FERS Pension Calculation: Estimating Your Federal Retirement Annuity

Your FERS basic annuity is calculated by multiplying three numbers: a percentage multiplier, your High-3 average salary, and your years of creditable service. The formula looks simple — but the details around the High-3 window, sick leave credit, and the 1.1% enhanced multiplier can shift your final number by tens of thousands of dollars. This guide walks through each piece with real examples, plus a pension estimator you can use with your own numbers.

The Core Formula

The FERS basic annuity formula is:¹

Annual Pension = Multiplier × High-3 Average Salary × Total Creditable Service

The multiplier is either 1% or 1.1%, depending on your retirement age and length of service (more on that below). A 30-year federal employee with a $120,000 High-3 average salary walking out the door at 57 gets:

1% × $120,000 × 30 years = $36,000/year ($3,000/month)

The same employee waiting until 62 with the same years and salary gets:

1.1% × $120,000 × 30 years = $39,600/year ($3,300/month)

That 10% bump for waiting to 62 is permanent — it's built into every payment for life.

The 1.1% Enhanced Multiplier

You qualify for the 1.1% rate if you meet both conditions at retirement:¹

• You are at least age 62 when you retire, and
• You have at least 20 years of creditable service (not counting sick leave).

Miss either condition by even a month and you're back to 1%. This is one of the cleaner incentives in the federal system to work a bit longer — the 5-year pension difference between retiring at 57 versus 62 (with 20+ years) compounds for decades.

High-3 Average Salary

The High-3 is the average of your three consecutive highest-paid years, not necessarily your last three years.¹ In most careers these overlap, but edge cases matter:

• Downgrade or lateral move near retirement. If you accepted a lower-graded position in your last few years, your High-3 window may reach back into earlier years at the higher grade.
• Part-time service. Part-time service years count at prorated pay. If you worked half-time for three years, those years contribute at half salary to the High-3 calculation.
• Pay bumps mid-year. The calculation uses actual pay received per pay period, then averages. A step increase in October of year one still improves the High-3 average for those months.

For most federal employees in full-time positions with steady step increases, the High-3 is effectively their salary 1–2 years before retirement. A quick approximation: take your current salary and subtract the last two GS step increases you received.

Years of Creditable Service

Creditable service includes:²

• Civilian federal service under FERS (including time in a FERS-covered position before you were enrolled)
• Civilian CSRS service that was converted to FERS at the time of FERS coverage election
• Qualifying prior federal service you've made a deposit for
• Military service, if you've paid the FERS military deposit (2% of military base pay plus interest)
• Unused sick leave — added separately, see below

Service time is measured in years, months, and days. OPM rounds down; a 25-year, 8-month, 14-day career computes as 25 years and 8 months, not 26.

Unused Sick Leave Credit

Under FERS, unused sick leave at retirement is credited toward your annuity computation (but not toward eligibility to retire, and not toward the 20-year threshold for the 1.1% rate).³ The conversion uses a 2,087-hour work year:

Sick Leave Credit = Unused Hours ÷ 2,087 = Additional Service Years

A federal employee with 2,000 hours of unused sick leave at retirement adds 2,000 ÷ 2,087 = 0.96 years to their service computation. On a $120,000 High-3 at the 1% rate, that's an extra $1,150/year in pension income — for free, every year, for life.

You receive 100% credit for all unused sick leave if you separated on or after January 1, 2014.

When Can You Retire? FERS Eligibility Overview

Your ability to claim an immediate, unreduced annuity depends on reaching specific age + service combinations:⁴

Your Minimum Retirement Age (MRA)

MRA depends on your birth year:⁴

MRA+10: The Reduced Early Retirement Option

If you've reached your MRA and have at least 10 years of service but don't yet qualify for a full immediate annuity (e.g., 15 years at MRA), you can retire under the MRA+10 provision — but your pension is permanently reduced by 5% for each year you are under age 62 when payments begin.⁴

Example: a federal employee born in 1968 (MRA = 56 years, 8 months) with 15 years of service and a $100,000 High-3 retires at 57:

• Unreduced pension: 1% × $100,000 × 15 = $15,000/year
• Years under 62: 5 years → reduction = 25%
• MRA+10 pension: $15,000 × 0.75 = $11,250/year

Postponed Retirement: Eliminating or Reducing the MRA+10 Penalty

If you qualify for MRA+10 but can't wait until 62, you have an option: retire from federal service but postpone the start of your annuity. For every year you delay the start date, the 5% penalty shrinks — if you delay to 62, it's eliminated entirely. You do lose FEHB health coverage during the postponement period, which is a significant cost to model carefully.

FERS COLA: How Your Pension Grows in Retirement

FERS annuities receive annual Cost-of-Living Adjustments (COLA) once you reach age 62 (special category employees — LEO, firefighters, ATC — receive COLA from the first retirement date regardless of age).⁵

FERS COLA is smaller than the Social Security COLA formula:⁵

For 2026, FERS annuitants received a 2.0% COLA — the CPI-W increase fell in the 2–3% band, so FERS received the flat 2%.⁵ Compare that to CSRS retirees and Social Security recipients who received the full CPI. Over a 20-year retirement, the FERS COLA cap meaningfully reduces purchasing power relative to inflation in high-inflation years.

FERS Pension Estimator

Enter your details to estimate your basic FERS annuity. This calculator applies OPM's standard formula — 1% or 1.1% multiplier on High-3 average salary × creditable service plus sick leave credit. It does not model survivor benefit reductions, FEHB premium changes, or Social Security offsets.

What Your Pension Tells You About Your TSP Need

Once you have a pension estimate, the next step is calculating the income gap — the difference between your pension (plus Social Security and FERS Supplement if applicable) and your target spending. That gap is exactly what your TSP must fill.

Example: a federal employee targeting $90,000/year in retirement income has a $38,000 FERS pension and expects $24,000 in Social Security at 67. That leaves a $28,000/year gap. At a 4% withdrawal rate, the TSP needs to reach $700,000 to fill it indefinitely. At a more conservative 3.5%, it needs $800,000.

This is why TSP contribution strategy, fund allocation, and the stay-in-TSP vs rollover-to-IRA decision can't be made in isolation from the pension. The pension sets the floor. TSP covers everything above it.