LEO Fair Retirement Act

Summary#

This bill changes how some federal law enforcement officers’ retirement pay (annuity) is calculated. If an officer worked hours that would have earned law-enforcement premium pay but were not paid because of pay caps, those unpaid amounts can be counted in the officer’s average pay for pension calculations. To get this, the officer must either make a required lump-sum payment to the Office of Personnel Management (OPM) or accept an actuarial reduction of their annuity. The lump-sum equals the difference between what the officer and employer would have contributed over the three consecutive years used to compute average pay if the unpaid premium pay had been included and what was actually contributed. The bill amends both CSRS (section 8339) and FERS (section 8415), says the annuity limit in section 8339(f) still applies, and applies to annuities calculated one year after enactment. OPM must write implementing regulations within one year and may allow transfers from a Thrift Savings Plan (TSP) account to make the lump-sum payment. Agencies must keep and provide payroll information needed for the calculations.

The bill also expands eligibility for availability pay (an extra pay category) to a list of covered employees, including Postal Inspectors, GS-1811 criminal investigators, federal air marshals, Diplomatic Security special agents, probation officers, and pretrial services officers. It adds a tax provision that lets individuals claim a nonrefundable personal tax credit for lump-sum payments made under the new retirement rules.

What it means for you#

• If you are a covered federal law enforcement officer nearing retirement, you may be able to have unpaid premium pay counted in your pension average pay.
• You can ask OPM for an estimate no later than 180 days before your annuity starts, showing the lump-sum required and the change in monthly annuity if you make the payment versus if you do not. You then have 90 days after getting that estimate to make an irrevocable election.
• You may pay the lump-sum from your TSP account if OPM rules allow a transfer, or choose an actuarial reduction in place of the lump-sum.
• The change applies to annuities computed on or after one year after the law is enacted.
• Certain criminal investigators and related employees become eligible for availability pay under the bill.

Expenses#

• The bill creates a nonrefundable personal tax credit for lump-sum payments, but no dollar estimates of federal revenue effects or program costs are included in the text. No publicly available information on estimated federal costs or savings is provided in the bill text or metadata.
• Administrative actions required include OPM rulemaking (within one year) and agency payroll record retention and reporting to support retroactive calculations.

Proponents' View#

Proponents state in the bill findings that federal law enforcement officers face unique, stressful, and dangerous duties and that overtime or premium hours are sometimes effectively unpaid because of statutory pay caps. The bill is presented as a way to let officers reclaim retirement credit for premium pay hours that were limited by those caps, and to give affected officers a path to include that pay in pension averages through a lump-sum payment or actuarial adjustment. Proponents also point to expanding availability pay eligibility to specified criminal investigators and related employees.

Opponents' View#

No publicly available information.