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Understanding Your Federal Benefits

Understand the federal retirement system, including age and service requirements for FERS and CSRS employees. Learn about creditable service, annuity computation, military deposits, and redeposit options. Get insights into FERS and CSRS annuity formulas and specifics on FERS annuity supplement. This guide provides clear explanations and examples, ensuring you make informed decisions about your federal benefits.

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Understanding Your Federal Benefits

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  1. Understanding Your Federal Benefits Cindy Lundquist

  2. What will we discuss? Page 2

  3. Qualifying for Retirement Minimum requirements: FERS or CSRS • Five (5) years of civilian service CSRS Only • Subject to retirement system 1 of 2 years before retirement FERS or CSRS • Meet age and length of service requirements Page 3

  4. Age and Service Requirements *Age for FERS optional retirement is based on date of birth. See next slide.

  5. Age and Service Requirements – FERS Page 5

  6. Age and Service Requirements *Reduced by 5% for each year you are under 62. Page 6

  7. Reduced Retirement – FERS “Minimum Retirement Age + 10” Provision • Special provision for FERS only • MUST • Attain minimum retirement age (MRA) • Have 10 years of creditable service • Reduction • 5% for each year under age 62 • Permanent reduction • Not eligible for supplement Page 7

  8. FERS – What is my MRA? Page 8

  9. Annuity Computation Page 9

  10. Annuity Computation Two basic factors Average high-3 salary Total length of service Page 10

  11. FERS Transferees Page 11

  12. FERS/CSRS Annuity • CSRS component • Service which CSRS deducted • Military service before transferred to FERS • Unused sick leave at time of transfer • FERS component • Service which FERS deducted • Military service after transferred to FERS Page 12

  13. Creditable Service Following used for eligibility and calculation of annuity Time from date of hire to separation LWOP—up to 6 months in calendar year OWCP Page 13

  14. Creditable Service • Part-time • Fully creditable for eligibility but • Prorated for computation Page 14

  15. Deposit Service • Period(s) of service with no retirement deductions (example: temporary service) • Amount of deposit due • Equal to amount that should have been withheld plus • Interest Page 15

  16. FERS Deposit Service Non-deduction service 1-1989 or later, no credit for eligibility or calculation. Non-deduction service before 1-1989: Page 16

  17. CSRS Deposit Service Note: If deposit not made, annuity reduced by 10% of deposit due Non-deduction service 10-1-1982 or later: Non-deduction service before 10-1-1982: Page 17

  18. Military Deposit • Active duty military service • Deposit amount • FERS – 3% of base pay plus interest • CSRS – 7% of base pay plus interest • Cannot use if receiving military retirement unless: • Military retirement waived at time of retirement from federal service • Military retirement based on combat-connected disability or service in the reserves Page 18

  19. FERS Military Service Page 19

  20. CSRS Military Service *Note: Annuity reduced at age 62 if eligible for Social Security Hired 10-1-1982 or later: Hired before 10-1-1982: Page 20

  21. FERS Redeposit If— • FERS funds withdrawn at termination • Subsequently re-employed Then— • Previous employment only used for eligibility if earlier contribution plus interest are not paid • Previous employment used for both eligibility and computation if contributions plus interest are paid Page 21

  22. CSRS Redeposit Refunded contribution • Time used for eligibility regardless if redeposit made • If refund not made— • Separated before 3-1-1991, actuarial reduction imposed • Separated after 2-28-1991, time not used in computation Page 22

  23. Interest Rates Through 12-31-1984 – 3%, thereafter: Page 23

  24. Total Length of Service Example: Civilian Service 27 yrs 6 mos 7 days Military Service 3 yrs 9 mos 10 days Total 31 yrs 3 mos 17 days Plus unused sick leave (1061 hrs) 6 mos 3 days Total 31 yrs 9 mos 20 days Page 24

  25. FERS General Formula • 1% x years of service x High-3, or • 1.1% x years of service x High-3 if retiring at age 62 with 20+ years of service Examples: MRA with 30 years of service = 30% x High-3 Age 62 with 30 years of service = 33% x High-3 Page 25

  26. CSRS General Formula 1.5% x 5 years + 1.75% x 5 years + 2.0% x remaining years of service Retirement factor X High-3 Average Salary Annual Annuity Note: Maximum annuity = 80% of high-3 at 41 years 11 months of service. Page 26

  27. CSRS General Formula Example: Age 55 with 30 years of service 1.5% x 5 years = 7.50% + 1.75% x 5 years = 8.75% + 2.0% x 20 years = 40.00% Retirement factor = 56.25% X High-3 Average Salary Annual Annuity Page 27

  28. CSRS Offset Annuity • Who is “CSRS Offset employee?” • Rehired after 1-1-1984 with more than 1 year break in service • Had 5 years of CSRS service before separation • Did not transfer to FERS • Annuity computed same as CSRS annuitant • At age 62, annuity reduced for Social Security • If not eligible for Social Security, no reduction • Reduction at 62 regardless if you apply for Social Security • Reduction less than Social Security check Page 28

  29. FERS Annuity Supplement Paid by: OPM not Social Security Paid at: MRA with 30 years of service, or age 60 with 20 years, or early out, or discontinued service Paid until: Age 62 Based on: Estimated full career Social Security benefit x years of FERS service divided by 40 Subject to: Social Security earnings limit Not payable: If retirement based on MRA+10, disability, or deferred retirement Page 29

  30. Electing Survivor Benefits • Election made at time of retirement • If less than maximum elected— • Signed and notarized statement from spouse • Cannot change election • Exception—no survivor elected can change within 18 months of retirement Page 30

  31. FERS Survivor Election Amount 50% of basic annuity, or 25% of basic annuity Reduction of annuity 10% if maximum elected 5% if 25% of basic annuity elected Page 31

  32. CSRS Survivor Election Amount 55% of full annuity 55% of any portion of basic annuity Reduction 2-1/2% of the first $3,600 of annuity plus 10% of amount over $3,600 Page 32

  33. Example of CSRS Election • CSRS annuity = $35,000 • Elect maximum survivor election • $35,000 x 55% = $19,250 annually • Or $1,604 monthly to surviving spouse • Annuity reduction $3,600 x 2.5% = $90 $35,000 - $3,600=$31,400 x 10% = $3,140 Total annual reduction = $3,230 (or $269.16 per month) Page 33

  34. Survivor Benefits for Children FERS • Same amount payable for CSRS children • Less any amount payable to children by Social Security CSRS • Single orphaned - $522 month per child • Maximum $1,566 • Double orphaned - $627 month per child • Maximum $1,881 Page 34

  35. FERS Death in Service With more than 18 months of civilian service 1 Lump sum payment of $33,072.03, plus 2 Lump sum of half of employees pay, plus 3 Any Social Security benefit payable, plus 4 Any Thrift Savings Plan payable Page 35

  36. FERS Death in Service With ten (10) or more years of creditable service, surviving spouse receives: 1 2 3 4 , , , (if payable), plus 5 A survivor annuity equal to 50% of FERS basic annuity at time of death Page 36

  37. CSRS Death in Service Spouse of employee receives 55% of the higher of: • Annuity using regular CSRS formula • Guaranteed minimum which is lesser of: • 40% of deceased High-3 • Regular annuity calculated increasing length of service up to age 60 Page 37

  38. Survivor Benefits Starts • Day after employee’s or retiree’s death Ends • Spouse/former spouse • Remarries before age 55 (unless married 30 years) • Death • Child(ren) • Marries • Becomes 18 (22 if full-time student) • Recovers from disability • Death Page 38

  39. Disability Retirement • FERS – 18 months of service • CSRS – 5 years of service • Unable to perform duties • Current job or • Other vacant job at same grade Page 39

  40. Disability Retirement FERS Payment CSRS Payment • 60% of average High-3 salary for first year • Thereafter, 40% of High-3 salary • Amount is reduced by Social Security • Less than 22 years of service, based on 40% of High-3 salary • More than 22 years, computed under general formula Page 40

  41. Date for Voluntary Retirement FERS Last day of the month CSRS Last day of the month, or 1st, 2nd, or 3rd day of the month Page 41

  42. Processing Your Retirement OPM • Sends acknowledgement • Authorizes interim payment • Obtains missing documents • Determines eligibility • Annuity • Health insurance • Life insurance • Computes benefits and sends letters Page 42

  43. After Retirement Changes after retirement contact OPM • www.opm.gov • www.servicesonline.opm.gov/ (contact after CSA number received) • 1-888-767-6738 • Address: US Office of Personnel Management, 1900 E St NW, Room 1323, Washington, DC 20415 Page 43

  44. Health and Life Insurance Federal Employees Health Insurance (FEHB) and Federal Employees Group Life Insurance (FEGLI) Page 44

  45. FEHB Eligibility requirements: • Enrolled for at least 5 years prior to retirement • CHAMPUS/TRICARE can count towards your 5 years • Single or family coverage • Covered by a family enrollment • Enrolled since first opportunity Page 45

  46. FEHB • Coverage and premiums same as employee • At age 65, Medicare is primary • Survivors of retirees or employee may continue coverage if: • Survivor benefit is payable, and • Employee/Retiree enrolled in family plan at time of death Page 46

  47. FEGLI Eligibility requirements: Enrolled for at least 5 years prior to retirement, or Enrolled since first opportunity Annuity is sufficient to cover costs Elections: Basic coverage Optional coverage (must elect Basic also) Page 47

  48. FEGLI Basic Life Insurance: Annual base pay plus $2,000 If under age 45, an “extra benefit” Amount into retirement based on your election Optional Life Insurance Option A – Additional $10,000 Option B – One, two, three, four or five times basic pay Option C – Family coverage Page 48

  49. Basic Life Insurance Options Page 49

  50. Cost of Various Options Page 50

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