By Reg Jones
Q. I have a postponed retirement. When I start my annuity at age 62, must I enroll in Federal Employees Health Benefits at startup or may I enroll at a later date?
Q. I’ve worked 10 years as a government employee, and I’m 58 years old. Can I retire early?
Q. If my retirement application shows a retirement date of Jan. 2, 2014, what is the process to postpone retirement until March 2, 2014? How far ahead is notification for a change in retirement date submitted?
Q. I’m a FERS employee considering retiring under the MRA+10 provision. I’m 59 with 20 years of service. If I postpone the start of my annuity until I reach 60, I know there won’t be any reduction in my annuity. Will I also be eligible for the special retirement supplement if I postpone my annuity?
Q. I am a FERS retiree who postponed the receipt of my annuity. I want to start my annuity at age 62. With my current job, I have health benefits that I would like to continue until age 65. Must I elect for health insurance when I start the annuity, or can I pick up health insurance at age 65, at which time I would choose health insurance for both my husband and myself.
June 21st, 2011 | Postponed retirement
Q: I am a 49-year-old FERS employee with 27 years of service and am currently eligible for a VERA & VSIP. I am considering resigning or retiring for another non-federal position to remain in my current location. I would like to lock in my retirement and benefits eligibility, yet avoid all the reduction of purchase power the early retirement with no COLA until age 62 will result in. What is my best option to accomplish this? Am I eligible for a postponed retirement through VERA, and will that enable my eligibility for my health care, LTC, and life insurance?
A: Because you have at least 25 years of service, you would be eligible to retire under the Voluntary Early Retirement Authority. Further, there would be no age reduction penalty for doing so. You would also be eligible for the special retirement supplement when you reach your MRA, unless you were earning more through wages or self employment than the annual Social Security earnings limit. In 2011 that limit is $14,160. As a retiree, you would be able to continue your coverage under the FEHB, FEGLI and LTC programs.
May 17th, 2011 | Postponed retirement
Q: If one retires under FERS MRA+10, but postpones (not “defers”) taking the annuity, is half of the sick leave now creditable to time in service? I have determined that it is creditable for immediate annuities, but not for deferred annuities. I can find nothing pertaining to postponed annuities. Example: I plan to retire at age 59 with more than 28 years of service. I plan to postpone my annuity until I am 60 (November 2012) to avoid the age penalty. Will half of my sick leave be used to compute my service time?
A: If you retire under on immediate annuity – including under the MRA+10 provision – you’ll get credit for your unused sick leave, even if you postpone the receipt of that annuity to a later date. How much credit you’ll get will depend on when you retire. If you leave government and later apply for a deferred annuity, you won’t get any credit for your unused sick leave.
March 2nd, 2010 | Postponed retirement
Q: Will I receive back pay if I wait to apply for my FERS retirement at 62? I postponed my retirement due to the penalty associated with starting before age 62. I have 15 years of service and am 61. I want to possibly wait to start my annuity because I do not want to be considered a re-employed annuitant when I apply for a job. I am currently on a temp appointment not covered by FERS and the next job will probably be a temp as well. I cannot get the job as a re-employed annuitant because the hiring agency will require special approval to hire me. I may change my mind and start Social Security and FERS when I turn 62 if I do not get back pay for my FERS retirement.
A: Whether you retired and postponed the receipt of your annuity or simply left government and applied for a deferred annuity, no back pay is due. Your annuity payments start when you annuity begins.
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 am a federal employee covered under the Federal Employees Retirement System, and at age 49 will have just over 30 years of service with my military time that I bought back. Can I retire without penalty by postponing or deferring my annuity until my minimum retirement age of 56 years and 2 months, and reapply for the Federal Employees Health Benefits plan for my spouse, and draw on my Thrift Savings Plan, as well? Do I defer my annuity or postpone my annuity under this scenario? What is the better of the two options, or should I not pursue either of them?
A: Because you haven’t reached your minimum retirement age but have 30 years of service, your only option, if you want to leave now, would be to resign from the government and apply for a deferred annuity when you reach your MRA. Unfortunately, deferred retirees aren’t eligible to re-enroll in the Federal Employees Health Benefits program.