Age and length of service are the two things that determine if you are eligible to retire. Your Basic pay is a key ingredient in computing your annuity. And Basic pay is the amount from which retirement deductions are taken. Included in Basic pay are:

• locality pay, including any portion of non-foreign cost-of-living adjustments that has been converted to locality pay;
• special salary pay for recruiting and retention purposes;
• within-grade and quality-step increases;
• premium pay, such as standby time, which primarily affects firefighters, and administratively uncontrollable overtime (AUO), which is paid to certain law enforcement officers;
• environmental differential pay for employees exposed to various degrees of hazard, physical hardship, and working conditions of an unusual nature; and
• night differential pay (for wage employees only).

Basic pay doesn’t include such things as:

• overtime (except as noted above);
• payment for credit hours
• holiday pay;
• military pay;
• bonuses or cash awards;
• allowances;
• night differential pay for GS employees;
• lump-sum payments for unused annual leave; or
• supplemental payments from the Office of Workers’ Compensation (OWCP).

Since only pay from which retirement deductions are taken is considered to be Basic pay, you’ll need to find out what your Basic pay is. The best way to do that is to look at your pay slip and figure out how much of it was subject to retirement deductions. If things don’t seem to add up, you’ll have to check with your payroll office.

Since Basic pay is used to determine your highest three years of Basic pay (your high-3), I’ll lead you through that next week.