CSRS and FERS Overview

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• CSRS and FERS Overview
• pending legislative changes

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Retirement Systems

• Civil Service Retirement System (CSRS)
• Federal Employees Retirement System (FERS)

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How Much Do I Pay?

Employee Contribution Amounts
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Civil Service RetirementSystem (CSRS)

• CSR Act effective August 1920
• A Defined Benefit Plan

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Civil Service RetirementSystem (CSRS)

• What CSRS employees pay
• Most employees pay 7 12 employing agency
  pays 7 2
• House continuing resolution passed 3/29/12

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Federal Employees Retirement System (FERS)

• What FERS employees pay
• Most employees pay 0.8 into Basic Benefit Plan
• 3.1 hired gt 1/1/13 FERS-RAE
• 4.4 hired gt 1/1/14 FERS-FRAE
• plus 6.2 into Social Security
• Middle Class Tax Relief and Job Creation Act
  of 2012 Passed into law
• Bipartisan Budget Act of 2013 Passed
  into law

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Federal Employees Retirement System (FERS)

• FERS effective 1/1/1987
• 3 different components
• Basic Benefit Plan ( Special Annuity Supplement)
  
• Social Security
• Thrift Savings Plan (up to 5 matching)
• House continuing resolution passed 3/29/12
• HR 3813
• Obama Administration FY 2013 budget

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Federal Employees Retirement System (FERS)

• FERS effective 1/1/1987
• 3 different components
• Basic Benefit Plan ( Special Annuity Supplement)
• Social Security (Reduced via Chained CPI)
• Thrift Savings Plan (up to 5 matching)
• Obama Administration 2012 and 2013 budgets

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Federal Employees Retirement System (FERS)

• FERS effective 1/1/1987
• 3 different components
• Basic Benefit Plan ( Special Annuity Supplement)
• Social Security
• Thrift Savings Plan (up to 5 matching)
• No matching employer contributions
• S 1486 Would allow USPS to bargain with unions
  to eliminate USPS matching TSP contributions

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Federal Employees Retirement System (FERS)

• FERS effective 1/1/1987
• 3 different components
• Basic Benefit Plan ( Special Annuity Supplement)
  
• Social Security
• Thrift Savings Plan (up to 5 matching)
• Burr, Coburn Chambliss senate bill
  Public-Private Employee Retirement Parity Act
  introduced 11/12/2013 S 644

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Federal Employees Retirement System (FERS)

• FERS effective 1/1/1987
• 3 different components
• Basic Benefit Plan ( Special Annuity Supplement)
• Social Security (Reduced via Chained CPI)
• Thrift Savings Plan (up to 5 matching)
• No matching employer contribution

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When Will I Be Eligible to Retire?

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Types Of Retirements

• Regular/Optional
• Early Retirement
• Disability
• Deferred
• Phased Retirement

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Age and Service Requirements for Regular
Retirement
FERS
Service
Age
MRA
30 years
60
20 years
62
5 years
MRA
10 years
(reduced benefits)
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The Minimum Retirement Age is determined as
follows
If you were born
Your MRA is
Before 1948 55 years In 1948 55 years,
2 months In 1949 55 years, 4 months In
1950 55 years, 6 months In 1951 55 years, 8
months In 1952 55 years, 10 months In 1953
to 1964 56 years In 1965 56 years, 2 months
In 1966 56 years, 4 months In 1967 56
years, 6 months In 1968 56 years, 8 months
In 1969 56 years, 10 months In 1970 and
after 57 years
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Selecting a Retirement Date
CSRS
FERS

• Last day of the month
• or
• 1st 2nd 3rd

Last day of the month
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Crediting Service

• ________________________________________

Years of service determine
HOW MUCH you get
ELIGIBILITY to retire

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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
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Crediting Military Service

• Honorable, Active Duty Service
• Military Retired Pay Considerations
• Post 1956 Considerations

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Crediting Post-1956 Military Service
CSRS
FERS
Military deposit equals 7 of base pay plus
interest
Military deposit equals 3 of base pay plus
interest
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Crediting Unused Sick LeaveCSRS 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

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How Much Will I Get?
Annuity Computation
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Basic Annuity

• Annuity is based on a percentage of the High 3 5
  year average salary
• Percentage is determined by the amount of
  creditable service and the appropriate annuity
  formula
• Securing Annuities for Federal Employees Act 2012

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High 3 5 Average Salary
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Basic Pay Includes

• Regular Pay
• Night Differential

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Basic Pay Does Not Include

• Bonuses
• Overtime
• Allowances

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General Formula
CSRS
FERS
1.5 x 5 years 1.75x 5 years 2 x service
over 10 years
1 or 1.1 x years of service
1.1 if age 62 with 20 years
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General Formula
30 Years Total Service
CSRS
FERS
1 x 30 30 or
1.1 x 30 33
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CSRS Calculation Example

• Employee has 30 years of service and the
• High 3 5 average salary is 56,000 54,320
• 1.5 of 56,000 54,320 x 5 years 4,200
  4,074
• 1.75 of 56,000 54,320 x 5 years 4,900
  4,753
• 2.0 of 56,000 54,320 x 20 years 22,400
  21,728
• Basic Annuity (per year)
  31,500 30,555
• Median 3 reduction high 5 vs high 3

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FERS Calculation Example

• Employee, age 62, has 24 years of service and
  high-3 average salary of 56,000
• 1.1 of 56,000 or 616 x 24 14,784
• or
• 1.1 x 24 26.4
• 26.4 x 56,000 14,784

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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

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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 MRA10 retirement)

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Calculation ofSpecial Annuity Supplement

• Get Social Security estimate of projected age-62
  benefit
• Multiply by years of FERS coverage
• Divide by 40

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Sample Calculation ofSpecial Annuity Supplement

• Social Security age-62 projection 18,000/year
• 30 years of FERS coverage
• 18,000 x 30 / 40 13,500

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Reductions Applied to Basic Annuity
CSRS
FERS

• Age
• Non-Deduction Service
• Survivor Annuity Election
• Refunded Service
• CSRS Offset

• If CSRS component, Age
• MRA 10 Age
• Survivor Annuity Election

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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

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FERS Age Reduction

• 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

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Reduction for Survivor Annuity
Applies if an employee

• 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

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Survivor Annuity Reduction
FERS

• CSRS

2 1/2 x 3600 10 x Amount of base in excess
of 3600 Survivor receives 55 of the base
elected by retiree
Full survivor annuity (50) 10 of
annuity Partial survivor annuity (25) 5 of
annuity
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Insurable Interest

• 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

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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

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Maximum Annuity
FERS
CSRS

• 80 of the high-3 average salary
• Equivalent to 41years and 11months service
• Limit may be exceeded with sick leave credits

There is no maximum annuity under FERS
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Returning to Government Work After Retirement
Generally, annuity continues and salary is offset
by amount of annuity

• Exceptions (CSRS)
• Disability annuitants

• Exceptions (FERS)
• Disability annuitants

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Cost of Living Adjustments (COLAS)
CSRS
FERS

• Begins the first December after retirement
• First COLA is prorated

• Generally not applied until the December after
  age 62
• Exception
• Disability

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Cost of Living Adjustments (COLAS)
FERS
CSRS

• 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

Equals the percent change in the Consumer Price
Index (CPI)
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Questions