Sample Employee Situations

The following sample situations may help you in directing an employee to specific information. These situations may also help you in recognizing the important factors in various employee profiles.

You may think an employee fits nicely into one of the categories listed below. However, after you have finished reviewing these categories, check the following considerations which could critically impact an employee's decision.

Younger, shorter service employees:

• Least likely to stay with the Federal Government until retirement
• Have the most alternatives to Federal Government employment
• FERS provides greater portability thus ensuring a better retirement benefit if the employee leaves the Federal Government

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Older, long-service employees approaching retirement age:

• Higher benefit formula and COLA's suggest CSRS
• There may not be time to accumulate 10 years for Social Security coverage
• Portability is generally not a factor however,
• FERS could be a logical choice if service to retirement under FERS would allow employee to acquire enough Social Security credits to qualify for a Social Security benefit

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Middle-aged, middle service employee (e.g., age 40 with 15 years of service):

• If certain of staying until retirement from the Federal Government, especially retirement before age 60, CSRS would be a strong choice for benefit formula and COLAs
• If post-retirement employment is likely, FERS Special Retirement Supplement could be reduced by Social Security earnings test, however,
• The longer the older employee intends to work, the better FERS looks due to greater Social Security benefits, TSP, and COLA after age 62
• If the employee is fairly likely to leave the Federal Government before retirement, FERS can provide a form of benefit insurance by beginning to accrue a more portable benefit and making deferred benefits available at age 55
• Employee who is most likely to stay but still would consider leaving is likely to be torn between the two systems
• Trade-off is between a slightly lower benefit at retirement but greater portability under FERS, and a higher benefit at retirement but no portability under CSRS; again, FERS is a form of insurance, at a cost
• In this case, the decision should hinge on factors like expected retirement age, ability to save in TSP, amount of Social Security credit to date, and spouse's Social Security coverage