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March 29, 2024

Federal Employee Retirement and Benefits News

Tag: FERS annuity

FERS annuity

Is A $1M Annuity Affordable for You? by Michael Wood

Michael Wood has been a licensed professional for almost 20 years, and he has focused exclusively on those consumers who are close to or already retired.

Could your golden years stay bright with a government-backed inflation-indexed CD of up to $1.5 million?

Most people have the kind of money it takes to buy a worthwhile guaranteed-for-life annuity. However, federal workers contributing to their Civil Service Retirement System or Federal Employees Retirement System plans are guaranteed both a lifetime income and survivor annuity.

The National Association of Retired Federal Employees says that current retirees have a median annuity of $3,171 a month for CSRS. The amount for those under the FERS program is $1,121 a month. However, for those living in the Washington, D.C. area, the retirement benefits are much higher. They usually see annuities of $40,000.

Most retirees who are enrolled in CSRS see full cost-of-living adjustments, while those FERS retiring employees see a not-so-great inflation rate adjustment of two percent a year.

If a person wanted a $40,000 annuity for life they would need to pay $1.3 million. Lower-income federal workers and those retiring at 55 through CSRS would need to pay $1.6 million to have the $3,000+ a month.

When a person is choosing a survivor annuity, usually the startup annuity cost is more.

If a FERS worker wanted to purchase the self-only annuity (starting at 62) for the guaranteed $1,121 a month, they would have to pay $430,000 to do so. This does not include the survivor annuity; that benefit is an added cost.

So, what can you do to get the most money from your retirement? The best thing you can do is contribute the maximum amount to your TSP plan ($18,500 or $24,500). Make sure these contributions are tax-deferred for as long as you are legally allowed and slowly withdraw the money from your TSP.

Michael Wood

Contact Michael Wood
[email protected]

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Federal Employee Annuities – FERS by Dave Baker

FEDERAL EMPLOYEE ANNUITIES – FERS

by Dave Baker

David Baker has more than two decades of experience, and as the founder of Retirement Income and Benefits Solutions, is dedicated to helping clients achieve a higher level of confidence in their financial plan. Here Dave Baker will cover the topic of Federal Employee Annuities and the benefits of the FERS.

Congress created thе Fеdеrаl Emрlоуееѕ Rеtіrеmеnt Sуѕtеm (FERS) іn 1986, аnd іt bесаmе effective on Jаnuаrу 1, 1987. Since thаt tіmе, nеw Fеdеrаl сіvіlіаn еmрlоуееѕ who hаvе rеtіrеmеnt соvеrаgе аrе соvеrеd bу FERS.

FERS іѕ a rеtіrеmеnt plan thаt рrоvіdеѕ bеnеfіtѕ frоm thrее dіffеrеnt ѕоurсеѕ: A Bаѕіс Bеnеfіt Plаn, Social Sесurіtу and thе Thrіft Savings Plan (TSP). Twо оf thе thrее раrtѕ оf FERS (Sосіаl Security аnd thе TSP) can gо wіth уоu to уоur next job if уоu lеаvе thе Federal Government before rеtіrеmеnt. Thе Basic Benefit and Sосіаl Sесurіtу parts of FERS require you tо pay уоur ѕhаrе each рау period. Your agency wіthhоldѕ thе cost of thе Basic Bеnеfіt аnd Sосіаl Sесurіtу frоm уоur рау аѕ payroll dеduсtіоnѕ. Yоur agency рауѕ іtѕ part tоо. Then, аftеr you retire, you receive annuity рауmеntѕ еасh mоnth for thе rеѕt оf уоur lіfе.

Thе TSP part of FERS іѕ an ассоunt thаt уоur аgеnсу automatically ѕеtѕ up fоr уоu. Each рау period уоur аgеnсу deposits into уоur account аmоunt еԛuаl tо 1% of the bаѕіс рау уоu еаrn for the рау period. Yоu саn also mаkе уоur оwn contributions tо уоur TSP ассоunt, and уоur аgеnсу wіll also make a mаtсhіng contribution. Thеѕе contributions аrе tаx-dеfеrrеd. Thе Thrіft Sаvіngѕ Plan іѕ аdmіnіѕtеrеd by thе Fеdеrаl Rеtіrеmеnt Thrіft Investment Bоаrd.

Bеnеfіtѕ оf Fеdеrаl Emрlоуее Rеtіrеmеnt Sуѕtеm

Rеtіrеmеnt frоm ѕеrvісе or thе wоrk іѕ оnе turning роіnt іn the life оf all employed. Some tаkе thіѕ junсturе аѕ days of enjoyment, аnd fоr some, іt turns tо be fіllеd wіth uncertainty. There аrе реорlе frоm wealthy сіrсumѕtаnсеѕ аnd іnhеrіtѕ рrореrtу and wеаlth. There аrе реорlе whо соuld make substantial ѕаvіngѕ over thе service реrіоd аnd соuld іnvеѕt іn thе form оf securities оr bank deposits оr іn ѕhаrе mаrkеt. Pеорlе frоm thіѕ category, lооk fоrwаrd to аn еnjоуаblе rеtіrеd lіfе wіth lеіѕurе.

Almоѕt аll countries have fоrmulаtеd retirement рrоtесtіvе ѕуѕtеmѕ іn thеіr constitution іtѕеlf tоdау. Pаrtісulаrlу іn western аnd Eurореаn соuntrіеѕ, thеrе are ѕtrоng systems to take care оf thе rеtіrіng community.

Fеdеrаl Employees Rеtіrеmеnt Sуѕtеm, рорulаrlу known аѕ FERS іѕ thе retirement protection ѕуѕtеm рrеvаіlіng іn the US fоr аll іtѕ gоvеrnmеnt еmрlоуееѕ. Thіѕ ѕуѕtеm was fоrmulаtеd іn thе уеаr 1986 to mаtсh with CSRS or Cіvіl Sеrvісе Rеtіrеmеnt Sуѕtеm which was thеrе on thоѕе dауѕ fоr employees of Private оrgаnіzаtіоnѕ. Federal Emрlоуееѕ Rеtіrеmеnt System brоught іn all gоvеrnmеnt еmрlоуееѕ арроіntеd оn оr аftеr 1st Jаnuаrу 1984. Emрlоуееѕ whо were appointed bеfоrе 1984 and continued in ѕеrvісе as оn 31ѕt Dесеmbеr 1986 wіth at lеаѕt 5 уеаrѕ іn ѕеrvісе were gіvеn аn option to jоіn thе FERS.

Elіgіbіlіtу tо jоіn FERS mаіnlу depended оn thе аgе оf thе еmрlоуее аnd thе numbеr оf years hе hаd рut іn ѕеrvісе wіth thе Gоvеrnmеnt. Agе and ѕеrvісе реrіоd were thе two mаjоr соntrіbutіng fасtоrѕ whісh dесіdеd whеthеr оnе wаѕ еlіgіblе to gеt thе bеnеfіtѕ of FERS. In ѕоmе ѕіtuаtіоnѕ, thе Mіnіmum Rеtіrеmеnt Age оr MRA was соnѕіdеrеd as thе basis сrіtеrіа for Federal Emрlоуее bеnеfіtѕ. MRA naturally dереndеd on оnе’ѕ dаtе оf bіrth. Eаrlу rеtіrеmеnt bеnеfіtѕ were оffеrеd tо selected grоuр оf people.

On specific ѕіtuаtіоnѕ, if a rеduсtіоn оf ѕtrеngth of the оrgаnіzаtіоn wаѕ on the саrdѕ, early rеtіrеmеnt bеnеfіtѕ were оffеrеd. In the аnоthеr situation, if ѕоmеоnе was declared as permanently dіѕаblеd, the person tоо wаѕ аllоwеd early rеtіrеmеnt bеnеfіtѕ іn the Fеdеrаl Emрlоуееѕ Retirement ѕуѕtеm. In thе normal conditions, to аvаіl bеnеfіtѕ of Fеdеrаl Employee’s Retirement System, one nееdѕ to аttаіn thе age оf 62 аnd must hаvе served the gоvеrnmеnt fоr a реrіоd оf 30 уеаrѕ.

Thеrе are thrее major components in the Federal Employees Rеtіrеmеnt System. Onе саn орt fоr

(1) Fеdеrаl Employees Rеtіrеmеnt Annuіtу Sсhеmе

(2) Social Security Plаn оr

(3) Thrіftѕ Saving Plаn.

In thе FERS аnnuіtу scheme, the bеnеfіt of thе employee оr the аnnuіtу іѕ calculated оn the реrіоd оf ѕеrvісе one hаd рut іntо service. Tо dеtеrmіnе thе аnnuіtу, in thіѕ саѕе, thе аvеrаgе оf thrее hіghеѕt ѕаlаrіеѕ he had rесеіvеd durіng hіѕ tеnurе tоо іѕ tаkеn into ассоunt. Whereas іn the оthеr twо орtіоnѕ, Sосіаl Sесurіtу аnd Thrіftѕ Sаvіng Plаn, thеrе аrе dіffеrеnt rules оr rеgulаtіоnѕ fоrmulаtеd.

Government employees саn рlаn thеіr rеtіrеd lіfе well іn аdvаnсе duе tо Fеdеrаl Emрlоуееѕ Rеtіrеmеnt Scheme.

David Baker
Dave Baker of Retirement Income and Benefits Solutions

Contact Dave Baker

[email protected]

(734) 794-2775

Other Dave Baker Articles:

Article: Common Thrift Savings Plan Misconceptions

 

Want to recapture FERS service via redeposits? Here’s how!

fersRe-deposits have been allowed by the contemporary employees of the FERS since late 2009 so we can’t really say that it’s going to be news to many people. These employees include those that left government and withdrew their retirement contributions. Before 2009, only the people that came under CSRS could do so.

Recapture FERS service:

When you make such a redeposit, it makes the service laudable to determine whether the employee is eligible for retirement and also for the calculation of the annuity. There are some details that can’t be overlooked in this regard:

The first one is that this policy is only applicable to those officers that are covered by FERS on or after October 2009. Furthermore, it will only affect the benefits pertaining to a FERS coverage separation that would have occurred on or after the date. So, if you have retired before 28th October 2009, you can’t just recapture the time by making the deposit.

If you want to make redeposit then you need to fill out the FERS application that’s especially designed to allow employees to make deposits. You can find it in the forms section on the OPM website. The completed application would then have to be forwarded to the agency for approval and only then will it be processed.

The whole process is pretty flaw-proof and there aren’t any catches involved so if you are trying to make your mind on whether you should make a redeposit or not, know that there isn’t much that can go wrong. On the other hand, just to be sure that you are eligible for this program, you need to make sure that you meet all the preliminary conditions necessary for the application. The processing might take some time but the end result will be something that would be worth the wait.

Public Sector Pensions in Peril

New Phased Retirement ProgramMost employees look forward to the day they can hang up their hat and start retirement.  For decades, many employees have relied on the promise on a steady income following leaving the workforce through pension plans. However, times are changing and the pension system is in a state of dire distress. For young employees, there is still plenty of time to secure retirement through smart investments with Thrift Savings Plans (TSP), 401(k) accounts and other means of saving. However, for employees who can see retirement on the horizon, times are scary. Many employees who have given decades of dedicated work may never see their promised pensions come to fruition.

According to a new report from The Pew Charitable Trusts, there is an epidemic of public sector pensions, with a combined deficit for all states estimated to be close to $1 trillion. Leading the deficit are Connecticut, Kentucky and Illinois.

Among the three states, they all fall well below the standard 80 percent funded standard. Connecticut is ranked at 48 percent, Illinois at 39 percent and Kentucky ranked at an astonishing 23 percent. On the heels of the report, all three states have taken drastic steps to attempt to correct their saving habits and build up a healthy pension fund for their employees – some are succeeding, others are not.

Connecticut has taken steps in recent years to improve its pension savings habits. “It’s clear that Pew is trying to get the attention of governors who haven’t gotten it yet that they need to deal with their pension liabilities,” said GianCarl Casa, spokesman for Governor Malloy’s budget office. “Here in Connecticut, Governor Malloy gets it and has been acting consistently to take care of the problem over the last four-and-a-half years, under Governor Malloy, Connecticut has been funding 100 percent of its annual required contribution, something that was not always the case before he took office. Taken in combination with changes in benefits that he negotiated, Connecticut is on track to fully fund our pension system in about 15 years.  We have made our pension system more affordable and we are keeping our commitments – at a time when other states are not.”

While all eyes have been on Illinois, Kentucky’s Employee Retirement System is at a dismal 23 percent and is $14 billion in the hole. The state has been paying around 50 percent of the actuarially required contributions (ARC) and 75 percent for teachers over the last 10 years – creating the present day situation. While Governor Beshear implemented a reform in March 2013, the deficit was only slowed down its growth. The reforms were recently ridiculed by a bankruptcy judge, stating, “the solvency of the fund to meet future requirement obligations is dependent upon consistent payment of the ARC…will almost certainly result in a fund that insufficient to pay future retiree benefits.” Areas of Kentucky have seen 6 percent property tax increases to help slow down the deficit. While there are very positive signs of financial gains in Kentucky, Governor Beshear says that the economy is gaining momentum, but the $14 billion liability will need to be handled by the next elected governor.

The state of Illinois has struggled to ease their monumental public pension deficit, and seem unable to gain their financial footing. Recently, the state has received a downgraded credit rating and have the worst-funded pension system in the country with $105 billion unfunded liability. Governor Rauner’s sweeping changes have included the option for the state to file for municipal bankruptcy to save billions of dollars for the local and state government – which is not a possibility, only insolvency of the pension payments can occur. However, if the state is able to obtain insolvency there will be massive layoffs in the public sector which is nothing short of catastrophic itself.

Most recently, Illinois, more specifically Chicago received another piece of bad news. Cook County Circuit Court Judge Rita Novak has deemed Mayor Emanuel’s pension reform act, void, unconstitutional and adding that “A public worker’s pension is a contract that cannot be diminished or impaired.” While many public sector employees rejoice over the ruling, one scary truth remains the same, without some type of reform to the current pension systems the funds will run out of money and Chicago cannot borrow any more money or continue to raise taxes. Currently, the city has a hefty $20 billion pension deficit that is only growing.

Compounding the Illinois’ dire financial situation is the recent downgrade of the state’s credit score.

Throughout the country 15 states have an overall funded ratio of 80 percent or higher, according to the Pew report. Many experts say a healthy pension program should have enough funds to cover at least 80 percent of its long-term obligations. South Dakota and Wisconsin ranked among the highest, each with 100 percent funding.

Lisa Grasso Egan, undersecretary for the Office of Policy and Management’s labor relations unit.

This debt “will remain higher as a percentage of U.S. gross domestic product than at any time before the Great Recession,” the Pew report states. “State and local policymakers cannot count on investment returns over the long term to close this gap and instead need to put in place funding policies that put them on track to pay down pension debt.”

Overall, if the state pension programs are unable to implement a stable legislation that has a solid path back to financial health then it could be disastrous. According to the Voya Retire Ready Index, nearly half of all public sector retirees (48 percent) say pension plans are a vital and major source for their retirement income.

 

Federal Retirement Related Articles

Survey Shows Lack of Retirement Savings Among Federal Employees

OPM Hikes Federal Long Term Care Insurance Program Premiums

FEGLI vs. Private Life Insurance

Survey Shows Lack of Retirement Savings Among Federal Employees

Federal Employee Benefits under Attack

TSP Board Approves Wider Investment, Withdrawal Options

Planning for your Federal Retirement by Todd Carmack

federal retirement guidePreparing for your federal retirement starts the day you are hired! By this I mean you want to start taking advantage of one of the greatest benefits a FERS employee has as early as possible; the Thrift Savings Plan. In order to maximize the matching contributions, you want to contribute at least 5%. This may be difficult for newbies in the workforce, but free money is too hard to come by. For those who are high-income earners and can’t take advantage of a private Roth, you can contribute to the Roth TSP.

For those employees who have served in the military, take advantage of buying back your military time (service credits) to count towards your CSRS/FERS pension. This can enhance your retirement annuity by thousands of dollars a year.

If you intend on carrying your Federal Employee Health Benefits Program into retirement, make sure that you have been enrolled for at least 5 years. When it comes to ensuring your spouse or significant other can continue on the FEHB if you pass away, make sure to select either the 25% or 50% Survivor Benefit option. This will not only ensure part of your FERS annuity payment, but also continuation of their FEHB coverage.

Throughout your working career with the federal government, you want to make sure to be up to date on your beneficiaries for TSP and FEGLI. Life events such as children born, marriage or divorce or death can happen.  Part of retirement planning is making sure your loved ones are provided for both during the working years and after.

 

Start considering the issue of Long Term Care coverage when you are young. You may want to consider utilizing either traditional long-term care policies, available through the government (John Hancock) or private policies (sometimes less expensive). Another option to consider is permanent life insurance with long-term care coverage or living benefits which can potentially allow for accelerated payments in the event of in-home health care or nursing home care expenses.

 

I would also suggest 5-10 years out, attend a retirement seminar – sometimes more than one. This may help you plan and provide some tips on the benefits and process.

 

Other Todd Carmack Articles

Social Security for FERS Employees by Todd Carmack

Understanding The Thrift Savings Plan, By Todd Carmack

Is The Pension ‘Survivor Benefit’ Best For You? by Todd Carmack

Understanding Your FEGLI Coverage, by Todd Carmack

 

Disclosure: BWM Advisory, LLC reserves the right to edit blog entries and delete those that contain offensive or inappropriate language. Content will also be deleted that potentially violates securities laws and regulations. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. All investment strategies have the potential for profit or loss. Hyperlinks on this website are provided as a convenience. We cannot be held responsible for information, services or products found on websites linked to ours. BWM Advisory, LLC is registered as an investment adviser with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.

COLA for Federal Employees

Some updates on COLA:

colaThe Cost of Living Adjustments are based on the changes in the Consumer Price Index (CPI).  Many of us don’t pay much attention to the CPI, but as we reach retirement age keeping informed about anything that impacts our financial picture is just smart planning.

Retirees live on a fixed income for the most part and it pays them to know about how their money is being impacted by policy changes, rules and regulations.  Retirees must keep their ears open and their eyes peeled because they are no longer in the workforce where information flows consistently whether right or wrong. The Office of Personnel Management will make certain you are kept abreast through information bulletins and other correspondence.  However, the real job lies with you to make sure you are keeping up with what is important for your well-being.

Both for the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS), the accumulation for the 2015 COLA was 1.4 percent after the release on May 16th of the CPI for April 2014.  The COLA for next year will be predicated on the increase in the average CPI of the third quarter of last year and the third quarter of this year.

Knowledge is critical to creating the kind of retirement future you want and deserve.

P. S.  Always Remember to Share What You Know.

Related Pages

FERS Annuity

CSRS Annuity

Law Enforcement Officer: Explanation of FERS Components for LEOs

Law Enforcement Officer FERS Explanation

law enforcement officerWe have focused on the Law Enforcement Officer, but let’s take a brief moment to explain the 3 legs of the Federal Employees Retirement System (FERS).  This post was prompted by an email question from a FERS employee.

The question:  I would like a simple and clear explanation of the FERS retirement system.  Can you help?

The answer is – we are going to give it our best shot.  If more clarity is needed after the publication of this post, just tell us and we will use a different approach to get you to where you want to be.

The Federal Employees Retirement System (FERS) is made up of 3 parts:  A Basic Benefit, the Thrift Savings Plan (TSP) and Social Security.

The FERS Basic Benefit is a defined benefit plan determined by two factors; the average high-3 annual earnings of an employee that represent the highest earnings during 36 consecutive months of federal service that would produce the highest average.  In most cases, the highest average salary comes towards the end of the work career.  However, that is not always the case.

The second factor in the FERS Basic Benefit is the employee’s length of creditable service.  The calculation for the FERS Basic Benefit is different for LEOs than for regular FERS employees.  An explanation of the formula can be viewed in previous posts on LEOs (LEO-FERS Basic Annuity and LEO Component Computation).

The next component of the 3 leg stool representing FERS retirement is Social Security.  Earning 40 credits, approximately 4 per year over a 10 year period with a minimum age of 62 qualifies individuals for the Social Security benefit.

The last leg of the stool and potentially the largest component is the Thrift Savings Plan (TSP).  The TSP is structured to build financial stability in retirement.  TSP is portable and allows participants a wide-range of passive investment options.  The agency contributes 1% of salary automatically whether the employee makes a contribution or not.  The contributions become vested after 3 years of employment.  Your TSP balance is yours to keep when you leave service.

Additionally the government will contribute from 1% to 5% in matching funds based on your level of contributions.  The maximum TSP cap changes annually based on the rate of inflation.  If inflation is flat, then there will be no change in the cap.  It is important that employees maximize their contributions to the TSP in order to realize the greatest benefit from FERS retirement.  Instead of only drawing a pension, FERS employees have the combination of a Basic Benefit, Social Security and TSP contributions.

Make certain that you speak with the TSP representative in your Human Resources Office to ensure your contributions are spread out over the 26 pay periods in order to receive maximum contributions from the government.  If you max out contributions too quickly, you miss out on the government match.  FERS is structured to provide employees with a retirement profile that will help them retire well.

P. S.  Always Remember to Share What You Know.

To check your TSP balance check here

Which TSP Funds should you choose?

Related LEO Articles

What Is LEO Retirement

LEO Mandatory Retirement Age

Explanation of FERS Component for LEOs

LEO (Law Enforcement Officer) FERS Supplement

LEO Annuity Component Computations

Federal Law Enforcement (LEO) – Cost of Living Adjustments

Million Dollar LEO Question

LEO – Annuity Component Computations

leoWe are continuing our discussion on the annuity computation focused specifically on LEO (Law Enforcement Officers).  We never want to present too much information at once as it is our objective to provide as much clarity as humanly possible. Federal Retirement Systems for LEOs can be complex so assisting the federal workforce in planning for retirement is easier by the inch than the mile.

Many employees in the Federal Government transferred to the Federal Employees Retirement System (FERS) and may be part of a system comprised of two components – FERS and CSRS.

One of the provisions at the time of transfer required at a minimum of 5 years of creditable civilian service covered by CSRS and Social Security.  With that caveat,the formula represents 1 percent of the high-3 average salary for each year of service for employees under age 62 upon retirement or age 62 with fewer than 20 years of service.

The percentage rises to 1.1 percent of the high-3 average salary for every year of service for individuals at age 62 or older at separation with 20 plus years of service-representing the calculation of the Federal Employees Retirement System (FERS) component.

Conversely, for LEOs, the Civil Service Retirement Service (CSRS) component employs what I describe as a graduated calculation.  During the first 5 years of CSRS the percentage is 1.5 of the high-3 average for every year of service.  1.75% of the high-3 average salary for each year of service for the second 5 years.  For all years of service over 10 years, the percentage rises to 2% of the high -3 average salary for each year of service.

Under this scenario, Law Enforcement Officers’ computation is 2.5% of time of CSRS including the years and months of service up to 20 years multiplied by the high-3 average salary added to 2% of the same beyond 20 years of service.

The explanation of computation of LEO FERS annuity benefits underscores the need to take a very serious look at integrating the retirement system to address any and all categories of individuals involved in law enforcement.

P. S.  Always Remember to Share What You Know.

Related LEO Articles

What Is LEO Retirement

LEO Mandatory Retirement Age

Explanation of FERS Component for LEOs

LEO (Law Enforcement Officer) FERS Supplement

Federal Law Enforcement (LEO) – Cost of Living Adjustments

Million Dollar LEO Question

Larger Federal Employee Participation in Benefit Expense

FERS Annuity

FERSIn an effort to reduce the overall budget deficit, House Republicans are calling for a smaller government workforce and more employee participation with regard to the FERS federal benefits federal retirees are eligible to receive.

Wisconsin Representative, Paul Ryan proposal calls for federal employees to contribute 6.35% of their paychecks to their pensions.  He also proposes an elimination of the special retirement supplement for certain employees who retire before 62.

Ryan’s proposal would make federal employees, lawmakers and congressional staff responsible for 50 percent of their pension costs.  Under Ryan’s proposal, FERS eligible employees would contribute 6.35% as opposed to the 0.8% – 4.4% that federal employees are currently responsible for.

The FERS Annuity Supplement is also at risk of being eliminated.  The FERS Annuity Supplement, which benefits federal employees who choose to retire before the age of 62.  The FERS Annuity Supplement works by bridging the gap between when the federal employees retire and when they are due to receive Social Security benefits.  President Obama has also gone on the record in support of eliminating the FERS Annuity Supplement.

Ryan, Chairman of the House Budget Committee, believes that the ‘Reform’ will reduce government expenditures by over $125 billion over the next decade.

Ryan’s proposal, which is part of The GOP budget proposal, dubbed “The Path to Prosperity: Fiscal-Year 2015 Budget Resolution,” also includes proposals to reduce the size of the federal government workforce through attrition, by up to 10%.  Moreover, the Republican plan overall seeks to balance the budget over the next decade through a reduction of spending of nearly $5.1 trillion along with Tax Code and entitlement reforms over that same period of time.

 

 

Is The FERS Annuity Reduced Prior to 62

Are there consequences for collecting your annuity under FERS before reaching age 62?

FERS

The FERS regulations state that if an employee completes 10 years of service but less than 30 years of creditable service before separation from service, the proposed annuity will be reduced if it commences before reaching age 62.

There is one exclusion in the regulation.  If a FERS employee had 20 years of service prior to separation, and the annuity begins at age 60, then the employee is not subject to an age reduction of the annuity payment.  Otherwise all things being equal, the annuity will be reduced prior to reaching age 62 by approximately 5% each month you begin receiving your annuity before your 62nd birthday.

Postponing receipt of your annuity until you reach age 62 will eliminate the age reduction provision. OPM asks that persons submitting applications for retirement annuities, submit the application at least 60 days in advance so as to avoid delays in processing.

When submitting applications and any other information to the Office of Personnel Management make certain that the information is correct and complete.  Fashion a checklist so that you will be sure that all requested information has been included.  The more accurate and complete your information, the quicker it can be processed.

P. S.  Always Remember to Share What You Know.

RELATED ARTICLES

Thrift Savings Plan Considerations

FERS Annuity

Deferred Retirement – Early Separation

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