Changes

===Annuity Calculation===

===Annuity Calculation===

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 annuity for the majority of Federal employees <ref>Different calculations apply for law enforcement officers, firefighters, and air traffic controllers (as these positions have 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 amount of "creditable Federal service" (in terms of years and whole months expressed as fractions of years; days of service less than 30 days in a month are dropped).

*The amount of "creditable Federal service" (in terms of years and whole months expressed as fractions of years; days of service less than 30 days in a month are dropped).

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 (e.g. an employee moved from an area with high locality pay differential to one with a lower differential<ref>It is not uncommon for an employee to do this, especially if the area with lower differential is an area where or near where s/he (and his/her family) intend to settle at retirement, and the move is paid for by the Federal government.</ref> 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 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).