Earning Annuity at a Higher Rate After a Step Increase

By on February 12, 2015 in Pay & Benefits, Q&A, Retirement with 6 Comments

Q: I plan to retire December 31, 2015, and on December 1, 2015 I am due for a step increase. Will the retirement estimate project from that increase? Will I be paid for my leave and annuity at the new pay increase?

A: Due to the fact that you are getting a pay increase one month before you retire, your high three will be slightly higher for the purpose of computing your retirement. OPM says the following about your high three: “The “high-3 average pay” 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.” One month is, in effect, 1/36 of the period used to calculate your high three.

You will be paid for you annual leave at the new pay rate.

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© 2016 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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