FERS Sick Leave Changes Dropped in Senate Bill: What Impact Should This Have on Your Retirement?

By on June 12, 2009 in Current Events with 0 Comments

 It has been a disappointing week for some federal employees who were hoping to see their future retirement payments increase.

The Senate has passed a bill on tobacco reform. As we have pointed out earlier, while the main purpose of the bill was to give the Food and Drug Administration regulatory control over tobacco, there were also provisions that impact the federal Thrift Savings Plan. The House version of the bill also included a provision that would have given federal employees under the FERS retirement system credit for unused sick leave. The House bill is HR 1256 and the Senate bill is S. 982. (See House Passes Legislation to Increase Federal Annuity Payments for Some Federal Employees)

But, while the House bill contained the FERS sick leave changes, the bill passed by the Senate did not.

As the bill has not yet become law, and there are now two versions of the bill, the final product will be resolved in a conference committee. It is possible that the FERS sick leave changes will be restored in that process.

Readers have been asking if this bill will become a law this year because they were hoping to retire and want the extra money that these changes would bring. Some were very confident the bill would pass since the Congress is under the control of Democrats and the administration has been supportive of the changes.

But, as the main purpose of the bill was to regulate tobacco, that was the focus of the debate in the Senate. The rejection of the amendment to change the sick leave provision for FERS employees was not about the content of the amendment; the rejection had more to do with the intense interest and the potential impact on companies resulting from changes in regulating tobacco through this new legislation.

While the failure of the changes to the FERS system are undoubtedly disappointing to many readers, it is not a big surprise that the proposal has had its ups and downs. Predicting what will happen during the legislative process usually involves a great deal of guesswork and bills are influenced by events that are unpredictable.

Should You Delay Your Retirement?

For those who have asked, here is our advice: If you are eligible to retire, and you think you are ready to retire from a financial standpoint and are ready to make the psychological adjustment, you should go ahead and retire at a time that makes the most sense for you.

Trying to time your retirement to coincide with proposed changes to federal benefits is likely to be frustrating and disappointing.

A number of readers who asked were obviously considering using their sick leave before retirement. But, if they are going to get credit for it in their retirement annuity, they wanted to save the leave up for a potential gain in the future.

I understand the motivation behind using sick leave today (even if you are not sick) or delaying your retirement in hopes that new legislation will pass that will enrich your retirement check.

Here is my advice.  For those who are old enough to be wondering if they should retire this year or next, take a deep breath and consider the bigger picture.

Most of us have known people, especially among those old enough to retire, who have suddenly become ill. The consequences can be devastating. Your sick leave can be a very valuable insurance policy if an unexpected health problem should strike.

Some people are intensely focused on the perceived "unfairness" for not getting credit for unused sick leave if they are under the FERS system. Adopt a more optimistic stance. The sick leave you have accrued is worth a considerable amount if you get sick. You are accruing this sick leave as an employee benefit without having any deduction from your paycheck for this benefit.

The potential consequences to you and your family under these circumstances could be much more significant to you and your family than the potential gain from the relatively small amount of money you might realize from a change in the FERS sick leave policy in calculating your annuity.

If you have not known a person who suddenly become seriously ill and missed work for months, consider yourself lucky. Talk to your colleagues. Chances are they know someone to whom this has happened. If you do that, it may give you a different perspective on risk and reward.

In short, if you get sick, use your sick leave. If you want to retire in the near future and are ready and able to do so, retire and enjoy the benefits you have earned. If, when you retire, you lose the sick leave, you can still enjoy your retirement. Spend the time with your friends and family but don’t make yourself sick over things you cannot control–such as what may happen in future legislation that could have had some impact on your retirement income if you had worked longer.

The advice is free. Some will conclude that is all it is worth. Fair enough as everyone has to make their own decisions. Just make sure you don’t get seriously ill.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.

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