Last Updated: September 2, 2026 Reading Time: 9 min

The August 28 alternative pay plan freezes civilian base and locality pay at 2026 rates for 2027. For anyone retiring in the next three years, that means a smaller paycheck and a permanently smaller High-3, and the High-3 sets the pension for life. Here is what one, two, and three frozen years cost, computed from the 2026 OPM tables, and which pay actions still move the number when the annual raise does not.

How High-3 Works, in One Paragraph

Your High-3 is the average of your basic pay over the highest-paid 36 consecutive months of federal service, each rate weighted by how long it was in effect (5 CFR 831.703; OPM CSRS/FERS Handbook, Chapter 30). Basic pay for this purpose includes your GS base rate, locality pay, special rates, and a few other items listed below. Then the FERS formula multiplies High-3 by years of service by 1.0%, or 1.1% if you retire at 62 or later with at least 20 years. A frozen year does not cut the average; it just fails to lift it the way a normal raise would.

What One, Two, and Three Frozen Years Cost

FedTools 2026 analysis. Both scenarios start from the verified 2026 OPM tables (GS-13 step 10 base $118,204; GS-12 step 7 base $91,757; DC locality 33.94%; Rest of US 17.06%). The counterfactual is the 5 U.S.C. 5303 formula rate of 3.1% a year (ECI of 3.6% minus the 0.5-point statutory offset), the raise the law would have delivered without an alternative plan. Only 2027 is a confirmed freeze; 2028 and 2029 are shown to make the compounding visible.

GS-13 step 10, Washington-DC locality (2026 salary $158,322):

Retire date Frozen years in window High-3 (freeze) High-3 (3.1% formula) High-3 gap Annuity gap, 1.0% × 30 yrs Annuity gap, 1.1% × 30 yrs
Dec 31, 2027 1 $157,800 $159,436 $1,636 $491/yr $540/yr
Dec 31, 2028 2 $158,322 $163,281 $4,959 $1,488/yr $1,636/yr
Dec 31, 2029 3 $158,322 $168,343 $10,020 $3,006/yr $3,307/yr

GS-13 step 10, Rest of US (2026 salary $138,370):

Retire date High-3 (freeze) High-3 (3.1% formula) High-3 gap Annuity gap, 1.0% × 30 yrs
Dec 31, 2027 $137,881 $139,311 $1,430 $429/yr
Dec 31, 2028 $138,370 $142,703 $4,334 $1,300/yr
Dec 31, 2029 $138,370 $147,127 $8,758 $2,627/yr

GS-12 step 7, Washington-DC (2026 salary $122,899):

Retire date High-3 (freeze) High-3 (3.1% formula) High-3 gap Annuity gap, 1.0% × 30 yrs
Dec 31, 2027 $122,265 $123,535 $1,270 $381/yr
Dec 31, 2028 $122,899 $126,748 $3,849 $1,155/yr
Dec 31, 2029 $122,899 $130,678 $7,778 $2,333/yr

GS-12 step 7, Rest of US (2026 salary $107,411):

Retire date High-3 (freeze) High-3 (3.1% formula) High-3 gap Annuity gap, 1.0% × 30 yrs
Dec 31, 2027 $106,875 $107,985 $1,110 $333/yr
Dec 31, 2028 $107,411 $110,775 $3,364 $1,009/yr
Dec 31, 2029 $107,411 $114,209 $6,798 $2,039/yr

The pattern holds at every grade and locality. One frozen year costs almost exactly one-third of that year's forgone raise, because it occupies one-third of the averaging window (GS-13 DC: $4,908 forgone in 2027, $1,636 off High-3). By the third frozen year the cost has more than sextupled, because every year in the window is now below the formula path and the formula path itself has compounded.

Over a 25-year retirement, before COLAs, the GS-13 DC three-year case is roughly $75,000 of pension not paid.

What Counts as Basic Pay for High-3, and What Does Not

This is the table that decides which "boost your pension" advice is real. The test is one legal question: is the pay element "basic pay" under 5 U.S.C. 8331(3) and OPM Handbook Chapter 30?

Pay element Counts toward High-3? Why
Annual across-the-board raise Yes, when it happens Adjusts the base table under 5 U.S.C. 5303
Locality pay Yes Basic pay for retirement since FEPCA
Within-grade increase Yes 5 U.S.C. 5335 raises your actual rate
Quality step increase Yes Same statute, same treatment
Promotion (two-step rule) Yes New rate at the new grade
Special or occupational rate (IT, cyber, nursing, others) Yes OPM special rates are basic pay by regulation
Retained rate under grade or pay retention Yes Named in 5 CFR part 536 as basic pay for retirement
Law enforcement availability pay (LEAP) Yes, for qualifying criminal investigators Treated as basic pay for retirement, TSP, FEGLI, FEHB
AUO Yes, only for statutory law enforcement officers Non-LEO recipients get no retirement credit for it
2027 law enforcement 3.8% raise Yes Delivered as a special rate in 2026
Part-time schedule No effect on the rate Deemed full-time rate is used; a separate proration factor reduces the annuity
LWOP up to 6 months per calendar year No penalty Fully creditable; the rate that would have applied is used
LWOP beyond 6 months per calendar year Excess service, generally excluded Reduces creditable service, not the High-3 rate
Standard overtime No Excluded under Handbook Chapter 30
Night, Sunday, holiday differential; standby; hazard pay No Excluded regardless of title
Cash awards and bonuses No Excluded
Recruitment, relocation, or retention incentive No OPM: no effect on future pay entitlements such as retirement
Sick leave balance No direct effect Converts to service time, not a pay rate

The distinction that trips up the most people, and most competitor coverage: a retention incentive is excluded, a retained rate is included. The two terms differ by one word and get opposite treatment.

The Levers That Still Work in a Freeze

The 2011 to 2013 freeze is the precedent. OPM's guidance then (CPM 2010-24) froze the across-the-board adjustment and locality percentages, and explicitly left within-grade increases, quality step increases, and promotions in place. The 2027 letter follows the same shape. So:

1. Time your step increase. Waiting periods are 52 weeks for steps 2 through 4, 104 weeks for steps 5 through 7, and 156 weeks for steps 8 through 10. A GS-12 moving from step 6 to step 7 in 2027 adds $2,549 in base pay, which is $3,414 in DC and $2,984 in Rest of US after locality. That single step is more than double the one-year freeze cost for a GS-12 in DC ($1,270) and 44% of the worst-case three-year cost ($7,778). If a step lands months after your planned date, the arithmetic often favors waiting for it.

2. Take the promotion, even late. Under the two-step rule you land at the lowest step of the new grade that equals or exceeds your old rate plus two within-grade increases. A late-career GS-12 to GS-13 move changes every remaining month of the High-3 window.

3. Move to a higher locality if a permanent position exists. A GS-13 step 10 earns $138,370 in Rest of US and $158,322 in DC, a $19,952 difference in basic pay. Held for the full 36 months, that is the full difference in High-3; held for 12 months, roughly a third of it.

4. Earn a quality step increase. It is a step increase awarded for an Outstanding rating, and it counts like any other step. Under the forced-distribution rating rules in effect since August, Outstanding ratings are scarcer, which makes a QSI harder to get but no less valuable.

5. Get into a special rate if your series has one. IT, cyber, medical, and other occupations carry OPM special rate tables that are basic pay. A lateral into a special-rate position is a High-3 raise.

6. Do not count on awards, incentives, or overtime. A $10,000 cash award, a $15,000 retention incentive, or a year of heavy overtime does nothing for High-3. Take them for the cash; do not plan retirement around them.

Delay a Year? What the Math Says in a Freeze

Waiting looks pointless when pay is frozen. The numbers say otherwise, for a reason unrelated to the freeze.

GS-13 step 10, DC, full-freeze scenario:

Retire Dec 31, 2027 (30 yrs) Retire Dec 31, 2028 (31 yrs) Difference
High-3 $157,800 $158,322 +$522
Years of service 30 31 +1
Annuity at 1.0% $47,340 $49,080 +$1,740/yr

Only $157 of that gain comes from the High-3 (the lower 2025 year rolling out of the window). The other $1,583 is the extra year of service. Working one more year in a freeze still adds about $1,740 a year for life before COLAs, and that is before counting another year of TSP contributions and match, and before the 1.1% multiplier if the extra year gets you to 62 with 20.

For the full cost of one more year against the paycheck you give up, see working one more year: the real pay. For the date-specific math, best dates to retire covers the leave-lump-sum and pay-period timing.

Run Your Own High-3

The High-3 Calculator averages your actual rates over any 36-month window, weights a mid-window step or promotion by the months it was in effect, and shows the annuity at 1.0% and 1.1%. Enter your 2026 rate as both 2027 and 2028 to see the freeze case, then enter the step or move you are considering. Calculate your High-3 →

Frequently Asked Questions

Does the 2027 pay freeze reduce my High-3 if I retire in the next few years?

Only relative to what a normal raise would have added. High-3 averages your actual basic pay over your highest 36 consecutive months, so a frozen year repeats the prior rate; it never goes backward. FedTools computes the gap for a GS-13 step 10 in the DC locality at $1,636 with one frozen year in the window and $10,020 with three, against the 3.1% statutory formula rate.

Do step increases and promotions still raise my High-3 during a freeze?

Yes, in full. Within-grade increases under 5 U.S.C. 5335 and promotions under the two-step rule in 5 CFR 531.214 are separate mechanisms from the annual across-the-board adjustment, and OPM's guidance for the 2011 to 2013 freeze excluded them from the freeze. One GS-12 step in the DC locality adds $3,414 a year to basic pay, more than double the one-year freeze cost.

Does moving to a higher-locality duty station raise my High-3?

Yes. Locality pay is basic pay for retirement under FEPCA, and OPM weights each rate by the time it was in effect during the 36-month window. A permanent move that covers the full window raises the average by the full locality difference; a move that covers part of it is credited proportionally.

Does a retention incentive or a cash award count toward High-3?

No. Recruitment, relocation, and retention incentives and cash awards are excluded from basic pay, and OPM states incentives have no effect on future pay entitlements such as retirement. A retained rate under grade or pay retention is different: 5 CFR part 536 counts it as basic pay. The two are easy to confuse.

Does overtime, LEAP, or AUO count toward High-3?

Standard overtime does not, nor do night, Sunday, or holiday differentials. Law enforcement availability pay under 5 U.S.C. 5545a counts for qualifying criminal investigators, and administratively uncontrollable overtime counts only for employees who meet the statutory law enforcement officer definition.

Should I delay retirement a year if pay is frozen?

Delaying still pays, but for a different reason. In a full freeze, a GS-13 step 10 in DC gains only $522 of High-3 by waiting from the end of 2027 to the end of 2028, yet the extra year of service raises the annuity by about $1,740 a year for life. The service credit does the work, not the salary.

Does the 3.8% law enforcement raise count toward High-3?

Yes. In 2026 OPM delivered it through special rate tables, and special rates are basic pay for retirement. A covered officer's higher adjusted rate flows straight into the High-3 average and, for 6(c)-covered officers, into the enhanced multiplier.

Does part-time work in my last three years lower my High-3?

Not the High-3 number itself. OPM uses the deemed full-time rate for the average, then applies a separate proration factor to the annuity for the part-time period. The reduction is real, but it shows up in the proration, not in the High-3.

Sources: House Document 119-189, alternative pay plan (Aug. 28, 2026); OPM CSRS/FERS Handbook, Chapter 30, Average Pay; 5 CFR § 831.703; 5 U.S.C. §§ 5303, 5335, 8331, 8401, 8415; 5 CFR §§ 531.214, part 536; OPM within-grade increase fact sheet; OPM CPM 2010-24 (2011 freeze guidance); OPM 2026 GS salary table and 2026 locality tables.