Glossary
Adjusted Career Earnings--A figure based on an employee's earnings history that is used in calculating Social Security benefits amounts. A worker's actual earnings through out his/her work history are indexed to reflect the national wage levels in effect when he/she becomes eligible for Social Security benefits.
Agency Automatic (1%) Contribution--An amount equal to 1% of a FERS employee's basic pay that his/her agency contributes to the employee's Thrift Savings Plan account each pay period. This contribution is made from agency funds; it is not a deduction from the employee's basic pay. It is made whether or not the employee contributes to the Thrift Savings Plan.
Agency Matching Contributions--A FERS employee who contributes a%age of his/her pay to the Thrift Savings Plan receives additional contributions from the Government. These Government contributions are known as Agency Matching Contributions.
Annuitant--An individual who is receiving a CSRS, CSRS-Offset or FERS annuity.
Annuity--The recurring monthly payments to a former employee who has retired.
Annuity, Deferred--An annuity that begins more than 1 month after separation from employment at some future point when retirement age is reached. (Also called deferred benefits.)
Annuity, Immediate--An annuity that becomes payable within 1 month after separation from Federal employment. (Also called immediate benefits.)
Annuity, Postponed--Delaying your FERS annuity benefit to sometime in the future after meeting your Minimum Retirement Age but before age 62.
Annuity, Reduced--A retiree's basic annuity that is reduced because of retirement before a certain age (for reasons other than disability). Annuities are also reduced because of unpaid deposits or redeposits, or to provide a survivor annuity. (Also called reduced benefits.)
Annuity, Survivor--The recurring monthly payments to a deceased employee's or retiree's survivor(s). Survivor annuities may be paid to surviving spouses, certain former spouses, and children. (Also called survivor benefits.)
Average Indexed Monthly Earnings (AIME)--The adjusted earnings determined under the Social Security Act formula used to determine Social Security benefits. It is based on an individual's lifetime earnings subject to the Social Security System.
Basic Benefit Plan--The first tier of FERS (Federal Employees Retirement System). The Basic Benefit Plan provides annuities and lump-sum payments based on years of service and pay.
Basic Pay--An employee's pay subject to retirement deductions under CSRS or the FERS Basic Benefit Plan, generally excluding such compensation as bonuses, overtime pay, special allowances, etc.
COLA, CSRS--CSRS cost of living adjustments (COLA's) provide an increase that is equal to the rate of inflation as measured by the Consumer Price Index (CPI). CSRS cost-of-living-adjustments are provided to retirees at all ages.
COLA, FERS--FERS cost of living adjustments (COLA's) provide an increase that is equal to the rate of inflation as measured by the Consumer Price Index (CPI) when the inflation rate is 2% or less. When the inflation rate is between 2% and 3%, the cost-of-living-adjustments will be 2%. When the inflation rate is 3% or more, FERS cost-of-living-adjustments are 1% less than the rate of inflation. FERS cost-of-living-adjustments under the Basic Benefit Plan are not provided until a retiree reaches age 62, except for disability and survivor benefits, and employees retired under the special provisions for law enforcement officers, firefighter, and air traffic controllers.
Common Stock Index Investment Fund (C Fund)--One of the three Thrift Savings Plan investment funds. This fund allows participants to invest in common stocks and is invested in a fund that tracks the Standard and Poor's 500 stock index.
Consumer Price Index (CPI)--The measure of change in consumer prices as determined by a monthly survey of the U.S. Bureau of Labor Statistics. Among the Consumer Price Index components are the costs of housing, food, transportation, and electricity. Both CSRS and FERS benefits are adjusted for changes in the rate of inflation as measured by the Consumer Price Index. (See Cost-of-living-adjustments entries.)
Cost-of-Living Adjustment (COLA)--An adjustment of an annuity amount based on the rate of inflation as measured by the Consumer Price Index (CPI). It protects an annuity's buying power in times of inflation.
Credits of Coverage -A measurement used to credit work covered by Social Security. In 1998, earnings totaling $700 generally equal one credit of coverage. No more than four credits may be earned in any one calendar year. The term "quarters" of coverage is also used.
CSRS--The Civil Service Retirement System.
CSRS Offset--Generally applies to an employee who was originally employed under CSRS, left the Federal service for more than a year, and returned after 1983 to be covered by both CSRS and Social Security. If you elect FERS, CSRS-Offset service changes to FERS service.
Deductions--The amount withheld from the basic pay of an employee for the basic retirement benefit plan.
Deposit--A sum of money paid into CSRS or FERS by an employee (or a survivor) to get credit for a period of Federal civilian service during which retirement deductions were not withheld from pay.
Earnings Offset--A reduction in an employee's Social Security payments or Special Retirement Supplement made when he/she continues to work after benefits begin and earns over an allowable amount ($9,120 in 1998). For every $2 earned over this amount, the employee will give up $1 in benefits. This offset does not apply to special groups of employees until the Minimum Retirement Age is attained.
Earnings Test--A method of connecting benefits to income so that as income increases, benefits decrease. Used in the earnings offset.
FERS--The Federal Employees Retirement System.
Federal Retirement Thrift Investment Board--An independent Federal agency established to administer the Thrift Savings Plan.
Fixed Income Investment Fund (F Fund)--One of the three Thrift Savings Plan investment funds. This fund allows participants to invest in fixed income obligations and is invested in a fund designed to closely track the Lehman Brothers Aggregate bond index.
Government Pension Offset--A part of the Social Security law that affects CSRS retirees who are also entitled to a Social Security spouse or survivor benefit. It is sometimes referred to as the "Public Pension Offset." The Social Security benefit is reduced because the CSRS retiree is also receiving a pension from employment that was not covered by Social Security. If you elect FERS, you must be covered for 5 years to avoid Government Pension Offset.
Government Securities Investment Fund (G Fund)--One of the three Thrift Savings plan investment funds. This fund consists exclusively of investments in short-term nonmarketable U.S. Treasury securities specially issued to the TSP.
High-3 Average Pay--The average of an employee's 3 highest consecutive years of basic pay earned during creditable service. Used in benefit computations under both FERS and CSRS.
Market Rate of Interest--The percentage of interest paid on certain FERS deposits and refunds. Based on the average interest earned by the Civil Service Retirement and Disability Fund in the previous year. In 1998, the interest rate is 6.75%.
Maximum Taxable Wage Base--The maximum amount of an employee's wages subject to Social Security taxes. In 1997, the maximum taxable wage base is $68,400. An employee pays no Social Security taxes on any earnings above the base. However, the excess earnings are not used in calculating the Social Security benefit, either. The maximum taxable wage base increases yearly based on the average increase in earnings of the American workforce as a whole.
Minimum Retirement Age (MRA)--The earliest age at which a FERS employee may retire voluntarily or elect to receive benefits if separated from Federal service after at least 10 years of service. The MRA varies according to the year in which the employee was born. For anyone born before 1948, the MRA is 55. It increases gradually to 57 for those born later. The benefits of an employee who has less than 30 years of service (or who is not age 60 with 20 years of service) are reduced it he/she elects to receive them at the MRA.
Non-CSRS Offset Service--Civilian service performed before the effective date of a transfer to FERS that was not subject to both CSRS and Social Security deductions. Non-CSRS Offset service includes nondeduction service performed before transferring to FERS, service for which a deposit or redeposit has been made at the full CSRS rate, and service for which deductions were taken at the full CSRS rate, whether refunded or not.
OASDI or Social Security Tax--The part of the Social Security tax that goes to the old age, survivor, and disability insurance. Since 1990 the tax rate has been 6.2% up to the maximum taxable wage base. The total Social Security tax also includes 1.45% for Medicare.
Offset Plan--(See CSRS Offset.)
OPM (U.S. Office of Personnel Management)--The Federal Government's central personnel agency. OPM administers the CSRS and the FERS Basic Benefit Plan.
Primary Insurance Amount--A worker's basic Social Security benefit based on his/her adjusted career earnings. (See Adjusted Career Earnings.)
Quarters of Coverage ("Quarters")--A measurement used to credit work covered by Social Security. In 1998, earnings totaling $700 generally equal one quarter of coverage. No more than four quarters of coverage may be earned in any one calendar year. The term "credit" is also used to refer to quarters of coverage.
Reasonable Offer--For discontinued service retirement (early, involuntary), a reasonable offer is a written offer of another position in the employing agency for which an individual is qualified, not lower than two grades below the individual's current grade, at the same tenure and work schedule, and in the same commuting area. A different definition applies for disability retirement: A written offer of another position in the employing agency for which an individual is qualified, at the same grade as the individual's current grade, at the same tenure and work schedule, and in the same commuting area.
Redeposit--A sum of money paid into CSRS by an employee (or a survivor) to get credit for a period of Federal civilian service for which a refund of retirement contributions was received. (Not allowable for FERS service.))
Refund--The amount of money a former Federal employee withdraws from his/her retirement account. Under FERS, refunds are paid with a market rate of interest.
Retiree--A former Federal employee who is receiving recurring CSRS or FERS payments based on his/her service.
Retirement, Deferred--Retirement under CSRS or FERS when the employee separates from service with at least 5 years of civilian service, but before meeting the requirements for an immediate annuity. A deferred retirement under CSRS begins on the employee's 62nd birthday. Under FERS, the deferred retirement can begin as early as the employee's MRA if the employee had at least 10 years of service.
Retirement, Early, FERS--Retirement with at least 10 but less than 30 years of service after reaching the MRA and receiving a reduced annuity. Not available under CSRS. Also called "MRA + 10" benefit.
Retirement Fund--The Civil Service Retirement and Disability Fund. This is the account that contains the employee and employer contributions to CSRS and FERS. It includes additional payments, as well, and is invested in Federal Government securities.
Retirement, Unreduced--Retirement under CSRS or FERS with full benefits after meeting appropriate age and length-of-service requirements: 62 with 5 years, 60 with 20 years, 55 with 30 years under CSRS, or the MRA with 30 years or involuntary and early out under FERS. (Also called unreduced benefits.)
Retirement, Voluntary, or Optional--Retirement from Federal service under CSRS or FERS at the individual's option with an immediate annuity at any time following completion of the appropriate age and length-of-service requirements.
Service, Nondeduction--Periods of civilian service for which no retirement deductions were withheld from pay for retirement purposes.
Social Security--A social insurance program that covers most of the Nation's work force. It is often the basic retirement plan to which other benefits are added. It provides retirement, disability, survivor, and Medicare benefits.
Social Security Credits--When an employee works in a position and pays Social Security taxes, he/she earns Social Security credits. Minimum numbers of credits are required in order to qualify for various Social Security benefits. (See Quarters of Coverage.)
Special Retirement Supplement--An annuity supplement provided to some FERS employees who retire before age 62, because Social Security benefits cannot start before then. The supplement approximates the portion of a full career Social Security benefit earned while under FERS, and ends at age 62 when Social Security benefits first become available. The supplement is subject to an earnings test.
Substantial Social Security Coverage or Earnings--Earnings above a certain amount that count toward reducing the effect of the Windfall Elimination Provision (WEP). The effect of the WEP starts to be reduced when 21 or more years of substantial Social Security coverage are earned. (In 1998, $12,675 in earnings subject to Social Security taxes are considered to be "substantial." In contrast, the amount needed to earn four credits for the year is $2,875.) (See Windfall Elimination Provision.)
Survivor--A person who is entitled to a benefit based on the service of a deceased employee or annuitant.
Thrift Savings Plan (TSP)--A retirement savings and investment plan established by Congress in the Federal Employees' Retirement System Act of 1986 to provide eligible Federal employees savings and tax benefits similar to those offered by many private corporations. It is a defined contribution plan administered by the Federal Retirement Thrift Investment Board. CSRS employees can also contribute but receive no agency contributions.
Wage Base--(See Maximum Taxable Wage Base.)
Windfall Elimination Provision (WEP)--This provision of the Social Security law reduces Social Security benefits for employees who have less than 30 years of substantial coverage under Social Security and get a pension from employment not covered by Social Security (for example, a CSRS benefit).
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