With Defense Bill Passed, FERS Employees to Receive Retirement Credit for Unused Sick Leave


This week, President Obama signed the 2010 National Defense Authorization Act. While a full repeal of the National Security Personnel System (NSPS) dominated headlines, one largely underreported aspect of the bill – and arguably one of the most important for federal employees throughout the civil service – was a provision extending credit for accrued sick leave to federal workers enrolled in the Federal Employee Retirement System (FERS).

Under the new law, FERS employees will receive a boost to their retirement annuity based on the amount of sick leave they have saved over the course of their federal careers. Like their counterparts in the Civil Service Retirement System, covered employees will have their accrued leave factored in their annuity calculation upon retirement.

Here’s how it works. Once an employee becomes eligible to retire, their accrued sick leave will be credited toward his/her years and months of service. For example, before the benefit was signed into law, if a federal employee worked for the federal government for 30 years, earning a high three of $70,000 and garnering 6 months of sick leave, his/her retirement annuity would be 1.0% x 30 x 70,000, or $21,000 per year.

With this new benefit included, the same employee would have their annuity calculated 1.0% x 30.5 x 70,000 or $21,350 for the year. That’s an extra $29.17 cents in his/her pocket every month upon retirement.

There is a catch, however, but only in the short term. Though the sick leave benefit will go into effect immediately, it will not do so in its fullest capacity. There will be a four-year phase in period during which retiring FERS employees will receive only half credit for their unused sick leave. Federal employees can expect to retire with the full benefit on or after January 1, 2014.

“We are very pleased that FERS employees will finally be given credit for their unused sick time,” said NFFE Legislative Director Randy Erwin. “Establishing this good government benefit has been a top priority for NFFE. Now our retirees are going to have a little more money in their pocket because they were dutiful in their service and rarely used sick time. They earned that benefit, and now they will get something for it.”