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Will a Furlough Affect Leave Accrual and Retirement Annuity Benefits?

by Ian Smith |

OPM recently added the following information to its guidance on furloughs:

Does a furlough affect the accrual of annual leave and sick leave?
A. If an employee is furloughed (i.e., placed in nonpay status) for part of a biweekly pay period, the employee’s leave accrual will generally not be affected for that pay period.

However, the accumulation of nonpay status hours during a leave year can affect the accrual of annual leave and sick leave over a period of time. (See 5 CFR 630.208 and Notes 1 and 2 below.) For example, when a full-time employee with an 80-hour biweekly tour of duty accumulates a total of 80 hours of nonpay status from the beginning of the leave year (either in one pay period, or over the course of several pay periods), the employee will not earn annual and sick leave in the pay period in which that 80-hour accumulation is reached. If the employee again accumulates 80 hours of nonpay status, he or she will again not earn leave in the pay period in which that new 80-hour total is reached. At the end of the leave year, any accumulation of nonpay status hours of less than 80 hours is zeroed out so that the accumulation of nonpay status hours for the next leave year starts at zero.

For part-time employees, the rule blocking accrual of leave based on the accumulation of nonpay status hours (5 CFR 630.208) does not apply. Instead, leave accrual for part-time employees is prorated based on hours in a pay status in each pay period; thus, time in nonpay status reduces leave accrual in each pay period containing such time (5 CFR 630.303 and 5 U.S.C. 6307).

Also, please see OPM’s fact sheet on the Effect of Extended Leave Without Pay (LWOP) (or Other Nonpay Status) on Federal Benefits and Programs, which has a section entitled, “Accrual of annual and sick leave.”

Note 1: The term “nonpay status” refers to period during which an employee is absent from his or her tour of duty established for leave usage purposes and receives no pay for such absence. Furlough is one type of nonpay status.

Note 2: The term “leave year” is defined as the period beginning on the first day of the first full biweekly pay period in a calendar year and ends on the day immediately before the first day of the first full biweekly pay period in the following calendar year. (For example, for employees on the standard biweekly payroll cycle, the 2013 leave year is January 13, 2013, through January 11, 2014.) (See fact sheet at http://www.opm.gov/policy-data-oversight/pay-leave/leave-administration/fact-sheets/leave-year-beginning-and-ending-dates/.)

Note 3: For full-time employees with an uncommon tour of duty under 5 CFR 630.210, the accumulation limit used in applying 5 CFR 630.208 is the number of hours in the uncommon tour of duty for a biweekly pay period.

Retirement Annuity Benefits

In the Guidance for Administrative Furloughs, we are adding a new Question G.6. in section G (Benefits) as follows:

How does a furlough affect retirement annuity benefits?
A. Generally, furloughs will not affect an annuity benefit under the Civil Service Retirement

System (CSRS) or the Federal Employees’ Retirement System (FERS).

The amount of a CSRS or FERS annuity paid by OPM is based primarily on the amount of creditable service an employee performs and the employee’s high-3 average salary. Both CSRS and FERS allow service credit for up to 6 months of nonpay status in any calendar year. If a furlough period does not cause an employee to be in a nonpay status for more than 6 months in a calendar year, the furlough period will be included as creditable service in determining the employee’s total creditable service used in the annuity computation. If the total amount of time an employee spends in a nonpay status in a calendar year exceeds

6 months, the amount of nonpay status in excess of 6 months in the calendar year will not be creditable for retirement purposes.

The high-3 average salary used to compute CSRS and FERS annuities is the largest annual rate resulting from averaging an employee’s rates of basic pay in effect over any period of 3 consecutive years of creditable civilian service, with each rate weighted by the length of time it was in effect. If a period of nonpay status (such as a furlough) that is creditable for retirement occurs during the 3-year period used to compute the high-3 average salary, the loss of actual pay during that nonpay status period generally would have no effect on the high-3 computation. The basic pay rate in effect during that nonpay status period would be used in the high-3 average salary calculation. For example, if an employee whose annual rate of basic pay is $85,000 is placed in a furlough status for two weeks and that 2-week period falls in the employee’s average salary period, that 2-week furlough period will be credited in the high-3 average salary calculation using the $85,000 annual rate of basic pay that was in effect during the furlough period. In this example, the loss of actual pay (or earnings) during that period is not material in the high-3 average salary calculation.

Basic pay for retirement includes locality pay and certain types of additional pay, such as law enforcement availability pay (LEAP), administratively uncontrollable overtime (AUO) pay, standby duty pay, firefighter pay (annualized salary), and market pay for physicians. These types of additional pay are included in the basic pay used to calculate the high-3 average salary during periods of creditable nonpay status as long as the authorization for the payments remains in effect.

Other additional types of basic pay, however, including night shift differential and environmental differential for wage grade employees, and certain overtime pay for customs officers are included in the average salary computation only when an employee has received that type of pay.

Revised Fact Sheet

Question I.2. in the Guidance for Administrative Furloughs includes a reference to the OPM fact sheet entitled, “Effect of Extended Leave Without Pay (LWOP) (or Other Nonpay Status) on Federal Benefits and Programs.” To reflect the new retirement annuity benefits guidance above, we are revising the “Retirement benefits” section of the fact sheet to read as follows:

An aggregate nonpay status of 6 months in any calendar year is creditable service. Coverage continues at no cost to the employee while in a nonpay status. When employees are in a nonpay status for only a portion of a pay period, their retirement deductions are adjusted in proportion to their basic pay (5 U.S.C. 8332 and 8411).

High-3 average salary computations are based on periods of creditable service. Thus, periods of nonpay status of 6 months or less in a calendar year that fall within an employee’s average salary period are included in the calculation of the average salary using the rate of basic pay in effect during the period of nonpay status. For example, if a full-time employee whose annual rate of basic pay is $85,000 per year is placed in nonpay status for 3 months, that 3- month period would be credited in the average salary calculation using the $85,000 basic pay rate. (If the rate of basic pay changed to $86,500 per year after 2 months of the nonpay period, the first 2 months of the nonpay period would be credited in the average salary calculation using the $85,000 basic pay rate and the last month of the nonpay period would be credited in the average salary calculation using the $86,500 basic pay rate.)

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