FERS

1 federal Employees Retirement System(An Overview of Your Benefits)Insurance ServicePersonnel Management FERS RI 90-1 Revised April 1998 Retirement and United States Office of Previous edition is usable. federal Employees Retirement System (An Overview of Your Benefits) This booklet contains highlights of the federal Employees Retirement System (FERS). It is not meant to provide a detailed explanation of all the plan provisions . The information is based on the law in effect at the time the booklet went to publication.

2 Under the Balanced Budget Act of 1997, Public Law 105-33 for fiscal year 1998, employee retirement contributions will increase as follows. Deductions for the Civil Service Retirement System and the federal Employees Retirement System would be increased by in January 1999, by an additional in January 2000, and by more in January 2001, for a total increase of These higher contribution rates would be in effect through 2002. Additional retirement information and all publications of the Office of Personnel Management listed in this pamphlet are available on the Internet.

3 OPM Website For sale by the Government Printing Office Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328 ISBN 0-16-045533-2 Table of Introduction ..1 Overview ..2 The Components Social Security Benefits Basic Benefit Plan Thrift Savings Plan Social Security Benefits ..3 What is Social Security? Social Security Benefits Social Security Taxes Basic Benefit Plan ..5 Eligibility Participation Vesting Creditable Service Contributions Refunds Retirement Options Immediate or Postponed Early Deferred Benefit Formula Special Retirement Supplement Survivor Benefits Spouse Former Spouses Children Disability Benefits What Does Disability Mean?

4 Eligibility The Benefits Cost-Of-Living Adjustments (COLA s) Form of Payment Contents Thrift Savings Plan ..12 Eligibility Contributions Agency Automatic (1%) Contributions Employee Contributions Agency Matching Contributions Vesting Requirement Investment Options Government Securities Investment (G) Fund Common Stock Index Investment (C) Fund Fixed Income Index Investment (F) Fund Contributing to TSP Tax Advantages Loan Program Withdrawing Your Funds Withdrawal Options Leaving Your Money in the TSP Automatic Cashout Additional Information Special Groups of Employees.

5 17 Firefighters, Law Enforcement Officers, and Air Traffic Controllers Military Reserve Technicians Part-Time Employees Members of Congress, and Congressional Employees Enrolling in FERS ..19 New Employees Rehires and Conversions Examples ..21 For More Information ..26 i Introduction R time for reflection, rest, and rewarding time. But, a rewarding retirement doesn t just happen. It takes careful planning. Knowing when you can retire and where you will stand financially are important parts of that planning process.

6 The financial security you will have in the future depends, in part, on the plans you make today. Recognizing the importance of your future, the federal Government offers a retire ment program that helps provide financial security for you and your family. You are a participant in the federal Employees Retirement System (FERS). This is one of the most important benefits you receive as a federal employee. FERS is a retirement system that is responsive to the changing times and federal work force needs. Many of its features are portable, so that if you leave federal employment, you may still qualify for the benefits.

7 FERS is flexible; you will be able to choose what is best for your individual situation. And FERS enables you to take an active role in securing your future. This booklet highlights the main features of the federal Employees Retirement Sys tem (FERS). 1 Overview The federal Employees Retirement Sys tem, or FERS, became effective January 1, 1987. Almost all new employees hired after December 31, 1983, are automatically covered by FERS. Certain other federal employees not covered by FERS have the option to transfer into the plan.

8 The Components FERS is a three-tiered retirement plan. The three components are: [ Social Security Benefits [ Basic Benefit Plan [ Thrift Savings Plan You pay full Social Security taxes and a small contribution to the Basic Benefit Plan. In addition, your agency puts an amount equal to 1% of your basic pay each pay period into your Thrift Sav ings Plan (TSP) account. You are able to make tax-deferred contributions to the TSP and a portion is matched by the Government. The three components of FERS work together to give you a strong financial foundation for your retirement years.]]]

9 2 Social Security Benefits The first part of your benefit is Social Security. What is Social Security? The term Social Security means bene fit payments provided to workers and their dependents who qualify as benefi ciaries under the Old-Age Survivors, and Disability Insurance (OASDI) pro grams of the Social Security Act. OASDI replaces a portion of earnings lost as a result of retirement, disability, or death. It is designed to provide benefits that replace a greater percentage of earnings for lower-paid workers than for higher-paid workers.

10 This means that Social Security benefits are more important for lower-paid workers than higher-paid workers. As an employee with FERS coverage, you have Social Security coverage. You also are covered under Social Security s Medicare Hospital Insurance program. This pays a portion of hospital expenses incurred while you are receiv ing Social Security disability benefits or retirement benefits at age 65 or older. Social Security Benefits Social Security programs provide: [ Monthly benefits if you are retired and have reached at least age 62, and monthly benefits during your retirement for your spouse and dependents if they are eligible; [ Monthly benefits if you become totally disabled for gainful employ ment and benefits for your spouse and dependents if they are eligible during your disability; [ Monthly benefits for your eligible survivors; and [ A lump sum benefit upon your death.]]]]