Post-Leave Retirement Benefits for Federal Service Employees
This article will go over the federal retirement benefits one is entitled to upon leaving the federal service.
Be mindful that the proposed 2018 budget is an ideal, and not yet official. It can be seen as the beginning point for negotiations while budgeting is taking place. It’s feasible to expect that minimal – if any – of the proposals will ever see fruition. With that in mind, it’s prudent to be ready for an event that doesn’t take place (as opposed to being caught off guard for something that will).
Qualifying for Retirement
Currently, a large amount of federal employees qualify for retirement, particularly when you take into consideration that VERA (Voluntary Early Retirement Authorities) will be implemented when agencies restructure. Here are the qualification criteria for both early and voluntarily retirement.
Many existing CSRS employees can voluntarily retire now. Those who aren’t eligible qualify for early retirement.
As per CSRS, someone who retires early will get a 2% reduction annually in their pension for each complete year they are below the age of 55 (1/6 of 1% monthly).
Retirement factors (as per FERS) are similar to the ones for CSRS. However, FERS has an extra choice for reduced retirement, sometimes referred to as an MRA+10.
As per FERS, someone who retires early won’t get an age-based reduction. However, an individual who accepts reduced retirement will face a 5% annual reduction for every complete year they are below the age of 62 (5/12 of 1% monthly).
With that said, if you qualify for any of the factors above, you can go through with the process whenever you want. Several people claim they “joined the club” upon qualifying for retirement. You might not wish to retire the first time you are eligible, but at least that choice is on the table.
Federal Employees Who Don’t Qualify for Retirement
What about federal employees who don’t qualify?
To qualify for a pension in the future (known as “deferred retirement”), an employee must have five years of creditable civilian service under their belt. An additional criterion is that the individual needs to have left their retirement payments on deposit with OPM.
Just about everyone who decides to leave prior to being eligible for retirement will be covered as per FERS. The deferred retirement criteria under FERS is identical to the ones for voluntary retirement.
For instance, if a FERS staff member (aged 42 who has just under 20 years of federal service under their wing) decides to end their employment and leaves their FERS payments on deposit, they will initially qualify for a deferred pension upon reaching their Minimum Retirement Age (as per MRA+10 criteria). However, that deferred pension will be lowered 5% annually for every year they are younger than 62 years of age. If they choose not to have their pension lowered, they will qualify for an un-lowered pension once they turn 62 (as per the 62 + 5 criteria). The retiree is not entitled to remain enrolled in FEGLI or FEHB because of deferred pensions.