Having sick leave not only helps when you are ill but can also be used for such things as childbirth, adoption, absence for funerals, family care and bereavement. However, if you use it with care and have a lot of hours stored up when you’ve met the age and service requirements to retire on an immediate annuity, it will be added to your actual service and used to increase the amount of that annuity.
When you retire, any unused sick leave will be converted into months. By law, 2,087 hours equals one year of service. So, if you are a CSRS retiree with at least 10 years of service and have a year of sick leave, your annuity will be increased by 2 percent. If you have less than a full year of sick leave, each month will increase your annuity by1/6 of 1 percent. If you are a FERS retiree, a year of sick leave would increase your annuity by 1 percent, each month by .0833 percent. If you retired at age 62 or later with at least 20 years of service, the annual multiplier would be increased from 1 percent to 1.1 percent (and the monthly multiplier also by a tenth).
Since annuities are based on years and full months of service, how much credit you’ll get for your unused sick leave depends on whether you have any days of actual service that don’t add up to a full month. If you do, those leftover days of actual service will be converted into hours and added to your unused sick leave hours. For retirement purposes, all days are 5.797+ hours long. You get that figure by dividing 2,087 by 360 (the product of 12 30-day months). So, an annuity month is approximately174 hours long (5.797+ x 30). When those any extra months are totaled, any days beyond the last full month are dropped.
Remember, sick leave is fully creditable under FERS. Up to October 28, 2009, the effective date of a change in law, it was not creditable at all under FERS; under that same law, it was half-creditable under FERS for retirements starting that date through 2013. There were some limited exceptions to the prior restrictions on FERS crediting.
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.
If you retire and later return to work for the government as a reemployed annuitant, any hours that weren’t used in the computation of your annuity will be restored. However, if you are hired into a position where you can receive both your annuity and the full salary of your position, that sick leave (and any you earn while back on the job) will be lost when you once again retire. By law, your annuity won’t be recomputed to include that new period of service.