Does unused sick leave raise my Oregon PERS pension?
How the PERS unused sick leave program works for Tier One and Tier Two members, how the hours are valued, and why OPSRP members don't get it.
Only if you're a Tier One or Tier Two member and your employer takes part in the PERS unused sick leave program. PERS puts a dollar value on half of your unused sick leave hours and adds it to your final average salary, not to your years of service. Hours count only up to 8 per month worked, minus what you used. OPSRP pensions don't use sick leave at all.
Who gets credit for sick leave
Two conditions must both be true:
- You're a Tier One or Tier Two member. That means you first worked in a PERS job before August 29, 2003. PERS's employer guide says the program "only applies to Tier One and Tier Two employees" (PERS: Calculating unused sick leave hours, employer guide).
- Your employer participates. Taking part is the employer's choice, not yours. Once an employer joins, it can't drop out. The State of Oregon participates for all of its employees, including police and fire (Oregon DAS: PERS Tier 1 and 2 sick leave program).
Many cities, counties and school districts also participate, but not all. Your payroll or human resources office can tell you whether yours does.
How PERS values the hours
A common belief is that sick leave adds months of service. It doesn't. Under the PERS rule, the hours are turned into dollars and added to your final average salary (your average pay over your highest-paid years, which the pension formula multiplies by your years of service and a percentage).
The rule, OAR 459-011-0500, works like this for most members:
- Take your monthly final average salary and divide by 173.3 hours to get an hourly rate.
- Multiply that rate by one-half of your accumulated unused sick leave hours.
- Add the result to the final average salary calculation.
School employees and others paid under a contract for fewer hours can have their hourly rate figured from the final contract instead (contract salary divided by contract hours), with some exceptions spelled out in the rule.
Lee, a made-up Tier Two state employee, has a final average salary of $72,000 a year and 1,200 hours of PERS-allowed unused sick leave.
- Monthly final average salary: $72,000 ÷ 12 = $6,000.
- Hourly rate: $6,000 ÷ 173.3 = about $34.62.
- Half the hours: 1,200 ÷ 2 = 600 hours.
- Value: 600 × $34.62 = about $20,772, which PERS adds into the final average salary calculation.
How much the pension rises depends on how that value fits into Lee's averaging period and which formula pays the most. A PERS estimate shows the exact effect.
The 8-hours-a-month cap
PERS doesn't simply use the sick leave balance on your pay stub. It recalculates a "PERS-allowed" balance with limits set in law and rule (PERS: Employer Announcement 88):
- Accrual is capped at 8 hours a month. If your employer's lowest accrual rate for any employee is lower, say 6 hours, the cap is 6. A rate of 12 hours a month still counts as 8.
- Only months you worked count. A month counts if you worked or took paid leave for more than half its days.
- Hours you used come off the top. All sick leave you actually took is subtracted from the capped total.
- Transferred and reinstated hours count toward the cap, but PERS already has them on record, so an employer must subtract them to avoid counting them twice.
- Hours paid out in cash count as used. If you cash out sick leave, those hours don't also raise your pension.
- Donated leave you received and didn't use doesn't count.
At 8 hours a month, the most you can build is 96 hours a year. The Oregon DAS sheet gives an example: with 30 years of service, no more than 2,880 hours could count.
| Years worked | Most hours (8 a month) | Half used by PERS |
|---|---|---|
| 10 | 960 | 480 |
| 20 | 1,920 | 960 |
| 30 | 2,880 | 1,440 |
These are ceilings. Every hour you used for illness comes off.
Which pension calculations it helps
PERS figures a Tier One or Tier Two pension more than one way and pays the highest. Sick leave helps only the methods (Full Formula and Formula Plus Annuity) that use final average salary (PERS: Unused sick leave):
| Method | Sick leave helps? |
|---|---|
| Full Formula | Yes |
| Formula Plus Annuity | Yes |
| Money Match | No, it doesn't use salary |
If Money Match already gives you a larger pension than the formula, sick leave may make no difference to your check. For more on Money Match, see Oregon PERS explained.
Unused vacation is different
Only Tier One members can apply unused vacation pay toward final average salary. PERS says that by law it isn't an option for Tier Two or OPSRP members (PERS: Tier One/Tier Two benefit estimate FAQs).
OPSRP members
If you were hired on or after August 29, 2003, you're in OPSRP. Under Oregon law, unused sick leave "is not used as part of the OPSRP retirement calculation." Employers still report a sick leave field for OPSRP members, usually as zero. What happens to an OPSRP member's sick leave balance when they leave depends on the employer's own policy or union contract, not on PERS.
That's one reason two coworkers with the same pay and years can end up with different pensions: the Tier Two member may get a sick leave boost that the OPSRP member can't. See the three plans compared.
Retirees going back to work
Once sick leave has been counted in your pension, it's treated as used. Employers can't reinstate it if you come back to work as a retiree, or if you return as an active member and retire again later (Oregon DAS: retiree sick leave reinstatement). For more on returning to work, see working after you retire from PERS.
Checking your hours before you retire
Your employer reports your net unused sick leave hours to PERS when you leave your job. PERS reviews the number at retirement and may send the employer a request if it looks wrong. Errors are fixed through a correction request from the employer.
If you think the hours used in your pension are wrong, you can dispute the benefit calculation in writing. Tier One/Tier Two members have 240 days from the notice of entitlement letter, or from the date benefits first became payable if later (PERS: preretirement guide, June 2026). It's easier to fix the count before you leave.
What to do next
- Ask payroll whether your employer participates in the PERS unused sick leave program, and what your PERS-allowed hours are.
- Think before cashing out sick leave. Hours paid in cash don't count toward the pension.
- Request a PERS estimate through Online Member Services or by calling 888-320-7377, and check that it includes your sick leave.
- Keep records of past employers and any transferred hours in case the count is questioned.
Try a higher final average salary in our PERS estimator to see roughly what a sick leave boost could be worth.
Estimate my PERS pensionCommon questions
Does unused sick leave add years of service in Oregon PERS?
No. PERS values half of your allowed hours in dollars and adds that to your final average salary, not to your service credit.
Do OPSRP members get credit for unused sick leave?
No. Unused sick leave isn't part of the OPSRP pension calculation.
How many sick leave hours can count?
Up to 8 hours for each month worked, or your employer's lowest accrual rate if lower, minus hours you used. PERS then uses half of that total.
Does sick leave help if I get a Money Match pension?
No. Money Match is based on your member account, not your salary, so sick leave doesn't change it.
Can I get paid for sick leave and still have it count?
No. Hours paid out in cash are treated as used and aren't reported as unused sick leave.
What if I worked for more than one PERS employer?
Hours transferred from a former PERS employer can count if your new employer accepts them, under its policies or union contract.
General information, not advice. We aren't part of Oregon PERS. For how your sick leave affects your pension, ask your employer's payroll office and request an estimate from PERS Member Services at 888-320-7377.