Payroll Personnel Output (PPO)

Appendix A: High-3 Average Pay Computations

Example 1 - High-3 Average Pay Computation

The employee's proposed date of retirement is 5/3/2013. Find rates of basic pay in effect for the pay period 5/3/2010 to 5/3/2013. The employee's pay history is shown below.

For each change in the employee's pay rate, determine the time interval that was in effect, the time factor for the interval, the annual pay in effect for the interval, and the pay earned during the interval.

1. The first interval begins on 5/3/2013, the proposed retirement date, and ends on 8/5/2012, the effective date of the first change in annual pay. The number of days in this interval is determined by subtracting the interval begin date from the interval end date. The result is 269 days.

   5/3/2013 - 8/5/2012 = 8 months, 29 days

   (8 x 30) + 29 = 269 days

2. The time factor for this interval is computed as Number of Days Interval / 360, PSBS Personal Statement of Benefits System assumes that a month is 30 days, so a year is equal to 360 days (30 x 12 = 360). So, for the first interval the time factor is 269 / 360. The result is 0.747222.
3. The annual pay in effect for this time interval is $29,400.00.
4. The pay earned for the time interval is computed as Time Factor x Annual Pay. So, for the first interval, the pay earned is 0.747222 x $29,400.00. The result is $21,968.33 estimated earnings this interval.

   Repeat steps 1 through 4 for each of the intervals in the 3-year period. See the completed chart below.

   End Date of Pay Change or Retire Date	Begin Date of Pay Change or Retire Date	Number of Days in Interval	Time Factor (Number of Days in Interval / 360)	Annual Salary in Effect	Pay Earned (Time Factor x Basic Pay)
   05/03/2013	08/05/2012	269	.747222	$29,400.00	$21,968.33
   08/04/2012	12/04/2011	238	.66111	$28,001.00	$18,511.77
   12/06/2011	04/06/2011	241	.669444	$27,653.00	$18,512.13
   04/05/2011	06/03/2010	303	.841667	$25,003.00	$21,044.20
   06/025/2010	05/04/2010	29	.080556	$23,890.00	$1,924.48

5. Determine the total estimated pay earned in the 3-year period. The result is $81,960.91.
6. Divide the total estimated pay earned by 3. If the employee does not have 3 years of salary data, use the actual length of service (total of time factors) to compute the high-3 average pay.

   $81,960.91 / 3 = $27,320 Estimated High-3 Average Pay

Example 2 - High-3 Average Pay Computation for U.S. Custom Officers covered by COPRA Customs Officer Pay Reform Act and Retirement Coverage Code 1

For the purposes of this statement, retirement benefits payable within the next 3 years have been estimated using a high-3 consisting of earnings including allowable overtime where possible. To estimate an eligible retirement date, PSBS Personal Statement of Benefits System assumes the tax year is 01/01 to 12/31 in this instance. By multiplying the total retirement deductions for a year by a factor of 1 divided by the retirement deduction rate (Factor Rate), the earning figure which yielded the deductions can be determined. This estimated earnings figure is used to determine an estimate of the employee's high-3.

The employee's proposed date of retirement is 10/15/2013. Find retirement deductions and rates of basic pay in effect for the 3 years ending on 10/15/2013. The employee's pay history is shown below.

For each period of retirement deductions or change in pay, determine the number of days in the interval, the time factor for the interval, the estimated salary plus overtime for the year covering the interval, and the earnings accumulated during the interval.

1. Because the 3-year window starts on 10/15/2010, the first interval begins on 10/15/2010 and ends on 12/31/2010. The number of days in this interval is determined by subtracting the begin date from the end date. The result is 75 days.

   12/31/2010 - 10/15/2010 = 75 days

2. The time factor for the first interval is computed as Number of Days in Interval divided by 360. PSBS Personal Statement of Benefits System assumes that a month is 30 days and a year is 12 months, so one year is equal to 360 days (30 x 12 = 360). So, for the first interval,the time factor is 75 / 360. The result is 0.208333.
3. The estimated salary plus overtime for 2010 is $48,545.42. This amount is found in the Employee History Table above. If tax year retirement deductions are not available for a time interval, use the employee's estimated salary for the interval. For example, on line 4 of the Time Factor Calculations Table below, the interval is 01/01/2013 to 10/15/2013. The salary in effect on this date is $52,395.18.
4. The estimated salary plus overtime earned in the first interval is computed as Salary x Time Factor. So, for the first interval, the amount earned is 0.208333 x $48,545.42. The result is $10,113.61 estimated earnings in this interval.

   Repeat steps 1 through 4 for each of the time intervals in the 3-year period. See the completed chart below.

   Line Number	Salary Interval Begin Date	Salary Interval End Date	Number of Days in Interval	Time Factor	Estimated Salary Plus Overtime	Amount Earned This Interval
   1	10/15/2010	12/31/2010	75	0.208333	$48,545.42	$10,113.61
   2	01/01/2011	12/31/2011	360	1.000000	$53,359.15	$53,359.15
   3	01/01/2012	12/31/2012	360	1.000000	$53,935.15	$53,935.15
   4	01/01/2013	10/15/2013	285	0.791667	$53,935.18	$42,698.70
   Totals				3.000000		$160,106.64

5. The total estimated salary, including allowable overtime, earned during the 3-year interval is estimated at $160,106.64. Divide this figure by 3 to determine the employee's high-3 figure. If the employee does not have 3 years of salary data, use the actual length of service (total of time factors) to compute High-3 average pay.

   $160,106.64 / 3 = $53,369 Estimated High-3 Average Pay

Example 3 - High-3 Average Pay Computation for U.S. Customs covered by COPRA and Retirement Coverage Code K or C

For the purposes of this statement, retirement benefits payable within the next 3 years have been estimated using a high-3 consisting of earnings including allowable overtime where possible. To estimate an eligible retirement date, PSBS Personal Statement of Benefits System assumes the tax year is 01/01 to 12/31 in this instance. By multiplying the total retirement deductions for a year by a factor of 1 divided by the retirement deduction rate (Factor Rate), the earnings figure which yielded the deductions can be determined. The estimated earnings figure is used to determine an estimate of the employee's high-3.

The employee's proposed date of retirement is 3/18/2013. Find retirement deductions and rates of basic pay in effect for the 3 years ending on 3/18/2013. The employee's pay history is shown below.

For each period of retirement deductions or change in pay, determine the number of days in the interval, the time factor for the interval, the estimated salary plus overtime for the year covering the interval, and the earnings accumulated during the interval.

1. Because the 3-year window starts on 3/18/2010, the first interval begins on 3/18/2010 and ends on 12/31/2010. The number of days in this interval is determined by subtracting the begin date from the end date. The result is 282 days.

   12/31/2010 - 03/18/2010 = 282 days

2. The time factor for the first interval is computed as Number of Days in Interval divided by 360. PSBS Personal Statement of Benefits System assumes that a month is 30 days and a year is 12 months, so one year is equal to 360 days (30 x 12 = 360). So, for the first interval, the time factor is 282 / 360. The result is 0.0783333.
3. The estimated salary plus overtime for 2010 is $110,781.25. This amount is found in the Employee History Table above. If tax year retirement deductions are not available for a time interval, use the employee's estimated salary for the interval. For example, on line 4 of the Time Factor Calculations Table below, the interval is 01/01/2013 to 03/18/2013. The salary in effect on this date is $118,733.75.
4. The estimated salary plus overtime earned in the first interval is computed as Salary x Time Factor. So, for the first interval, the amount earned is 0.783333 x $110,781.25. The result is $86,778.81 estimated earnings this interval.

   Repeat steps 1 through 4 for each of the time intervals in the 3-year period. See the completed chart below.

   Line Number	Salary Interval Begin Date	Salary Interval End Date	Number of Days in Interval	Time Factor	Estimated Salary Plus Overtime	Amount Earned This Interval
   1	03/18/2010	12/31/2010	282	0.783333	$110.781.25	$86,778.61
   2	01/10/2011	12/31/2011	360	1.000000	$113,833.75	$113,833.75
   3	01/01/2012	12/31/2012	360	1.000000	$118,733.75	$118,733.75
   4	01/01/2013	03/18/2013	78	0.216667	$118,733.75	$25,725.69
   Totals				3.000000		$345,071.80

5. The total estimated salary, including allowable overtime, earned during the 3-year interval is estimated at $345,071.80. Divide this figure by 3 to determine the employee's high-3 figure. If the employee does not have 3 years of salary data, use the actual length of service (total of time factors) to compute High-3 average pay.

   $345,071.80 / 3 = $115,024 Estimated High-3 Average Pay

Example 4 - High-3 Average Pay Computation for U.S. Customs Officers covered by COPRA and Retirement Coverage Code O or Q

For the purposes of this statement, retirement benefits payable within the next 3 years have been estimated using a high-3 consisting of earnings including allowable overtime where possible. To estimate an eligible retirement date, PSBS Personal Statement of Benefits System assumes the tax year is 01/01 to 12/31 in this instance. By multiplying the total retirement deductions for a year by a factor of 1 divided by the retirement deduction rate (Factor Rate), the earnings figure which yielded the deductions can be determined. The estimated earnings figure is used to determine an estimate of the employee's high-3.

The employee's proposed date of retirement is 4/18/2013. Find retirement deductions and rates of basic pay in effect for the 3 years ending on 4/18/2013. The employee's pay history is shown below.

For each period of retirement deductions or change in pay, determine the number of days in the interval, the time factor for the interval, the estimated salary plus overtime for the year covering the interval, and the earnings accumulated during the interval.

1. Because the 3-year window starts on 4/28/2010, the first interval begins on 4/28/2010 and ends on 12/31/2010. The number of days in this interval is determined by subtracting the begin date from the end date. The result is 242 days.

   12/31/2010 - 04/28/2010 = 242 days

2. The time factor for the first interval is computed as Number of Days in Interval divided by 360. PSBS Personal Statement of Benefits System assumes that a month is 30 days and a year is 12 months, so one year is equal to 360 days (30 x 12 = 360). So, for the first interval, the time factor is 242 / 360. The results is 0.672222.
3. The estimated salary plus overtime for 2010 is $105,664.24. This amount is found in the Employee History Table above. If tax year retirement deductions are not available for a time interval, use the employee's estimated salary for the interval. For example, on line 4 of the Time Factor Calculations Table below, the interval is 01/01/2013 to 04/28/2013. The salary in effect on this date is $115,158.47.
4. The estimated salary plus overtime earned in the first interval is computed as Salary x Time Factor. So, for the first interval, the amount earned is 0.672222 x $105,622.24. The result is $71,016.38 estimated earnings this interval.

   Repeat steps 1 through 4 for each of the time intervals in the 3-year period. See the completed chart below.

   Line Number	Salary Interval Begin Date	Salary Interval End Date	Number of Days in Interval	Time Factor	Estimated Salary Plus Overtime	Amount Earned This Interval
   1	04/28/2010	12/31/2010	242	0.672222	$105.644.24	$71,016.38
   2	01/10/2011	12/31/2011	360	1.000000	$112,089.36	$112,089.36
   3	01/01/2012	12/31/2012	360	1.000000	$115,158.47	$115,158.47
   4	01/01/2013	04/28/2013	118	0.327777	$115,158.47	$37,746.30
   Totals				3.000000		$336,010.51

5. The total estimated salary, including allowable overtime, earned during the 3-year interval is estimated at $336,010.51. Divide this figure by 3 to determine the employee's high-3 figure. If the employee does not have 3 years of salary data, use the actual length of service (total of time factors) to compute High-3 average pay.

   $336,010.51 / 3 = $112,004 Estimated High-3 Average Pay