is no upper limit on the number of sick leave hours that can used to create additional months.
How to determine the annuity increase
The following examples show how your annuity would be increased by the addition of unused sick leave. I’ll begin with one for CSRS employees. It starts with your total years and months of creditable service, including any service for which you’ve made a deposit or redeposit.
CSRS
Total service: 30 years
Age: 55
High-3: $80,000
Initial CSRS annuity: $45,000 (0.015 x $80,000 x 5 years, plus 0.0175 x $80,000 x 5 years, plus 0.02 x $80,000 x 20 years)
Unused sick leave: 1,460 hours
Additional credit: 8 months (1,391 hours), with 69 hours left over and dropped
Final CSRS annuity: $46,072 ((0.015 x $80,000 x 5 years, plus 0.0175 x $80,000 x 5 years, plus 0.02 x $80,000 x 20.67 years)
Here’s an example to show how the amount of your FERS annuity will be increased. It starts with your total years and months of creditable service, including any CSRS service and/or other service for which a deposit or redeposit has been paid. However, by law your FERS annuity component will be increased only by the amount of sick leave that was earned while you were employed under FERS. Any sick leave balance attributable to your CSRS service will be added separately.
FERS
Total service: 30 years (20 years FERS/10 years CSRS)
Age: 55
High-3: $80,000
Unused sick leave: 1,460 hours (1,100 earned under FERS/360 under CSRS)
Initial FERS annuity: $16,000 (0.01 x $80,000 x 20 years)
Additional credit for unused FERS sick leave: 6 months (1,044 hours), with 56 hours left over and dropped
Final FERS annuity: $16,400 (0.01 x $80,000 x 20.5 years)
Initial CSRS annuity: $13,000 (0.015 x $80,000 x 5 years, plus 0.0175 x $80,000 x 5 years)
Additional credit for unused CSRS sick leave: 2 months (348 hours), with 12 hours left over and dropped
Final CSRS annuity: $13,267 ($13,000 plus 0.02 x $80,000 x 0.167 year)
Combined annuity: $29,667
If you don’t have a CSRS component in your annuity, you can run the numbers using only your high-3 and your FERS years and full months of service.
Note: If you have at least 20 years of FERS service and retire at age 62 or later, the initial multiplied is increased to .011.
Special category employee covered by either CSRS or FERS, such as a law enforcement officer, firefighter or air traffic controller, are entitled to an enhanced annuity computation for any years of service up to 20. Any service beyond that will be computed using the standard formulas, shown above.
In conclusion, sick leave is a benefit of federal employment. Use it wisely, and only when permitted by law and regulation. When you retire, it will become a gift that keeps on giving through increased annuity payments.
14 Comments
Is this policy in writing where I could print it out. A retired employee took his sick leave to care for his spouse because she was in an accident and is going to sue. His lawyer needs this policy in writing to get compensation for him using his sick leave that he could have use for his retirement.
You’ll find what you’re looking for at http://www.opm.gov/policy-data-oversight/pay-leave/leave-administration/fact-sheets/family-and-medical-leave/
This illustrate how little FERS sick leave adds in comparison to CSRS, less that 50% for the same amount of hours. Hardly incentive to save.
Since unused sick leave has the same value as the hours you work, it’s a wonder that you stay on the job. Maybe it’s because – unlike CSRS employees – there are matching contributions to your TSP investments and you earn Social Security credits, both of which will make it easier for you to retire.
My dad is 57 years old of age and is sick. I want to know is it possible for him to retire now and get his package as it without any deductions?
How old is he? Which retirement system is he in, CSRS or FERS?
Is unused sick leave that is applied to service years taxable when no payment is received only service credit which is taxed when you receive your retirement check
Your analysis is correct.
My college rejected my request of retirement and then fired me. They refused to cash out my sick days of 40-plus days, being over $28000. They claimed that the anticipated firing cancels the paying any monies after working 40-plus years. Do I have a case and should I get my sick day monies. Can you give me an opinion?
Because this is a site for federal employees and retirees, we aren’t able to answer your question.
Is it indeed the case that sick leave whether earn under CSRS or FERS cannot be used towards one’s length of service when applying for a deferred annuity?
Yes, that is correct.
Hello, my husband is 62 years old and he works for TSA part time (20 hours). He recently got into a car accident where he is seriously injured. He is currently on sick leave and is using his sick leave time accrued over the years. However, he is not sure if he can come back to work due to the pain. TSA has this rule that you have to give them 3 months to complete your retirement package. I don’t believe he has enough sick hours for 3 months. I believe he has about 2 months worth of sick leave.
He is concern that
1. TSA won’t let him file for retirement while he is on sick leave.
2. Will they fire him and won’t let him retire once the sick leaves runs out (2 months)
We are at a loss and very worry . Please let us know if you have any thoughts on this.
How many years of federal government service does he have?