Information For Employees Who Plan to Retire Soon After Transferring to FERS

1. I have decided to transfer to FERS. I plan to retire next year at age 55 with 30 years of service. Will I get credit for my sick leave?

Yes. Credit for your sick leave will be added to the CSRS portion of your annuity. The amount of sick leave will be the LESSER of the amount of sick leave you have when you transfer and the amount of sick leave you have when you retire.

2. I am 56 years old, and have decided to transfer to FERS. I plan to retire next year. Will I get immediate cost-of-living increases after I retire?

Yes. The portion of your annuity that is computed under the CSRS rules will receive COLA's according to the CSRS COLA rules. That portion will get full COLA increases when they are paid to CSRS retirees. However, the first COLA increase will be prorated according to how many months have passed since you retired.

The portion of your annuity that is computed under the FERS rules will receive COLA's according to the FERS COLA rules. That portion of your annuity will get no COLA's until you are age 62. Then you will get COLA's that are 1 percent less than the cost-of-living increases as measured by the Consumer Price Index (CPI), except that FERS matches the CPI up to 2 percent.

3. I understand that when I retire, CSRS computation rules will apply to the years and months of my CSRS service and FERS computation rules will apply to the years and months of my FERS service. What happens to left over days of service under each computation?

Both CSRS and FERS use only years and months in annuity computations. Left over days are dropped. This is true even if your left over days of CSRS service and left over days of FERS service total a full month or more.

4. Is there any minimum period of service required under FERS before I can retire under FERS?

No, except that you need 5 years of total civilian service to retire. Your past CSRS service counts toward this 5-year requirement. (See the next three questions about how a benefit is computed and when it can begin.)

5. When do annuities begin under FERS?

Except for disability, discontinued service, and military reserve technician benefits, FERS benefits begin on the first day of the month after separation for retirement. (The CSRS provision allowing benefits to begin the next day if an employee separates for retirement on the first, second, or third of the month does not exist under FERS.)

6. If I retire on one of the first 3 days of the month, will the CSRS portion of my annuity begin the next day?

No. You are retiring under FERS, not CSRS. The FERS law lets you keep the benefits you earned under CSRS by applying CSRS computation rules to your service under CSRS. However, for most other purposes, the FERS rules apply to your annuity.

7. I plan to transfer to FERS and retire immediately, with less than one full month of service under FERS. Will I get a FERS benefit?

No. It takes a full month of service under FERS to get any benefit under FERS rules. (Like CSRS, FERS only uses years and months in annuity computations. Left over days are dropped.) Your annuity will be based completely on your CSRS service before you transferred. Your benefit won't have a FERS component to it. Note, however, that since your will be retiring under FERS, your survivors' benefits will be computed under FERS rules.

8. I have 43 years of service under CSRS and I want to avoid the "80 percent limitation." If I transfer to FERS, can my annuity exceed 80 percent of my average pay?

Yes, but only if it is the FERS portion of your annuity that causes the total annuity to exceed 80 percent of your average pay. The CSRS portion is still limited to 80 percent of your average pay. Under the general CSRS formula, you reach the 80 percent level at 41 years, 11 months of service. Retirement deductions that were withheld from your pay after you reached the 80 percent level are first used to pay any deposits (for past non-deduction service) or redeposits (of refunds) that you owe. Any money that remains can be returned to you or used to purchase additional annuity under the voluntary contribution provisions of law.

AGE REDUCTIONS

1. I am 55 years old and I have 15 years of service. I plan to transfer to FERS so that I can retire right away. Will the FERS reduction for age apply only to the FERS portion of my annuity?

No. The FERS reduction for age will apply to your entire combined CSRS/FERS annuity. The FERS reduction is 5% per year for each year you are under age 62. There is no CSRS counterpart for this type of retirement - minimum retirement age with at least 10 years of service - and there is no separate CSRS age reduction affecting it.

2. I am 55 years old and I have 15 years of service. I plan to transfer to FERS and retire next year. Can I postpone getting my annuity to lessen the age reduction for being under age 62?

Yes. Remember, however, that if you defer getting your annuity you don't have health and life insurance until the annuity begins.

3. I am 53 years old and already have 31 years of service. If I transfer to FERS and leave the government, can I get my unreduced annuity at age 55?

Yes. You will be eligible for an unreduced annuity at age 55. Remember, though that by taking a deferred benefit you can't keep your health or life insurance as a retiree. Also, you will not be eligible for the Special Retirement Supplement.

4. I am 50 years old with 20 years of service. My agency may have a RIF next year. If I transfer to FERS and am RIFFed next year, will my annuity be reduced because of my age?

Yes, the portion computed under CSRS will be reduced for age. There is no age reduction under FERS for involuntary retirement based on 20 years of service and age 50 ( or 25 years of service and any age), so the FERS part of your annuity won't be reduced. The CSRS age reduction is 2% for each year you are under age 55. If you have at least 1 calendar year of service subject to FERS computation rules when you separate, you will be eligible for the FERS Special Retirement Supplement when you reach the Minimum Retirement Age (age 55 in your case).

SPECIAL RETIREMENT SUPPLEMENT

1. I am now covered by full CSRS, but I plan to transfer to FERS and retire in less than one year. Will I be eligible for the Special Retirement Supplement?

No. In order to be eligible for the Special Retirement Supplement, you must have at least one full calendar year (January 1 - December 31) of service subject to FERS computation rules.

2. I am transferring to FERS with 20 years of service. I plan to retire two years later when I reach age 60. Will I get the Special Retirement Supplement?

Yes. You will have met the age and service requirements for an immediate unreduced annuity - in this case, age 60 with 20 years of service. You also will have at least one full calendar year under FERS. Remember, however, that the Special Retirement Supplement is subject to an earnings offset, and if you earn too much after you retire, your Supplement may be reduced to zero.

3. I am a 46-year-old law enforcement officer with 23 years of law enforcement service. If I transfer to FERS now and retire in 2 years when I have 25 years of service, will I be eligible for the Special Retirement Supplement as soon as I retire?

Yes. You will have met the age and service requirements for immediate unreduced retirement as a law enforcement officer. You will also have 1 calendar year of service under FERS. Since you qualify for benefits under the special provisions for law enforcement officers, it is not necessary for you to meet the minimum retirement age applicable to other types of immediate retirement in order to be eligible for the Supplement. In addition, the Supplement will not be reduced by any outside earnings until you reach the minimum retirement age.

4. I am 53 years old with 12 years of service. I want to transfer to FERS so I can retire when I reach age 55. I understand that my annuity will be reduced because of my age. Will I be eligible for the Special Retirement Supplement?

No. To be eligible for a Special Retirement Supplement, you must retire under a provision of the FERS law that does not require reduction for age.

5. I am 53 years old with 18 years of service. I understand that I can retire under FERS at age 55, when I will have 20 years of service. I also understand that if I postpone the start-up of my annuity until I reach age 60, there will be no reduction in my annuity. Will I also be eligible for a Special Retirement Supplement if I postpone starting up my annuity?

No. You would not be eligible for the Special Retirement Supplement in either case. Postponing the start of your annuity will not change the provision of law under which you retired. You must meet the minimum age requirement for an unreduced annuity at the time you retire to qualify for the Supplement.

6. Does the Special Supplement approximate the amount of Social Security I will get at age 62?

No. The Special Supplement approximates the portion of an estimated Social Security benefit that you would earn during civilian service that is creditable toward the FERS portion of your annuity. Since the formula for the Special Supplement assumes a working life of 40 years, each year of FERS service is worth one-fortieth of the estimated Social Security benefit.

SURVIVOR BENEFITS

1. If I transfer to FERS and then retire, will my spouse get a "combined" CSRS/FERS benefit?

Only to the extent that the survivor annuity would be based on your own "combined" annuity. Otherwise, FERS rules apply to the entire survivor benefit. That is, your spouse's survivor benefit would be 50% or 25% of the amount of your benefit at retirement, plus the total percentage of cost-of-living increases you received as a retiree. (Your annuity is reduced by 10% to provide this survivor benefit.)

2. Is my family protected if I die soon after I transfer to FERS?

Yes. All of your CSRS service counts toward eligibility for FERS survivor benefits. Under FERS, survivor benefits are payable after 18 months of creditable civilian service.

3. Since my spouse also has good retirement benefits, I had planned to elect $3,600 as the base for survivor benefits under CSRS so that our health insurance coverage can continue if I die first. Can I do this under FERS?

No. FERS doesn't allow you to select the base for the survivor benefit. You must choose "ALL," 25%, or nothing. If you don't want to provide a survivor benefit, or you want to provide less than a full survivor benefit for your spouse, your spouse must consent to your election not to provide the full benefit. The widow(er) of a deceased annuitant cannot continue coverage in the Federal Employees Health Benefits Program unless there is a survivor annuity.

MISCELLANEOUS

1. I am now covered by CSRS Offset because I returned to the Federal Government in 1984 after a break in service of more than a year. I now have a total of 18 years of civilian service. If I transfer to FERS will I get a combined CSRS/FERS computation when I retire?

No. Your service from 1984 until your transfer to FERS (about 14 1/2 years), during which time your were paying into both Social Security and CSRS, will be included in the FERS portion of your annuity computation. Since the balance of your service (about 3 1/2 years) is less than 5 years, it too, will be under FERS computation rules.

2. I am a 60-year-old widow who was planning to retire later this year. I just learned that I won't be able to receive the spousal benefit I had expected to receive based on my late husband's Social Security-covered employment because of the Government Pension Offset. I've been told that if I transfer to FERS, I could avoid the offset but only if I work 5 years under FERS. Is this correct?

Yes, this is correct.