Special Considerations Before Making a Decision

Be wary of categorizing an employee too early. The following is a list of special considerations which may critically impact an employee's decision. More information on all of these considerations is available in the FERS Transfer Handbook.

• Social Security Spouse Benefit - Social Security provides spousal benefits which can amount to an additional 50% benefit to a family when the spouse reaches age 65. This benefit makes the Social Security tier of the FERS attractive to married couples where one spouse has not worked, or has little work experience.
• Public Pension Offset (also called the Government Pension Offset) - If an employee is receiving a CSRS benefit, the current Social Security law reduces the Social Security benefit and any Social Security survivor or spousal benefit by a certain amount. If an employee transfers into FERS and accumulates at least 5 years of FERS service, that Social Security reduction will be avoided.
• Earnings Test - Except for disability benefits, CSRS benefits are not reduced if an employee continues to work outside the government after retirement. The FERS supplement and all Social Security benefits received until age 70 are tested for earning and reduced at fairly low levels. In 1998, the annual exempt amount of earnings is $9,120 if you're under 65, and $14,500 if you're age 65-69. You can earn up to these amounts without affecting your Social Security income. If you earn more than these amounts, however, your Social Security benefit will be reduced. If you are under age 65, it will be reduced by $1 for every $2 above the limit that you earn by work. For people age 65 and over, $1 in benefits is withheld for each $3 in earnings above the limit. If you are age 70 or above, your Social Security benefits will not be reduced because of your earnings. The amount you can earn each year before your benefit is affected increases yearly. How much it increases is based on how much average wage levels increase in the United States as a whole.
• Windfall Elimination Provision - Under this provision, Social Security benefits are reduced below their normal level if an employee has less than 30 years under Social Security. This prevents employees who earned all their Social Security quarters at low wages early in their career, then left Social Security for a full career in the CSRS, from receiving Social Security benefits equal to workers who spent a full career under Social Security. This reduction continues to apply to those who transfer to the FERS, and may be detrimental to certain transferees.