CSRS and FERS Overview. Retirement Systems 2 Civil Service Retirement System (CSRS) 1.4 Million...
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Transcript of CSRS and FERS Overview. Retirement Systems 2 Civil Service Retirement System (CSRS) 1.4 Million...
CSRS and FERS Overview
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
Civil Service RetirementSystem (CSRS)
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• CSR Act effective August 1920
• A defined benefit plan
• FERS effective 1/1/1987
• 3 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)
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How Much Do I Pay?
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Employee Contribution Amounts
Civil Service RetirementSystem (CSRS)
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What CSRS employees pay
• Employee pays 7%
• Employer pays 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)
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When Will I Be Eligible to Retire?
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Types Of Retirements
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• Regular/Optional
• Early Retirement
• Disability
• Deferred
• Phased Retirement
Age and Service Requirements for Regular Retirement
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Age Service
MRA 30 years
60 20 years
62 5 years
MRA 10 years*
Age Service
55 30 years
60 20 years
62 5 years
CSRS FERS
(*reduced benefits)
The Minimum Retirement Age is determined as follows:
If you were born Your MRA isBefore 1948 55 years In 1948 55 years, 2 months In 1949 55 years, 4 months In 1950 55 years, 6 monthsIn 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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Crediting Service________________________________________
&ELIGIBILITY to retire
HOW MUCH you get
Years of service
determine
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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
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• Honorable, Active Duty Service
• Military Retired Pay Considerations
• Post 1956 Considerations
Crediting Post-1956 Military Service
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CSRS FERS
Military deposit equals 7% of base pay plus
interest
Military deposit equals 3% of base pay plus
interest
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
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• 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
High-3 Average Salary
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3 Consecutive Years
$ $ $
Basic Pay Includes:
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Basic Pay Does Not Include:
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General Formula
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CSRS FERS
1.5% x 5 years +1.75%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
General Formula
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30 Years Total Service
1.5% x 51.75% x 52.0% x 20
===
7.50%
8.75%40.00%
56.25%
1 % x 30 = 30%
or
1.1% x 30 = 33%
CSRS FERS
CSRS Calculation Example
Employee has 30 years of service and the high-3 average salary is $56,000
1.5% of $56,000 ($840) x 5 years = $ 4,200
1.75% of $56,000 ($980) x 5 years = $ 4,900
2.0% of $56,000 ($1,120) x 20 years = $ 22,400
Basic Annuity (per year) = $ 31,500
or
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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 MRA+10 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
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• Age• Non-Deduction
Service• Survivor Annuity
Election• Refunded Service• CSRS Offset
CSRS FERS
• If CSRS component, Age
• MRA + 10 Age• Survivor Annuity
Election
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
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• 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
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
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Survivor Annuity Reduction
CSRS
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2 1/2 % x $3600+
10 % 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
Insurable Interest
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• 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%
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
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• 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
Returning to Government Work After Retirement
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Exceptions (FERS)• Disability annuitants
Generally, annuity continues and salary is offset by amount of annuity
Exceptions (CSRS)• Disability annuitants
Cost of Living Adjustments (COLAS)
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CSRS FERS
• Generally not applied until the December after age 62
Exception• Disability
• Begins the first December after retirement
• First COLA is prorated
Cost of Living Adjustments (COLAS)
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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%
More Information
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listserv emails!
Log into the OPM webpage at:
http://apps.opm.gov/Listserv_Apps/list-sub.cfm
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Questions
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