As a full-time federal employee, you are able to accrue 104 hours of sick leave every year. While the primary purpose of sick leave is to provide short-term income protection in the event of illness or injury, it can also become an important benefit to leverage near or at retirement.
There is no cap on the amount of sick leave that may be carried over from year to year. Therefore, earned sick leave can significantly accumulate over a 20 or 30-year career. As a result, you can potentially have your monthly retirement pension increased through unused sick leave. But, how does this actually work?
When you retire, your sick leave is converted to additional creditable service that is used in computing your retirement benefit. While sick leave may add an extra year or several months to your length of service for the annuity calculation, it can’t be used to make you eligible to retire.
Sick leave can only be added after you have met the age and service requirements for an immediate retirement benefit. If you resign or opt for a deferred retirement, your sick leave balance will be dissolved at the time of your departure, and it can only be restored if you return to federal service.
Furthermore, retirement annuities are based on years and full months of service. Consequently, the amount of credit you will get for your unused sick leave will depend on whether your converted hours are sufficient enough to make a full month. Any days that don’t add up to a full month are discarded.
It’s also important to note that since all months equal 30 days for retirement purposes, sick leave hours are credited and implemented differently than standard work hours. For retirement calculations, one day is equivalent to 5.8 hours, a month is 174 hours, and a year is 2,087 hours.
To provide further clarity, let’s look at an example of how a retiree’s benefit may increase from unused sick leave at retirement.
Diane plans to retire on December 31, 2021 at age 60. Her retirement service computation date (SCD) is July 10, 1995. Thus, when she retires, Diane will have 26 years, 5 months, and 21 days of creditable service. She has accumulated 1,455 hours of sick leave, which converts to 8 months and 11 days.
Note: Retirement Facts #8 provides a sick leave conversion chart. The chart can be used for both CSRS and FERS employees. If your number of hours falls between two figures, use the next higher number.
| Diane’s Retirement | Years | Months | Days |
| Eligibility Length of Service | 26 | 5 | 21 |
| Unused Sick Leave (1,455 hours) | 8 | 11 | |
| 26 | 13 | 32 | |
| Total Creditable Service for Annuity | 27 | 2 | 2 |
Diane’s creditable service for her annuity calculation will increase from 26 years and 5 months to 27 years and 2 months. The additional two days will not be counted in the annuity computation.
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