There are several fine points of crediting unused sick leave, including one that proves to be a disappointment to many federal employees who are approaching retirement, and another that often proves to be an unexpected bonus.
On the negative side, and to the surprise of many, unused sick leave 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 (however, if you return to work for the government, those unused hours will be restored to your credit).
The positive side involves the boost to the annuity of those who do qualify under an age and service combination. Many people who have been thinking that eight hours of unused sick leave are needed for a day’s credit toward retirement are happy to discover that for retirement purposes, only about 5.8 hours are needed. OPM gets that figure by dividing 2,087, the number of work hours per year, by 360 (the product of 12 30-day months; for retirement purposes, all months are 30 days long).
See also Sick Leave Credit for Federal Retirement at ask.FEDweek.com
Those days are added to any hours actually worked beyond your last full month of creditable service—which also are credited under that same formula—and converted into additional months in the annuity calculation. If you are retiring under CSRS, each month will increase your annuity by1/6 of 1 percent. Under FERS, each month increases the annuity by 1/12th of 1 percent or of 1.1 percent (the latter if you retired at age 62 or later with at least 20 years of service). After extra months are counted and credited, any days beyond the last full month are discarded.
Some special considerations:
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 retired under FERS before 2014 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 to you. That time will be available to use for the usual allowable purposes while you are employed, and will be counted in any recomputed annuity you earn through your new employment.
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 on the job will be lost when you once again retire. That’s because, by law, your annuity won’t be recomputed to include that new period of service.