The Basic FERS Pension Formula

Your FERS pension is calculated using a single formula that multiplies three numbers together: your years of service, your average salary, and a fixed percentage. The formula is 1% × your high-3 average salary × your years of creditable service. That percentage stays the same for everyone; what changes is how many years you worked and what your salary was during your highest-earning years.

The "high-3" is the average of your three highest-paid consecutive years as a federal employee. If you earned $50,000, $52,000, and $54,000 in your three highest years, your high-3 is $52,000. FERS then takes that number and multiplies it by how many years you actually worked, then multiplies the result by 0.01 (the 1% factor). If you worked 30 years, the math is: $52,000 × 30 × 0.01 = $15,600 per year.

Key Takeaways

  • Your FERS pension payment equals 1% of your high-3 average salary multiplied by your years of creditable service.
  • The high-3 is calculated from your three consecutive highest-paid years, not your final year alone.
  • Only time you actually worked as a federal employee counts toward your years of service; military service can be added but requires a deposit payment.
  • You can request a detailed calculation from the Office of Personnel Management (OPM) using Form SF-2801 or through your agency's human resources office.
  • Your pension is reduced by a small amount if you retire before age 62 and have fewer than 30 years of service.

Understanding Your High-3 Average Salary

The high-3 is not your final salary. It is the average of your three consecutive highest-paid years, which may have occurred years before you retired. If you were promoted in year 15 of your career and stayed at that higher pay level until retirement in year 30, your high-3 will be based on years 28, 29, and 30. But if you took a lower-paying position in your final years, your high-3 might be from years 20–22 instead.

OPM calculates the high-3 by adding your salary for those three years and dividing by three. Part-time work, temporary assignments, and periods of leave without pay can all affect this number. If you received a large bonus or back-pay settlement in one of those years, it counts toward your high-3. You can request a statement of your high-3 from OPM or your agency's benefits office to verify the number before you retire.

Counting Your Years of Creditable Service

Not all time you spent as a federal employee counts equally. Full-time service counts as one year per calendar year. Part-time service is prorated: if you worked half-time for two years, that counts as one year of service. Periods of leave without pay reduce your service credit unless you made a deposit to buy back that time.

Military service can be added to your FERS service credit, but only if you make a deposit to OPM to "buy back" that time. The deposit amount varies based on your military rank and length of service. You do not have to buy back military service to retire from FERS, but if you do not, those years do not count toward your pension calculation. You must request a military service deposit estimate from OPM before you retire if you want to include that time.

The Age Reduction Factor

If you retire before age 62 and have fewer than 30 years of service, your pension is reduced by a small percentage for each month you are under 62. This is called the age reduction or early retirement reduction. The reduction is 5/12 of 1% per month, which means roughly 5% per year.

For example, if your calculated pension is $20,000 per year and you retire at age 60 with 25 years of service, you are 24 months under age 62. Your reduction is 24 months × 5/12 of 1% = 10%. Your actual pension becomes $20,000 − $2,000 = $18,000 per year. This reduction stays in place for life; it does not disappear when you turn 62. If you have 30 or more years of service, you can retire at any age with no reduction.

Working Through a Complete Example

Suppose you are a federal employee with the following record: you worked for 28 years, your high-3 average salary is $65,000, and you are retiring at age 59. Here is how to calculate your pension.

Start with the base calculation: $65,000 × 28 × 0.01 = $18,200 per year. Next, apply the age reduction. You are 36 months under age 62 (from age 59 to age 62). The reduction is 36 × 5/12 of 1% = 15%. Your final pension is $18,200 − ($18,200 × 0.15) = $15,470 per year. This is the amount you would receive each month, divided by 12, for the rest of your life. If you had waited until age 62, your pension would have been the full $18,200.

Where to Get Your Official Calculation

You can request an official pension calculation from the Office of Personnel Management using Form SF-2801, "Request for Leave and Earnings Statement." You can also contact your agency's human resources or benefits office, which can submit the request on your behalf. OPM typically provides the calculation within two to four weeks.

Your calculation will show your high-3, your total years of creditable service, any age reduction that applies, and your estimated monthly pension payment. This is the number you should use for retirement planning, not a rough calculation you do yourself. If you spot an error—such as a missing year of service or an incorrect high-3—you can dispute it with OPM before you retire, when corrections are easier to make.

Frequently Asked Questions

Does my FERS pension increase after I retire?

Yes. FERS pensions receive an annual cost-of-living adjustment (COLA) each January, based on inflation. The adjustment is tied to the Consumer Price Index and is the same percentage for all retirees. You do not have to do anything to receive it; it is automatic.

What if I worked part-time for some years?

Part-time service is prorated based on the percentage of full-time hours you worked. If you worked 50% time for four years, that counts as two years of service. Your salary during those years is also used in the high-3 calculation at the rate you actually earned, not adjusted upward to a full-time equivalent.

Can I include unused sick leave in my pension calculation?

Yes. Unused sick leave is converted to additional months of service credit at retirement. The conversion is one month of service for every 240 hours of unused sick leave. This increases both your years of service and potentially your high-3 if the sick leave payout occurs in one of your three highest-earning years.

What happens to my pension if I return to federal work after retiring?

If you return to work as a federal employee after retiring, your pension continues unchanged. You do not earn additional pension credit for the new service. However, you may be subject to the Windfall Elimination Provision (WEP) if you also receive Social Security, which can reduce your Social Security benefit.

How do I know if my high-3 is correct?

Request a Leave and Earnings Statement (LES) from your agency for each of your three highest-paid years. Add those three annual salaries and divide by three. Compare your result to the high-3 figure OPM provides. If they do not match, contact OPM immediately with documentation of the discrepancy.