How the FERS Annuity Is Computed, Step by Step
The FERS basic annuity is computed as your high-3 average salary multiplied by your years of creditable service multiplied by 1.0 percent, or 1.1 percent when you retire at age 62 or older with at least 20 years of service (5 USC 8415). High-3 is your highest average basic pay over any three consecutive years of service, and creditable service includes full months with the fractional part of a month dropped. Three worked examples show exactly how the numbers combine.
Your FERS pension is not a mystery. The Office of Personnel Management publishes the exact computation it uses, and the rule is the same for every federal employee under the Federal Employees Retirement System. Once you know your high-3 average salary and your creditable service, the annuity is three multiplications.
Step 1: Determine your high-3 average salary
High-3 is the highest average basic pay you earned during any three consecutive years of service. For most employees these are the final three years, but the rule does not require that. If your pay was higher during an earlier three-year stretch, for example before a demotion or a move to a lower grade, OPM uses the earlier period.
Basic pay is the salary for your position, including any increases for which retirement deductions were withheld, such as shift differentials. It does not include overtime, bonuses, awards, or allowances. If your total service was less than three years, OPM averages your basic pay across all of your creditable federal service instead.
To compute it by hand, add your basic pay for each of the three years and divide by three. A common working estimate is simply your current salary if raises have been steady, but for accuracy pull the actual pay records, since a mid-career promotion pattern can shift the average meaningfully.
Step 2: Determine your creditable service
OPM adds up all periods of creditable service, then eliminates any fractional part of a month from the total. Full months beyond the last full year are credited proportionally. Two years and six months of service is 2.5 years in the computation.
Creditable service includes your actual federal civilian service, plus any military service for which you paid the required deposit, plus certain refunded service for which you repaid the refund. What does not count toward eligibility is unused sick leave. Unused sick leave cannot get you to the years-of-service threshold needed to retire, but it is added to your service when OPM computes the annuity amount, as though it were time actually served.
Step 3: Choose the correct multiplier
The accrual rate is 1.0% of high-3 for each year of service in nearly every case. The rate is 1.1% only when two conditions are both true at separation for retirement: you are age 62 or older, and you have 20 or more years of service. Miss either condition and the computation stays at 1.0%. Age 62 with 19 years uses 1.0%. Age 60 with 30 years uses 1.0%.
Step 4: Multiply
Annual annuity = high-3 average salary x years of service x multiplier. Divide by 12 for the monthly gross. That is the entire computation for a regular voluntary retirement. Reductions for survivor elections, early retirement under MRA plus 10, or part-time proration come after.
Worked example 1: 30 years, $90,000 high-3, age 57
A career employee retires at age 57 with 30 years of service and a high-3 of $90,000. Age is under 62, so the 1.0% rate applies. Computation: $90,000 x 30 x 0.01 = $27,000 per year, or $2,250 per month. This equals 30% of high-3 pay, which is the standard shorthand: years of service roughly equals the percentage of pay replaced, one point per year.
Worked example 2: 30 years, $90,000 high-3, age 62
The same employee works to age 62 with 30 years of service. Both conditions for the higher rate are met. Computation: $90,000 x 30 x 0.011 = $29,700 per year, or $2,475 per month. The 1.1% multiplier is worth $2,700 per year here, and it is paid for life.
Worked example 3: 22 years, $120,000 high-3, age 63
An employee retires at age 63 with 22 years of service and a high-3 of $120,000. Age 62 or older with 20 or more years: the 1.1% rate applies. Computation: $120,000 x 22 x 0.011 = $29,040 per year, or $2,420 per month. Note the trade the formula makes visible: the higher salary partly offsets the shorter career.
What happens after the basic computation
The result above is the gross basic annuity. Three common adjustments follow. A survivor election reduces it: 10% for the maximum 50% survivor annuity, 5% for the partial 25% survivor annuity. Retiring under the MRA-plus-10 provision reduces the annuity by 5% for every year you are under age 62, permanently. And cost-of-living adjustments under FERS are reduced relative to inflation and are not paid to nondisabled retirees under age 62.
Run your own figures with our FERS pension calculator, then confirm with your agency retirement counselor, because individual service histories often include details, such as deposits for military time or refunded service, that change the final number.
Data current as of October 2026. Source: U.S. Office of Personnel Management (opm.gov), 5 USC 8415.