Unused Sick Leave and Your FERS Pension

For most of a career, sick leave is something you hope not to need. Near retirement it becomes something else: a small but real addition to your pension. Because the effect is modest year to year and invisible until the end, it's easy to overlook in planning.

What the credit does

Under FERS, unused sick leave can be added to your creditable service for the purpose of calculating your pension. Your sick leave hours are converted into additional time, roughly 2,087 hours to a year, and that time is added to your actual service when the pension formula is applied.

Because the FERS pension rewards years of service, a meaningful sick leave balance translates into a slightly larger monthly payment for life. It won't transform the picture, but it isn't nothing either, and it's paid every month for as long as you receive your pension.

What it doesn't do

Three limits are worth knowing, because they're where expectations most often go wrong:

• It doesn't help you qualify to retire. Sick leave counts toward the calculation, not toward eligibility. If you need a certain number of years of service to retire at a given age, the sick leave credit can't get you there.
• It doesn't raise your high-3. Your high-3 average salary comes from what you were actually paid. The credit adds time; it doesn't add salary.
• It generally applies to retirements where the pension starts right away. If you leave federal service and your pension starts years later, the treatment can differ. If your plans involve leaving before you're eligible for an immediate pension, check OPM's rules for your situation.

Why it's worth a look now

The practical value of knowing about the credit is mostly about not wasting it, and about getting your estimates right.

• Find your balance. It's shown on your leave and earnings statement. Note it alongside your service computation date.
• Make sure your estimate includes it. When you ask for a pension estimate, check whether the sick leave credit has been included. An estimate that leaves it out understates your income.
• Treat it as part of the plan, not a bonus. If you're working through the gap between your income and your spending, the credit belongs in the income column.

None of this is a reason to come to work sick. Sick leave exists to be used when you need it, and your health matters more than a fractional increase in a pension. It's simply a reason not to forget what's left when you go.

Where to go from here

OPM's retirement pages and your agency's benefits office can confirm exactly how much credit your balance would give you. Once your pension estimate includes it, move on to the bigger question of what your TSP needs to do, set out in the FERS pension gap and The TSP Secure Path.