Retirement & Financial Planning Report

How to figure out a "high-3" is central to calculating your annuity. Therefore, it’s essential that you know what’s included and excluded from basic pay for this purpose.


If you have already reached your retirement age (or soon will), you can take that number and your and length of service, plug them into a formula, one for CSRS service and one for FERS service, and compute the amount of your annuity.

Included in basic pay are the following:

* locality pay, including any portion of non-foreign cost-of-living adjustments that has been converted to locality pay under recent legislation;

* special salary pay for recruiting and retention purposes;

* within-grade and quality-step increases;

* premium pay, such as standby time, which primarily affects firefighters, and administratively uncontrollable overtime (AUO), which is paid to certain law enforcement officers;


* environmental differential pay for employees exposed to various degrees of hazard, physical hardship, and working conditions of an unusual nature; and

* night differential pay for wage employees;

Excluded from basic pay are:

* overtime (except as noted above);

* payment for credit hours

* holiday pay;


* military pay;

* bonuses or cash awards;

* allowances;

* night differential pay for GS employees;

* unused sick leave;

* lump-sum payments for unused annual leave; or

* supplemental payments from the Office of Workers’ Compensation (OWCP).

To figure out the amount of your basic pay, look at your pay slip and see how much of it was subject to retirement deductions. Only pay from which retirement deductions are taken is considered to be basic pay. If you discover that what’s been deducted is less than the pay you are receiving, it’s a clear sign that some of you salary isn’t considered to be basic pay. If that’s the case, you’ll need to visit your payroll office and get some answers.


While the three years that make up your high-3 have to be consecutive, they don’t have to be continuous. As a result, two or more periods of service can be joined together to produce a high-3, if you have a break in service.

Your high-3 also won’t be affected if you were on leave without pay that didn’t exceed six months in a calendar year when your pay was at its highest. However, any period beyond six-months would be treated as if it didn’t exist. As a result, your three years would have to be extended by however long you were on LWOP in excess of six-months. For example, if you were on LWOP for eight months in a calendar year, your high-3 would be based on a period of time that was three years and two months long.