Retirement & Financial Planning Report

Though sick leave helps when you are ill (and for a myriad of other things, such as childbirth, adoption, absence for funerals, and family care and bereavement), another payoff comes when you retire. Although you won’t get a lump-sum payment for any unused sick leave hours, they increase your annuity.

When you retire, any sick leave you have will be converted into months of creditable service–and even years, if you have enough of it. By law, 2,087 hours equals one year of service. If you are a CSRS retiree, who has a year of sick leave, your annuity will be increased by 2 percent. That means each month will increase your annuity by1/6 of 1 percent.

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Under FERS, each 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 multiplier would be increased from 1 percent to 1.1 percent.

Because 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 of actual service will be converted into retirement hours and added to those unused sick leave hours. For retirement purposes, all days are 5.797+ hours long. OPM gets that figure by dividing 2,087 by 360 (the product of 12 30-day months). As a result, an annuity month is approximately174 hours long.

Those days are added to any days you actually worked beyond the last full month and converted into additional creditable months. Any days beyond the last 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. However, if you return to work for the government, those unused hours of sick leave will be restored.