Earning Annuity at a Higher Rate After a Step Increase

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By on February 12, 2015 in Pay & Benefits, Q&A, Retirement with 0 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.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

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About the Author

John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.