Reg Jones Expert's View

To FERS employees, one of the most galling features of their retirement system is the fact that when they retire, they are not permitted to have their hours of unused sick leave added to their service credit time. In effect, a FERS employee whose health has been good for a full career will see a thousand or more hours of unused sick leave tossed in the dumpster. CSRS employees get credit for those hours. Why don’t FERS employees?

FERS employees don’t get credit because of a provision in the FERS law. Once upon a time, CSRS employees suffered the same fate. They got no credit for their unused sick leave either. Those were the days when communication was more primitive (think typewriters, carbon copies, snail mail, and phone calls that had to be approved by your supervisor) and control more difficult. However, as primitive as these tools were, word bubbled to the surface that federal employees were using up their sick leave by the fistfuls as they approached retirement. So a study was undertaken and a cost analysis done, after which the law was changed to encourage employees to save their leave and get increased retirement benefits. Not surprisingly, the change worked. Most employees saved their leave and enjoyed the benefits of having done so.

We’ll lower the curtain for a moment and raise it in the late 1980s, when the Congress was writing the FERS law. In a much more cost-conscious era, further studies had revealed that the expense to the retirement system of giving benefits for which no deposits had been made by either employees or the government was just too high. So, FERS employees were denied the opportunity to get credit for their unused sick leave in their annuity computation. The Congress understood that it was creating a potential for sick leave abuse, but it also believed that with the advent of more sophisticated means of communication and data analysis that abuse could be kept under control. And it appears that by and large, it has.

Before I leave the subject, I need to point our that FERS employees eligible for a CSRS component in their annuities will be given retirement credit for their unused sick leave in that annuity calculation, but only up to the amount they had accumulated on the date they converted to FERS. For example, a CSRS employee who converted to FERS and carried over a balance of 250 hours of unused sick leave would only have that much applied to the CSRS annuity component, even if his leave balance at retirement was 900 hours. On the other hand, if that same employee carried over a balance of 250 hours of unused sick leave but retired with 100 hours, only 100 hours would be credited.