Ask The Experts: Retirement

By Reg Jones

FERS retirement eligibility

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Q: I worked as a civilian federal employee from July 2006 through December 2008. During that time, I bought back my three years of active-duty military service. Does this give me enough credited service to receive a retirement under the Federal Employees Retirement System?

A: No, it doesn’t. You’d have to have five years of creditable civilian service to be eligible for a deferred annuity at age 62.

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Buying time to get benefits?

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Q: If someone is going into his eighth year under the Federal Employees Retirement System and is eligible to retire in two years, is there any way he could buy two years of service so he could retire with benefits?

A: No, there isn’t.

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Military buyback and reserve retirement

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Q: If I buy back my active-duty military time to put it toward my Federal Employees Retirement System retirement, do I then lose that time toward my Navy Reserve retirement?

A: No. Making a deposit for your period(s) of active-duty service will have no affect on reserve retired pay. You’ll get full credit for that time.

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FERS coverage exceptions

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Q: What is the exception for automatic coverage under the Federal Employees Retirement System for federal employees hired on or after Jan. 1, 1987, and for most employees hired after Dec. 31, 1983?

A: There are number of exceptions to the automatic FERS coverage you referred to. To find out what they are, go to this handbook on the Office of Personnel Management website and scroll down to Section 10A1.3-5, entitled “FERS: Exclusions.”

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FERS supplement earnings test

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Q: I retired at age 52 under a Federal Employees Retirement System law enforcement (1811) retirement. I am now 55 and am employed. I generally understand the earnings test that will apply to my FERS supplement beginning the year I reach my minimum retirement age, but I am not clear how it is calculated the first year. I will reach my MRA in 2011 at the age of 56. Are my earnings for the entire year of 2011 calculated, or do they only calculate the earnings after I turn 56? I have not been able to get an answer from the Office of Personnel Management on this.  

A: There’s a special rule for the first year you retire. How your income will be treated is spelled out in a Social Security Administration publication. You’ll find it here.

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Disability benefit reduction

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Q: I was hired after 1983 to a nonmilitary position. I left federal employment with a 40 percent Federal Employees Retirement System disability annuity. I was recently approved for Social Security disability. It is my understanding that per Federal Law 5 U.S.C. 8452(a)(2) that my monthly FERS disability check will be reduced by 60 percent of my Social Security disability benefit. That doesn’t seem fair. Isn’t there a bill pending in Congress that repeals this? Do you know which bill I should refer to when I contact my Congressman? 

A: That’s the law and, to the best of my knowledge, no one has ever introduced legislation to change it.

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Disability retirement basics

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Q: I am a federal employee who will soon be going in for open-heart surgery. I am 58 years old and will be 59 in March. I have until I’m 60 to reach 20 years of service for early retirement. I am also a retired E-6. What would happen if the doctor after the operation says I can no longer work? Would I be given 100 percent disability of my base pay?

A: As an employee under the Federal Employees Retirement System, if you were approved by the Office of Personnel Management for disability retirement, during the first 12 months you would receive 60 percent of your high-3 minus 100 percent of any Social Security disability benefit to which you were entitled. (You have to file for a Social Security disability benefit at the same time you file for FERS benefits.) After the first 12 months, you’d receive 40 percent of your high-3 minus 60 percent of any Social Security disability benefit.

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Military-civilian-VA benefit breakdown

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Q: I retired from the Army in 2007 and receive both military retirement pay and Veterans Affairs Department disability pay. I immediately went to work for the federal government under the Federal Employees Retirement System. When I retire from government employment, will I be paid all of the following: military retirement pay, VA disability pay, FERS retirement pay and Social Security benefits?

A: Yes, you would be able to receive all four benefits. Just remember that your FERS retirement annuity would be based solely on your years of civilian service unless you chose to make a deposit for your years of active-duty service and waived your military retired pay.

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Unused sick time and annuity calculation

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Q: Under the Federal Employees Retirement System, after 20 years, your annuity is figured at 0.011 percent of your high-3 salary average multiplied by your years of service. Below 20 years, the percentage used is 0.01. With the new law allowing 50 percent of unused sick time to be used for annuity calculations, can that time also be used to meet the 20-years-of-service criterion?

A: Let’s first get the computational facts straight. The standard FERS formula is as follows: 0.01 x your high-3 x your years of creditable service. The 0.011 multiplier is only used if you retire at age 62 or later with at least 20 years of service. Now, to your question: No, sick leave can not be used to meet the years-of-service requirement. It can only be added after that criterion has been met.

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Calculation of FERS with retirement with military deposit

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Q. I am a federal employee under FERS. I paid my military deposit for eight years of active duty. I heard at a pre-retirement seminar that when they calculate the FERS annuity, they use a 4 percent (instead of the 1 percent) for the years we paid military deposit.  Is this correct?

A. Absolutely untrue. Military service for which a deposit is made is treated no differently than regular civilian service.

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Survivor benefits under FERS

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Q: Nobody can seem to give me a straight answer to this question: I’m 59 years old and under the Federal Employees Retirement System, with 18 years of service. I had heart bypass surgery four years ago, and I’m now having complications. Because I have to have 20 years of service to qualify for a pension, it appears that my wife will not get my pension if I die before I hit the 20-year mark, which is 20 months away. However, I have reached the minimum retirement age, so if something happens soon, can my wife get my pension, less 5 percent per year for each year under age 62? I really don’t want to retire under the MRA provisions because I need another year to pay off some debts, but fate may not give me that much time.

A: I’m surprised that no one can give you a straight answer. The law provides that if a FERS employee has at least 10 years of service and dies while still working, his spouse will receive a survivor annuity equal to 50 percent of what his annuity would have been based on his years of service, but without any age penalty. In addition, the spouse would receive a cash payment equal to half his annual base pay on the day he died.

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Social Security and FERS benefits

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Q: I am a federal employee covered under the Federal Employees Retirement System. I am also paying Social Security taxes. Would I receive 100 percent of my retirement from both systems given that I retired at the stipulated age? Will my Social Security pension change my FERS pension?

A: If you retire on an immediate annuity after reaching the right combination of age and service (62 years old with five years of service, 60 with 20, or at your minimum retirement age with 30), you’ll receive an unreduced FERS annuity and, if you retire before age 62, the special retirement supplement, which approximates the Social Security benefit you earned while employed under FERS. The SRS will end at age 62, when you’ll be eligible for a Social Security benefit based on all your Social Security-covered service. As you can see, there won’t be any offset.

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Age 62 disability recomputation

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Q: When a person on Federal Employees Retirement System disability reaches age 62 and a recomputation is done, are the cost-of-living adjustments added to the “high-3″ salary from the regular pay schedule or from the annuity COLA schedule? My high-3 was $47,116 when I became disabled in February 2004, and I turned 62 in June 2010. I live in the Dallas-Fort Worth area. I was under the impression that COLA was determined by the GS schedule and locality pay.

A: When you reach age 62, the time your spent on the disability annuity roll will be added to your actual service. The total time will then be multiplied by 1 percent. The product will then be multiplied by your high-3 at the onset of your disability, increased by all FERS cost-of-living adjustments payable from that time until age 62. Changes that may have occurred in the salary of your previous position after you retired won’t be used in this recomputation.

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When do penalties apply?

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Q: Thank you for your recent article on key dates for retirement  in the Oct. 4 edition of Federal Times. I have a question that wasn’t completely answered by the article. 

I am a veteran with more than 22 years of active-duty service. I joined the Food and Drug Administration two years ago, so I am under the Federal Employees Retirement System. I turned 51 this year and plan to retire sometime between age 62 and 65. I will not have 20 years of service at age 60, but I certainly will have five years of service at age 62. From my understanding of the article I fall into the category of between 10 and 30 years’ service at minimum retirement age, and there is simply no way I’m working until age 81. You mention there is a 5 percent per year penalty for retirement unless I postpone payment of the annuity, but there is no explanation of how long that postponement would have to be.  In my case, how long would the postponement be to negate the penalty, or would it better for me to pay the penalty and collect the annuity right away?  

A: If you retire at age 62 with at least five years of creditable service, there won’t be any age-based reduction in your annuity. The age penalty applies only to those who retire under the MRA+10 provision of law (minimum retirement age plus between 10 and 29 years of service).

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MRA benefit breakdown

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Q: I am a 39-year-old federal employee. I have nine years of Federal Employees Retirement System-covered federal service. I also bought back eight years of Army service time two years ago. I am thinking of resigning my position and starting a small business. Would it benefit me to wait three years and reach 20 years of creditable service? And if so, what benefits will I be eligible for at my minimum retirement age?

A: You wouldn’t be eligible for any benefits when you reached your minimum retirement age.  With fewer than 20 years of service, you’d be eligible for a deferred annuity at age 62. With at least 20, you’d be eligible for the annuity at age 60.

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FERS supplement specifics

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Q: Is the Federal Employees Retirement System supplement (Social Security) sent to retirees as a separate payment, or is it combined with the annuity?
 
A: The special retirement supplement is included in a retiree’s monthly annuity payment.

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Health care coverage and retirement

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Q: I have been opting out of health care coverage because I am covered by my wife’s plan, but I plan to retire under the Federal Employees Retirement System in 2016 and want to take advantage of the post-retirement health care benefits. I will enroll during the upcoming open season, but I would like to know whether I need to enroll in self and family coverage in order to have coverage for my family after I retire, or if I can enroll in self coverage now and add family members after I retire.

A: You can switch from self-only coverage to self and family coverage during any health benefits open season.

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FERS sick leave credit

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Q: From Oct. 28, 2009, to Dec. 31, 2013, half of of sick leave may be credited toward retirement time. Is that correct? If so, does a Federal Employees Retirement System employee who retires in that window receive payment for the other half of the unused sick leave, or is it just lost? Do FERS retirees receive full payment for unused vacation time?

A: Any FERS employee retiring between now and Dec. 31, 2013, will only receive credit for half of his unused sick leave. The rest is lost. After that date, full credit will be given. All employees, whether covered by FERS or the Civil Service Retirement System, receive a lump-sum payment for their unused annual leave.

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USPS and disability retirement

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Q: My husband has been working for the U.S. Postal Service for 26 years. He is 53 years old. He is entitled to Federal Employees Retirement System benefits at age 56, but he wants to retire now due to health issues. Can he do that?

A: The only way he could retire before reaching his minimum retirement age would be if he was approved for disability retirement. To find out if he is eligible, he’d have to file for disability retirement and, at the same time, file for Social Security disability benefits. His personnel office can help him do that.

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FERS and Social Security

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Q: I have been working for the government for the past seven years under the Federal Employees Retirement System and expect to retire in 13 years at age 67. Prior to my government service, I worked in the private sector and paid into the Social Security system for 35 years. Am I to assume that I will be receiving both a full FERS and Social Security benefit when I retire?

A: Yes. You will receive your FERS annuity based on your years of FERS-covered employment and a Social Security benefit based on all your Social Security-covered employment, not just that under FERS.

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