Calculating your government pension can seem like a daunting task, but in reality the formula is not overly complicated. Modify the formula by various retirement options to allow you to more effectively plan the age you will retire and how much service credit you need to fulfill your plans for retirement. Calculating pension amounts can also help government employees to determine if purchasing additional service credit -- typically very expensive -- represents a worthwhile investment.
Review your employee handbook, personnel policies or information from the pension plan to find your retirement formula. The formula will contain a pension multiplier and retirement age: 2 percent at 60, for example. Some retirement associations provide a calculator on the association website for employees to calculate their future benefits, whereas others provide the formula and leave employees to perform the calculations themselves.
Calculate the salary upon which the pension will be based. Some retirement plans provide that pension is determined on the "final highest year" salary -- for example, the highest-paying consecutive 52-week period in a person's employment history under the plan. Other plans state that the salary will be based on an average of the three highest years, or some similar variant. Study the plan documents to determine if there were any payments or premiums that count toward the final salary, such as temporary assignment pay. Overtime typically does not count.
Calculate how many years of creditable service you will have at the time of retirement. Some types of service, most unpaid leaves and certain job classifications do not count toward years of service. However, many retirement associations allow certain types of service, leave and time in other classes to be purchased as service credit. Some employers also allow employees to convert leave to service time at the end of employment.
Multiply the final salary by the number of years of service and the percentage multiplier specified in the retirement formula. For example, if your final salary is $45,000, you have 25 years service and a multiplier of 2 percent, the calculation would look like this: 45,000 x 25 x 0.02 = 22,500. Your final annual pension would, therefore, be $22,500.
If you had a break in service, check the retirement plan is the same for both service periods. If not, you will need to calculate each time period separately according to the controlling formula. The pension amount is reduced for employees who retire earlier than the age specified in your retirement plan.
If you will receive a pension from a government job that did not deduct contributions to Social Security, you will need to account for the post-retirement "government pension offset" deduction. Refer to the IRS maximum limitations if you are a high earner. As of 2011, the pension maximum amount set by the IRS is $195,000.