The Federal Employees Retirement System (FERS) became effective in 1987, and almost all new Federal civilian employees hired after 1983 are automatically covered by this new retirement system. The Federal Employees Retirement System is a response to the changing times and Federal workforce needs. Many of its features are "portable" so that employees who leave Federal employment may still qualify for the benefits. The new retirement system is flexible. Covered employees are able to choose what is best for their individual situation.

The retirement system is a three-tiered retirement plan. The three components are:

• Social Security Benefits,
• Basic Benefit Plan, and
• Thrift Savings Plan Benefits.
  

The first available part of the retirement benefit is Social Security. It provides monthly payments if you are retired and have reached at least age 62, monthly benefits if you become disabled, monthly benefits for your eligible survivors, and a lump sum benefit upon your death.

The basic benefit portion is financed by a very small contribution from the employee and from the Government. Basic Plan Benefits are a monthly payment depending on the employee's pay and length of service. As in most retirement plans, a formula is used to compute the payments under the Basic Benefit Plan. The Government averages the highest 3 consecutive years of basic pay. This "high-3" average pay, together with the employees length of service are used in the benefit formula. Employees who meet the criteria also receive a "Special Retirement Supplement" which is paid as a monthly benefit until the employee reaches age 62. This supplement approximates the Social Security benefit earned by the employee while they were employed by the Federal government.

The third part of the Federal Employees Retirement System benefit is the Thrift Savings Plan. The Thrift Savings Plan is a tax-deferred retirement savings and investment plan that offers the same type of savings and tax benefits that many private corporations offer their employees under 401 (k) plans.

The Federal Employees Retirement System is a flexible plan for a flexible work force - a work force that is more likely to work for several different employers during the course of a career. It allows for the fact that many employees may not retire from the Federal government. It also builds on the Social Security credits that employees already have or may earn in the future from non-Federal work.

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