Last week I explained what’s included in Basic pay, and what isn’t. Since your annuity will be based in large part on your highest three consecutive years of Basic pay, I want to explain how your high-3 is computed.

As a rule, it will be based on the three years before you retire, because that’s when you’ll be earning the most money. In rare cases, it will lie in your past. Regardless, when you retire OPM will review your entire pay history and find the 78 highest consecutive biweekly pay periods, from which it derive your average Basic pay.

While the service that makes up your high-3 has to be consecutive, it doesn’t have to be continuous. For example, if you had a break in service, those two periods of employment can be joined together to produce a high-3.

Your high-3 also won’t be affected if you were on leave without pay during the three-year period when your pay was at its highest, but only if that period of LWOP didn’t exceed six months in a calendar year. For any period beyond six months, your three years would be extended by however long you were on LWOP in excess of six months. For example, if you were on LWOP for a year, your high-3 would be based on a period of time that was three years and six months long.

Note: In an earlier article, I mentioned that sick leave can’t be used to increase your years of service. The same is true when calculating your high-3.

In the past few weeks, I’ve explained when you’ll be eligible to retire, what is and isn’t creditable civilian and military service, what’s included in and excluded from Basic pay, and how your high-3 is determined. Next week I’ll show you how your annuity will be calculated when you retire.