Key Takeaways
- The FERS high three average is based on your highest-paid consecutive 36 months, not always the final three years.
- Understanding what counts—and what doesn’t—avoids common mistakes and supports more accurate retirement planning.
For many federal employees, the “high three” salary average is a crucial part of FERS retirement planning. Yet, misunderstandings are common. By clarifying facts and dispelling myths, you can better understand this calculation and support your retirement goals with confidence.
What Is the FERS High Three?
Definition of High Three Average
The “high three” under the Federal Employees Retirement System (FERS) is your average annual basic pay over the highest-paid consecutive 36 months of federal service. These months do not have to be the last three years before retirement. Instead, the system automatically selects whichever 36-month period produced your highest average pay, as long as they are consecutive.
Who Determines High Three Period
Your employing agency, guided by federal regulations and the Office of Personnel Management (OPM), is responsible for identifying and certifying your high three period. They review your pay history and calculate the average, which is then verified during retirement processing. OPM provides official oversight and final confirmation.
How Is the High Three Calculated?
Which Salaries Count
Only your basic pay earned as a federal employee counts toward the high three average. This includes regular salary and locality adjustments, but not overtime, bonuses, awards, or other premium pay. The calculation focuses on the fixed, pensionable elements of your compensation.
Calculation Steps
- Identify the consecutive 36 months of federal service with the highest average annual basic pay.
- Add up your total pay from that period (including locality pay).
- Divide by three to calculate the annual average.
The result is your high three average salary, which forms the base for your FERS pension calculation.
Periods That Do Not Count
Periods when you were not on the federal payroll, such as breaks in service, leave without pay exceeding six months in a calendar year, or long-term unpaid leave, typically do not count toward the high three period. Those months are skipped, so only your time in paid status counts toward the calculation.
Do Promotions Affect Your High Three?
Increases During High Three Period
Promotions, step increases, and locality pay adjustments can significantly impact your high three average. If you receive a raise, any subsequent months at the higher rate are counted if they fall within the highest consecutive 36-month window. For example, if you are promoted near the end of your career, those higher-salary months may make up your high three, even if they are not your last three years in service.
Temporary Pay Considerations
Temporary pay increases—such as acting assignments or detail stipends—may count if they are included in basic pay for retirement purposes. However, short-term bonuses or non-pensionable premiums do not. Always check whether a pay component is considered basic pay under OPM rules before assuming it will be included.
Does Leave Without Pay Impact High Three?
Types of Leave Considered
Leave without pay (LWOP) may affect your high three calculation, depending on its length and purpose. Short periods, especially those covered under certain federal leave policies (such as military leave or Family and Medical Leave Act provisions), are typically treated as creditable service for high three purposes. Extended LWOP over six months in a calendar year is excluded from your high three period.
Impact on Average Salary
Time spent in non-creditable LWOP does not reduce your high three figure; those months are simply not counted. The calculation will skip them, ensuring only months with eligible pay contribute to your average. This helps you avoid lower averages due to unpaid absences, but may mean your high three period is shifted back further in your career.
What Are Common High Three Misconceptions?
Mistaking High Three for Highest Salary
Many employees believe their high three always means their last three years of pay. In reality, it is the highest-paid consecutive 36 months anywhere in your career. For some, this could be a period earlier than the end of service, especially if job changes or location adjustments temporarily raised your pay.
Including Overtime or Awards
Another widespread myth involves the types of pay included. Overtime, bonuses, performance awards, and other one-time or premium payments do not count. Only regular salary and eligible locality payments are used for the high three calculation.
Assumptions About Sick Leave Inclusion
Unused sick leave does not add time to your high three calculation. However, it can be credited toward your total service length, affecting your pension calculation independently. The high three itself is based solely on paid salary, not accumulated leave.
Where to Find High Three Details?
Official OPM Guidance
The most reliable and current information comes directly from the OPM website and official OPM publications. These resources provide definitions, calculation examples, and regulatory language so you can understand every aspect of the high three calculation clearly.
Reviewing Your SF-50
Your SF-50 Notification of Personnel Action forms provide a detailed pay history throughout your federal career. Review these documents to verify pay rates and periods of service. Accurate SF-50 records are essential for confirming your high three and addressing any discrepancies before retiring.
Can You Estimate Your FERS Pension?
Simple Estimation Formula
A basic estimate of your FERS pension uses the formula: High Three Average Salary × Years of Creditable Service × 1%. For most employees, 1% is the standard multiplier. If certain conditions are met (such as retiring at age 62 with at least 20 years of service), a higher multiplier may apply, as specified in OPM rules.
Factors That May Change the Amount
Several factors can adjust your final pension, including your total years of service, type of retirement, survivor elections, unpaid leave, and eligible deductions. Any service or pay changes, or shifts in your high three period, will naturally affect your ultimate retirement income.
Why Does Understanding High Three Matter?
Long-Term Retirement Planning
Knowing how your high three is calculated allows you to make informed decisions during your career. This understanding can help you plan transitions, promotions, or location changes with your long-term retirement benefits in mind.
Avoiding Retirement Surprises
Awareness prevents last-minute surprises or disappointments. By reviewing your pay records and understanding what counts, you align expectations with reality and reduce the risk of miscalculations when retirement approaches.
What If You Have Further Questions?
Where to Find More Resources
OPM’s official retirement resources, agency human resources offices, and informational guides are the best sources if you have further questions about your high three calculation and federal retirement benefits.
Frequently Asked Questions
OPM and agency HR websites often maintain detailed FAQ sections addressing common scenarios and clarifications on high three calculation, creditable service, and retirement eligibility. Regularly checking these updates keeps you informed as policies or rules evolve.
