FERS Transfer Handbook: Survivor Benefits Under CSRS and FERS

Introduction

CSRS and FERS both provide survivor benefits, but the benefits offered by the two plans differ greatly. Depending on your personal situation, the benefits offered by one plan may be better for you than the other plan's benefits.

Recipients of Survivor Benefits

Under CSRS, FERS, and Social Security, survivor benefits can be paid under various conditions to current and former spouses and children. Social Security benefits can also be paid to dependent elderly parents. Surviving spouses must meet certain age and length of marriage requirements in order to qualify for benefits. You can also elect benefits for a spouse you marry after retirement under both FERS and CSRS. The rules for who is eligible for spousal benefits are the same for FERS Basic Benefits and CSRS. Under both CSRS and FERS, children's benefits are payable to each unmarried child:

• up to age 18
• up to age 22 if a full-time student
• at any age if child became disabled before age 18

Also, under both CSRS and FERS, your Thrift Savings Plan account will be available to your designated survivor. If you want more information about CSRS and FERS survivor benefits (including court ordered benefits for a former spouse), several pamphlets on OPM's website have more information.

If You Die as an Employee

CSRS

CSRS will pay benefits to the eligible survivors of an employee who had at least 18 months of creditable civilian service.

Under CSRS, if you die while you are a Federal employee, your eligible spouse will receive 55% of your accrued benefit. If a larger benefit would result, your spouse would receive the smaller of the following computations: 55% of 40% of your high-3 annual salary or 55% of what your annuity would have been if you had worked until age 60.

Your eligible children will receive an annuity that is based on how many children you have and whether or not your spouse is still living. This is true under CSRS whether you die as an employee or retiree.

CSRS Offset

If your spouse or children are eligible for survivor benefits based on your service, OPM must reduce the benefit that is paid to your surviving spouse and children. This reduction is computed in the same way as the offset reduction in a retirement annuity. Here is how the offset reduction is computed.

FERS

FERS also pays benefits to the eligible survivors of an employee who had at least 18 months of creditable civilian service. Your CSRS service counts to meet this requirement.

Under FERS, if you die while you are a Federal employee, and have more than 18 months of creditable civilian service but less than 10 years of total service, your eligible spouse will receive a two-part FERS benefit. It includes a lump-sum payment that is adjusted each year for inflation ($21,783.34 for 1998), plus the greater of half of your high-3 average pay, or half of your annual rate of pay at death. Social Security and other survivor benefit payments will not affect this lump-sum benefit.

In addition, if you had 10 years of service, your eligible spouse will also receive an annuity equal to one-half of your accrued Basic Benefit.

FERS children's benefits also depend on whether your spouse is still living and how many children are eligible for benefits. In addition, children's benefits are reduced dollar for dollar by Social Security children's benefits that may be payable.

Social Security also provides survivor benefits to the eligible survivors of an employee who met the minimum Social Security eligibility requirements. The number of Social Security credits needed to qualify depends on when the employee was born and how old he/she was at the time of death. The minimum number of credits required is 18 months.

Under CSRS and FERS these benefits are available without additional cost to you, that is, at the regular deduction rate for CSRS and FERS benefits.

If You Die After You Retire

CSRS

If you are a CSRS retiree when you die, your eligible spouse will be paid 55% of the amount you were receiving as your annuity or a lesser amount that you and your spouse agreed on when you retired.

As a married retiree, your annuity will be reduced in order to provide for this survivor benefit unless you and your spouse waive this benefit. The amount of the reduction is 2.5% of the first $3,600 of your annual benefit, plus 10% of the amount over $3,600. For most career retirees, this amounts to a 7% to 8% reduction. Note that the 55% benefit is based on the amount of your annuity before this reduction is taken. You may also choose, if your spouse agrees, a smaller survivor benefit.

If you want more information about survivor benefits, see the pamphlet Retirement Facts 5, Survivor Benefits Under the Civil Service Retirement System (RI 83-5) [151 KB] available at your personnel office.

CSRS Offset

If you are a CSRS Offset retiree, OPM must reduce the survivor annuity if your widow(er) or children are entitled, or would be entitled upon your proper application, to Social Security benefits as your widow(er) or children. This reduction is done in the same manner as the reduction in a retiree's annuity.

FERS

If you are a FERS retiree when you die, your eligible spouse will be paid 50% of the amount of your annuity, plus a Special Retirement Supplement if your spouse is younger than age 60 and not yet eligible for Social Security benefits.

As a married retiree under FERS, your annuity will be reduced in order to provide for this survivor benefit unless you and your spouse waive the reduction. Under FERS, the reduction is larger than under CSRS. It is a full 10% of your entire annual benefit amount. Again, the 50% benefit is based on the amount of your annuity before this reduction is taken. You and your spouse also can choose a smaller survivor benefit of 25% of your annuity, with a 5% reduction in your benefit. However, under FERS you cannot choose other benefit levels as you can under CSRS.

Children's benefits are the same for both retirees and employees.

If You Die After You Leave Federal Service, But Before You Retire Under FERS

If you have at least 10 years of service and die after you leave Federal service but before you begin to receive your annuity, a survivor benefit is payable to your spouse under FERS. The amount of the benefit payable to the surviving spouse is one-half of your accrued basic retirement benefit. The benefit will begin at the time you would have reached age 62, or sooner if your survivor elects a reduced benefit. For your spouse to be eligible, you must not take a refund of your contributions. No similar benefit exists in CSRS. Social Security benefits are also payable to survivors of employees who meet the Social Security requirements. These benefits are based on the Social Security benefit for which the employee was eligible. Benefits vary based on the age and situation of the survivor.

Transfer Considerations

If you transfer, the FERS survivor rules will apply to all of your benefit--even the CSRS part. This includes:

• the 10% or 5% reduction to provide survivor benefits after you retire;
• the 50% or 25% benefit levels (this was up to 55% under CSRS); and
• Cost-of-living increases generally equal to consumer price index increase less 1%; and
• the 18 month FERS service requirement for lump sum, death-in-service benefits.

Conclusion

The survivor benefits under FERS and CSRS differ substantially. Your individual circumstances will determine which system is better for you. Also, you need to remember that FERS rules apply to all of your survivor benefits.

As a general rule, surviving spouses who will receive a substantial spousal Social Security benefit will be better protected by FERS. Surviving spouses who are employed and/or earn a Social Security benefit on their own will receive greater benefits from CSRS.

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