FEDweek

Preparing for Change in FERS Policy

Employees who are considering retiring later this year or early in 2014 will want to take into account a change that takes effect January 1 regarding crediting of unused sick leave toward retirement benefits.

That’s the point where the next step takes place in a phased-in change ordered by a law enacted in late 2010.

Traditionally, unlike in CSRS, those retiring under FERS generally could not have their unused sick leave time credited as time served in their retirement benefit calculations. There were limited exceptions only for FERS employees who had prior CSRS service and for certain VA medical personnel.

However, the 2010 law made unused sick leave half creditable for those retiring (and for survivor annuities based on a death in service) between the effective date of that law, October 28 of that year, through December 31, 2013.

For new annuities (and for death in service survivor benefits) that begin in calendar year 2014 and forward, unused sick leave will be fully creditable as time served in the benefits calculation.

The value of the difference will depend on an individual’s situation. Long-serving employees may find that delaying past the turn of the year could increase their annual benefit by several hundred or even several thousand dollars, depending on the amount of unused leave to their credit and the other component of the calculation, their high-3 salary. Note that for this purpose, of unused sick leave counts as a full month of credit, and that days beyond a full month, when added to actual service days beyond a full month, are dropped.

While the additional benefit could make the difference for some persons between retiring, say in November versus January, there are many factors that go into picking a retirement date and all must be considered together.