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Understanding Your Federal Benefits

Understanding Your Federal Benefits. Cindy Lundquist . What will we discuss?. Qualifying for Retirement. Minimum requirements:. FERS or CSRS. Five (5) years of civilian service. CSRS Only. Subject to retirement system 1 of 2 years before retirement. FERS or CSRS.

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Understanding Your Federal Benefits

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  1. Understanding Your Federal Benefits Cindy Lundquist

  2. What will we discuss? Page 2

  3. Qualifying for Retirement Minimum requirements: FERS or CSRS • Five (5) years of civilian service CSRS Only • Subject to retirement system 1 of 2 years before retirement FERS or CSRS • Meet age and length of service requirements Page 3

  4. Age and Service Requirements *Age for FERS optional retirement is based on date of birth. See next slide.

  5. Age and Service Requirements – FERS Page 5

  6. Age and Service Requirements *Reduced by 5% for each year you are under 62. Page 6

  7. Reduced Retirement – FERS “Minimum Retirement Age + 10” Provision • Special provision for FERS only • MUST • Attain minimum retirement age (MRA) • Have 10 years of creditable service • Reduction • 5% for each year under age 62 • Permanent reduction • Not eligible for supplement Page 7

  8. FERS – What is my MRA? Page 8

  9. Annuity Computation Page 9

  10. Annuity Computation Two basic factors Average high-3 salary Total length of service Page 10

  11. FERS Transferees Page 11

  12. FERS/CSRS Annuity • CSRS component • Service which CSRS deducted • Military service before transferred to FERS • Unused sick leave at time of transfer • FERS component • Service which FERS deducted • Military service after transferred to FERS Page 12

  13. Creditable Service Following used for eligibility and calculation of annuity Time from date of hire to separation LWOP—up to 6 months in calendar year OWCP Page 13

  14. Creditable Service • Part-time • Fully creditable for eligibility but • Prorated for computation Page 14

  15. Deposit Service • Period(s) of service with no retirement deductions (example: temporary service) • Amount of deposit due • Equal to amount that should have been withheld plus • Interest Page 15

  16. FERS Deposit Service Non-deduction service 1-1989 or later, no credit for eligibility or calculation. Non-deduction service before 1-1989: Page 16

  17. CSRS Deposit Service Note: If deposit not made, annuity reduced by 10% of deposit due Non-deduction service 10-1-1982 or later: Non-deduction service before 10-1-1982: Page 17

  18. Military Deposit • Active duty military service • Deposit amount • FERS – 3% of base pay plus interest • CSRS – 7% of base pay plus interest • Cannot use if receiving military retirement unless: • Military retirement waived at time of retirement from federal service • Military retirement based on combat-connected disability or service in the reserves Page 18

  19. FERS Military Service Page 19

  20. CSRS Military Service *Note: Annuity reduced at age 62 if eligible for Social Security Hired 10-1-1982 or later: Hired before 10-1-1982: Page 20

  21. FERS Redeposit If— • FERS funds withdrawn at termination • Subsequently re-employed Then— • Previous employment only used for eligibility if earlier contribution plus interest are not paid • Previous employment used for both eligibility and computation if contributions plus interest are paid Page 21

  22. CSRS Redeposit Refunded contribution • Time used for eligibility regardless if redeposit made • If refund not made— • Separated before 3-1-1991, actuarial reduction imposed • Separated after 2-28-1991, time not used in computation Page 22

  23. Interest Rates Through 12-31-1984 – 3%, thereafter: Page 23

  24. Total Length of Service Example: Civilian Service 27 yrs 6 mos 7 days Military Service 3 yrs 9 mos 10 days Total 31 yrs 3 mos 17 days Plus unused sick leave (1061 hrs) 6 mos 3 days Total 31 yrs 9 mos 20 days Page 24

  25. FERS General Formula • 1% x years of service x High-3, or • 1.1% x years of service x High-3 if retiring at age 62 with 20+ years of service Examples: MRA with 30 years of service = 30% x High-3 Age 62 with 30 years of service = 33% x High-3 Page 25

  26. CSRS General Formula 1.5% x 5 years + 1.75% x 5 years + 2.0% x remaining years of service Retirement factor X High-3 Average Salary Annual Annuity Note: Maximum annuity = 80% of high-3 at 41 years 11 months of service. Page 26

  27. CSRS General Formula Example: Age 55 with 30 years of service 1.5% x 5 years = 7.50% + 1.75% x 5 years = 8.75% + 2.0% x 20 years = 40.00% Retirement factor = 56.25% X High-3 Average Salary Annual Annuity Page 27

  28. CSRS Offset Annuity • Who is “CSRS Offset employee?” • Rehired after 1-1-1984 with more than 1 year break in service • Had 5 years of CSRS service before separation • Did not transfer to FERS • Annuity computed same as CSRS annuitant • At age 62, annuity reduced for Social Security • If not eligible for Social Security, no reduction • Reduction at 62 regardless if you apply for Social Security • Reduction less than Social Security check Page 28

  29. FERS Annuity Supplement Paid by: OPM not Social Security Paid at: MRA with 30 years of service, or age 60 with 20 years, or early out, or discontinued service Paid until: Age 62 Based on: Estimated full career Social Security benefit x years of FERS service divided by 40 Subject to: Social Security earnings limit Not payable: If retirement based on MRA+10, disability, or deferred retirement Page 29

  30. Electing Survivor Benefits • Election made at time of retirement • If less than maximum elected— • Signed and notarized statement from spouse • Cannot change election • Exception—no survivor elected can change within 18 months of retirement Page 30

  31. FERS Survivor Election Amount 50% of basic annuity, or 25% of basic annuity Reduction of annuity 10% if maximum elected 5% if 25% of basic annuity elected Page 31

  32. CSRS Survivor Election Amount 55% of full annuity 55% of any portion of basic annuity Reduction 2-1/2% of the first $3,600 of annuity plus 10% of amount over $3,600 Page 32

  33. Example of CSRS Election • CSRS annuity = $35,000 • Elect maximum survivor election • $35,000 x 55% = $19,250 annually • Or $1,604 monthly to surviving spouse • Annuity reduction $3,600 x 2.5% = $90 $35,000 - $3,600=$31,400 x 10% = $3,140 Total annual reduction = $3,230 (or $269.16 per month) Page 33

  34. Survivor Benefits for Children FERS • Same amount payable for CSRS children • Less any amount payable to children by Social Security CSRS • Single orphaned - $522 month per child • Maximum $1,566 • Double orphaned - $627 month per child • Maximum $1,881 Page 34

  35. FERS Death in Service With more than 18 months of civilian service 1 Lump sum payment of $33,072.03, plus 2 Lump sum of half of employees pay, plus 3 Any Social Security benefit payable, plus 4 Any Thrift Savings Plan payable Page 35

  36. FERS Death in Service With ten (10) or more years of creditable service, surviving spouse receives: 1 2 3 4 , , , (if payable), plus 5 A survivor annuity equal to 50% of FERS basic annuity at time of death Page 36

  37. CSRS Death in Service Spouse of employee receives 55% of the higher of: • Annuity using regular CSRS formula • Guaranteed minimum which is lesser of: • 40% of deceased High-3 • Regular annuity calculated increasing length of service up to age 60 Page 37

  38. Survivor Benefits Starts • Day after employee’s or retiree’s death Ends • Spouse/former spouse • Remarries before age 55 (unless married 30 years) • Death • Child(ren) • Marries • Becomes 18 (22 if full-time student) • Recovers from disability • Death Page 38

  39. Disability Retirement • FERS – 18 months of service • CSRS – 5 years of service • Unable to perform duties • Current job or • Other vacant job at same grade Page 39

  40. Disability Retirement FERS Payment CSRS Payment • 60% of average High-3 salary for first year • Thereafter, 40% of High-3 salary • Amount is reduced by Social Security • Less than 22 years of service, based on 40% of High-3 salary • More than 22 years, computed under general formula Page 40

  41. Date for Voluntary Retirement FERS Last day of the month CSRS Last day of the month, or 1st, 2nd, or 3rd day of the month Page 41

  42. Processing Your Retirement OPM • Sends acknowledgement • Authorizes interim payment • Obtains missing documents • Determines eligibility • Annuity • Health insurance • Life insurance • Computes benefits and sends letters Page 42

  43. After Retirement Changes after retirement contact OPM • www.opm.gov • www.servicesonline.opm.gov/ (contact after CSA number received) • 1-888-767-6738 • Address: US Office of Personnel Management, 1900 E St NW, Room 1323, Washington, DC 20415 Page 43

  44. Health and Life Insurance Federal Employees Health Insurance (FEHB) and Federal Employees Group Life Insurance (FEGLI) Page 44

  45. FEHB Eligibility requirements: • Enrolled for at least 5 years prior to retirement • CHAMPUS/TRICARE can count towards your 5 years • Single or family coverage • Covered by a family enrollment • Enrolled since first opportunity Page 45

  46. FEHB • Coverage and premiums same as employee • At age 65, Medicare is primary • Survivors of retirees or employee may continue coverage if: • Survivor benefit is payable, and • Employee/Retiree enrolled in family plan at time of death Page 46

  47. FEGLI Eligibility requirements: Enrolled for at least 5 years prior to retirement, or Enrolled since first opportunity Annuity is sufficient to cover costs Elections: Basic coverage Optional coverage (must elect Basic also) Page 47

  48. FEGLI Basic Life Insurance: Annual base pay plus $2,000 If under age 45, an “extra benefit” Amount into retirement based on your election Optional Life Insurance Option A – Additional $10,000 Option B – One, two, three, four or five times basic pay Option C – Family coverage Page 48

  49. Basic Life Insurance Options Page 49

  50. Cost of Various Options Page 50

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