FERS Medical Retirement, learn about retiring from the federal government with a disability pension.
40% of the disability annuitant’s high-three average salary minus 60% of the disability annuitant’s Social Security disability benefit for any month the disability annuitant is entitled to Social Security disability benefits.
However, if the disability annuitant is entitled to the retired FERS employee “earned” (regular) FERS annuity (equal to 1 percent of the annuitant’s high-three average salary multiplied by the annuitant’s years and months of FERS service), the retired employee will receive that annuity. Years and months of service includes temporary service and/or military service for which a full deposit was made, and unused sick leave hours converted to months and days of service.
When a FERS disability annuitant becomes age 62, the annuitant’s disability annuity will be recomputed by OPM’s retirement office using an amount that the disability annuitant would have received had he or she continued working until the day before his or her 62nd birthday, and then retired under FERS non-disability provisions.In the computation of the disability annuity at the time the disability annuitant becomes age 62, OPM’s retirement office increases the disability annuitant’s FERS service time by the number of years the disability annuitant received a FERS disability annuity. The high-three average salary will be increased by all FERS cost-of-living adjustments (COLAs) which occurred during the time the disability annuitant received a disability annuity. The FERS “basic” annuity formula (equal to 1 percent of the FERS employee’s high-three average salary multiplied by the total years and months of service) is then applied by OPM’s retirement office. The total months of service include temporary time and military service for which a full deposit was made, and unused sick leave hours. If the actual service time, plus the credit for the time receiving a disability annuity, equals 20 or more years, then the accrual factor increases from 1 percent to 1.1 percent.
The following table summarizes how the FERS disability annuity is computed by OPM’s retirement office at the various stages of a FERS disability annuitant’s retirement:
| Stage of Retirement | Disability Annuity Computation |
| First 12 months of FERS disability retirement | 60% of high-three average salary less 100% of Social Security disability benefit, if entitled |
| Starting the 13th month after FERS disability retirement starts and through the month before the month the disability annuitant becomes age 62 | 40% of high-three average salary less 60% of Social Security disability benefit, if entitled. |
| Starting the month in which the disability annuitant becomes age 62 | The amount the disability annuitant would have received if he or she had worked until the day before his or her 62nd birthday |
The following example illustrates the various calculations associated with a FERS disability retirement:
Margaret, age 56, has been approved for a FERS disability retirement. She also applied for and was approved for Social Security benefits.
Relevant information:
Years of service under FERS before being approved for FERS disability retirement: 14
High-three average salary: $120,000
Social Security disability benefit: $10,000 per year
The following table shows Margaret’s FERS disability annuity amounts at various stages of Margaret’s disability retirement:
| First 12 months of disability retirement | 60% of $120,000 less 100% of $10,000 = $72,000 – $10,000 = $62,000 |
| Starting the 13th month after disability retirement starts and through the month before the month Margaret becomes age 62 | 40% of $120,000 less 60% of $10,000 = $48,000 – $6,000 = $42,000 |
| Starting at age 62 | 201 times 1.1% times ($120,000 times 1.1052) = $29,1723 |
1 At age 62 Margaret would have 20 years of service (14 years of actual FERS service and 6 years receiving her FERS disability annuity).
2 Between the time that Margaret’s disability annuity started at age 56 and the year Margaret became age 62, FERS COLAs totaled 10.5%.
3 Starting the year after Margaret becomes age 62, Margaret is eligible to receive her first FERS annuity COLA.
Edward A. Zurndorfer is a Certified Financial Planner, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street – Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While the employees of Serving Those Who Serve are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
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