FERS High-3 Salary: How It Is Calculated (With Examples)
Almost every dollar of your FERS pension traces back to one number: your High-3 average salary. Because the annuity formula multiplies this figure by your years of service, getting it right is the single most important step in any retirement estimate.
- High-3 is the highest average of basic pay over any 36 consecutive months.
- Only "basic pay" counts — overtime, bonuses, and most lump sums do not.
- Locality pay generally counts; the three years usually aren’t your final calendar years.
- The FERS formula is High-3 × years of creditable service × multiplier (1.0% or 1.1%).
What "High-3" actually means
Your High-3 is the highest average annual rate of basic pay you earned during any 36 consecutive months of creditable Federal service. The word "consecutive" matters: it is a continuous three-year window, not your three best calendar years cherry-picked from a career. For most employees the High-3 falls in the final three years of service because pay generally rises over time — but that is a tendency, not a rule. An employee who took a downgrade, moved to a lower locality, or dropped to part-time at the end of their career may have a High-3 that sits earlier in their timeline.
What counts as "basic pay"
The High-3 is built only from basic pay — the pay from which retirement deductions are withheld. This is a narrower figure than your total gross income.
- Counts: your scheduled base salary and locality pay (and certain law-enforcement availability pay or premium pay specifically defined as basic pay).
- Does NOT count: overtime, bonuses and awards, holiday pay, military pay, "cash" allowances, and most one-time lump-sum payments.
How the 36-month window is chosen
OPM looks across your entire service history and identifies the continuous 36-month stretch that produces the highest average. Each pay rate is weighted by how long you held it. If you received a step increase or promotion partway through a year, the average reflects the portion of the year at each rate — not a simple average of the salaries.
A worked example
Suppose an employee held these basic-pay rates during their final three years:
| Period | Annual basic pay | Time at rate |
|---|---|---|
| Year 1 | $98,000 | 12 months |
| Year 2 | $101,000 | 12 months |
| Year 3 | $104,000 | 12 months |
The simple average here is ($98,000 + $101,000 + $104,000) ÷ 3 = $101,000. That $101,000 is the High-3. Now apply the FERS formula for someone retiring at 62 with 30 years of service and the 1.1% multiplier: $101,000 × 30 × 1.1% = $33,330 per year before survivor elections and insurance deductions.
The 1.0% vs 1.1% multiplier
The standard FERS multiplier is 1.0% per year of service. It increases to 1.1% only if you retire at age 62 or older with at least 20 years of creditable service. On a 30-year career that 0.1% difference is worth roughly 10% more pension for life, which is why many employees model working until 62 specifically to capture it.
You can apply your own numbers using the FERS annuity calculator, and see how the High-3 flows into a full retirement picture in the full retirement analysis.
Does locality pay count toward my High-3?
Yes. Locality pay is part of basic pay, so it is included in the High-3 average for most General Schedule employees.
Do overtime hours increase my High-3?
Generally no. Overtime is not basic pay and is excluded, with limited exceptions such as certain law-enforcement availability pay that is statutorily defined as basic pay.
Is the High-3 always my final three years?
Usually, because pay tends to rise, but not always. If your highest-paid 36 consecutive months occurred earlier, that window is used instead.
Where can I confirm the official rules?
The Office of Personnel Management publishes the authoritative FERS computation rules at opm.gov. This article is educational and not a substitute for an official OPM estimate.
Authoritative reference: OPM — FERS Information. This site is not affiliated with the U.S. government.