How the FERS basic annuity is computed
The Federal Employees Retirement System (FERS) basic annuity follows one of the most transparent formulas in American retirement planning: High-3 average salary × years of creditable service × multiplier. The multiplier is where most of the variation lives.
The three multipliers
- 1.0% — applies to most employees who retire before age 62, or at any age with fewer than 20 years of service.
- 1.1% — applies to employees who retire at age 62 or older with at least 20 years of service. This is the single biggest reason to consider working to 62 if you can.
- 1.2% — applies to special-category employees (law enforcement officers, firefighters, air traffic controllers, Capitol Police, Supreme Court Police) who retire under the special formula.
What counts toward the High-3?
The High-3 is the average of your highest 36 consecutive months of basic pay — not necessarily your last three years. Basic pay includes locality pay but excludes overtime, bonuses, allowances, and premium pay. If you received a step increase or promotion in your final years, your High-3 may be lower than your final salary.
FERS-RAE and FERS-FRAE
Congress created two newer categories of FERS employees to address pension funding shortfalls:
- FERS-RAE (Retirement-eligible at age 62) — employees hired between January 1, 2013, and December 31, 2013, contribute 3.1% of pay instead of 0.8%.
- FERS-FRAE (Further Retirement-eligible at age 62) — employees hired on or after January 1, 2014, contribute 4.4% of pay.
The annuity formula is identical for all three categories — only the employee contribution rate changes. That means a FERS-FRAE employee receives the same pension as a regular FERS employee with the same High-3 and service, but pays substantially more for it over a career.
The survivor benefit election
At retirement you may elect a survivor annuity for your spouse. The full election provides a 50% survivor annuity and reduces your own annuity by 10%. The partial election provides a 25% survivor annuity and reduces your annuity by 5%. Married retirees who do not elect a survivor benefit must obtain spousal notarized consent.
For the full picture — including the FERS Annuity Supplement, TSP coordination, and FEHB decisions — see our complete FERS retirement guide.