Part time work impact to Annuity

Indexed Universal Life

Part time work impact to Annuity

part timeThe Federal Employees Retirement System (FERS) provides for employees to retire with disability benefits under certain conditions. This article discusses eligibility, calculation of benefits and other issues related to disability retirement as well as the part time work impact to annuity.

Eligibility

You may be eligible for a FERS Disability Retirement at any age if you…

  • Have at least 18 months of creditable FERS service;
  • You became disabled while performing your government job;
  • You can prove that the disability will last longer than one year; and
  • Your agency certifies that they are not able to accommodate your disability, and that they have considered you for other vacant positions.

Calculation of Benefits

Before Age 62
If you qualify for a Disability Retirement before age 62, your disability benefit will be calculated at three different times:

  • First 12 months after disability
  • 12 months after disability, until age 62
  • At age 62

For the first 12 months after you qualify, you will receive:

60% of your high-3 average salary minus 100% of your Social Security Disability Benefit.  However, you are entitled to your “earned” annuity, if it is larger than <

After the first 12 months until age 62, you will receive:

40% of your high-3 average salary minus 60% of your Social Security Disability Benefit. However, you are entitled to your “earned” annuity, if it is larger than this amount.

At age 62 your disability benefit changes for the last time:

Your pension will be recomputed using the regular FERS retirement formula. Your annuity will be recomputed using an amount that essentially represents the annuity you would have received if you had continued working until the day before your 62nd birthday and then retired under FERS. Here’s the formula:

  • If your actual service, plus the credit for time as a disability annuitant equals less than 20 years, your disability benefit will be 1% of your high-3 average salary for each year of service.
  • If your actual service, plus the credit for time as a disability annuitant equals 20 or more years, your disability benefit will be 1.1% of your high-3 average salary for each year of service.
  • Total Service used in the computation will be increased by the amount of time that you have received a disability annuity.
  • Average Salary used in the computation will be increased by all FERS COLA’s paid during the time you received a disability annuity.

Age 62 or Older, or Qualified for Immediate Retirement

If you qualify for a Disability Retirement Benefit at age 62 or older with less than 20 years or service, or you are under age 62 and qualify for an immediate voluntary retirement, your disability benefit is 1% of your high-3 average salary for each year of service.
If you qualify for disability at age 62 or older and you have 20 or more years of service, your disability benefit is 1.1% of your high-3 average salary for each year of service.

Termination of Disability Benefits

FERS disability pensions can be terminated due to death, medical improvement or restoration of earnings capacity. Following the termination, the individual may receive a discontinued service pension based only on length of service and not disability.