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Federal Benefits Q&A

Question: “Are the high-three years calculated by actual pay or by actual grade/step pay scale that you are in? What if you had taken leave without pay intermittently and it was during your highest salary? Also, during the computation of basic pay, is locality pay included?”

Question: “Are the high-three years calculated by actual pay or by actual grade/step pay scale that you are in? What if you had taken leave without pay intermittently and it was during your highest salary? Also, during the computation of basic pay, is locality pay included?”

Answer: The high-three average salary is calculated by averaging a retiring employee's highest three consecutive annual salaries as shown on the employee's SF 50 (Notice of Personnel Action). Note that locality pay adjustments are shown on an employee's SF 50, and therefore are included in the calculation of the high-three average salary. For most employees, who earn their highest salaries at the end of their federal service, the last three year's worth of salaries (ending on the day an employee retires) will be averaged.

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