1 percent pay raise, step increase and annuity computation


Q. A federal employee under CSRS becomes eligible to retire with 30 years of employment in December. Also, that same individual earns a step increase in late December. If that individual decides to retire in January 2014, will the 1 percent pay raise for federal workers be calculated in his/her retirement salary along with the higher salary? If yes, please explain.

A. Your annuity will be based on a formula that includes your highest three consecutive years (78 pay periods) of average basic pay. If your basic pay receives a bump in any of those pay periods, it will increase your annuity. However, if it affects only one pay period, the increase would be small. For example, if your high-3 was $80,000 and for one pay period your salary was increased by 1 percent, your paycheck for that pay period would only be $66.66 higher and the increase in your annuity could be counted in pennies.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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