How to Calculate Annuity for FERS

The Federal Employee Retirement System is a retirement benefits program offered to all civilian employees working for the federal government. FERS became the default retirement plan for government organization starting in 1983, making it feasible for those employed prior to this date to have two different employer retirement benefits plans. The FERS plan incorporates Social Security benefits, accumulated government and employee contributions and the addition of accumulated sick time. Upon employment ending, individuals may elect a lump-sum distribution or annuity payments. Computing the annuity payments helps the decision-making process.

Step 1

Call your employer's contact for FERS benefits located on your benefits statement or ask human resources for the appropriate contact information. Obtain your employment statistics in terms of years, months and days of employment and further request any unused sick hours that have accumulated. Request the value of your three highest paid salary years.

Step 2

Compute your annuity percentage amount by averaging your highest three salary years then factoring either one percent or 1.1 percent of that value. Use one percent if you are under age 62 or have less than 20 years of service; use 1.1 percent if you are over age 62 with more than 20 years of service. For illustration purposes: if your average monthly income equals $3,000 and you are 65 years old with 25 years of service you would compute ($3,000 * 0.011) *25 = $825 per month.

Step 3

Calculate the number of hours of unused sick hours. For every 2,087 hours of unused sick time, you can add 1 percent to your three highest salary years.

Step 4

Recalculate annuity payment based on sick leave adjustment: ($3,000 *0.021) * 25 = $1,575 per month.

Things You'll Need

  • Paper

  • Pencil

  • Phone

  • Calculator