Understanding your Federal Employees Retirement System Published Aug. 4, 2015 By Rebecca Amber Staff writer EDWARDS AIR FORCE BASE, Calif. -- Since 1987, federal civilian employees have prepared for their non-working years through FERS, the Federal Employees Retirement System. FERS, created by Congress, is a three-tiered system that provides benefits through Social Security, a FERS Basic Benefit Plan and the Thrift Savings Plan (TSP). Following retirement at the assigned age, the employee will receive annuity payments each month for the rest of their life. Contact BEST at 1-800-525-0102 for any retirement questions. Federal employees have their own unique work history, so retirement benefits will vary between employees. To learn more about your FERS benefit visit: https://www.opm.gov/retirement-services/. In FERS, federal civilian employees pay full Social Security taxes and a small contribution to the Basic Benefit Plan. The employee's agency will withhold those monies as payroll deductions. The agency also contributes an amount equal to 1% of an employee's basic pay each pay period into the TSP account. The employee may also choose to make tax-deferred contributions to the TSP, a portion of which is matched by the government. The TSP is administered by the Federal Retirement Thrift Investment Board and the account is set up automatically by the employee's agency. Both Social Security and TSP can be carried over into non-Federal Government jobs before retirement. Within FERS, there are four types of retirement: disability, early, voluntary and deferred retirement. Eligibility for voluntary retirement is based on the individual's age and number of years of creditable service and any other special requirements. For example, if an employee has a minimum of five years of service, they would be eligible for retirement at age 62, but with 20 or more years of service, they can retire at age 60. Employees with 10 or more years of service are eligible to retire at the Minimum Retirement Age with a reduced annuity payment. The reduction is five percent per year and will be in place for each year that the individual is under age 62. Annuity is not reduced if the employee has completed at least 30 years of service or at least 20 years of service and annuity begins at age 60. Minimum Retirement Age varies according to the employee's birth year. If the employee chooses to postpone the start date of their annuity payments, the age reduction will be reduced or eliminated. Postponing annuity payments may affect life insurance, health insurance and long term care insurance policies as well as cost of living allowances and survivor benefits. Former federal employees who were covered by FERS may be eligible for a deferred annuity at age 62 or at their Minimum Retirement Age if they have at least five years of credible civilian service or 10 years of creditable service including five years of civilian service. Disability retirement should be considered only after you have provided your employing agency with complete documentation of your medical condition and your agency has exhausted all reasonable attempts to retain you in a productive capacity, through accommodation or reassignment. Social Security benefits are designed to cover workers and qualified beneficiaries under the Old-Age Survivors, and Disability Insurance (OASDI) programs of the Social Security Act. These benefits replace a portion of earnings lost due to retirement, disability, or death. FERS coverage also includes Social Security's Medicare Hospital Insurance program. The amount of monthly benefits an employee receives from Social Security is based primarily on three factors: · Average earnings upon which you have paid Social Security taxes, which are adjusted over the years for changes in average earnings of the American work force. · Family composition (for example, whether you have a spouse or dependent child who may be eligible for benefits) · Consumer Price Index (CPI) changes that occur after you become entitled to benefits. Benefits are subject to individual and family maximums. Retirees must meet a variety of conditions to continue receiving Social Security benefits after they start. For instance, earnings that exceed specified amounts while the retiree is under age 70, benefits will be reduced or stopped. To be vested (eligible to receive your retirement benefits from the Basic Benefit plan if you leave Federal service before retiring), you must have at least five years of creditable civilian service. Survivor and disability benefits are available after 18 months of civilian service. Creditable service generally includes: · Federal civilian service for which contributions have been made or deposited. · Military service, subject to a deposit requirement. To receive credit for military service, generally, you must deposit 3% of your military base pay. Interest begins 2 years 5 months after you are hired. With certain exceptions, you cannot receive credit for military service if you are receiving military retired pay. Also, see the note that follows on credit for National Guard service. · Leaves of absence for performing military service or while receiving workers' compensation. The final part of the FERS benefit is the TSP, which offers the same kind of savings and tax benefits as many 401(k) plans offered by private corporations. The TSP is employee-controlled allowing the saver to decide how much money to put in, how to invest it and how it will be paid out. The TSP is especially important for higher-paid employees because Social Security replaces less of the higher-paid employees' income than it does for lower-paid workers. You can learn more about the TSP here: www.tsp.gov. Contact BEST at 1-800-525-0102 for any retirement questions. Click on the below links to learn more about FERS: https://www.opm.gov/retirement-services/publications-forms/pamphlets/ri90-1.pdf http://www.socialsecurity.gov/planners/retire/qualify.html https://www.opm.gov/retirement-services/retirement-faqs/ https://www.opm.gov/retirement-services/publications-forms/pamphlets/ri90-1.pdf