Changes

===Annuity Calculation===

===Annuity Calculation===

The annuity is calculated based on three factors:

The annuity for the majority of Federal employees <ref>Different calculations apply for employees in positions having mandatory retirement ages under age 62, and for employees retiring on disability.</ref>is calculated based on three factors:

*The employee's "high-3" salary (the average salary for the highest 36 consecutive months of pay),

*The employee's "high-3" salary (the average salary for the highest 36 consecutive months of pay),

*A specified percentage (either 1% or 1.1% in most cases), and

*A specified percentage (either 1% or 1.1% in most cases), and

The "high-3" salary is usually the final 36 months of the employee's tenure, but may be an earlier period if an employee took a voluntary downgrade in pay, or left Federal service and returned at a lower grade.  The salary includes base pay, locality adjustments (pay increases to account for cost of living in certain metropolitan areas), and shift differentials, and includes any cost of living adjustments applied to them, but does not include overtime (except for some categories involving mainly first responders), bonuses/awards, severance pay (including voluntary buyouts), cash out payments for unused annual leave and credit hours, or hazard pay.

The "high-3" salary is usually the final 36 months of the employee's tenure, but may be an earlier period if an employee took a voluntary downgrade in pay, or left Federal service and returned at a lower grade.  The salary includes base pay, locality adjustments (pay increases to account for cost of living in certain metropolitan areas), and shift differentials, and includes any cost of living adjustments applied to them, but does not include overtime (except for some categories involving mainly first responders), bonuses/awards, severance pay (including voluntary buyouts), cash out payments for unused annual leave and credit hours, or hazard pay.

The system is structured to provide employees an incentive to continue working until age 62 (the earliest date at which an employee can also obtain Social Security benefits), as the annuity percentage is 1.1% for employees age 62 or older with at least 20 years service, and 1% for all others.  Also most employees retiring before age 62 will not receive a cost of living increase until age 62 (except for certain occupations where the mandatory retirement age is under 62, or employees retiring on disability).

The system is structured to provide employees an incentive to continue working until age 62 (the earliest date at which an employee can also obtain Social Security benefits), as the annuity percentage is 1.1% for employees age 62 or older with at least 20 years service, and 1% for all others.  Also most employees retiring before age 62 will not receive a cost of living increase until age 62 (except for occupations where the mandatory retirement age is under 62, or employees retiring on disability).

Although unused sick leave is added to "creditable Federal service"<ref>The conversion is based on a chart, where 2,087 hours equals one full year, for an example of the chart see http://www.federalretirement.net/sickleavechart.htm.  If actual unused sick leave falls between two amounts, the higher amount is used.</ref>, it cannot be used to increase the service time so as to make an employee eligible for retirement and/or eligible for the increased 1.1% percentage.

Although unused sick leave is added to "creditable Federal service"<ref>The conversion is based on a chart, where 2,087 hours equals one full year, for an example of the chart see http://www.federalretirement.net/sickleavechart.htm.  If actual unused sick leave falls between two amounts, the higher amount is used.</ref>, it cannot be used to increase the service time so as to make an employee eligible for retirement and/or eligible for the increased 1.1% percentage.