DODDS-Europe FERS Retirement Briefing

Federal Employee Retirement System (FERS)

WHO IS COVERED BY FERS?



EMPLOYEES WHO:



Were hired on or after 1 January 1984



Were hired after a break in service of over 1 year (365 days) with less than 5 years of prior creditable CSRS service at date of last separation



Elected FERS coverage during transfer opportunities

 

Are excluded from CSRS by law and regulation Were rehired in a covered position after a separation from a FERS position

FERS

Types of Retirement Under FERS

     

Voluntary/Optional Retirement MRA + 10 Voluntary Early Retirement Discontinued Service Retirement Deferred Retirement Disability Retirement

3

GENERAL REQUIREMENTS



Minimum 5 years civilian service with the federal government (except 18 months for disability)



Employed in FERS position on last day of service being used to establish retirement eligibility

FERS

AGE AND SERVICE REQUIREMENTS FOR ANNUITIES RETIREMENT TYPES AGE YEARS OF SERVICE

1

. VOLUNTARY IMMEDIATE NO AGE REDUCTION 2. MRA + 10* 3. INVOLUNTARY VOLUNTARY (EARLY OUT) 4. DEFERRED MRA 60 62 MRA 50 ANY 62 MRA* 30 20 5 10-29** 20 25 5 10 5. DISABILITY ANY 18 MONTHS *RECEIPT OF ANNUITY MAY BE POSTPONED TO ANY SPECIFIED DATE THROUGH 62ND BIRTHDAY TO ELIMINATE (OR DECREASE) THE REDUCTION FOR AGE **REDUCTION IS 5% FOR EACH YEAR THE EMPLOYEE IS UNDER AGE 62

MINIMUM RETIREMENT AGE SCHEDULE FOR VOLUNTARY RETIREMENTS OTHER THAN “EARLY OUT ” If you were born : Your MRA is: Before 1948.............................................................

In 1948 1949 1950 1951 1952 1953 to 1964 1965 1966 1967 1968 1969 After 1969 55 Years 55 yrs, 2 mths “ 4 “ “ 6 “ “ 8 “ “ 10 “ 56 Years 56 yrs, 2 mths “ 4 “ “ 6 “ “ 8 “ “ 10 “ 57 Years

CREDITABLE SERVICE FOR RETIREMENT PURPOSES



FERS: Credit all civilian service Exceptions: Non deduction service performed on/after 01 Jan 1989 Credit all active duty military service only after post 56 deposit has been made Exception: Retired Military

FERS Your Choices Concerning Deposit

Before 1-1-89 Not paying deposit On or After 1-1-89 No choices Before 1-1-89 Paying the deposit The deposit service cannot be used to determine your eligibility for retirement nor can it be used in determining the length of service for annuity computation purposes You will receive an annuity based on all of your creditable civilian service

UNUSED SICK LEAVE



For employees Mandatorily covered by FERS:

If retiring before 2014 - receive 50% credit of unused sick leave balance toward annuity computation, If retiring 2014 and later - receive 100% credit of unused sick leave balance toward annuity computation



UNUSED SICK LEAVE

Employees who transferred to FERS with a CSRS component. Receive the lesser of: Sick leave balance on date of transfer to FERS Or Sick leave balance on date of retirement Any remaining hours of sick leave, if applicable, will be credited in the FERS component of the annuity  The sick leave is credited to the retirement service computation date in 30-day, monthly increments

General Formulas for Calculating FERS Annuity



If you are 62 with 20 or more Years of Service use the following formula:



1.1% x average salary (Hi-3) x Years of Service



If you are under or over 62 with less than 20 Years of Service use the following formula :

 

1% x average salary (Hi-3) x Years of Service Plus Annuity Supplement, where applicable

FERS Computation (Example)

Age: 55 Average High-3 = $50,000 Total of service = 20 years 62-55=7 years 7 x 5% reduction = 35% FERS Formula

1% x $50,000 x 20 = $10,000 Annual annuity $10,000-$3,500 = $6,500 Annual reduced annuity

Survivor Elections FERS



Maximum Survivor Benefits 50% of Full Annuity



Partial Survivor Annuity 25% of Full Annuity Need consent of spouse



No Survivor Benefit Need consent of spouse

FERS

Assume your basic annuity is: $6,000 10% x $6,000 = $600 Your annuity after reduction $6,000 – 600= $5,400 Survivor’s Annuity: 50% x $6,000 = $3,000

13

Survivor Benefits

Will your spouse need continued FEHB coverage in the event of your death?

No Survivor Benefit = No Health Insurance

Even the Minimum Survivor Benefit Election will permit the current spouse to continue FEHB coverage .

WHEN DOES MY ANNUITY BEGIN?

A FERS annuity always starts the following month.

Example:

If your retirement date is 1 June or 15 June, your annuity will start 1 July.

Disability Retirement: begins, at the employee’s option, on the date after (1) separation from service; or (2) pay ceases

and

the employee meets the requirements for a disability annuity.

**Unless otherwise requested, OPM will begin a Disability annuity under option 2 because, under most circumstances, it will be to the employee’s advantage to do so.

FERS ANNUITY SUPPLEMENT

  

PURPOSE:

To substitute for Social Security until age 62

BASIS:

An estimate of the Social Security earned during FERS service.

ELIGIBILITY:

service.

At least one calendar year of FERS Annuity supplement paid immediately to voluntary retirements with: 1. MRA and 30 years of service 2. Age 60 with 20 years of service

FERS ANNUITY SUPPLEMENT (CONT)

Annuity Supplement paid at MRA (age 55-57) 1. Early Out Retirements 2. Discontinued Service retirements

*

Annuity supplement is payable only until the month prior to the one in which the retiree reaches age 62.

The following retirees are not entitled to the Annuity Supplement:  Voluntary retirees subject to the 5% reduction in annuity for being under age 62 (MRA + 10)   Disability retirees Deferred retirees

ANNUITY SUPPLEMENT (CONT) EARNINGS TEST

1. The Annuity Supplement is tested for earnings above the exempt amount ($14,106.00 for 2009). It is reduced $1 for every $2 over the exempt amount.

2. Special Group employees are not tested until MRA (55-57)

RETIREMENT & FEHB

Continuation into Retirement

 Retires on an Immediate Annuity  Insured on Date of Retirement  Covered for the 5 years of Service Immediately Preceding Retirement OR since the first opportunity to Enroll

Coverage as a Family Member under FEHB or CHAMPUS counts towards the 5 year requirement

FEHB Changes Permitted After Retirement

 Cancellation  Self & Family To Self Only (Anytime)  Open Season  Self Only To Self & Family (Event)  Change In Plan/option

FEHB Cost After Retirement

Blue Cross and Blue Shield - Standard Option, Self & Family Bi-Weekly = $164.58

Monthly = $356.59

$ 164.58 x 26 = $ 4279.08

$ 356.59 x 12 = $ 4279.08

FEHB & Medicare

 MEDICARE Part A = Hospital Insurance  Has been paid for from wages (1.45%)  Federal employees eligible since 1983  MEDICARE Part B = Medical Insurance  2009 rate = $96.40 per month  Rate increases 10% each year not elected

FEHB & Medicare

EMPLOYEES CONTINUING TO WORK AFTER 65



FEHB is the primary coverage and MEDICARE provides secondary coverage

ANNUITANTS ELIGIBLE FOR MEDICARE



MEDICARE is the primary coverage and FEHB provides secondary coverage

Federal Employees’ Group Life Insurance (FEGLI)

     What FEGLI coverage do I currently have?

Do I have or need other life insurance?

Should I reduce my FEGLI options as I get older?

Are my beneficiary forms up-to-date?

Am I eligible to continue my FEGLI as an annuitant?

Basic Life    Option A – Standard Option B - Additional Option C - Family

Continuation of FEGLI into Retirement

Employee may continue Life Insurance into Retirement if you are:

   Eligible to Retire on Immediate Annuity (Includes Retiring at MRA + 10, even if postponing receipt of annuity) Insured on date of Retirement Covered for the 5 years of service immediately preceding annuity commencing date or since the first opportunity to enroll

Employee may continue Option A, B and C into Retirement if you are:

   Eligible to continue Basic Covered for the 5 years of service immediately preceding annuity commencing date or Since the first opportunity to enroll

Basic Insurance Post-Retirement Coverage

Option Before Beginning Age 65 Age 65 75% 100% 2% Per Month Until Reduction Reduction Reduces To 25% 50% 100% 1% Per Month Until Reduction Reduces To 50% No 100% 100% Reduction

Option A - $10,000 Post-Retirement Coverage

 Premiums are withheld from annuity at the same rate as an active employee  After age 65, premiums are not withheld  Insurance is reduced 2% per month until the value is reduced to 25% or $2,500

Options B and C Post-Retirement Coverage

FULL REDUCTION ELECTION:

 Before age 65 - Premiums are withheld from annuity at the same rate as active employees  After age 65 - No cost. Insurance value begins to reduce 2% per month until reduced 100%

Options B and C Post-Retirement Coverage

NO REDUCTION ELECTION:

 Premiums deducted from annuity at the same rate as active employees  No reduction to coverage when annuitant reaches age 65  Premiums continue after age 65

Thrift Savings Plan (TSP) DEFINITION:

A defined contribution retirement savings and investment plan for Federal employees

TSP ACCOUNT:

 Employee contributions  Earnings

Options At Separation/Retirement

 Leave money in TSP account until age 70.5

 Receive TSP account in a single payment  Receive TSP account in equal monthly installments  Purchase a life annuity through TSP  Transfer, or rollover, to IRA or other eligible retirement plan

      

Order of Precedence

Court Order Designated Beneficiary Widow or widower Children and/or descendants of any deceased children Parents Executor, Administrator of the Estate Next of kin

Update your Beneficiary forms due to:

     Marriage Acquisition of a child Divorce Death Change of Address

Flow of your Retirement Packet

  Employee submits a completed retirement application packet to your servicing District Human Resources Specialist.

The DoDDS Europe Personnel Office reviews the application packet, making sure the paperwork is complete and filled out correctly. The application packet is then forwarded to the DoDEA Personnel Center.

Flow of your Retirement Packet

(Continued) 

The DoDEA Personnel Center will do the following

: Certified Summary of Federal Service Obtains verification of any undocumented service, if time permits Reviews your application packet for completeness Certifies Life Insurance coverage Transfers Health Benefits Enrollment to OPM Send your retirement SF-50 to your address on your application packet TSP withdrawal packet with all the forms and information you need regarding your TSP options will be sent to your address The DoDEA Personnel Center sends your retirement packet to DFAS

Flow of your Retirement Packet

(continued) 

DFAS will do the following

: Authorizes final paycheck Authorizes lump sum payment for any unused Annual Leave – not for Educator Leave Prepares Individual Retirement Records (SF 2806/SF-3100) for transfer to OPM These records reflect your yearly retirement contributions and other information DFAS includes pay and leave records and forwards the packet to OPM



Flow of your Retirement Packet

(continued)

When OPM receives your retirement packet they will:

Send you written notice which includes your CSA number Authorizes interim payments Obtains missing documentation Determines your eligibility for annuity and continued FEHB and FEGLI coverage Computes amount of your annuity and sends election letters Authorizes regular annuity payments It will be 6-8 weeks before you receive your annuity but be prepared to wait 12 weeks or longer Your first annuity payments may only be partial payments until OPM finishes processing your retirement When processing is complete, OPM will send you a lump sum to make up for the difference between the partial and full annuity Sends a personalized booklet, “Your Federal Retirement Benefits,” and other information

Where to direct questions while your retirement is being processed

   Have you received number from OPM yet?

Yes

acknowledgement and a claim

Y e s If Not

Ask DoDEA Personnel Office if your retirement packet has been sent to OPM.

If Not

If your retirement packet has been sent to Payroll, the Personnel Office will contact DFAS on your behalf.

 Direct questions to OPM. Always cite claim number when contacting OPM.

Yes

 Wait until you receive acknowledgement, then direct questions to OPM Contacting OPM Online www.servicesonline.opm.gov

You will need your CSA claim number and Personal Identification Number (PIN )  Start, change, or stop Federal and State income tax withholdings  Purchase savings bonds  Obtain duplicate tax statements (1099Rs)

STEPS IN PLANNING YOUR RETIREMENT

1. Determine whether you are eligible to retire.

2. Identify the factors that affect your annuity computation 3. Decide whether to make a deposit for civilian or military service 4. Make a decision about survivor election 5. Make decisions regarding health benefits and life insurance coverage 6. Identify the steps in the processing of your retirement application 7. Identify factors affecting your eligibility for Social Security benefits, the amount of those benefits, and how to apply for them 8. Decide how to receive your Thrift Savings Plan proceeds

Internet Resources

Name of Website WWW Address (URL)

The Office of Personnel Management (OPM) Home Page EBIS Tax Calculator – Figures Tax Free Portion of Annuity Payments Withholding – To complete the amount of monthly Federal income tax withholding from your Annuity Military Deposit Interest Calculator (MILDEP 99) OPM Electronic Forms Social Security Administration Homepage Thrift Savings Plan (TSP) Homepage MEDICARE Homepage Internal Revenue Service (IRS) Homepage Access America for Seniors Defense Finance and Accounting Service CSRS/FERS Retirement Calculators FEGLI CALCULATOR Http://www.opm.gov

Http://www.dodea.edu

Http://apps.opm.gov/tax_cal c Http://apps.opm.gov/tax_cal c Http://www.opm.gov/asd Http://www.opm.gov/forms Http://www.ssa.gov

Http://www.tsp.gov

Http://www.medicare.gov

Http://www.irs.gov

Http://www.seniors.gov

Http://www.dfas.mil/money/retired/index .htm

Http://www.finance.gsa.gov/csrs http://apps.opm.gov/calculator /