CSRS and FERS Overview. Retirement Systems 2 Civil Service Retirement System (CSRS) 1.4 Million annuitants*

CSRS and FERS Overview

Retirement Systems

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• Civil Service Retirement System

(CSRS) 1.4 Million annuitants*

<10% current employees*

• Federal Employees Retirement System (FERS) 280 Thousand annuitants*

>90% current employees*

*2011 data

Civil Service RetirementSystem (CSRS)

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• CSR Act effective August 1920

• A defined benefit plan

• FERS effective 1/1/1987

• 3 different components:

• Basic Benefit Plan (+ Special Annuity Supplement)

• A defined benefit plan

• Social Security

• Thrift Savings Plan (up to 5% matching)

• A defined contribution plan

Federal Employees Retirement System (FERS)

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How Much Do I Pay?

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Employee Contribution Amounts

Civil Service RetirementSystem (CSRS)

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What CSRS employees pay

• Employee pays 7%

• Employer pays 7%

What FERS employees pay

• Employee pays 0.8%

into Basic Benefit Plan

plus 6.2%

into Social Security

• Employer pays varying amounts

Federal Employees Retirement System (FERS)

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When Will I Be Eligible to Retire?

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Types Of Retirements

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• Regular/Optional

• Early Retirement

• Disability

• Deferred

• Phased Retirement

Age and Service Requirements for Regular Retirement

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Age Service

MRA 30 years

60 20 years

62 5 years

MRA 10 years*

Age Service

55 30 years

60 20 years

62 5 years

CSRS FERS

(*reduced benefits)

The Minimum Retirement Age is determined as follows:

If you were born Your MRA isBefore 1948 55 years In 1948 55 years, 2 months In 1949 55 years, 4 months In 1950 55 years, 6 monthsIn 1951 55 years, 8 months In 1952 55 years, 10 months In 1953 to 1964 56 years In 1965 56 years, 2 months In 1966 56 years, 4 months In 1967 56 years, 6 months In 1968 56 years, 8 months In 1969 56 years, 10 months In 1970 and after 57 years

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Crediting Service________________________________________

&ELIGIBILITY to retire

HOW MUCH you get

Years of service

determine

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Amount of Creditable Service

Federal Civilian Service is normally credited from the beginning to ending

date of an appointment

Exception:

Cumulative LWOP exceeding 6 months in a calendar year is not credited

unless the LWOP was due to an on-the-job injury & wage loss compensation was paid

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Crediting Military Service

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• Honorable, Active Duty Service

• Military Retired Pay Considerations

• Post 1956 Considerations

Crediting Post-1956 Military Service

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CSRS FERS

Military deposit equals 7% of base pay plus

interest

Military deposit equals 3% of base pay plus

interest

Crediting Unused Sick LeaveCSRS and FERS

• Sick leave balance at retirement is added to the length of service to calculate the amount of an immediate annuity

• Sick leave is not creditable for establishing retirement eligibility

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How Much Will I Get?

Annuity Computation

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Basic Annuity

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• Annuity is based on a percentage of the High 3 year average salary

• Percentage is determined by the amount of creditable service and the appropriate annuity formula

High-3 Average Salary

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3 Consecutive Years

$ $ $

Basic Pay Includes:

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Basic Pay Does Not Include:

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General Formula

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CSRS FERS

1.5% x 5 years +1.75%x 5 years +2% x service over

10 years

1% or 1.1%* x years of service

*1.1% if age 62 with 20 years

General Formula

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30 Years Total Service

1.5% x 51.75% x 52.0% x 20

===

7.50%

8.75%40.00%

56.25%

1 % x 30 = 30%

or

1.1% x 30 = 33%

CSRS FERS

CSRS Calculation Example

Employee has 30 years of service and the high-3 average salary is $56,000

1.5% of $56,000 ($840) x 5 years = $ 4,200

1.75% of $56,000 ($980) x 5 years = $ 4,900

2.0% of $56,000 ($1,120) x 20 years = $ 22,400

Basic Annuity (per year) = $ 31,500

or

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FERS Calculation Example

Employee, age 62, has 24 years of service and high-3 average salary of $56,000

1.1% of $56,000 or $616 x 24 = $14,784

or

1.1% x 24 = 26.4%26.4% x $56,000 = $14,784

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FERS Special Annuity Supplement

• Substitutes for the Social Security part of the total FERS benefit until age 62

• Approximates the Social Security benefit earned under FERS

• Subject to earnings test

• No COLAs

• Ends at age 62

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FERS Special Annuity Supplement

To be eligible for the Supplement

• Employee must have 1 full calendar year of deductions under FERS, and

• Must qualify for an immediate, non-disability retirement (other than an MRA+10 retirement)

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Calculation ofSpecial Annuity Supplement

• Get Social Security estimate of projected age-62 benefit

• Multiply by years of FERS coverage

• Divide by 40

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Sample Calculation ofSpecial Annuity Supplement

• Social Security age-62 projection = $18,000/year

• 30 years of FERS coverage

• $18,000 x 30 / 40 = $13,500

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Reductions Applied to Basic Annuity

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• Age• Non-Deduction

Service• Survivor Annuity

Election• Refunded Service• CSRS Offset

CSRS FERS

• If CSRS component, Age

• MRA + 10 Age• Survivor Annuity

Election

CSRS Age Reduction

• Permanent Reduction

• Equals 2% for each full year under age 55

• Applies to CSRS annuities or CSRS component of a FERS/CSRS annuity

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FERS Age Reduction

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• Applies if the employee retires on an MRA + 10 retirement

• Employee begins receiving annuity before age 62

• Permanent reduction equals 5% for each full year under age 62

Reduction for Survivor Annuity

• Elects a survivor annuity for a spouse and/or former spouse

• Has a former spouse entitled to a survivor annuity based on a valid court order, and/or

• Elects to provide someone with an insurable interest annuity

Applies if an employee

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Survivor Annuity Reduction

CSRS

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2 1/2 % x $3600+

10 % x Amount of base in excess of

$3600

Survivor receives 55% of the base

elected by retiree

FERS

Full survivor annuity (50%)10% of annuity

Partial survivor annuity (25%)5% of annuity

Insurable Interest

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• A person who has a reasonable expectancy of financial benefit in the continued life of the employee

• Reduction to provide a survivor annuity to someone with an insurable interest ranges between 10 and 40%

Insurable Interest

• New regulations effective July 20, 2013

• Presumed Insurable Interest for Same Sex Domestic Partners

• The modification of the pre-existing rule now includes same-sex domestic partners in the class of persons presumed as having an insurable interest in the continued life of the employee/retiree

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Maximum Annuity

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• 80% of the high-3 average salary

• Equivalent to 41years and 11months service

• Limit may be exceeded with sick leave credits

CSRS FERS

There is no maximum

annuity under FERS

Returning to Government Work After Retirement

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Exceptions (FERS)• Disability annuitants

Generally, annuity continues and salary is offset by amount of annuity

Exceptions (CSRS)• Disability annuitants

Cost of Living Adjustments (COLAS)

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CSRS FERS

• Generally not applied until the December after age 62

Exception• Disability

• Begins the first December after retirement

• First COLA is prorated

Cost of Living Adjustments (COLAS)

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CSRS FERS

Equals the percent change in the Consumer Price Index (CPI)

If the percent change in the CPI is:

• 0-2% the COLA equals the CPI increase

• 2-3% the COLA equals 2%• Over 3% the COLA equals

the change in the CPI minus 1%

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Questions

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