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 LEAVE AND EARNINGS STATEMENT
Q
I began my federal career recently, and I receive pay statements from my agency each pay period. Should I be keeping all of these for the next 30 years, or should I purge these each year after I’ve confirmed that I’ve been paid properly?
A
Congratulations to you for reviewing your biweekly Leave and Earnings Statements to be sure that they accurately reflect your salary and proper withholdings. If you don’t want to keep all of your statements, at least consider keeping the following: • First statement received at the beginning of your appointment. • Salary changes. • Status of military deposit payment information. • Hours worked (if work schedule is less than full time). • Statements for the last five years before separation from federal service. • When changing payroll offices or transferring to a new agency, keep the last statement from your old payroll office 18
NARFE MAGAZINE MARCH 2022
and the first statement from your new payroll office.
HIGH-3 AVERAGE SALARY
Q
After a long break in federal service, I recently returned to a federal position with a modest salary. Although I plan to continue this job until I’m old enough to qualify for an immediate retirement, I don’t expect to reach the salary level that I previously had when I was a federal employee years ago. How will my current salary affect the high-3 average salary that the Office of Personnel Management (OPM) uses to calculate my annuity?
A
By definition, the “high-3 average pay” is the largest annual rate resulting from averaging an employee’s
rates of basic pay over any period of three consecutive years of creditable civilian service, with each rate weighted by the length of time it was in effect. When OPM computes your retirement benefit, it will identify the three years of consecutive creditable federal civilian service where your basic salary rates were the highest. When the agency looks at your salary history, it ignores breaks in service by squeezing your entire federal career together (from beginning to end), as if you had no breaks in federal service, and then searches for the highest three consecutive years of basic salary earned while employed. In some cases, like yours, the high-3 average salary may not be the last three years but another three-year period that produces a higher average. Now that you have returned to federal service, I’d recommend that you ask your agency’s retirement office to prepare a retirement estimate report, which will show the correct high-3 average salary.
