Ask The Experts: Retirement

By Reg Jones

Pay increases

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Q. Can you tell me how Executive Level IV pay, which limits the maximum pay of GS scale employees, is calculated? What is the formula? In searching, I can find the pay rate but not the rules. In other words, will GS-15 Step 9s and Step 10s who have hit that ceiling ever see that ceiling rise?

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Retirement calculation for 30+ years of service

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Q. I am a FERS employee. I have 18 years of civil service and five years of Air Force service that I bought back for a total of 23 creditable years. I will reach my 30-year service mark long before my minimum retirement age of 57½. How is retirement calculated if I decide to go past the 30 years putting me at 38½ years of civil service and the MRA of 57½? I have heard that for each year over 30 you get additional percentage points.

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Deferred annuity arrears

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Q. I turned 62 in 2006 October. Since I am gainfully employed, I did not file for deferred annuity until February 2012. To my surprise, my calculation is showing that my eligibility starts in October 2008 and paid arrears only up to October 2008. Secondly, it appears that cost-of-living adjustments are not considered in calculating arrears. Could you please advise me to understand and resolve this issue?

A. According to the Office of Personnel Management, “For a deferred retirement, the commencing date is normally their 62nd birthday. The commencing date remains the same even if they don’t apply until a later date. The annuity will be retroactive to the date they were first eligible and they receive any COLAs that would have been applicable from the commencing date until the date the case is adjudicated.” If this doesn’t square with what you received in your deferred annuity calculation, you’ll have to get in touch with the people who sent you that information.

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Rehired annuity

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Q. I am a GS-14 federal retiree, having retired in October. I worked continuously (no break in service) for 34½ years. My period of employment was entirely competitive service. I was classified as exempt from the federal Fair Labor Standards Act. I am interested in knowing how I would be paid if I decided to apply as a rehired federal annuitant. Is there a table that you can point me to with a step-by-step decision tree as well as examples of how a salary would be determined?

A. Nope. There aren’t any tables or decision trees. It would be up to you to find a job and negotiate with your potential employer to set a rate of pay within the pay scale for that grade. In most cases, your salary would be offset by the amount of your annuity. If you worked for a year full time, you’d be entitled to a supplemental annuity. If you worked for five years full time, you’d be entitled to a redetermined annuity.

Note: If you were hired into a position that allowed you to receive both your annuity and the full salary of your position, you wouldn’t be entitled to either a supplemental or a redetermined annuity. When you left, your salary would simply stop and your annuity would continue.

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Special retirement supplement

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Q. I have 30 years of federal service: two years in CSRS, in which I did not get a retirement refund; four years in the Coast Guard, where I made a deposit for my time; and 24 years under FERS. When I retire under FERS at my minimum retirement age, 56, will the two years under CSRS be considered FERS and used toward my special retirement supplement calculation?

A. Yes, because those two years were automatically converted to FERS time. If you had worked under CSRS for five or more years, they wouldn’t have been. Instead, you’d have a CSRS component in your annuity.

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High-3 and law enforcement

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Q. I will be retiring next week from federal law enforcement. I live and work in the San Francisco area. I was initially provided with a calculation based on an average high-3 salary of $145,250 and was told I would receive a net of $6,050 per month. However, when I visited Employee Express this morning, I saw that the agency is now listing my high-3 average as $116,000 and my expected net monthly annuity payment would be around $5,000. I pulled my W-2s for the past three years and confirmed that my top average 3-year salary is $145,250. I’m awaiting a response from my employer to determine why they are now listing my high-3 average $29,250 lower than originally reported to me. I receive 25 percent availability pay as well as my base pay and locality pay. It’s my understanding that all three of these factor into my retirement annuity.

A. The amount of a high-3 is based on three consecutive years of average pay from which retirement contributions were deducted. Any pay you received from which retirement contributions weren’t taken won’t be included. You’ll need to check with your payroll office to find out if there’s a difference between your gross income and your retirement deductions.

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CSRS Offset

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Q. Having read the Office of Personnel Management’s Retirement Fact 13, I am still somewhat confused. If I retire at 62 with over 32 years of service under CSRS Offset, and the CSRS calculation comes out to $5,000 per month with a Social Security amount with federal earnings (Computation 2) being $500 per month, and the Social Security Administration indicates my Social Security benefit with federal service is $1,500 and $800 without federal service (Computation 1), what would my monthly annuity be from CSRS and what would be the benefit amount from Social Security?

A. The closest you’ll be able to get to an accurate estimate of how your CSRS annuity will be offset to account for your Social Security benefit is by using this simple formula: Take your Social Security benefit estimate for age 62, multiply it by your total years of CSRS Offset service (rounded to the nearest full number) and divide it by 40. In the long run, however, this is just an academic exercise because the total amount of money you’ll receive will be the same; it will just come from two different places, OPM and the Social Security Administration. Any other Social Security benefit to which you are entitled as a result of nonfederal employment will be in addition to that.

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Two pensions

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Q. I am 51 years old, a retired active reservist with 20 years active duty and receiving my pension as of January 2011. I am also a federal employee under FERS and have paid back 14 years active duty for retirement credit. I plan on retiring from the federal government in 2014. Will I receive both pensions? How do I know which one pays more?

A. Yes, you will receive both benefits without a reduction in either. Why you want to know which benefit pays more escapes me. You will get what you are entitled to under each retirement system. Most FERS retirees can find out what their annuity will be by using the standard formula: 0.01 x  high-3 x years and full months of service (both FERS and active duty purchased through a deposit). Since this is a civilian site, I have no idea how your reserve retired pay will be calculated. You’ll have to check with your branch of service.

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Retirement options for special agent

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Q. I am a 48-year-old 1811 with 22 years of service as a special agent. Do I have any retirement options other than serving another two years with the FBI or in another agency as an 1811? If in the next year, I obtain a non-1811 or non-law-enforcement Senior Executive Service position with another agency, how will that affect my retirement?

A. Since you have at least 20 years of covered service, you could take any other job and be able to retire when you reach your minimum retirement age, which would be 56. Those 20 years would be calculated using the enhanced formula and the rest using the standard formula. Alternatively, you could continue to work in a covered position and retire at age 50.

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Service computation date

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Q. I entered active duty with the Army on Sept. 16, 2002, and got an honorable discharge for medical reasons on Nov. 5, 2003. Those dates were recorded on my DD-214. I joined the federal civilian workforce in May 2004, and that federal agency calculated my service computation date as March 12, 2003. I think this calculation is wrong. If it is, which documents should I reference to have this corrected? And whom should I contact for the correction, as I just transferred to another federal agency?

A. You’ll find the definition of creditable service and the methodology used for crediting it at www.opm.gov/feddata/gppa/GPPA06.pdf. If you have any questions, ask your agency to show you how they applied that methodology to your case.

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Prior credit for annual leave calculation

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Q. I completed a full one-year internship with the Veterans Affairs Department system (with annual leave and sick leave earnings) prior to my current federal employment. Three years after this internship ended, I obtained a job at a VA hospital. I have known other VA employees who have had this period counts toward changes in annual leave accrual from four to six hours. Upon my hire, I was informed that the VA hospital I worked at had some of the documentation but was missing a specific form required to change annual leave calculation. Hence, our human resources office could not verify that I was at this site (even though if had I not completed this training, I would not have been eligible for my degree, been properly credentialed, obtained professional licensure, or have been eligible for my current employment).

The person in HR who processed my application retired shortly after my start date. My case was turned over to another individual. I met with that person who stated that HR “was probably going to credit me this” after reviewing information. I was not notified that other documentation (e.g. tax returns, pay stubs, etc.) could be provided for verification at that time. I sent some follow-up communications but had no response.

As my two-year employment service date approached (which would have been three years given prior-qualified federal service for annual leave calculation), a new HR employee provided assistance in checking into the annual leave calculation. He noted: 1). that this one-year internship did qualify for annual leave recalculation; 2). that nothing had been changed in terms of credit for the internship. Basically, he said there had been no follow-through by the HR person I previously met with. This new person stated that HR could not verify my prior service but that it could be done with pay stub/W-2 forms.

I was then informed that annual calculation could not be retroactive. Hence, changing to six hours from four hours would only be approved after the documentation I provided was approved. To date, I have lost over three days of annual leave due to all the administrative errors with no resolution in sight. How can I move forward?

A. I checked with the Office of Personnel Management. Here is their response:

If an agency discovers an employee should have received credit for a period of service that would advance the date in which the employee reaches a higher annual leave accrual category, the correction to the service credit date should be handled immediately, and the employee’s annual leave account must be reconstructed for each affected leave year. That is, the new leave accrual rate would not be prospective only. The employee may be entitled to additional annual leave.  However, in order to receive the additional leave accrual, leave records must be available to ensure the employee does not receive annual leave in excess of the statutory limit.

“When reconstructing leave accounts due to an administrative error, the annual leave accumulation limit still applies (5 U.S.C. 6304 for most employees), and an agency may recredit only annual leave that is not in excess of the statutory limit.

“When an employee is recredited with leave in order to correct an administrative error, his leave records are reconstructed for each leave period affected.  In thus reconstructing the employee’s leave account, he may not be recredited with any leave which would cause his leave balance for the beginning of a new leave year during the period in question to exceed the statutory limitation of 240 hours imposed on annual leave carry over from one leave year to the next by The Annual and Sick Leave Act of 1951, as amended, now 5 U.S.C. 6304.” See Comptroller General Decision B-177977, May 21, 1973, at http://www.gao.gov/products/465098#mt=e-report.

In reconstructing the leave account, if the employee would have earned additional annual leave over the statutory limit, the excess leave will be forfeited.

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Annuity/Survivorship

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Q. I am looking at my Federal Employee Benefits Statement. Can you tell me what the difference is between the estimated annuity without survivorship, with max survivorship, and annuity to survivor?

A. If you are unmarried, you would receive the full benefit to which you are entitled based on your years of service, high-3 and the formula used to calculate an annuity (either CSRS or FERS). If you are married, you are required by law to provide a full survivor annuity to your spouse (55 percent for CSRS; 50 percent for FERS). Under CSRS, you could provide any amount of survivor annuity from $1 up or none at all with the written consent of your spouse; for FERS, the choice is either 25 percent or none. It is also possible for qualified retirees to provide an insurable interest annuity to someone who has a financial interest in their continuing well-being. Since there’s such range of possible arrangements for a reduced insurable interest annuity, you’ll have to check with your payroll office to learn what they mean when they say annuity to survivor.

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Early retirement penalty calculation

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Q. If I were to retire Jan. 3, 2013, and will turn 55 on July 7, how is the CSRS early retirement penalty computed?  Is it by days or months?

A. In months, with a reduction of 1/6 percent per month.

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