United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter 

Number: 04-105 Date: December 7, 2004 

Subject: Enhanced Annuity for Certain Federal Employees’ Retirement System 

(FERS) Employees Receiving Compensation from the Office of Workers’ 

Compensation Programs (OWCP) 

Introduction 

Public Law 108-92 was signed on October 3, 2003. The law allows a 1 percent annuity 

enhancement for certain Federal Employees’ Retirement System (FERS) employees receiving 

disability compensation from the Office of Workers’ Compensation Programs (OWCP). This 

provision is designed to make up for FERS beneficiaries’ inability to participate in Social 

Security or the Thrift Savings Plan during a period of absence from the workplace while 

receiving workers’ compensation benefits. The purpose of the Benefits Administration Letter is 

to provide guidance on when and how this enhanced annuity formula is applied. 

Eligibility for an Enhanced Annuity under Public Law 108-92 

A FERS employee who receives OWCP benefits during qualifying periods of absence is eligible 

for the enhanced annuity computation if the sum of all qualifying periods of absence totals 2 

months or more. An employee’s qualifying periods of absence include: 

• A period of leave without pay (LWOP) while the employee is performing no work and is 

receiving OWCP benefits. 

• A period of separation from service while receiving OWCP benefits, if the former 

employee is later reinstated in Federal service and earns title to a FERS annuity. 

• A period of retirement while receiving OWCP benefits in lieu of annuity payments, if the 

annuitant is later reemployed in the Federal service and earns title to a new FERS 

annuity. 

In order for the employee to receive the enhanced annuity computation, his or her final 

separation for retirement must be on or after October 3, 2003. If the employee transferred from 

the Civil Service Retirement System (CSRS) to FERS, OPM will apply the enhanced formula to 

any qualifying periods that are creditable under FERS rules (i.e., periods that are not part of the 

employee’s CSRS component). 
Annuity Computation 

The annuity of an employee who qualifies for the enhanced benefit equals the sum of: 

 The regular annuity computed under the appropriate FERS annuity formula, 

plus

 The enhanced benefit computed by multiplying the number of years and full months of 

qualifying service by 1 percent. 

EXAMPLE

A 56 year old employee has a total of 26 years, 7 months, and 27 days of total creditable FERS 

service; 2 years, 2 months, and 18 days of which was qualifying OWCP service. The 

employee’s high-3 average salary is $50,000. The employee’s basic annuity will be calculated 

as follows: 

 26 years 7 months (26.583333) x 1 % x $50,000 = $13,291.67 (regular annuity)

plus 

 2 years 2 months (2.166667) x 1% x $50,000 = $1,083.33 (enhanced benefit)

equals 

 $14,375.00 (Basic Annuity with Enhanced Benefit) 

If the employee retired at age 62 or older, the computation would be as follows: 

 26 years 7 months (26.583333) x 1.1 % x $50,000 = $14,620.83 (regular annuity)

plus 

 2 years 2 months (2.166667) x 1% x $50,000 = $1,083.33 (enhanced benefit)

equals 

 $15,704.16 (Basic Annuity with Enhanced Benefit) 

If the employee retired as a law enforcement officer at age 55, the computation would be as 

follows: 

 20 years 0 months (20.0) x 1.7 % x $50,000 = $17,000, plus 

6 years 7 months (6.583333) x 1% x $50,000 = $3,291.67, equals 

$20,291.67 (regular annuity) 

plus 

 2 years 2 months (2.166667) x 1% x $50,000 = $1,083.33, (enhanced benefit) 

equals 

 $21,375.00 (Basic Annuity with Enhanced Benefit) 

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OWCP Benefit and Disability Retirement 

Employees are encouraged to apply for OWCP and disability retirement simultaneously. This 

process provides a safety net because an annuitant may have his or her disability annuity 

reinstated if OWCP benefits are terminated for any reason, and it protects survivor benefits in the 

event that the annuitant dies from an injury or illness not related to his or her job injury. The 

annuitant must choose between OWCP and disability retirement when both benefits are 

approved. The enhanced 

formula does not apply to the FERS disability annuity computed using 60 percent or 40 percent 

of the high-3 average salary. 

Annuitant Who Returns to Work 

An annuitant may qualify for the enhanced formula for the periods when he or she received 

OWCP benefits in lieu of annuity, if he or she returns to work and retires with a new FERS 

annuity on or after October 3, 2003. 

If the original annuity terminates on reemployment, and the employee separates meeting the age 

and service requirements for a new FERS annuity, the employee may receive credit under the 

enhanced formula for qualifying periods of absence when he or she received OWCP benefits, 

including periods when he or she received OWCP benefits in lieu of annuity. 

If the original annuity does not terminate upon reemployment, and the reemployed annuitant 

works long enough to meet the eligibility criteria for a redetermined annuity under FERS (five 

years of actual, continuous, full-time reemployed service, or part-time reemployed service 

equivalent to 5 years of full-time service), the employee may receive credit under the enhanced 

formula for qualifying periods of absence when he or she received OWCP benefits, including 

periods when he or she received OWCP benefits in lieu of annuity. 

Disability Annuitant Whose Annuity Terminates Without Reemployment 

If a disability annuity terminates due to restoration or medical recovery, and the annuitant is not 

reemployed, he or she has a “deemed involuntary separation” and may be eligible for a new non 

disability retirement benefit. See Chapter 60, Parts 60A9 and 60B6 of the Handbook. If a 

disability annuity that began before October 3, 2003, terminates on or after October 3, 2003 and 

the annuitant is not reemployed, OPM will apply the enhanced formula in the computation of the 

non-disability benefit that results from the deemed involuntary separation. OPM will apply the 

enhanced formula to qualifying periods of absence when the annuitant received OWCP benefits 

before he or she initially retired on disability. However, unless the annuitant earns title to a new 

annuity based on reemployment, OPM will not credit periods after the annuitant’s original 

separation for disability retirement. 

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Disability Annuitant Whose Annuity is Recomputed at Age 62 

When a FERS disability is recomputed at age 62, the amount of service used in that computation 

includes the amount of actual creditable service the individual performed before retirement plus 

the amount of time during which the individual received disability annuity or received OWCP 

benefits in lieu of disability annuity. The time during which the individual received disability 

annuity or OWCP benefits in lieu of disability annuity is typically not a qualifying period of 

absence under Public Law 108-92 and the individual is not entitled to the enhanced formula for 

that time. The individual also is not entitled to the enhanced formula for any time before the 

original disability retirement during which he or she may have received OWCP benefits if the 

original disability retirement was based on a separation before October 3, 2003. 

Documentation of Service 

To ensure accurate processing of claims until OPM can revise the standard form 3107-1, FERS 

retirement application, the human resource office must document OWCP time under the 

Certified Summary of Federal Service, section B of the retirement application. Make a separate 

entry for each qualifying period of absence when the employee received OWCP benefits that is 

documented in the employee’s Official Personnel Folder (OPF) and reference P.L. 108-92. 

Please also note any additional OWCP time the employee may claim that is not verified in the 

OPF. OPM will verify the OWCP time when it receives the retirement package. 

EXAMPLE

Employee Information: 

Name: Wayne Jeffries 

Date of Retirement: 08-31-2005 (Early Optional) 

Service: 

Army - Active Duty Military: 10-12-1978 to 10-11-1982 (deposit paid) 

NASA: 01-04-1983 to 06-15-1987 (non-deduction – deposit paid 

Department of Agriculture: 06-16-1987 to 04-18-2000 (FERS) 

Break in Service:

(lwop for OWCP: 08-25-1992 to 12-15-1993) 

04-19-2000 to 03-15-2001 (OWCP) 

Department of Agriculture: 03-16-2001 to 01-08-2003 (FERS) 

Department of Navy: 01-09-2003 to 08-31-2005 (FERS) 

4 
FERS

Federal Employees

Retirement System Certified Summary of Federal Service 

Federal Employees Retirement System 

Office of Personnel 

Management 

5 CFR Part 841 

Information for Agency Instructions for Employee 

Section A – Identification 

1. Wayne Jeffries 

Section B – Verified Service History Documented in Official Personnel Records 

Appointment, Separation, or 

Conversion Dates for Civilian 

and Active Honorable Military 

Service 

Federal Agency or 

Military Service Branch 

From To 

Name of 

Retirement System* 

Remarks and Non-Creditable Time** 

U.S. Army 10-12-78 10-11-1982 Honorable Active 

Duty 

Military deposit paid in full 

NASA 01-04-1983 06-15-1987 FICA Deposit paid in full – CSD 8 88888 

Department of 

Agriculture 06-16-1987 04-18-2000 FERS 

(OWCP 08-25-1992 12-15-1993 Lwop – OWCP – PL 108-92) 

Separation – OWCP 04-19-2000 03-15-2001 OWCP – PL 108-92 

Department of 

Agriculture 

03-16-2001 01-08-2003 FERS 

Department of Navy 01-09-2003 08-31-2005 FERS Voluntary Early Retirement 

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The next revision of Chapter 102 of the Handbook will discuss enhanced annuity computations 

under Public Law 108-92. 

Please do not hesitate to call or e-mail your contact in the Benefits Officers Training and 

Development Group if you have any questions. 

 

 Raymond J. Kirk, Manager 

 Benefits Officers Training & Development Group 

 Human Capital Leadership & Merit Systems Accountability 

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