Furloughs could lower leave benefits but probably not retirement

March 1, 2013

Being put on an unpaid furlough generally would not affect federal employees’ later retirement benefits, but it would affect the annual leave and sick leave they accumulate if the unpaid time covers at least 10 days, according to guidance issued this week by the Office of Personnel Management.

An impact on benefits is one of the spillover effects of unpaid furlough days that employees of many agencies would face under sequestration.

OPM said that furloughs generally “will not affect” the benefits accumulating under the Federal Employees Retirement System or the Civil Service Retirement System. Both are defined-benefit types of programs in which the annuity is based on years of service and an employee’s salary in the highest three consecutive years of pay, called the high-3.

CSRS provides only the civil service annuity, while FERS provides a smaller annuity plus Social Security. In addition, employees in both systems may invest in the defined-contribution Thrift Savings Plan, with FERS employees also eligible for government contributions.

Both systems provide service credit for up to six months of unpaid leave time in any calendar year, OPM said, and the high-3 figure is based on the employee’s rate of pay, not the actual salary received.

The potential impact on vacation time and sick leave would vary by the employee’s years of service and the number of furlough days.

Federal employees accumulate annual and sick leave by two-week pay periods within the federal leave year, which started Jan. 13 this year and ends Jan. 11, 2014. All full-time employees accumulate four hours of sick leave each biweekly period, while annual leave accumulation is based on years of service: four hours for those with less than three years of service; six hours for those with between three and 15 years; and eight hours for those with 15 years or more.

However, an employee will not earn leave during the pay period in which he or she reaches a total of 80 hours in a nonpay status during a leave year, OPM said. “If the employee again accumulates 80 hours of nonpay status, he or she will again not earn leave in the pay period in which that new 80-hour total is reached,” it said.

While several agencies have said they anticipate no furloughs or that furloughs would be fewer than 10 days, several others, including the largest, the Defense Department, have warned of the potential for as many as 22 furlough days.

Unpaid time would not carry over from one leave year to the next for that purpose, OPM said.

Leave accrual for part-time employees is prorated by the hours worked in each pay period, and therefore they would earn less in each pay period in which they were furloughed on a regularly scheduled work day.

Separate new guidance said that agencies must pay the travel expenses of employees whose travel status requires a stay that includes a furlough day.

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Lisa Rein | March 1, 2013