This article is part of a series dealing with common misconceptions about federal benefits and retirement. These articles are written by John Grobe and Ehren Clovis.
Myth-conception: You must have sick leave in 30-day (1 month) increments for it to increase your annuity.
Reality: As few as 6 hours of sick leave can increase your annuity!
This common misunderstanding probably comes from the fact that only years and months of service are used in the final step of calculating annuities. (Days are dropped.) However, the sick leave credit is added to the actual service before this point, so even 6 hours of sick leave (or 1 day of credit) can make a difference.
Here’s an example: Suzanne is retiring with 30 years, 6 months, and 29 days of actual service credit. Without the sick leave credit added in, Suzanne’s annuity computation will reflect 30 years and 6 months. But Suzanne also has 6 hours of sick leave, which is equal to 1 day of service credit. When that 1 day of credit is added to her actual service credit, the total is 30 years, 6 months, and 30 days. For retirement purposes, every month has 30 days, so the 30 days is credited as a month, raising the service credit for annuity purposes to 30 years and 7 months.
Actual service credit: 30 – 06 – 29
+ Sick leave credit: 00 – 00 – 01 (6 hours)
Total credit for annuity: 30 – 06 – 30
or 30 – 07 – 00 (days are dropped)
Note: Please remember that if you are under FERS and retire before 1/1/2014, only half of your sick leave balance will be credited for retirement purposes. FERS employees retiring on or after 1/1/2014, though, will receive credit for their entire balance at retirement. If you have a lot of sick leave, you may want to consider postponing your retirement from 12/31/2013 to 1/1/2014 (or later) in order to receive that additional credit toward your annuity!
So how can you tell what your sick leave balance is worth? The easiest way is to convert your creditable balance using the same conversion chart the Office of Personnel Management (OPM) will use.
So now you know the truth. Don’t let anyone tell you that you need at least a month of sick leave before it can help you; you know that as little as 6 hours may increase your annuity!