FAQs for Calculating the Annuity

When it comes to retirement, it’s the light at the end of a hard-working tunnel. However, many questions loom. As the days pass and retirement is starting to become a reality and not some distant dream, working out the annuity we can expect in retirement can bring difficulties. With this in mind, we want to answer some of the most common questions we see in this regard.

By the end, you should feel more confident with how to make the appropriate calculations and the minutiae of how it all works!

When attempting to meet the length of service requirement for retirement, can I add unused sick leave?

Sadly, the answer to this is ‘no.’ If you’ve seen people using it in their annuity computation, this is because they’ve already passed the retirement age and service requirements.

Should the three years for my high-3 be continuous?

Not necessarily, many people have a break in service, so this is considered. If they’re consecutive, two or more separate service periods can be joined together. As long as the three years produce the highest average salary, this isn’t a problem; in total, it should be 78 biweekly pay periods.

What happens to the loose days that don’t quite add up to another month of service?

With these ‘loose change’ days, they will be lost and cannot be included in annuity calculations.

After retirement, will the recent pay increase show?

Ultimately, the answer to this will depend on when you actually retire. To receive the full benefit of the increase, you would need to have this new salary for at least twelve months. If you’re retiring only a few months into the increase, it will play less of a role in your annuity. The longer you work with the pay increase, the more important it will be.

Is my eligibility to an annuity or retirement affected by LWOP?

Assuming you haven’t taken longer than six months off in any given calendar year, leave without pay (LWOP) will not affect eligibility. With these types of breaks, they will be considered as normal time as if you were receiving your normal salary.

If you did exceed six months over a calendar year, this would be seen as a full break in service. Therefore, when calculating your service time, it cannot be included.

Will my annuity increase when employees get a pay rise?

Although this would be a great feature, this isn’t the case. Rather than increases being based on current pay, any changes you experience will be tied to CPI-W (consumer price index) adjustments. In terms of the actual changes, the rules governing this vary depending on whether you were a CSRS or FERS employee.

Thanks for reading our short FAQ guide for annuity computation, hopefully, you found the answer to a question that has perhaps been playing on your mind. If you need further advice, don’t be afraid to ask for help from those who know all about the process!