Federal Retirement
Comparison of High-3, 4, and 5 Salary Factors Gao ID: GGD-97-84R April 25, 1997Pursuant to a congressional request, GAO provided information on the effects of changing the high-3 salary factor in the formulas that are currently used to compute Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) pension benefits.
GAO noted that: (1) employees retiring under either CSRS or FERS would need to work longer to receive annuities under a high 4 or high 5 that would be comparable to the annuities they would have received under a high 3, before any change in the annuity compensation factor; (2) the amount of extra time, however, is measured in months rather than years; (3) reasons why include the fact that an employee's pay normally increases when he or she works longer, thus, so does the employee's annuity at retirement; (4) employees who work into the next calendar year in order to earn comparable annuities can receive general schedule pay increases early in the calendar year as well as step increases; and (5) in addition, the extra time employees work is added to their years of creditable service, which also increases the value of their annuities at retirement.