Why Have I Been Given This Book?
You have an opportunity that few workers have - the chance to choose your retirement plan. You can keep the retirement coverage you now have, or you can choose to be covered by the Federal Employees Retirement System (FERS). This is a very important decision. Depending on what the future holds for you, your decision can make a difference to you in how early you can retire from the Federal government and how much retirement income you will have.
FERS was created by Congress in 1986, and it became effective on January 1, 1987. Since that time, new Federal civilian employees who have retirement coverage are covered by FERS.
However, when the Congress created FERS, one of the rules it established was that people who already had enough Federal civilian service to potentially be eligible for a benefit some day under the old Civil Service Retirement System (CSRS) would have a choice whether or not to be covered by FERS. Your agency has identified you, based on your current appointment and employment history, as someone who meets this criterion. As a result, you have a choice whether to keep the retirement coverage you now have or to transfer to FERS.
Depending on your current appointment and employment history, you currently may have CSRS coverage, CSRS Offset coverage, or only Social Security coverage. CSRS Offset coverage normally applies to employees who are going to a job with retirement coverage after a break in both service and CSRS coverage of more than 1 year, and who also had at least 5 years of civilian service as of the break in service.
If you have a term or indefinite appointment, you are not eligible for CSRS coverage, but you can elect FERS coverage.
This handbook is written primarily for employees who have a choice between CSRS or CSRS Offset coverage and FERS coverage. The Standard Form 50 (or equivalent personnel form) that shows your current appointment will say whether you currently have CSRS coverage, CSRS Offset coverage, or only Social Security coverage. If you have any questions about what your current retirement status should be, contact your servicing personnel office. Be sure that they have accurate records of all your Federal service. Even a few days can make a difference.
If you are already covered under FERS, you do not need to read this handbook. The U.S. Office of Personnel Management (OPM) booklet called The Federal Employees Retirement System, (RI 90-1) describes your benefits. If you are a Member of Congress or a congressional staff person, you should see your servicing personnel office.
The information in this handbook is based on the law in effect as of the printing date.
You have a personal election opportunity for 6 months from the date of your reemployment or your conversion to an appointment that offers FERS coverage. If you choose FERS, you can't change your mind later; so you want to choose the plan that fits best with your future plans.
Both CSRS/CSRS Offset and FERS are good retirement plans. Each plan has advantages and disadvantages. Neither plan is best for all Federal employees. That's why you are being given a choice.
In general, CSRS may be better if you think that you will retire from the Federal Government after a long career -- 20 or 30 years and before age 62. But what if you're not sure what the future holds? Maybe you're not planning to spend the remainder of your career with the Federal Government, or you may want to retire before you have 20 or 30 years of Federal service. In either case, FERS may be the retirement plan you want.
If you are like many people, your initial reaction may be that this will be a complicated decision. For some people who have complex situations, it may be. However, for most people, it becomes a fairly simple decision when they think about the choices in terms of their own situation. You need to consider factors such as your work history, when you want to retire, and whether or not you plan to stay in Federal service until then. To help you organize your thoughts about what it important to you, we have included a checklist at the end of this section. It contains a list of factors that are important to many people in making their decisions. Some of them will be important to you, too.
The same transfer considerations apply, whether you are working full-time or on a part-time basis. If you are married, we encourage you to discuss your choice with your spouse.
This handbook takes you through important considerations and shows you why they're different in CSRS/CSRS Offset and FERS. Many people reach a decision without reading very much of this handbook, but we encourage you to at least review the first 6 sections because there are some special circumstances that may change your mind. You should look at the table of contents to identify topics that may be of interest to you. When you finish reading, you should be prepared to make a choice based on the plan overviews, comparisons, and examples. In most cases, you shouldn't have to do any calculations to decide which retirement plan is better for you.
Remember, the decision whether to choose FERS is yours to make. This handbook contains the information you need to consider, but it won't tell you what to do. You must decide based on what you know about yourself, your past, and your expectations for the future. You shouldn't decide based on what someone else did. There may be one key factor in that person's situation that would make his or her choice inappropriate for you.
We have tried to keep this handbook as simple as possible, but if you have questions, your agency should have personnel who can help answer your questions. So, if there is a part of the handbook that's important to your situation and that you don't understand, you should ask for help. However, while your agency should help answer your questions about the handbook, they will not tell you what to do.
Finally, remember that you are choosing between two very different retirement systems. The handbook stresses the differences. If you try to understand the differences between the systems in terms of what's important to you, your choice will be easier. If you try to master exactly how each system works, your decision will take more time and effort on your part. Of course, this handbook in no way replaces the many pages of regulations that govern benefits under CSRS, FERS basic benefits, the Thrift Savings Plan, and Social Security but, it should contain all of the information you need to make your decision.
If you do nothing, your current coverage (CSRS, CSRS Offset, or Social Security) will stay the same. Most people will not have another chance to choose FERS coverage unless they leave Federal service for more than 3 days.
How This Handbook is Organized
This handbook begins with a review of the important features of CSRS and FERS, so you can understand how each plan works.
Next there's a section called "Making Your Decision" that explains how to determine which plan better meets your needs. It also discusses some important cautions to consider when making your decision.
The next section provides a brief description of the Social Security Program.
Another section contains examples using several hypothetical employees that portray typical employee situations. Looking at them may help you make your decision.
This handbook also has an appendix that contains a handy reference chart for comparing the basic elements of CSRS and FERS as well as the special rules for employees who transfer.
Also, you'll come across some words that appear as links. These words are important to know. They are explained in the text, and are also included in the "Glossary" section.
What Things Do You Need To Make Your Choice?
For many employees, this handbook will give you enough information to decide which retirement plan you like better. You will need only a pen to fill out the retirement plan election form. The forms are available electronically on this web site in the Transfer Forms section.
If you have already earned some Social Security credits, but are not sure how many, you should request this information from the Social Security Administration, using Form SSA-7004, Request for Earnings and Benefit Estimate Statement. Your personnel office may have the form or you can request it by calling 1-800-SSA-1213, or you can request a PEBES statement electronically on the SSA's web site at http://www.ssa.gov/pebes/.
Some employees want to do some calculations before deciding. For you, there is a computer program that allows employees like yourself to enter data about your work history and future career expectations to compare CSRS and FERS benefits. To use this program, you may want to have your Social Security earnings history and the amount of your Thrift Savings Plan balance available.
This program is a projection into the future that requires making assumptions that may or may not turn out to be accurate, so you should not use the numbers if produces as estimates of the future benefits. Instead, the results allow employees to evaluate the relative benefits of the two retirement systems as they apply to the data provided.
The program is available for downloading on this site in the FERS Transfer Model section. It also should be available through your agency.
Finally you need some time to read at least the beginning of this handbook. Choosing your retirement coverage is an important decision, so set aside some time to read the parts of this handbook that are important to you, and to fill out your retirement plan election form.
Whether you switch to FERS or decide to keep the retirement coverage you have, you should complete an election form, SF 3109, Election of Coverage, and return it to your servicing personnel office. An election to transfer to FERS is effective at the beginning of the next pay period after your agency receives the completed form. An election to transfer to FERS is irrevocable once it has become effective. If you transfer to FERS, you then have a personal 30-day period to enroll in the Thrift Savings Plan or to change your enrollment.
Your spouse does not need to consent to a decision to change retirement plans. However, if 1) you have a former spouse who is entitled, by court order, to a portion of your CSRS annuity or CSRS survivor benefits, 2) the court order is on file at OPM, 3) the former spouse has not remarried before reaching age 55, and 4) the former spouse is still living, you cannot transfer to FERS without that former spouse's consent. Your former spouse needs to complete SF 3110, Former Spouse's Consent to FERS Election in order for you to be able to transfer.
OPM can waive this requirement only in very limited circumstances. If you don't know whether OPM has a qualifying court order on file, or want to request a waiver of the consent requirement, ask your servicing personnel office for Standard Form 3111, Request for Waiver, Extension, or Search.
Finally you may want to file a new designation of beneficiary form, SF 3102, Designation of Beneficiary, Federal Employees Retirement System, since CSRS designations are cancelled upon a transfer to FERS.
All of these forms are available from OPM's web site at http://www.opm.gov/asd/.
The following is a list of points that experience has shown are important to many people in making a decision to keep their existing retirement coverage or switch to FERS. If you review the list and check off the points that are important to you, it should help organize your thoughts before you start reading about the features of the retirement plans. There are some blank lines so you can add additional points that aren't on the list. Remember, we are all different; what is important to someone else may not be important to you. You may print this list for your own use. The information you enter will not be submitted or saved through this web site. This form is designed only for you to use as a reference tool.
Updated 14 May 1998