Federal Employees Retirement System

If you are a government employee, then it is important that you know all that you can about the Federal Employees Retirement System which is the current system of retirement for US federal agency employees.
"The challenge of retirement is how to spend time without spending money." - Anonymous

Everyone looks forward to having enough time on their hand without the worries and stress of working and slogging everyday to earn money. But without proper retirement planning, this could turn into a disastrous situation with funds on the lower side due to a lack of steady income. Most government employees are saved of this worry to some measure due to the existence of the Federal Employees Retirement System, which is the functional retirement system for employees of the US government. The Federal Employees Retirement System or the FERS as it is more popularly referred to, took the place of the earlier legislature which was the Civil Service Retirement System (CSRS), in 1986. This change was to ensure that the retirement plans for the federal employees matched those that existed for employees in the private sector.

Eligibility for Federal Employees Retirement System

According to the Federal Employees Retirement System act of 1986, all employees who were hired after or on the 1st of January 1984, would automatically be eligible for the FERS scheme. All those employees who were rehired before this date and had at least five years of service by the date 31st December 1986 have the option of choosing between the CSRS or the FERS. Once you are under the system, you stay under it.

Eligibility for the FERS is also determined by what your age is and how many years of service you have had in the government. This determines whether or not you are eligible for federal employee benefits. In some cases in order to be able to get retirement benefits, you have to reach what is referred to as the Minimum Retirement Age (MRA). This MRA depends on what your year of birth is. In case of military service, it is possible to purchase certain levels but this is optional and conditional. In case of immediate retirement which begins just a month after the employee starts working, the employee needs to meet one of the following combinations of criteria to be eligible.
  • At the age of 62, the employee has at least five years of creditable service.
  • At the age of 60, the employee has at least 20 years of creditable service.
  • In case you retire at the MRA but with less than 30 years and at least ten years of service, then your benefits are reduced by five percent for each year below the age of 62 that you are.
In certain specific cases, employees are eligible for early retirement. This is case of involuntary separation of some sort or due to voluntary separation caused by reduction in force. In such a scenario, the employee should have at least 25 years of service at any age or 20 years if he is 50 years old. In cases of disability according to the FERS, early retirement benefits are applicable with only 18 months of service.

Benefits Under the System

The FERS consists of three major plans; the FERS annuity, participation in social security and participation in the Thrifts Savings Plan (TSP). The annuity is calculated using the length of the service of the employee in the government and the other two benefits or components which are social security and the TSP have separate regulations. The calculator uses the time that the employee has spent on the payroll of the government and the average of the three highest salaries he has earned in this period to calculate the annuity. The average pay that the calculation takes into consideration are things like locality pay adjustments, shift differentials, etc but does not take into consideration overtime or bonus. The employees are eligible for the annuity a month after the retirement starts. The FERS is designed in a way that the pension provides incentives to those employees who choose to continue in the service till they turn 62. Calculations differ for some employees like Members of the Congress and law enforcement officers, and also for those employees who were earlier under the CSRS but shifted to the FERS. Along with the TSP and the social security benefits the Federal Employees Retirement System is just one of the government employee benefits that is given to federal employees.

The Federal Employees Retirement System enables retirement planning for those who are in government jobs. Now that you know the details of the retirement system, at least where the benefits and the eligibility is concerned, you can be aware of what all benefits you will be eligible for, if you are a government employee.
By Tulika Nair
Published: 8/18/2010
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