Should You Use Your Sick Leave or Save It For The Potential of a Higher Annuity?

Should employees under the FERS system use their sick leave or save it with the possibility of getting more credit toward a higher annuity payment?

Earlier this week, we published a column on the subject of whether federal employees would have an additional paid holiday on December 26th. That has been the most popular topic of many comments and emails we have received from readers and obviously is of high interest to a number of readers. (See Christmas Holidays, Federal Employees, Atheists and Lawsuits)

President Bush had not issued an executive order or any other announcement on the issue at the time the article was written. As of today, he still has not done so. Despite the interest in this issue among our readers, we can probably assume the White House is spending more time on issues impacting the world economy, the riots in Greece or, perhaps the proliferation of nuclear weapons. In any event, there is no public decision we can pass along as to whether December 26th will be a federal holiday. If or when a decision is made, we will pass it along quickly.

Perhaps the second most popular topic of interest is the status of changes to the FERS retirement system. Specifically, will federal employees under the FERS system get credit for unused sick leave in calculating a retirement annuity? The emails we have received from readers have read something like this:

"I don’t know if I should use my sick leave this year or not. What is the status of legislation to give FERS employees credit for unused sick leave when they retire?" Or, a similar question that appears to be based on the same concern: "If Congress passes a law to give us credit for unused sick leave, will it be retroactive to include sick leave we did not already use?"

Back in July, the House passed the "Family Smoking Prevention and Tobacco Control Act." This law contained provisions that would impact the federal government’s Thrift Savings Plan and new provisions on calculating a retirement annuity for federal employees under the FERS system. (See House Passes Legislation to Increase Federal Annuity Payments for Some)

Here is what this bill would do if it became law and who it would affect.

1. A federal employee who retires within 3 years after the date of enactment, 3/4 of the days of unused sick leave to his credit under a formal leave system will be used in computing an annuity payment.

2. A federal employee who retires after 3 years from the date of enactment the days of unused sick leave to his credit under a formal leave system will be used in computing an annuity payment.

In plain English, this means that federal employees who are under the FERS system would count their unused sick leave toward the computation of their retirement annuity.  Employees under the Civil Service Retirement System (CSRS) already do this but the systems are different and this is one of the differences. While the new legislation would not provide identical credit for unused sick leave, the theory is that the legislation would cut down on the higher usage of sick leave among FERS employees.

For those readers who have asked "Why haven’t you told us more about the current status of this new law?", there isn’t much to tell you. The House passed the bill (HR 1108) and it was referred to a Senate committee. It is not a new law.

This bill will probably not pass this year. Congress wants to get out of town and, on a priority list of concerns, this one is not likely to be on any list of essential legislation for this Congress. If it does become law, it is much more likely to happen next year.

As to the question of whether an employee under the FERS system should save sick leave in anticipation of getting more credit toward your eventual annuity payment, the legislation does not provide a definitive answer. My guess is that if this legislation becomes a law, when a FERS employee retires, it is likely that unused sick leave that has accrued will be applied without regard to the year in which the leave was accrued.

The answer to the question depends on the final content of any legislation and the content of regulations and guidance issued by the Office of Personnel Management to implement the legislation that is passed.

Despite knowing this observation will irritate some who feel cheated by the current system because CSRS employees are treated differently, here is my free advice. Forget about the potential change in the annuity provisions for FERS employees.  If you are sick, use the sick leave. Don’t go to work and infect your colleagues with your cold, virus or the flu.

If you are not ill, save your sick leave for a time when you are sick and need to take the time off from work. It is an excellent benefit that preserves your pay for a time when you may need more than a "mental health day" or any other euphemism for taking a day off of work because you don’t feel like working that day.

There is a reasonable chance this legislation will pass in the future. For now, enjoy the benefits you have, have a Merry Christmas, and use your sick leave if you get sick but save it for the proverbial rainy day if you don’t need it now.


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 on federal human resources. Follow Ralph on Twitter: @RalphSmith47