The Federal Employees Retirement System (FERS) is the current retirement system for employees within the U.S. federal civilian employees. FERS was enacted on June 6, 1986, to replace the Civil Service Retirement System (CSRS) and to conform federal retirement plans in line with those in the private sector.
Contents |
Most new federal employees hired on or after January 1, 1984, are automatically covered under FERS (those newly hired and certain employees rehired between January 1, 1984, and December 31, 1986, were automatically converted to coverage under FERS on January 1, 1987). Rehired federal employees who worked prior to December 31, 1983, and have 5 years of civilian service by December 31, 1986, can choose between remaining CSRS or electing FERS within 6 months of rehire. Once an employee is covered by FERS or elects FERS coverage (from being previously covered under CSRS), the employee remains covered by FERS. Employees of Nonappropriated Fund Instrumentalities of the Departments of Defense and Homeland Security participate in a separate retirement system, except when retaining previous coverage under a different retirement system following a transfer.
FERS consists of three major components:
The FERS annuity is based on a combination of the length of an employee's Federal service eligible for FERS retirement (referred to as "creditable Federal service, which may or may not equal the actual length of Federal service) and the average of the employee's highest three salaries earned during service (commonly shortened to "high-3").
The annuity does not begin until one full calendar month has passed since the employee's retirement. Thus, an employee retiring on the last day of a month (June 30, for example) will have his/her annuity begin on August 1 (as the entire month of July will have passed), but an employee retiring during a month (July 1, for example) will not have his/her annuity begin until September 1 (as July will not be a full month passed, but August will be).
Eligibility for Social Security benefits and TSP withdrawals are covered by the regulations for those plans.
In order to qualify for the standard FERS annuity an employee must have reached a minimum retirement age (MRA) and have a specified number of years of "creditable Federal service". Certain levels of military service may be purchased for a specified amount, but such repurchase is optional.
The MRA is based on the employee's birth year as shown on the table below:
| Birth Year | MRA | Birth Year | MRA |
|---|---|---|---|
| 1947 or earlier | 55 years | 1965 | 56 years, 2 months |
| 1948 | 55 years, 2 months | 1966 | 56 years, 4 months |
| 1949 | 55 years, 4 months | 1967 | 56 years, 6 months |
| 1950 | 55 years, 6 months | 1968 | 56 years, 8 months |
| 1951 | 55 years, 8 months | 1969 | 56 years, 10 months |
| 1952 | 55 years, 10 months | 1970 or after | 57 years |
| 1953–1964 | 56 years |
For an immediate retirement (which starts 30 days after the employee stops working) or a deferred retirement the employee must meet one of the following combinations of age and years of creditable service:
| Age | Years of Service |
|---|---|
| 62 | 5 years |
| 60 | 20 years[1] |
| MRA | 30 years |
| MRA | 10 years [2] |
Employees in certain cases of either involuntary separation, or voluntary separation during a "reduction in force" can qualify for early retirement. The employee must either have 25 years service at any age, or 20 years and be age 50. Disability retirements are available for eligible employees with at least 18 months service.
The FERS annuity is calculated on a base of the "high-3" average pay. The average pay includes all items for which retirement deductions are withheld (e.g., locality pay adjustments and shift differentials, but not overtime, bonuses, or hazard pay).
For the majority of FERS employees the annuity is structured to provide employees an incentive to continue working until age 62 (which is also the earliest age at which a FERS employee can collect Social Security benefits) and is calculated as follows:
Separate calculations exist for certain workers (mainly Members of Congress or congressional staff, or law enforcement officers and similar categories) and for employees who transferred from CSRS to FERS.
Married employees will have their annuity reduced by a survivor benefit unless the spouse consents to receiving less than a full benefit; the reduction is based on the survivor benefit chosen.
Employees are eligible for a cost of living adjustment (COLA) if they meet certain criteria. The most notable is retirement after age 62; most employees who retire before age 62 will not receive a COLA until age 62.
The Federal Erroneous Retirement Coverage Corrections Act (FERCCA) legislation was signed in September 2000. It was designed to provide relief to federal civilian employees who were placed in the wrong retirement system for at least three years of service after December 31, 1986.
FERCCA gave affected employees and annuitants placed in the wrong retirement system an opportunity to choose between the Federal Employees Retirement System (FERS) and the offset provisions of CSRS. FERCCA may also provide one or more of the following:[3]