Questions & Answers
Q&A
THE FOLLOWING QUESTIONS & ANSWERS were compiled by NARFE’s Federal Benefits Institute experts. NARFE does not provide legal, financial planning or tax advice or assistance.
EMPLOYMENT FERS DISABILITY RETIREMENT
Q
I retired with a disability retirement under FERS just over 15 years ago. Upon reaching my 62nd birthday, it’s my understanding that OPM will automatically recompute my annuity as if I had been working the entire time. Can you explain that?
A
As a FERS employee, if you were approved by OPM for a disability retirement and did not meet the age and service requirement to qualify for a full, unreduced age-based retirement upon separation, then you would have received 60% of your high-3 average salary for the first 12 months of your retirement (offset by 100% of any Social Security disability benefits you might have received), and beginning the 13th month, your disability retirement would have been reduced to 40% of your high-3 average salary (offset by 60% of any Social Security disability benefits you might have received). Upon reaching the age of 62, OPM automatically recomputes your FERS disability retirement using the regular 20
NARFE MAGAZINE AUGUST 2023
FERS computation formula by considering the amount of federal service that was already creditable under FERS prior to your separation and then adds the amount of service you would have had if you had continued your federal career up until the day before your 62nd birthday. They also consider your unused sick leave balance upon separation to possibly increase the length of service used in this recalculation. OPM also recomputes your high-3 average salary based on the cost-of-living adjustments that were previously applied to your retirement. The regular FERS formula states that you receive at least 1% of your high-3 average salary for all years and months of creditable service in the computation of your FERS annuity. But for
disability annuitants who have at least 20 years of service credit in the automatic recalculation at 62, they receive 1.1% of their high-3 average salary for all their years and months of creditable service. For example, if you only had two years of FERS service upon separation for a disability retirement and 15 years later reached age 62, the automatic recalculation of your annuity would equate to 17% of your recalculated high-3 average salary (i.e., 17 years x 1% = 17%). But if you had five years of FERS service upon separation for a disability retirement and reached the age of 62 fifteen years later, the automatic recalculation of your annuity would equate to 22% of your recalculated high-3 average salary (i.e., 20 years x 1.1% = 22%). Note for Special Category employees: An additional annuity accrual rate—1.7%—will generally be included in the computation of the earned annuity if an employee has performed service as a law enforcement officer,