Is a Change to a 'High-Five' Calculation Likely to Happen?

By on March 30, 2016 in Pay & Benefits, Q&A, Retirement with 14 Comments

Q.  I’ve heard rumors that Congress will be changing how our retirement is computed by mandating a “high-five” calculation, rather than a “high-three.”  Is this likely to happen and, if it does, what will it do to our pensions?

A.  I’ve heard threats emanating from Congress and other sources about changing to a high-five in the calculation of our CSRS or FERS annuities.  In fact, I first heard about the threat when I was 25 years old and a letter carrier for USPS.  It hasn’t happened yet.  Of course, my hindsight is 20-20, there’s no telling what Congress might do, but organizations such as NARFE and our federal employee unions will strongly oppose any changes.  I do not view this change as likely.

Even if there was a change that mandated a high-five, it is very likely that all current employees would be grandfathered in.  If you look at past changes (e.g., implementation of FERS, change in FERS retirement contributions, etc.), all employees who were already on the rolls were protected from those changes.  As federal employees we have had our benefits protected, at least to some extent, by “congressional insurance.”  Members of Congress are covered by federal retirement and would be highly unlikely to change their own benefits.

If a change to a high-five were implemented, the effect wouldn’t be as drastic as we might think, but it still would adversely affect the pocketbooks of future retirees.

Let’s assume a prospective retiree is making $100,000 five years before retirement and receives annual raises of 1.5% for the next five years.  He will have 30 years of service when he retires.  Under a high-three formula, a CSRS retiree would receive a pension of $58,818 and a FERS retiree (1% factor) would receive $31,370.  With a high-five formula substituted, the CSRS pension would be $57,949 ($869 less) and the FERS pension (1% factor) would be $30,906 ($464 less).  COLAs would compound the difference over time.

I wrote an article about proposed threats to our retirement and benefits that was posted on FedSmith on November 30, 2014. (See Worried About Cuts to Your Federal Benefits? Don’t Panic!)  It looks at the threat of a high-five, as well as other threats that were proposed by the Congressional Budget Office.  You can find it as well as all of my other articles on my author page.

John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at

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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.