United StatesOffice of
Personnel Management
The Federal Government's Human Resources Agency
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| Subject: | Annual Benefits Changes |
Background
Each year, we publish a Benefits Administration Letter with information that changes annually, such as interest rates and cost-of-living adjustments. This letter contains the figures for 2003. Also attached is a chart that provides the Benefits Changes from 1997 and forward. This Benefits Changes Chart will be updated annually and can be found at www.opm.gov/benefits
Cost-of-Living Adjustments
Many people who receive monthly annuity payments from the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS) will receive a cost-of-living adjustment (COLA) effective December 1, 2002. They will receive the increase in their January 2, 2003, annuity payments. The maximum increase is 1.4% for both CSRS and FERS annuitants.
Annuitants who have been retired at least 1 year will receive the full COLA, or maximum increase. To get the full COLA, a retiree's annuity had to begin no later than December 31, 2001.
Retirees whose annuities began between January 1, 2002, and November 30, 2002, will receive a prorated COLA. They will receive one-twelfth of the applicable increase for each month they receive any annuity. The following tables show the prorated percentage increases according to the month in which the annuity began.
| CSRS and FERS COLA Proration Table | |
| Month Annuity Began | Amount of Percentage Increase |
| December 2001 or earlier | 1.4% |
| January 2002 | 1.3% |
| February 2002 | 1.2% |
| March 2002 | 1.1% |
| April 2002 | 0.9% |
| May 2002 | 0.8% |
| June 2002 | 0.7% |
| July 2002 | 0.6% |
| August 2002 | 0.5% |
| September 2002 | 0.4% |
| October 2002 | 0.2% |
| November 2002 | 0.1% |
{$1152} per month divided by the number of eligible children. When the child has no living parent who was married to the employee or retiree, the benefit payable to that child is the lesser of: {$461} per month per child; or
{$1383} per month divided by the number of eligible children. FERS Basic Employee Death Benefit When a FERS employee dies, a surviving spouse (or former spouse) may be eligible for a death benefit called the Basic Employee Death Benefit. This benefit is an amount equal to 50 percent of the employee's final annual pay (or average pay if higher), plus $15,000, adjusted for COLA's under CSRS rules. For deaths that occur on or after December 1, 2002, and before December 1, 2003, the $15,000 plus COLA's amount is now $24,354.74. Chapter 70 of the CSRS and FERS Handbook has detailed information on the Basic Employee Death Benefit. Reminder Regarding Reemployed Annuitants If your agency employs any retirees whose salaries are reduced by the amount of their annuity, remember to increase the reduction by the amount of the COLA that the retiree received. To compute the new monthly reduction in the reemployed annuitant's salary, multiply the old monthly rate by the appropriate percentage and round to the next lowest dollar. An adjustment must be at least one dollar. For annuitants who transferred to FERS and have a portion of their benefits computed under CSRS rules, remember to apply CSRS rules to the CSRS portion of the annuity and FERS rules to the FERS portion of the annuity. Chapter 100 of the CSRS and FERS Handbook contains instructions on how to pro-rate the old and new COLA's during the pay period in which the COLA becomes payable. If you can't determine the retiree's new rate, you may obtain it by calling the Retirement Information Office at 1 (888) 767-6738 (or for callers within the Washington, DC local calling area, (202) 606-0500). The TDD number for the hearing impaired is 1 (800) 578-5707. When you call, please provide the annuitant's full name, date of birth, and retirement claim (CSA) number or Social Security number. You may also write to us by email at retire@opm.gov or regular mail at: U.S. Office of Personnel Management
Retirement Operations Center
P.O. Box 45
Boyers, PA 16017-0045 Interest Rate for Service Credit Payments, Refunds, and Voluntary Contributions The interest rate that applies to both CSRS and FERS is 5.0 percent in 2003. Salary Cap Sometimes officials in certain Executive level positions do not receive the full official salary of their positions because of a cap on the amount that can be paid to them. These officials pay retirement deductions on the capped amount, rather than the full amount, a nd we compute retirement benefits using the capped amount. Once the President signs the Executive order for 2003, the caps will be available on OPM's Web site at www.opm.gov/oca. In addition, we will add this information to Chapter 30 of the CSRS and FERS Handbook. Reminder Regarding Military Deposits Deposits for military service performed during 1999 and 2000 are subject to the same temporary increase that applied to employee retirement deductions for that year. Use the table below to compute military deposits for service during these years and for the new 2003 rates. Chapter 23 of the CSRS and FERS Handbook has detailed information on Service Credit Payments for Post- 56 Military Deposits. Employees who want to pay deposits for military service they performed during any of these years need to request that the military pay center provide year-by-year earnings so that you can compute deposits correctly. Military Deposits
| 1999 | 2000 | Other Years | |
| CSRS | 7.25% | 7.40% | 7% |
| FERS | 3.25% | 3.40% | 3% |
U.S. Military Retirement Pay
London, KY 40742-7130
Phone: 1-800-469-6559 Chapter 22 of the CSRS and FERS Handbook (Chapter 22, Section 22 A4.1-2) contains information that must be provided and sample wording that can be used. Significant Social Security Figures for 2003 On October 18, 2002, the Social Security Administration published a Fact Sheet that listed 2003 figures that are significant for retirement matters. You can find that Fact Sheet on the Social Security Administration's Internet site, Social Security Online at www.ssa.gov/pressoffice/colafacts2003.htm . We have included the figures here for your convenience. Social Security Maximum Wage Base The Social Security maximum taxable wage base for 2003 is $87,000. Hospital Insurance Contribution Base The limitation on the amount of earnings subject to the Hospital Insurance contribution was repealed (Public Law 103-66, section 13207). The Hospital Insurance tax is due on the total remuneration paid during the year. Average Total Wages The amount of average total wages for 2001 is $32,921.92 Bend Points The dollar amounts, or bend points, used in the benefit formula for workers who become eligible for benefits in 2003, and in the formula for computing maximum individual benefits for 2003, are $606 and $3,653. FERS Retiree Annuity Supplement Earnings Limit The Social Security earnings limitation for 2003 is $11,520.00. Any FERS annuitant who is receiving a FERS annuity supplement (unless he or she is under age 55 and retired under one of the special provisions for law enforcement officers, firefighters, air traffic controllers, or military reserve technicians separated for loss of military membership) will have his or her annuity supplement offset in 2004 by $1.00 for every $2.00 over this amount earned in 2003. Note: Public Law 106-182, signed on April 7, 2000 does away with the earnings limitation for Social Security recipients ages 65-69. It does not, however, affect the earnings limitation for recipients ages 62- 64 nor have any impact on the rules governing the FERS retiree annuity supplement. Increase in Age for Full Social Security Benefits Legislation passed in 1983 provided that the age for receiving full Social Security benefits will gradually increase from 65 to 67. The first increase took effect in January 2001. It affects workers born in 1938. They must be age 65 and 2 months to be eligible to receive full Social Security benefits. More information on this change is available on SSA's web site. Note: This change does not affect the entitlement of any person who is age 62 to receive reduced benefits if he or she has sufficient Social Security credits to receive a benefit. TSP Deferral Limit The Internal Revenue Service annual limit on elective deferrals is $12,000 for tax year 2003. For purposes of the Thrift Savings Plan (TSP), the term "elective deferrals" means the maximum amount that employees can contribute to their thrift accounts. You also can find the elective deferral limit on the TSP web site at www.tsp.gov
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Raymond J. Kirk Director, Benefits Officers Resource Center |
Attachment
Benefits Changes Chart Web Paqe
Benefits Changes Chart PDF File
Download the Letter as a PDF File