Unused Sick Leave at Federal Retirement: How It Adds to Your FERS Pension

Your sick leave adds to your pension, but it won't get you to retirement any sooner.

Sick Leave Is Service Time You Don't Have to Buy

Under FERS, your unused sick leave is added to your service when you retire, at no cost. Each year of unused sick leave raises your pension by 1% of your high-3 salary. If you retire at 62 or older with at least 20 years, it raises it by 1.1%.

Sick leave can't pay for a military or civilian service deposit. Those are paid in dollars. Sick leave is a separate credit that is added on top.

How Your Sick Leave Hours Turn Into Months

2,087 hours equals one year of service.
About 174 hours equals one month.
About 5.8 hours equals one day.

Your sick leave is added to your actual service first. Then any days beyond the last full month are dropped. Only full months count.

What Your Sick Leave Could Add

Here is a rough example for someone with a $90,000 high-3 salary.

Unused Sick Leave	Service Added	Added Pension at 1%	Added Pension at 1.1%
174 hours	1 month	About $75 a year	About $83 a year
1,044 hours	6 months	About $450 a year	About $495 a year
2,087 hours	1 year	About $900 a year	About $990 a year

Rough estimates before taxes and survivor benefit reductions. Your numbers depend on your own high-3 and service.

What Sick Leave Can and Can't Do

It Can

Add months or years to the service used to figure your pension.
Get you to 20 years for the 1.1% rate at 62. OPM confirmed this in a September 2018 letter to agencies.
Turn leftover days into a full month that counts.

It Can't

Make you eligible to retire. You need the age and actual service first.
Raise your high-3 salary.
Count if you leave before you are eligible and take a deferred pension later.
Be paid out in cash. Only annual leave is paid out when you leave.

Using Sick Leave Now or Saving It for Your Pension

It is a trade. A day of sick leave you use is paid at your full salary today. A day you save adds a small amount to your pension for the rest of your life.

Picking Your Retirement Date

Because days beyond the last full month are dropped, a few days can decide whether a month counts. Before you pick a date:

Ask your HR office for your total service with your sick leave added.
Check how many days you are from the next full month.

Sick leave is one piece of your federal retirement plan, along with your FERS pension, the FERS supplement, and TSP withdrawals.

Will Your Pension, Supplement, TSP, and Social Security Work Together?

Sick leave is just one part of your retirement. Contact me so we can put everything together.

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These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice.