Ask The Experts: Retirement

By Reg Jones

Within-grade increase, step increase and timing

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Q. I just had a within-grade increase but was told that I was also submitted for a quality step increase. My WIGI are due at the end of November. If I get a QSI midyear, would that then change when my WIGIs are given?

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Within-grade increases

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Q. I’m a GS-13/Step 10. What happens in within-grade increases when I go beyond the 156-week automatic step increase period?

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2014 pay raise

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Q. Due to the conversion from the National Security Personnel System back to GS, I was converted to a GS-2210-12, Step 00. I am working overseas and am above the GS-12 limit ($86,191). For the 2014 pay raise, I didn’t get a 1 percent pay raise; I only got 0.49 percent. Could you explain why that is and, if possible, give me the reference/regulation that applies to this? A couple of my work colleagues were also affected in this way.

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Lump-sum payment for leave

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Q. I retired from the Department of Agriculture on Jan. 3 with a balance of 440 hours of annual leave. The earnings statement for the lump-sum payment I received Feb. 1 shows that I was paid at my 2013 GS-12 hourly rate. I thought I was to be paid for this leave with the new 2014 hourly pay rate that is 1 percent higher since this payment was made after the new rates went into effect. Am I correct? If so how do I get this rectified?

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Terminal leave payments

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Q. The following is from the U.S. Postal Service Employment and Labor Relations Manual:

512.732 Entitlement Amounts
Separating employees may receive lump-sum terminal leave payments as follows:

Nonbargaining Unit Employees. Nonbargaining unit employees may receive a lump-sum leave payment for accumulated annual leave carried over from the previous year; accrued annual leave for the year in which they separate, including amounts over the carryover maximum; any unused donated leave; and for full-time and part-time regular employees, holidays that fall within the terminal leave period.
I retired Oct. 31 with an annual leave balance of 576 hours, for which I received a lump-sum payment.

That balance, if used, would have carried me into February 2014. Shouldn’t I have also been paid for all the holidays between my retirement date and the time my annual leave would have been exhausted?

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High-3

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Q. I am a CSRS employee planning to retire in 2015. I’ll retire in May or September, depending on when a full year at my highest step will be included in my high-3.  September 2015 is the month of my 56th birthday, as well as the anniversary of my 38th year of federal service. I’ll receive my final within-grade increase in May 2014, after having been three years at the previous step. As far as high-3 is concerned, will one full year at the highest step be included in the high-3 on the anniversary of the WIGI in May, or on the anniversary of my entry on duty with the federal government?

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FEHB

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 Q. Due to the Affordable Care Act, the numbers of people with increased health care risks will be able to get health insurance. The insurance companies are not restricted from charging as much as it takes to provide the coverage and make a great profit. Will these additional costs be passed on to those now covered by Federal Employees Health Benefits, including retirees? Also, the federal employees’ pay and retirees’ cost-of-living adjustments are frozen!

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Pay raises

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Q. Are federal employees (GS and Wage Grade employees) getting pay raises in 2014?

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1 percent pay raise, step increase and annuity computation

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Q. A federal employee under CSRS becomes eligible to retire with 30 years of employment in December. Also, that same individual earns a step increase in late December. If that individual decides to retire in January 2014, will the 1 percent pay raise for federal workers be calculated in his/her retirement salary along with the higher salary? If yes, please explain.

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Retirement date and Jan. 1 raise

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Q. I’m a CSRS employee who planned on retiring either Nov. 30 or Dec. 28. I know we are supposed to get a 1 percent raise Jan. 1. Would it make sense to retire Jan. 3 to get the 1 percent raise?

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1 percent raise, retirement date and annual leave

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Q. I plan on retiring Jan. 11 or Feb. 22. With the 1 percent raise starting in January, wouldn’t it be better to wait until the February date to get the max from my 240 hours of use-or-lose leave, or would it not make a difference?

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15 years vs. 20 years

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Q. I am 45 years old with 15 years of FERS. My job is being moved 85 miles away and I am trying to determine the benefit (if any) to my FERS pension (beyond the addition of five years to the total) of continuing on five more years until I have 20 years and am 50 years old. Resign now with 15 years at 45 years old vs. tough out the drive for five more years and resign at 20 years at 50 years old? What advantage is there to this (if any) on my FERS pension?

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COLA formula

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Q. What formula is used to calculate the annual increase to a CSRS pension?

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FMLA, leave without pay and within-grade increases

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Q. If someone uses the Family and Medical Leave Act beyond the 80 hours leave-without-pay duration, will it delay their within-grade increase date?

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Computing new pay rate

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Q: I work for postal service as a PS-06 mail processing bargaining clerk with a base rate of $53,102. I have been offered an Inspection Service ISLE 09 position (equivalent to a GS-09) that will include a locality pay of 24.22 percent. As far as I know, as a bargaining employee who gets an EAS promotion, the salary schedule would receive a 5 percent increase to my existing bargaining-unit salary. In my case, the new base pay rate would be $55,757. So how would the locality pay be computed? Would it be new base pay rate of $55,757 + 24.22 percent locality pay?

A: I can’t tell you what your new salary would be because I don’t know anything about the Postal Service’s rules governing pay adjustments upon promotion. However, I can tell you that locality pay would be on top of that new salary, whatever it is.

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Too early to determine pay-freeze details

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Q: I just heard the news about the freezing of federal employees’ pay rates. Does this also mean that we will not receive within-grade increases that are due to us in the next two years? 
 
A: Because a pay freeze is a proposal and not a fact (the Congress would have to pass legislation to make it happen), it’s far too early to say what would happen to within-grade increases.

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Annual leave buyout

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Q: How is an annual leave buyout calculated? Is it “accumulated hours x current hourly wage”? Is this considered unearned income? I have also heard they take 40 percent in taxes for this.

A: Lump sum annual leave payments are calculated using the hourly rate of basic pay you would have received had you remained on the agency’s rolls. Therefore, if you were to retire before the annual pay adjustment becomes effective, any hours before that will be computed at the old rate and those after on the new rate. Any step increase that would have occurred after you retired won’t be included; you have to actually be on the job to receive that. For tax purposes, lump sum payments are treated as earned income. Check with your agency to find out what it will deduct from your payment.

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Overseas locality pay

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Q. I work for the Air Force in Germany (YA-02/GS-13). In a recent question/answer on your Web site, it was stated locality pay would start for “affected employees” in 2010. In my situation, would I be an “affected employee?” It further states the locality pay will be phased in. In 2010/2011, overseas employees would only get one-third/two thirds of the locality pay. Will we still be getting some type of post allowance/COLA so that we don’t end up getting paid less than we did in 2009?
Why are overseas employees going to be tied to the “rest of the U.S.” locality pay table? This is one of the lowest salary rates of all the locality pay tables. Overseas living expenses are as high or higher than many other specific-city locality pay rates especially with the low Euro-dollar rate. Are overseas employees going to get some type of post allowance/COLA in addition to locality pay to account for currency fluctuation, or are overseas employees going to continue getting the worst pay deal of all, like they have been getting for many years now?

A The change in law only applies to those employees who work in nonforeign areas of the U.S., specifically, Alaska, Hawaii, Guam and the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.

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New year, same COLA

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For employees, 2010 is a mixed year for benefits. For retirees, it’s pretty much a bust.

General Schedule employees received a 2 percent pay increase, with 1.5 percent going to all employees and the remainder being distributed through locality pay. If you want to compare how you made out against employees in other areas, go to the Salaries and Wages page on the Office of Personnel Management Web site.

The maximum taxable earnings for Social Security withholding stay at the 2009 level — $106,800. So, if you are a Federal Employees Retirement System or Civil Service Retirement System Offset employee, any amount you earn above that amount won’t be subject to the 6.2 percent Social Security deduction. However, the 1.45 percent of salary that goes to pay for your eventual coverage under Medicare Part A will continue to be deducted.

Of course, depending on which Federal Employees Health Benefits Program plan you are enrolled in, a substantial bite may have been taken out of your pay increase. The same is true if you are enrolled in the Federal Long Term Care Insurance Program, where premium increases triggered a loud and anguished cry from affected enrollees.

If you are a retiree, you have the same concerns about increases in health insurance and long-term care insurance premiums. But you also have a bigger problem. For the first time in decades, you won’t receive a cost-of-living adjustment in your annuity. If you receive a Social Security benefit, you won’t get an increase in that, either.

COLAs for retirees and Social Security beneficiaries are determined by changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third quarter of one year to the third quarter of the following one. Not surprisingly, considering the tumble the economy took, the CPI-W dropped. The good news is that there’s a “hold harmless” provision in the law: It prevents benefit recipients from having their annuities and Social Security benefits reduced, and it means most Medicare beneficiaries who are enrolled in Part B won’t see an increase in their monthly premiums. In fact, the Centers for Medicare and Medicaid Services said 73 percent of beneficiaries will be protected.

However, about 27 percent of Medicare beneficiaries will see increases because they are new enrollees, are subject to the income-related additional premium or don’t have their Part B premiums withheld from Social Security benefit payments.

If you receive a Social Security benefit, the Social Security exempt amount — the amount you can earn from another job or self-employment without causing that benefit to be reduced — is the same as it was in 2009: $14,160 for an individual or $37,680 for a couple.

If you are under full retirement age, $1 in benefits will be deducted for every $2 you earn above the limit. In the year in which you reach full retirement age, benefits will be reduced by $1 for every $3 you earn above the limit. There isn’t any limit beginning with the month in which you reach full retirement age.

While there’s been talk in Congress about giving all Social Security recipients a $250 payment to compensate for their loss of a COLA in 2010, and there have been finger-pointing hearings about the increases in premiums for health benefits and long-term care insurance, I wouldn’t hold my breath waiting for something positive to happen.

While things look bleak for retirees in 2010, they won’t be any better next year. According to those who crank out the numbers at the Social Security Administration, there won’t be any COLA increase for 2011 either. Sad to say, it’s just the way the numbers crunch in a downturn that hasn’t yet turned up.

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