By Reg Jones
Q. My problem, as noted below, is that I have combined legislative, military and federal service. I purchased my military service years ago, while in the legislative branch. I know the legislative branch calculates their annuity at a higher rate than do other federal agencies. I’m not sure what that rate is and I have yet to find a calculator that can factor in the combined time/pay to come up with a annuity estimate. My question is, how is legislative service calculated and how is it factored into my ultimate annuity? For the sake of discussion, my basic info is as follows:
DOB — 7/18/59
SCD — 11/6/1981
USMC — 11/6/81 – 11/5/86
U.S. Senate — 11/6/86-11/3/2001
U.S. Dept. of Veterans Affairs — 11/4/2001 to present
My current salary is $113,785; my average high three, as of now, is $104,642. Can you help me figure this out?
A. You’ve come to the right address. If you have at least five years of congressional service, that time will be computed using a more generous formula: 0.017 x your high-3 x all years and full months of congressional service. Since you cut it rather close, you’ll need to check with your personnel office to see if you do, in fact, have five years of such service.
Q. I am a government DoD CSRS employee of 38 years and plan on working for another couple of years –- I want that 40 years with 80 percent of my salary as retirement. I turn 62 this September and have been told I can draw my ex’s Social Security starting Oct 1. We were married for 28 years. Is this true? Is there a limit on the amount of money I can draw while I am still employed? I know when I retire, it will offset my retirement (which I feel is unfair).
Q. I am currently on approved Leave Without Pay due to a work injury and I am receiving federal compensation benefits. I am nearing regular retirement age and I am concerned about my high-3 retirement calculation. I have been on LWOP for 3 years. Will the salary I would have earned during these years be used in my calculation? I also understand that a new law may increase by retirement calculation for lost TSP contributions.
A. As long as you are on LWOP and receiving compensation, that time will be treated as if you were still on the job, both for length of service and high-3 computation purposes.
My readers seem to be confused about two types of annuities: postponed and deferred. I think the misunderstanding arises because they are using the terms interchangeably. Let me explain the difference, which is a big one.
A postponed annuity is one where you retire after meeting the age and service requirements and postpone the receipt of your annuity until a later date.
This option is only available to employees under the Federal Employees Retirement System who have reached their minimum retirement age (MRA) and have at least 10 years of creditable service.
If you retire under the MRA+10 provision, you can avoid the stiff age reduction penalty that goes along with it by postponing the receipt of your annuity to a later date.
If you have fewer than 20 years of service, that penalty is 5 percent for every year (5/12 percent per month) that you are under age 62. If you have at least 20 years of service but fewer than 30, the penalty applies until you reach age 60.
The annuity you eventually receive will be based on your years and full months of service and your high-three salary on the day you retire. It will not be increased by any cost-of-living adjustments that have been given to other retirees since your retirement date. However, once you begin receiving your annuity, you will be treated the same as all other retirees.
If you retire and postpone the receipt of your annuity, you can’t continue your coverage under the Federal Employees’ Group Life Insurance Program. Nor can you continue your coverage under the Federal Employees Health Benefits Program, other than through the Temporary Continuation Provision of law, where you pay the entire premium plus 2 percent.
However, if you were enrolled in FEGLI or FEHBP for the five continuous years before you retired, you may re-enroll in them when your annuity begins. If you re-enroll in FEHBP, you may choose any plan, not necessarily the one in which you were enrolled when you retired. Your FEGLI coverage will be limited to the amount you had when you retired.
A deferred annuity is one where you don’t meet the age and service requirements to retire, you have at least five years of creditable service when you leave the federal government, you don’t take a refund of your retirement contributions, and you apply for an annuity when you reach the right age.
If you are a former Civil Service Retirement System employee, the right age is 62. If you are a former FERS employee, you have more options. You can retire at age 62 with at least five years of service, at age 60 if you have at least 20 but fewer than 30 years of service, and at your MRA with 30 years of service.
You may also receive a deferred annuity under the MRA+10 provision, but with the same age reduction penalty mentioned above, unless you postpone the receipt of your annuity to a later date.
Your annuity will be based on your years and full months of service and your high-three salary on the day you left government. No unused sick leave will be added to the calculation of your service time. Nor will your annuity be increased by any COLAs that were given to retirees after you left.
However, once you begin receiving your annuity, you’ll be treated the same as all other retirees.
There are other downsides to a deferred annuity. Even if you were enrolled in FEHBP and FEGLI for five years before you left government, you won’t be able to re-enroll in them when you begin receiving your deferred annuity.
Reg Jones was head of retirement and insurance programs at the Office of Personnel Management. He and Mike Miles, Federal Times Money Matters columnist, answer readers’ questions on the Federal Times Web site. Go to “Ask the Experts” at www.federaltimes.com.
Q: I plan to retire at 60 years old with FERS. If I take the lump sum, will my health insurance still be valid and will the agency still pay its portion? Please give all scenarios (even the bad ones).
A: I assume by “lump sum,” you mean accepting a Voluntary Separation Incentives Payment. If I’m right about that, you are eligible to retire, and you have been continuously enrolled in the Federal Employees Health Benefits program for the five years before you retire, you will be able to continue that coverage in retirement. If you are an employee of the Postal Service, your premiums will be higher when you retire because you will no longer enjoy the subsidy negotiated by the postal unions. If you are not a Postal Service employee and, after retiring, are employed by any other agency of government, your premiums will be the same as they were when you were employed.
Q: I am a federal law enforcement officer covered by FERS with more than 20 years of service under FERS, but I have not reached the minimum retirement age of 50. Due to plans to transfer me, I must either separate myself from my family, find another job or retire early. My question concerns the viability of the early retirement option. If I retire at 47 with more than 20 years as a federal LEO, what happens? Do my benefits get deferred and, if so, to when? Is there also a financial penalty and, if so, how much?
A: You don’t have the combination of years and covered service needed to retire now. However, since you do have 20 years of service, you could leave government and apply for an annuity when you reach your minimum retirement age. Your annuity would be computed using the more generous law enforcement formula and based on your years and full months of covered service and highest three years of average salary on the day you left.
Q: My husband was forced to retire from the Defense Department due to base closures in 1999. He was 45, and combined with his navy and shipyard time he had 25 years in. He took the retirement and has worked in the private sector since. He has an opportunity to work at the Veterans Hospital and was wondering what it would do to his retirement. He gets about $20,000 a year in retirement and the job pays $25 per hour. Any help is welcome.
A: It depends entirely on the nature of his appointment. If he takes a government job, his annuity would stop and he would be unable to retire again until he met the age and service requirements for regular retirement. If he is hired as a contractor, it would have no affect on his annuity. To find out which, he’ll have to talk to someone in the VA hospital’s personnel office.
February 17th, 2010 | Benefits
Q: My wife only worked for 11 years and based on the annual statements she receives from the Social Security Administration, she can only expect to receive about $300 a month at age 62. She is 5 years older than me and I plan on retiring under FERS at age 60 and drawing my Social Security at 62. Recently someone mentioned if her full amount was less than half mine she would get half of mine. This sounds like a better deal, but trying to get the facts on this from the SSA Web site without a background in cryptography is virtually impossible. I keep running into something that leads me to believe I would have to wait until my full retirement age for her to get half of mine. Can she still get half if I retire at 62?
A: When your wife begins receiving Social Security benefits, you would be entitled to a spousal benefit when you reached age 62, not before. The spousal benefit would be one-half of her benefit. Regardless of the age at which you apply for your Social Security benefit, she would be entitled to receive the larger of the two benefits, the one based on her own work record or the spousal benefit based on your work record. If, as is likely, your earned benefit was larger than the spousal benefit based on her work record, you would only be entitled to your own benefit. In short, either of you is only entitled to the larger of two benefits.
Q: As a federal firefighter retiring under FRES at the mandatory age of 57, can I continue working in another agency? For instant, transferring into fire prevention, which does not apply to the mandatory retirement or to another federal agency outside of the federal fire service. If so, would I still receive the firefighter retirement computation?
A: Once you have 20 years of covered service, you have locked in your eligibility to retire under the more generous computation formula for firefighters. You can continue working where you are in any job or work for another federal agency without affecting that right. No matter what you decide to do, all years of service over 20 will be computed using the standard retirement formula.
Q: My wife died last year. She was a retired educator with more than 30 years of service. She turned 60 in December 2009. She also had been receiving Social Security disability for almost two years before she died. I will be turning 61 in 2010; however I am still working with more than 30 years of federal service under CSRS. I am an outset employee because I left the federal government for two years and have been back since Jan. 6, 2009.
Can I received her Social Security at age 62 and delay drawing mine until I am 65? If so, will it reduce my amount at age 65? I am also a substantial contributor from the military with 37 years of service in the National Guard and will not be subject to offset.
A: If you were age 62 and still working, you would be eligible to receive an unreduced spousal Social Security benefit. On the other hand, if you had retired, that benefit would be reduced by $2 for every $3 you received in your CSRS annuity. Further, because you are covered by CSRS Offset, if you are retired and eligible for a Social Security benefit at age 62, your CSRS annuity would be offset by the amount of Social Security benefit you earned while covered by CSRS Offset. If you retired after age 62, the reduction would occur on the day you retired. The reduction would occur whether or not you applied for a Social Security benefit.
February 16th, 2010 | Special retirement supplement
Q: I took the VER that was offered for postal clerks on Oct. 31, 2009. I have received three very small interim annuity checks since then. Processing is taking forever. I assume it will all come out in the wash. I am 60 with 25+ years in FERS. Will I receive the SRS? Do I have to make a special request either to OPM or to Social Security for that? Can I use the 26/40x the figure on my SSA statement to figure the amount? The statement I have is dated July 2009. In addition, I’ve had a part-time job for the past 20 years. I’ve been putting into Social Security there and I intend to keep working there part time for at least a few more years.
A: Because you took early voluntary retirement and have already reached your minimum retirement age, you are entitled to receive the special retirement supplement, which represents the Social Security benefit you earned while employed under FERS. That benefit will automatically be included in your FERS annuity, and will continue to age 62 unless you exceed the Social Security earnings limit, which is $14,160 in 2010. To estimate the amount of your SRS, take the Social Security benefit estimate provided to you by the Social Security Administration, multiply it by your total years of FERS service and divide by 40. You can also go to www.FEDbens.us and use the handy calculator you’ll find there.
Q: Does time worked at the Federal Reserve count toward time worked for the Small Business Administration?
A: It only counts if you waive any right to benefits from the Federal Reserve retirement system for that prior service and make a deposit into the Civil Service Retirement and Disability Fund. Your current agency can help you work out the details and may be able to arrange the transfer of the contributions you made to the Federal Reserve retirement system into your current retirement system.
Q: I am retiring soon under the Federal Employees Retirement System and my spouse is already retired under the Civil Service Retirement System. Should I die before her, will she be able to collect unreduced Social Security survivor’s benefits?
A: No, she won’t. Her survivor benefit will be subject to the government pension offset provision of the law, which will reduce that benefit by $2 for every $3 she receives in her CSRS annuity.
February 11th, 2010 | Annual leave
Q: I resigned my GS position (involuntarily) from an abusive work section situation in Utah and received a lump-sum payment. I have since acquired a new federal job. When I go to the Employee Benefits Information System Web site, it states 180 hours of leave, but the amount says “n/a.”
So, I guess it is a one-time payment?
A: Yes, it is a one-time payment. When you left government, you exchanged your accumulated hours of annual leave for cash. The site you went to reflects the fact that on the day you left government, you had a balance of 180 hours; however, because you received a lump-sum payment for it, the slate has been wiped clean.
February 11th, 2010 | FERS annuity computation
Q: Regarding your answer concerning retirement and locality pay: I will
retire under the Federal Employees Retirement System with 30 years in February 2012. Does locality pay count as part of your high-3?
A: Yes, it does.
February 11th, 2010 | CSRS annuity computation
Q: I am covered by the Civil Service Retirement System with 41 years of service. I was all set to retire this year when they finally phased in the locality pay. There is a clause for those retiring between January 2010 and December 2012 that says we can have the locality pay included in our base pay for annuity purposes. It is my understanding that I would have to work the full three years and then pay the additional CSRS withholding for my high-3 to have locality pay included all three years. What if I want to retire at the end of this year or next year — will I still have the option to have three years with locality pay included in my annuity calculation?
A: No, you wouldn’t have that option.
February 11th, 2010 | Special category employee retirement
Q: I am hoping to retire with 20 years as a 6c law enforcement officer. I have approximately 10 additional years of federal service (noncovered). Will the annuity for these noncovered 10 years be computed at a 2 percent rate? Will the rate be the high-3 of those 10 years (noncovered) or the high-3 of the covered service?
A: If you have 20 years of covered service as a law enforcement officer, the special, more generous annuity computation will be used to compute that part of your annuity (0.025 x your high-3 x 20 years). Any years of service over 20, whether covered or not, will be computed using the standard formula (0.02 x your high-3 x all years over 20).
Q: I’m thinking of retiring and wondering if there is anything that precludes an individual from retiring one day and coming back to work as a federal employee the next?
A: Not that I’m aware of. However, there are some things you need to keep in mind. If you were to take early retirement, when you returned to work your annuity would be canceled and you would be treated as any regular employee with the same age and service. And you wouldn’t be eligible to retire again until you met the age and service requirements. On the other hand, if you met the age and service requirements to retire on an immediate, unreduced annuity, your annuity would continue, but in most cases, the salary of your new position would be offset by the amount of your annuity. In either case, any lump-sum payment for unused annual leave you received would have to be returned to your former agency. And, if you had received a buyout payment, that money also would have to be returned.
Q: I recently retired at age 56, air traffic control mandatory retirement, with 36 years in the Civil Service Retirement System. A desirable position for which I am qualified has become available with a local Transportation Security Administration unit. If rehired at TSA, would I be under the Federal Employees Retirement System or CSRS? If I’m under FERS, could I retain full CSRS annuity? If rehired into CSRS, what are some factors to consider: annual leave rate, recomputation of CSRS annuity, etc.? I would like to work until age 62, when my wife can retire and would be very close to maximum CSRS annuity (80 percent).
A: If you were rehired anywhere in the federal government, your annuity would continue, and, in most cases, the salary of your new position would be offset by the amount of your annuity. You would have the option of electing to be covered by FERS. You wouldn’t be starting anew if you did, you would simply be continuing your federal employment under another retirement system. Whatever you decide to do, if you worked for one year you would be eligible for a supplemental annuity. If you worked for five years, you’d be eligible for a redetermined annuity. Whether this would be to your advantage financially if you had switched to FERS is something you’d have to explore with your new personnel office. On the other hand, if you stayed under CSRS and worked for a total of 41 years and 11 months, your annuity would equal the maximum 80 percent annuity available under CSRS.
February 9th, 2010 | Creditable service: FERS
Q: I have nine years of military service that began Nov. 28, 1980, and ended Dec. 3, 1989. My federal service began Dec. 4, 1989, and I am still employed by the Federal Aviation Administration. I am under the Federal Employees Retirement System. On Nov. 27, I will have 30 years of continuous service if you include the military time. Does that qualify me for the any-age minimum retirement age under FERS with 30 years of government service?
A: Because you are covered by FERS, those years of active-duty military service would only be considered to be creditable service for retirement purposes if you have made a deposit for that time to the civilian retirement fund. If you have made a deposit and will have 30 years of creditable service, you can retire at your MRA. If you haven’t, you can’t.