Last week I wrote about annual leave, one of a federal employee’s best benefits, especially at the retirement when you’ll get a lump-sum payment (money, money, money) for any hours you haven’t used. This time I want to remind you of what a friend you have in sick leave. No, you won’t get a lump-sum payment for any sick leave hours you have in your account. However, it can give a real boost to your annuity.
To understand how that happens, you need to know how sick leave is converted into months and years of service when you retire. By law, 2,087 hours equals one year of service. If you are a CSRS retiree, that translates into a 2 percent increase in your annuity or, if you have less than a full year of sick leave, 1/6 percent per month. If you are a FERS retiree, how it translates is a function of when you retire. If you retire before January 1, 2014, you’ll only get credit for half of your unused sick leave. Therefore, a year of unused sick leave would only translate into a .5 percent increase in your annuity instead of the 1 percent you’d get if you retired on or after January 1, 2014.
Since annuities are based on years and full months of service, the exact amount of credit you’ll get for your unused sick leave depends on whether you have any days of actual service that don’t equal a full month. Any leftover days will be converted into retirement hours and added to those unused sick leave hours. For retirement purposes, days are 5.797+ hours long. OPM gets that figure by dividing 2,087 (the number of hours in a work year) by 360 (the product of 12 30-day months). As a result, an annuity month is approximately174 hours long. When the extra months are tallied, 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 sick leave hours up to the maximum number you had when you transferred to FERS will be credited to your CSRS annuity. Any sick leave hours above that number will be credited to your FERS annuity.
While sick leave can be used to increase your annuity, it can’t be used to make you eligible to retire. It can only be added after you have met the age and service requirements to do that. Further, you won’t get any credit for unused sick leave if you leave government before you are eligible to retire and later apply for a deferred annuity. If you return to work for the government, those unused hours of sick leave will be restored.