Q: I am a FERS employee and am 49 years old. I will have 30 years of federal service in February 2015. I am considering going part-time in a couple of years. I would like to stay part time until I am eligible to retire at age 57. For annuity calculations my high three will be the last 3 years of full time work. However, since that will be approximately 5 years before I retire will OPM use my full time high three or the most recent (part-time) high three years?
A: The rules for calculating a FERS annuity for an employee with part-time service are more complicated than you think. However, since you work for the agency that I retired from, you should be used to complicated rules.
When you retire, your annuity will be calculated as if you were full-time (i.e., they will use the full-time salary for your high-three). They will also use your full length of service (i.e., part-time years are treated as full-time years). OPM will then prorate your annuity on a factor that they derive from dividing the number of hours you actually worked divided by the number of hours you could have worked.
I did some very rough math to show how working part-time your last 5 years would affect you. If you had a high-three of $100,000 and had worked 37 years full-time, your pension would be $37,000 per year. If, however, you worked part-time your last 5 years, you would have a proration factor of 93%, resulting in an annual pension of $34,410.
If your agency were to offer phased retirement as an option, you might want to explore it and see if it is better for you.
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