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CSRS and FERS Overview. Retirement Systems 2 Civil Service Retirement System (CSRS) 1.4 Million annuitants* <10% current employees* Federal Employees.

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Presentation on theme: "CSRS and FERS Overview. Retirement Systems 2 Civil Service Retirement System (CSRS) 1.4 Million annuitants* <10% current employees* Federal Employees."— Presentation transcript:

1 CSRS and FERS Overview

2 Retirement Systems 2 Civil Service Retirement System (CSRS) 1.4 Million annuitants* <10% current employees* Federal Employees Retirement System (FERS)280 Thousand annuitants* >90% current employees* *2011 data

3 Civil Service Retirement System (CSRS) 3 CSR Act effective August 1920 A defined benefit plan

4 FERS effective 1/1/ different components: Basic Benefit Plan (+ Special Annuity Supplement) A defined benefit plan Social Security Thrift Savings Plan (up to 5% matching) A defined contribution plan Federal Employees Retirement System (FERS) 4

5 How Much Do I Pay? 5 Employee Contribution Amounts

6 Civil Service Retirement System (CSRS) 6 What CSRS employees pay Employee pays 7% Employer pays7%

7 What FERS employees pay Employee pays 0.8% into Basic Benefit Plan plus 6.2% into Social Security Employer pays varying amounts Federal Employees Retirement System (FERS) 7

8 When Will I Be Eligible to Retire? 8

9 Types Of Retirements 9 Regular/Optional Early Retirement Disability Deferred Phased Retirement

10 Age and Service Requirements for Regular Retirement 10 Age Service MRA 30 years years 625 years MRA 10 years* Age Service years years 625 years CSRS FERS (*reduced benefits)

11 The Minimum Retirement Age is determined as follows: If you were bornYour MRA is Before years In years, 2 months In years, 4 months In years, 6 months In years, 8 months In years, 10 months In 1953 to years In years, 2 months In years, 4 months In years, 6 months In years, 8 months In years, 10 months In 1970 and after57 years 11

12 Crediting Service ________________________________________ & ELIGIBILITY to retire HOW MUCH you get Years of service determine 12

13 Amount of Creditable Service Federal Civilian Service is normally credited from the beginning to ending date of an appointment Exception: Cumulative LWOP exceeding 6 months in a calendar year is not credited unless the LWOP was due to an on-the-job injury & wage loss compensation was paid 13

14 Crediting Military Service 14 Honorable, Active Duty Service Military Retired Pay Considerations Post 1956 Considerations

15 Crediting Post-1956 Military Service 15 CSRSFERS Military deposit equals 7% of base pay plus interest Military deposit equals 3% of base pay plus interest

16 Crediting Unused Sick Leave CSRS and FERS Sick leave balance at retirement is added to the length of service to calculate the amount of an immediate annuity Sick leave is not creditable for establishing retirement eligibility 16

17 How Much Will I Get? Annuity Computation 17

18 Basic Annuity 18 Annuity is based on a percentage of the High 3 year average salary Percentage is determined by the amount of creditable service and the appropriate annuity formula

19 High-3 Average Salary 19 3 Consecutive Years $ $ $

20 Basic Pay Includes: 20 Regular Pay Night Differential

21 Basic Pay Does Not Include: 21 Bonuses Overtime Allowances

22 General Formula 22 CSRS FERS 1.5% x 5 years %x 5 years + 2% x service over 10 years 1% or 1.1%* x years of service *1.1% if age 62 with 20 years

23 General Formula Years Total Service 1.5% x % x 5 2.0% x 20 = = = 7.50% 8.75% 40.00% 56.25% 1 % x 30 = 30% or 1.1% x 30 = 33% CSRS FERS

24 CSRS Calculation Example Employee has 30 years of service and the high-3 average salary is $56, % of $56,000 ($840) x 5 years = $ 4, % of $56,000 ($980) x 5 years = $ 4, % of $56,000 ($1,120) x 20 years = $ 22,400 Basic Annuity (per year) = $ 31,500 or 24

25 FERS Calculation Example Employee, age 62, has 24 years of service and high-3 average salary of $56, % of $56,000 or $616 x 24 = $14,784 or 1.1% x 24 = 26.4% 26.4% x $56,000 = $14,784 25

26 FERS Special Annuity Supplement Substitutes for the Social Security part of the total FERS benefit until age 62 Approximates the Social Security benefit earned under FERS Subject to earnings test No COLAs Ends at age 62 26

27 FERS Special Annuity Supplement To be eligible for the Supplement Employee must have 1 full calendar year of deductions under FERS, and Must qualify for an immediate, non-disability retirement (other than an MRA+10 retirement) 27

28 Calculation of Special Annuity Supplement Get Social Security estimate of projected age-62 benefit Multiply by years of FERS coverage Divide by 40 28

29 Sample Calculation of Special Annuity Supplement Social Security age-62 projection = $18,000/year 30 years of FERS coverage $18,000 x 30 / 40 = $13,500 29

30 Reductions Applied to Basic Annuity 30 Age Non-Deduction Service Survivor Annuity Election Refunded Service CSRS Offset CSRS FERS If CSRS component, Age MRA + 10 Age Survivor Annuity Election

31 CSRS Age Reduction Permanent Reduction Equals 2% for each full year under age 55 Applies to CSRS annuities or CSRS component of a FERS/CSRS annuity 36

32 FERS Age Reduction 32 Applies if the employee retires on an MRA + 10 retirement Employee begins receiving annuity before age 62 Permanent reduction equals 5% for each full year under age 62

33 Reduction for Survivor Annuity Elects a survivor annuity for a spouse and/or former spouse Has a former spouse entitled to a survivor annuity based on a valid court order, and/or Elects to provide someone with an insurable interest annuity Applies if an employee 38

34 Survivor Annuity Reduction CSRS /2 % x $ % x Amount of base in excess of $3600 Survivor receives 55% of the base elected by retiree FERS Full survivor annuity (50%) 10% of annuity Partial survivor annuity (25%) 5% of annuity

35 Insurable Interest 35 A person who has a reasonable expectancy of financial benefit in the continued life of the employee Reduction to provide a survivor annuity to someone with an insurable interest ranges between 10 and 40%

36 Insurable Interest New regulations effective July 20, 2013 Presumed Insurable Interest for Same Sex Domestic Partners The modification of the pre-existing rule now includes same-sex domestic partners in the class of persons presumed as having an insurable interest in the continued life of the employee/retiree 36

37 Maximum Annuity 37 80% of the high-3 average salary Equivalent to 41years and 11months service Limit may be exceeded with sick leave credits CSRS FERS There is no maximum annuity under FERS

38 Returning to Government Work After Retirement 38 Exceptions (FERS) Disability annuitants Generally, annuity continues and salary is offset by amount of annuity Exceptions (CSRS) Disability annuitants

39 Cost of Living Adjustments (COLAS) 39 CSRS FERS Generally not applied until the December after age 62 Exception Disability Begins the first December after retirement First COLA is prorated

40 Cost of Living Adjustments (COLAS) 40 CSRS FERS Equals the percent change in the Consumer Price Index (CPI) If the percent change in the CPI is: 0-2% the COLA equals the CPI increase 2-3% the COLA equals 2% Over 3% the COLA equals the change in the CPI minus 1%

41 More Information Sign up to receive the BenefitsInfo listserv s! Log into the OPM webpage at: sub.cfm 41

42 Questions 42


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