Understanding your FERS pension options

How the pension is calculated

For most FERS employees, the basic annuity is 1% of your high-3 average salary for each year of service. If you retire at 62 or later with at least 20 years of service, the rate is 1.1%.

Your high-3 is the highest average basic pay you earned during any three consecutive years. Because the formula multiplies by years of service, each extra year, or each credited month of unused sick leave, raises your pension for life.

When you can retire

Eligibility depends on your age and years of service. The minimum retirement age (MRA) is between 55 and 57 depending on your birth year. In general you can retire with an unreduced pension at your MRA with 30 years, at 60 with 20 years, or at 62 with 5 years. Retiring at your MRA with at least 10 but fewer than 30 years is possible, but the pension is reduced for each year you are under 62 unless you meet other conditions.

Rules differ for special categories such as law enforcement, firefighters, and air traffic controllers, so confirm your own category with your agency or OPM.

The survivor benefit decision

When you retire, you choose whether to leave a survivor annuity for your spouse. A full survivor benefit pays your spouse 50% of your pension after you pass away and reduces your own pension by 10%. A partial survivor benefit pays 25% and reduces your pension by 5%.

Waiving the survivor benefit means a larger check now and nothing for your spouse later. Your spouse generally must consent in writing.

Unused sick leave counts toward your pension

Under FERS, unused sick leave is converted into additional service time when your pension is calculated. It raises the amount of your pension. It does not count toward the length of service needed to be eligible to retire.

Mixing those two up is a common reason people choose the wrong retirement date.

The FERS special retirement supplement

If you retire before 62 with an immediate, unreduced retirement, you may receive a special retirement supplement. It is designed to approximate the Social Security benefit you earned through federal service, and it is paid until age 62. It is subject to an earnings test if you keep working.

It does not apply to every retirement type, so confirm your eligibility before you plan around it.

Do not forget health insurance

To keep Federal Employees Health Benefits (FEHB) into retirement, you generally must have been covered for the five years before you retire. Many people check this too late.