Differences for CSRS, FERS Retirees

[swsop]

Those retired under CSRS will get the full adjustment, while those
retired under FERS and who are eligible for COLAs--in most cases,
not until age 62--will get 2.0 percent on their civil service
benefits and 2.3 percent on their Social Security benefits. FERS
employees who have a CSRS component to their annuities, typically
those who transferred from CSRS to FERS during one of the open seasons
for doing so, will get the full adjustment on their CSRS component
and the reduced adjustment on the FERS component. COLAs are pro-rated
for those who retired, or will retire, during this calendar year.

COLA about Average for Recent Years

The 2.3 percent COLA that most federal retirees and survivor
beneficiaries will receive with their January 2008 payments in
the mid-range for adjustments in recent years, although down
from the 3.3 percent increase that was paid in January of this
year. The COLA was determined by a 12-month measuring period
that ended with September inflation figures as measured by the
consumer price index for urban wage earners. Whle the increase
is the smallest since 2004, over the last 10 years COLAs have
ranged from 1.3 to 4.1 percent. The 2.3 percent amount also
will apply to Social Security and military retirement benefits.

CSRS Still the Dominant System Among Retirees

While about three-fourths of active federal employees are covered by
the FERS system, the large majority of retirees are drawing benefits
under CSRS, the older of the two systems. There are about 1.6 million
CSRS retirees versus about 280,000 under FERS; similarly, there are
about 590,000 CSRS survivor beneficiaries compared with about 27,000
under FERS. The average monthly benefit for CSRS retirees is about
$2,600 and for FERS retirees about $950; survivor benefits average
about $1,200 and $400, respectively. The difference in benefit
levels reflects the less generous FERS computation; FERS was designed
to produce benefits roughly equivalent to those under CSRS after
taking into account Social Security coverage and enhanced TSP
benefits.

SWSOP

 

[DCguy]

I'm a new fed employee and I have about 20 years left before retirement. Under FERS, will fed retirees receive the pension? How is the FERS pension different from CSRS pension? and ppl tell me that I'll receive the ss supplement when I retire, but isn't that because I'm paying ss tax? I know that the fed govt matches up to 5% of my tsp contribution. So what else does the gov't pay for my retirement?

 

[DoughBoy]

Under FERS, will fed retirees receive the pension? How is the FERS pension different from CSRS pension? and ppl tell me that I'll receive the ss supplement when I retire, but isn't that because I'm paying ss tax? I know that the fed govt matches

Depends. Are you in a special group?(ie:ATC, Firefighter)

 

[SkyPilot]

I'm a new fed employee and I have about 20 years left before retirement. Under FERS, will fed retirees receive the pension? How is the FERS pension different from CSRS pension? and ppl tell me that I'll receive the ss supplement when I retire, but isn't that because I'm paying ss tax? I know that the fed govt matches up to 5% of my tsp contribution. So what else does the gov't pay for my retirement?

Read this booklet. It will answer most of your questions.

http://www.opm.gov/forms/pdfimage/RI90-1.pdf

 

[DCguy]

cool thx!

 

[James48843]

I'm a new fed employee and I have about 20 years left before retirement. Under FERS, will fed retirees receive the pension? How is the FERS pension different from CSRS pension? and ppl tell me that I'll receive the ss supplement when I retire, but isn't that because I'm paying ss tax? I know that the fed govt matches up to 5% of my tsp contribution. So what else does the gov't pay for my retirement?

Quick and dirty answers:

FERS employees DO get a FERS pension, but it is tiny compared to CSRS people. CSRS got somewhere in the neighborhood of half their salary as a pension- FERS only get (regualr FERS) about one percent for each year of service. (If you serve 20 years, you only get about 20% of your high three ina pension).

FERS retirees are expected to also have a social security component (perhaps a third), and the TSP makes up the third leg of your retirement dollars. If you build a lot of TSP funds, then you build a good third leg.

Social Security supplement they refer to MAY be the FERS additional money you can receive if you are over the minimum retirement age, (age 57) but not yet eligible for regular social security payments (at least Age 62,). Some FERS people can get a supplement nearly equal to their SSN payment from the time they retire until age 62.

First, however, you must make it there. Prepare now, by putting in at least enough to get your five percent matching funds in TSP. Some people say also do a Roth IRA. Others say do as much TSP and Roth as you can afford to do- so you don't end up poor when it comes time to retire.

Finally, if you are a recently hired federal employee, or have just begun looking seriously at your TSP account, please start by reading this thread:

http://www.tsptalk.com/mb/showthread.php?t=3629

thanks, good luck, and happy investing.

 

[DrFaustus]

I left my Fed job in 04, but I seem to recall different figures than what James posted. As I recall, the FERS pension was about 42% of your high 3, the CSRS pension was close to 80%. FERS made up for the difference by adding in Social Security and the TSP. CSRS employees do not have access to Social Security (though I think they had access to Medicare) and (initially) did not have access to the TSP.

Am I all wet here?

 

[EW_ret]

Some of your statements are not completely true. The percentages you cite for FERS and CSRS are for near 42 years of service. The CSRS maximum is 80% of high three is reached at 42 years, 10 months service. CSRS receive 16.25% for 10 years then 2% each year beyond ten years. Thirty years service in CSRS gets you 56.25% of high three average. The regular FERS employees get 1.0% for each year of service, and a bonus of 0.1% per year if they retire at age 62 or older. Those special FERS folks in LEO, FFO, ATC receive 1.7% credit each year of service. I don't think FERS has a maximum FERS annuity cap.

CSRS employees can collect social security benefits if they have 40 or more quarters credit. It will likely be reduced (~50%) by WEP because do not have 30 or more years of substantial social security earnings. They pay into Medicare and have its benefits at age 65.

CSRS employees first had access to TSP in January 1988 but could only invest in G fund until January 1991. I believe the FERS employees started in the special G fund in 1986 or 1987. FERS could invest in C and F funds starting in January 1988, but had they certain restrictions. These restrictions were lifted in January 1990.

I left my Fed job in 04, but I seem to recall different figures than what James posted. As I recall, the FERS pension was about 42% of your high 3, the CSRS pension was close to 80%. FERS made up for the difference by adding in Social Security and the TSP. CSRS employees do not have access to Social Security (though I think they had access to Medicare) and (initially) did not have access to the TSP.

Am I all wet here?

 

[James48843]

The CSRS maximum is 80% of high three is reached at 42 years, 10 months service. CSRS receive 16.25% for 10 years then 2% each year beyond ten years. Thirty years service in CSRS gets you 56.25% of high three average.

The regular FERS employees get 1.0% for each year of service, and a bonus of 0.1% per year if they retire at age 62 or older.

Those special FERS folks in LEO, FFO, ATC receive 1.7% credit each year of service. I don't think FERS has a maximum FERS annuity cap.

Thanks EW for the better numbers. I just remembered the ruff estimate that as a FERS employee, I only get one percent for each year of service, and that CSRS employees get more.

That was all part of that big revision of the retirement system in the early 1980's, when the Regan Administration figured out that if they didn't change from a defined benefit program (only CSRS), to a hybred reduced defined benefit (FERS) and defined contribution program (TSP matching), they were going to be ina world of hurt when it came to financing retirements in the future.

My state did not figure that out, and today our government employees - (particularly school employees in our state, local, and university) retirement system is killing our local school budgets here.

The local school has to now pay 17% of the educator's salary, in additon to 7.65% Social Security, towards every employees salary. And that 17% is expected to rise to almost 30% by the year 2016, if they don't do anything to fix the problem. Political infighting has really reeked havoc on the attempts to change the system.

 

[The HalfBreed]

The percentages you cite for FERS and CSRS are for near 42 years of service. The CSRS maximum is 80% of high three is reached at 42 years, 10 months service....

Actually, CSRS can receive OVER 80%, but that time is only inclusive if it's Sick Leave added to years time in service. I THOUGHT it was 41 yrs, 10 months for 80%, but I may be mistaken.

Either way, I know some who've received over 80%, and I think sick leave sold back to the gov't is rated at 174 hours/month. If you sell back 2088 hours of sick leave, you're eligible for an additional 2% retirement. Hence, 82% vs 80%, and so on.