FERS - opm.gov

1 FERS. federal Employees federal EmployeesRetirement RetirementSystem system (An Overview of Your Benefits). (An Overview of Your Benefits). United States Retirement and Office of Insurance Personnel Service Management RI 90-1. Previous edition is usable. Revised April 1998. 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. 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.

2 Additional retirement information and all publications of the Office of Personnel Management listed in this pamphlet are available on the Internet. 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 Contents Introduction .. 1 Thrift Savings Plan .. 12 Eligibility Overview .. 2 Contributions The Components Agency Automatic (1%). Social Security Benefits Contributions Basic Benefit Plan Employee Contributions Thrift Savings Plan Agency Matching Contributions Social Security Benefits .. 3 Vesting Requirement Investment Options What is Social Security? Government Securities Social Security Benefits Investment (G) Fund Social Security Taxes Common Stock Index Basic Benefit Plan .. 5 Investment (C) Fund Eligibility Participation Fixed Income Index Vesting Investment (F) Fund Creditable Service Contributing to TSP. Contributions Tax Advantages Refunds Loan Program Retirement Options Withdrawing Your Funds Immediate or Postponed Withdrawal Options Early Leaving Your Money in the TSP.

3 Deferred Automatic Cashout Benefit Formula Additional Information Special Retirement Supplement Special Groups of Survivor Benefits Employees .. 17. Spouse Firefighters, Law Enforcement Former Spouses Officers, and Air Traffic Controllers Children Military Reserve Technicians Disability Benefits Part-Time Employees What Does Disability Mean? Members of Congress, and Eligibility Congressional Employees The Benefits Cost-Of-Living Adjustments (COLA's) Enrolling in FERS .. 19 Form of Payment New Employees Rehires and Conversions Examples .. 21 For More Information .. 26. i Introduction R etirement.. a time for reflection, rest, and enjoyment .. a 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. The financial security you will have in the future depends, in part, on the plans you make today.

4 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. 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 You pay full Social Security taxes and a tem, or FERS, became effective January small contribution to the Basic Benefit 1, 1987.

5 Almost all new employees Plan. In addition, your agency puts an hired after December 31, 1983, are amount equal to 1% of your basic pay automatically covered by FERS. Certain each pay period into your Thrift Sav . other federal employees not covered by ings Plan (TSP) account. You are able FERS have the option to transfer into to make tax-deferred contributions to the plan. the TSP and a portion is matched by the Government. The Components The three components of FERS work FERS is a three-tiered retirement plan. together to give you a strong financial The three components are: foundation for your retirement years. [ Social Security Benefits [ Basic Benefit Plan [ Thrift Savings Plan 2. Social Security Benefits The first part of your benefit is Social Social Security Benefits Security. Social Security programs provide: What is Social Security? [ Monthly benefits if you are retired and have reached at least age 62, The term Social Security means bene.]]]]

6 And monthly benefits during your fit payments provided to workers and retirement for your spouse and their dependents who qualify as benefi . dependents if they are eligible;. ciaries under the Old-Age Survivors, and Disability Insurance (OASDI) pro . grams of the Social Security Act. OASDI. [ Monthly benefits if you become totally disabled for gainful employ . replaces a portion of earnings lost as a ment and benefits for your spouse result of retirement, disability, or and dependents if they are eligible death. It is designed to provide benefits during your disability;. that replace a greater percentage of earnings for lower-paid workers than for higher-paid workers. This means [ Monthly benefits for your eligible survivors; and that Social Security benefits are more important for lower-paid workers than higher-paid workers. [ A lump sum benefit upon your death. As an employee with FERS coverage, To become eligible for benefits, you and you have Social Security coverage.]]]

7 You your family must meet different sets of also are covered under Social Security's requirements for each type of benefit. Medicare Hospital Insurance program. An underlying condition of payment of This pays a portion of hospital most benefits is that you have paid expenses incurred while you are receiv . Social Security taxes for the required ing Social Security disability benefits or period of time. retirement benefits at age 65 or older. 3. The amount of monthly benefits you benefits, ask your servicing personnel receive is based on three fundamental office or local Social Security office for factors: copies of the factsheet, A Pension From Work Not Covered by Social Security [ Average earnings upon which you (Publication No. 05-10045) and the have paid Social Security taxes, factsheet, Government Pension Offset which are adjusted over the years (Publication No. 05-10007). You may for changes in average earnings of also request these publications by call.]

8 The American work force; ing the Social Security Administration on (800) 772-1213 or by downloading [ Family composition (for example, from the Web at: whether you have a spouse or dependent child who may be eligi . ble for benefits); and Social Security Taxes [ Consumer Price Index (CPI) changes Most of the cost of Social Security is that occur after you become entitled paid for through payroll taxes. Each to benefits. year you pay a percentage of your sal . ary up to a specified earnings amount Benefits are subject to individual and called the maximum taxable wage family maximums. base. The federal Government, as your employer, pays an equal amount. The Once benefits begin, their continuation percentage you each pay for old age, may depend upon your meeting a vari survivor, and disability insurance cov . ety of conditions. For example, if you erage is of your earnings up to have earnings that exceed specified the maximum taxable wage base.]]

9 Amounts while you are under age 70, your Social Security benefits will be The maximum taxable wage base is reduced or stopped. There are special $68,400 in 1998. It increases automati . Social Security rules that may affect cally each year based on the yearly rise the benefits of federal employees, in average earnings of the American including the federal Employees Retire work force. ment system (FERS) participants. If you previously had some service that The Social Security tax covers both the was covered by the Civil Service Retire Old Age, Survivors, and Disability ment system (CSRS) (or another similar Insurance (OASDI) and Medicare Hospi . retirement system for federal employ tal Insurance programs. The Medicare ees), your Social Security benefits may portion you and your agency each pay be affected by the Windfall Elimination is of your total pay. All wages Provision. If you transferred to FERS are subject to the deduction for Medi.

10 And do not complete 5 years of service care. under FERS, any spousal benefit you are entitled to under Social Security may be reduced because of the Govern . ment Pension Offset. If you think either of these provisions may affect your 4. Basic Benefit Plan The second part of the federal Employ after you are hired. With certain ees Retirement system (FERS) is the exceptions, you cannot receive Basic Benefit plan. credit for military service if you are receiving military retired pay. Also, Eligibility Participation see the note that follows on credit for National Guard service. If you were automatically covered by FERS, or you elected to transfer from [ Leaves of absence for performing the Civil Service Retirement system military service or while receiving (CSRS) to FERS, you will participate in workers' compensation. the Basic Benefit plan. Unused sick leave is not converted into creditable service for any purpose. Vesting (There is a limited exception for CSRS.)]