Ask Reg: How does a mid-year pay increase affect my High Three?

The following is a question submitted by a reader to Federal Times columnist Reg Jones, a charter member of the senior executive service and the resident expert on federal employee retirement issues.

A Fed Times reader asks:

“In August of 2023 IHS Pharmacists received a roughly 21% increase in their pay. I am retiring at the end of 2024.

How does this increase impact my high three calculation (last 3 years for me)?

For 2023, does it use what my new base pay was after the increase or 17/26 x the ‘old’ base pay + 9/26 x ‘new’ base pay?”

Reg’s response:

When you retire, the high-3 that’s used in your annuity computation will be the average of your highest three consecutive years (78 bi-weekly pay periods) of basic pay.