Well, the day has at last arrived. Under Public Law 111-84, FERS employees can now get credit for their unused sick leave in determining their years of service in the computation of their annuities.
CSRS-covered employees have had that right since a 1969 change in law following a study by OPM’s predecessor that revealed that about half of retiring federal employees had zero sick leave balances, with the remainder having an average of only 44 days. A similar study by a House committee showed that retiring employees burned up an average of 320 hours during their last year on the job—more than three sick leave days a month. Strange, how they all turned so unhealthy all of a sudden.
It’s beyond me why anyone thought that FERS employees wouldn’t do the same when they were denied credit for unused sick leave when the FERS system was created in the mid-80s. So, when the Congressional Research Service, OPM and others in recent years studied the use of sick leave, they discovered that CSRS employees retire with significant balances but FERS employees with far lower ones, after using their sick leave at high rates in the years leading up to retirement. Surprise!
The new law isn’t an unmixed blessing. Rather than immediately giving full credit for a FERS employee’s unused sick leave when he or she retires, the benefit has been phased in. Half credit will be given to any one retiring October 28, 2009 through December 31, 2013. Full credit will be given to those who retire on or after January 1, 2014. I’m tempted to call this the “No FERS Employee Retires in 2013” provision of law.
In simple terms, a year’s worth of unused sick leave, fully credited, would increase a FERS annuity by 1 percentage point (1.1 points if the employee retired at age 62 or later with at least 20 years of service). At half-credit, a year of leave increases an annuity by 0.5 percentage points (or .055 in the latter case).
To be more precise, in an annuity computation any days of actual service that didn’t equal a full month are converted to hours and added to unused sick leave hours. (Note: For these purposes, all days are worth 5.797 hours, with a month equaling 174 hours.) Each extra full month’s worth of service credit will increase the benefit proportionately. Any days that don’t add up to a full month are discarded.
If you are a FERS employee who will have a CSRS component in your annuity, any unused sick leave hours up to the maximum number you had when you transferred to FERS will be fully credited to your CSRS component (this is a continuation of the prior policy in this situation). Any sick leave hours above that number will be credited to your FERS component at 50 percent.
Note: Credit for sick leave won’t be given to any FERS employee who leaves (or has already left) government and applies for a deferred annuity. This is the same rule that has applied in CSRS all along.