A lot of federal employees reach the edge of retirement without ever having seen the actual math behind their pension — they know it's "based on salary and years," but not what the number will be. The good news: the FERS basic annuity is one of the simpler parts of federal retirement. It's three numbers multiplied together, and each one is something you can understand and, in part, influence.
The formula
Every FERS pension comes from the same calculation, set by the Office of Personnel Management (OPM):
The FERS basic annuity formula
High-3 salary × years of creditable service × multiplier = annual pension
That's the whole thing. The rest of this page is just understanding what goes into each of the three pieces — and where you have leverage.
Number 1 — Your High-3
Your High-3 is the average of your highest 36 consecutive months of basic pay. For most people that's the final three years before retirement, when salary is highest — but it can be any consecutive 36-month stretch if you earned more earlier.
What counts as "basic pay" matters:
- Included: your base salary and locality pay.
- Not included: overtime, bonuses, awards, cash incentives, or other premium pay.
One nuance that surprises people: because it's a 36-month average, a raise in your final months moves the number less than you'd expect — it's diluted across three years. Working a few extra months at a higher grade helps, but it's a gradual lift, not a jump.
Number 2 — Your years of creditable service
This is your total federal service that counts toward the pension — and it's broader than just the years on your payroll. Creditable service can include:
- All your FERS-covered federal employment
- Unused sick leave, converted to service time (more below)
- Military service you've "bought back" by paying a deposit
- Refunded service you've redeposited, and certain non-deduction service with a deposit
Partial years count as decimals — six months is 0.5 years in the formula — so every bit of service shows up in the result.
The sick-leave boost
This is the lever most employees underuse. When you retire, OPM converts your unused sick leave into extra creditable service: roughly 2,087 hours equals one full year, and about 174 hours equals one month. Since 2014, 100% of a FERS employee's unused sick leave counts (it used to be half).
Three things to know about it:
- It boosts your pension amount, but it does not count toward retirement eligibility — it can't help you reach the 5, 10, 20, or 30-year thresholds that let you retire.
- Unlike annual leave, sick leave is never paid out in cash — converting it to pension credit is its only retirement value.
- Only whole months of converted credit count; leftover days are dropped. If you're close to crossing into another full month, a little timing can capture it.
Worth Knowing
There's a subtle exception to the "doesn't count for eligibility" rule worth its own mention: while sick leave can't make you eligible to retire, it can push your total service across the 20-year line that unlocks the 1.1% multiplier — if you're already 62 and otherwise eligible. OPM has confirmed this. For someone sitting at 19-plus years, a sick-leave balance can be worth a permanent 10% pension bump.
Number 3 — The multiplier
The multiplier is usually the smallest-looking number and the one with the biggest leverage. For most FERS retirees it's 1.0% — you earn 1% of your High-3 for every year of service. But two situations change it:
- 1.1% — the age-62 boost. Retire at age 62 or older with at least 20 years of service and your multiplier rises to 1.1% — roughly a 10% larger pension. Crucially, it applies to every year of service, not just the years past 20. You have to actually be 62 at separation; retiring at 61 and turning 62 later doesn't count.
- 1.7% — special provisions. Law enforcement officers (LEOs), firefighters, and air traffic controllers (ATCs) earn 1.7% for their first 20 years of covered service, then 1.0% for any years beyond that.
Retire at 60 with 30 years — $100,000 High-3
$100,000 × 30 × 1.0% = $30,000 / year
Full, unreduced — but the standard 1.0% multiplier.
Retire at 62 with 30 years — $100,000 High-3
$100,000 × 30 × 1.1% = $33,000 / year
Same service, $3,000 more every year — for life, with COLA on top.
Pro Tip
The 1.1% threshold is the single highest-return timing decision in FERS. If you're near age 62 with around 20 years, working even a few extra months to land on the right side of both lines can add tens of thousands of dollars over a retirement. Run the date both ways before you commit.
What the formula doesn't show
The three-number formula gives your base annuity. A few things adjust the check you actually receive:
- Survivor election. Providing a full survivor annuity for a spouse reduces your pension by 10% (or 5% for a partial benefit) — in exchange for lifetime coverage for them.
- Early-retirement reduction. If you leave under MRA+10, your annuity is cut 5% for each year you're under 62.
- Cost-of-living adjustment (COLA). FERS pensions get annual COLAs in retirement, though on a slightly reduced formula — and if you retire before 62, COLAs generally don't begin until you turn 62.
- Part-time service is prorated, and taxes apply to nearly all of your pension.
Your pension is also just one leg of the picture — see how it fits with your TSP and Social Security to get your true retirement income.
Estimate yours
The quick estimator at the top applies the core formula. To layer in sick-leave credit, survivor reductions, early-retirement penalties, and your eligibility date, the Stone Rose FERS Retirement Calculator does the full computation — and it's the backbone of The Federal Employee's Financial Playbook. One reminder for any estimate: always confirm your official numbers with your agency and OPM before you set a retirement date.
Frequently asked questions
How is the FERS pension calculated?
High-3 average salary × years of creditable service × multiplier. The multiplier is 1.0% for most, or 1.1% at age 62+ with 20+ years. A $100,000 High-3 with 30 years at 1.0% gives $30,000 a year.
What is the High-3 average salary?
The average of your highest 36 consecutive months of basic pay — base salary plus locality, but not overtime, bonuses, or awards. Usually your final three years. Because it's a 36-month average, a late raise has a muted effect.
What counts as creditable service?
FERS-covered employment, unused sick leave, bought-back military time, and certain redeposited or non-deduction service. Partial years count as decimals.
How does unused sick leave affect my pension?
It converts to extra service (about 2,087 hours = 1 year), increasing your pension amount — but not your eligibility. Since 2014, 100% counts. It's never paid out in cash, and only whole months of credit count.
When do I get the 1.1% multiplier?
At age 62 or older with at least 20 years of service. It's roughly a 10% larger pension and applies to every year of service, not just years past 20. You must be 62 at separation.