It may come as a surprise that, before 2009, Federal Employees Retirement System (FERS) employees forfeited their unused sick leave at the end of each year. Understandably, this led to a rush of employees utilizing their sick days before losing the accrued paid time off. Consequently, the government faced a surge of vacant desks, particularly towards the year-end.
A significant change came about with the enactment of a new law under President Obama. For those retiring through December 31, 2013, up to 50% of unused sick leave could contribute to the calculation of a worker’s monthly pension (annuity). Starting January 1, 2014, this policy evolved, allowing 100% of unused sick leave to be considered creditable service in the calculation of a FERS retiree’s monthly pension.
The Significance of Unused Sick Leave
While unused sick leave doesn’t factor into the determination of eligibility for immediate annuity retirement under FERS, there is a silver lining. Once the age and service requirements for an immediate, unreduced annuity under FERS are met, unused sick leave is factored into the calculation to boost the annuity amount.
Calculating Unused Sick Leave
Sick leave days are considered approximately 5.8 hours each for retirement credit purposes. Federal rules, acknowledging 2,087 hours in a full work year, divide this by 360 for retirement calculations, treating each month as 30 days.
For full-time workers, half a day of sick leave is accrued per pay period, translating to four hours every two weeks, totaling 13 days (104 hours) annually. Under FERS, each year of unused sick leave increases the annuity by 1%, with a 1.1% multiplier for those eligible for the FERS Bonus upon retirement at age 62 or later. (Note: For Civil Service Retirement System (CSRS) retirees, each year of unused sick leave boosts the annuity by 2%.)
Unused Sick Leave and Separation from Service
If you depart from your federal job before meeting retirement eligibility, unused sick leave won’t be factored into the annuity calculation when applying for the pension later. However, if you rejoin the federal government, the hours of unused sick leave will be reinstated to your record, contributing to the calculation of your benefit.
