CSRS and FERS Overview

Retirement Systems

2

• 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)

3

• 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)

4

How Much Do I Pay?

5

Employee Contribution Amounts

Civil Service RetirementSystem (CSRS)

6

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)

7

When Will I Be Eligible to Retire?

8

Types Of Retirements

9

• Regular/Optional

• Early Retirement

• Disability

• Deferred

• Phased Retirement

Age and Service Requirements for Regular Retirement

10

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

11

Crediting Service________________________________________

&ELIGIBILITY to retire

HOW MUCH you get

Years of service

determine

12

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

13

Crediting Military Service

14

• Honorable, Active Duty Service

• Military Retired Pay Considerations

• Post 1956 Considerations

Crediting Post-1956 Military Service

15

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

16

How Much Will I Get?

Annuity Computation

17

Basic Annuity

18

• 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

19

3 Consecutive Years

$ $ $

Basic Pay Includes:

20

Basic Pay Does Not Include:

21

General Formula

22

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

23

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

24

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

25

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

26

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)

27

Calculation ofSpecial Annuity Supplement

• Get Social Security estimate of projected age-62 benefit

• Multiply by years of FERS coverage

• Divide by 40

28

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

29

Reductions Applied to Basic Annuity

30

• 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

36

FERS Age Reduction

32

• 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

38

Survivor Annuity Reduction

CSRS

34

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

35

• 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

36

Maximum Annuity

37

• 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

38

Exceptions (FERS)• Disability annuitants

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

Exceptions (CSRS)• Disability annuitants

Cost of Living Adjustments (COLAS)

39

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)

40

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%

More Information

Sign up to receive the BenefitsInfo

listserv emails!

Log into the OPM webpage at:

http://apps.opm.gov/Listserv_Apps/list-sub.cfm

41

Questions

42