FERS question.

[Afishegg]

Hey guys, I searched the forums but couldnt find the answers so I decided to post a new thread. I have a couple of very specific questions regarding FERS.

1. The government contribution. Question: how much exactley does the government contribute to my fers annuity.I have read that it is $14 for every $1 of "my" money.So if I contribute $1000.00 in one year the government puts in $14,000.00. But this seems excessive. So what is the answer?

2. Early withdrawel. Question: If I quit government service and decide to withdraw my fers contributions ( yes making me unable to recieve a pension check when i retire) I believe form sf3106, would I get the money the government contributed all these years or just the money I contributed? ...Example.... say I work 8 years and I contribute 1k a year from my check thats 8k but if I get the government portion ( Im going to assume the 14k) that would be approx 112,000k..... HUGE difference there, so these are my 2 questions. Can anyone help?

 

[travelingman]

As to your first question.., unknown.., 14 for every 1 , does sound kind of high. But, I do know that the 700 plus billion that is suppose to be in the Federal CERS/ FERS fund.., is spent, as in gone, disappeared, does not exist... As for your second question.., Unless u just won the lotto.., don’t quit. Didnt know you could even do that (early withdrawel). You definitely wont be seeing that 14 of the 14 to 1 part. In 29 years of working for the govt, never heard of it... The only way I know that you will be tapping FERS, is if you have met the min years and MRA required in order to retire....If you find out, let me know. Because I know plenty of people who worked for a couple of years and quit, they never withdrew any money that they put into FERS...

 

[SkyPilot]

Just as a point of clarification, OPM uses confusing language that muddies the water when we discuss these topics. FERS does not supply an annuity as a matter of course. The three legs of FERS are 1. Social Security, (or the Supplement if you retire before 62 if you qualify) 2. TSP, and 3. Hi-3 Pension.

From time to time you will see the Pension referred to as an annuity. However, this is somewhat of a misnomer. An annuity is a typically a financial instrument that is purchased with a predictable payout and timetable.

One might use the term "Pension Annuity" to describe our Pension. However, this is inaccurate and again confuses and confounds our conversation by cross using specific terms.

Ultimately, what we have is a simple old fashioned Pension which has no investment component involved, and which we must contribute a portion of our income to fund.

That being said, as all of us earn different rates at different times for different amounts of times, it would be very difficult to state with any accuracy a general principle for calculation, other than the OPM Hi-3 formula.

http://www.opm.gov/retire/pre/fers/index.asp

That being said, there is an annuity available for purchase, however only about 3% ever dump their TSP into this option. One may also employee a 72t option (equal monthly payments based on lifetime expectancy), but again, is not really an annuity.

 

[Afishegg]

Ok, i see what your saying so I guess my question would now be. If I fill out the SF 3601 FERS early withdrawel form, what is THAT money from? Thats not my tsp money is it? Nor am I getting my social security money, but does it come from another fund, I assume it has to do with the High 3 part. I do remember getting some statement showing I put up around a thousand dollars for the year and it showed what the government put in as well a awhile ago, but i forgot where i put the statement, it wasnt my social security statement nor my TSP statement. I guess what im getting at is that, this is a very vauge aspect of our fers account, i get it, its a three leg retirement package, but if i quit I CAN withdraw my FERS, but WHAT am I withdrawing? Its NOT the SS or the TSP part so .....just what? There should be more information on this subject somewhere, the government should have a number they can give me. Anyway thanks for the help, any more info or clarity would be most appreciated.

As for the poster below, about not knowing he could withdraw FERS early, yes..you can, its form SF3601. Look it up online. But getting the "how much" will I get answer is proving elusive...hmmmmm?

 

[SkyPilot]

Maybe this will help...Leaving the Government

 

[PessOptimist]

This discussion is very confusing. OPM constantly refers to an annuity.

FERS Computation

As far as the percentage or ratio of your contribution vs the government's, look at your LES. There is an entry under "deductions" called "retire, FERS". There is an entry under "benifits paid by government for you" called retire, FERS.

The answer to the second question is right there on OPM too. You get back your personal contribution plus interest.

 

[SkyPilot]

Annuities and Pensions are the same in that the payout scheme may be the same or similar. However, pensions are based on terms of employement (while the pension fund itself may be invested for the group or class) and annuities are based on investments made by the individual and are not related directly to employement or terms of service.

From Investopedia:

[h=2]Definition of 'Annuity'[/h]A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.

Read more: Annuity Definition | Investopedia

[h=1]Pension Fund[/h]



[TABLE="class: table-definition"]
[TR]
[TD="class: icon"]

[/TD]
[TD="class: text"][h=2]Definition of 'Pension Fund'[/h]A fund established by an employer to facilitate and organize the investment of employees' retirement funds contributed by the employer and employees. The pension fund is a common asset pool meant to generate stable growth over the long term, and provide pensions for employees when they reach the end of their working years and commence retirement[/TD]
[/TR]
[/TABLE]


Read more: Pension Fund Definition | Investopedia​

 

[k0nkuzh0n]

I believe its:
Employee pays 0.8% of salary
Employer pays 11.9% of salary
So the ratio would be 0.8:11.9 Or 1:14.875

The employer contribution percentage changed last october (This fiscal year) from 11.7% to 11.9%

 

[Afishegg]

This discussion is very confusing. OPM constantly refers to an annuity.

FERS Computation

As far as the percentage or ratio of your contribution vs the government's, look at your LES. There is an entry under "deductions" called "retire, FERS". There is an entry under "benifits paid by government for you" called retire, FERS.

The answer to the second question is right there on OPM too. You get back your personal contribution plus interest.

Ok, This answers "part" of my question. This LES is what caught my attention, specifically the benefits paid for by the government. NOW.....If I leave the government and fill out an SF 3601 Do I get the monies paid BY the government or only what I paid? I even read the fine print on the sf3601 but found nothing.

Now I understand were not talking about TSP NOR SS part of our retirement but only the annuity portion, and this seems to be where there is some vagueness. If I pay into the FERS and the government pays into FERS and they have yearly numbers, then shouldnt there be a total number somewhere (again for the annuity part, not the TSP or SS part) AND when you leave the government and withdraw your FERS (sf3601) your NOT taking out your TSP nor your SS, ...so JUST what is it? And how much? I mean maybe Im just looking at it wrong? I know this is getting very technical and specific, but hey this IS the government, THEY trained me hehe.... Thanx guys for any and all info.

 

[Mapper]

Afishegg,

I'm with you and also want to know the answer to this question. I'll be surprised if I'm still working for the Feds by the time I reach MRA and want to do the best planning I can. I imagine you get some component of the Fed contribution after achieving a "vested" status but I certainly don't know this for sure. I know vesting takes 3 years for TSP.

 

[Mapper]

BTW. I looked at my Earnings and Leave Statements (is this what you guys are calling LES?) and see the ratio of employer to employee contributions to "Retirement" is 14.874. This is NOT TSP, it's the money that goes into the pension fund.

 

[Afishegg]

Hey thanx mapper for looking at that, I am really glad you get what im trying to figure out here, I thought I was the only one. This seems to be one of those questions NOoNe can get/give a clear cut answer on when there should be an answer. This IS the U.S govmt, and they always have an answer/plan.........er.........well, I mean most of the time.....

I guess at this point the only option would be to call OPM directly and see if you can talk to a real live person and see if they could answer it. I might try that in fact

Update: (I emailed this question to OPM which generated an automatic email saying they will let me know in 3 days, Ill update the answer I get from them, if THEY can even answer it.)

 

[Handballer]

Why not just decide to put in your 30 years and retire a millionaire like others want to/have do? Government work is easy (my opinion) and pays very well for what we do. Probably can't beat the retirement system or annual leave (which can be sold - ?) . Of course you may have your reason for questioning weather to stay or not. Whatever your reason, hope the very best to you.

 

[konakathy]

Maybe this site will have some answers.

My Federal Retirement | FERS CSRS Thrift Savings TSP FEHB FEGLI

 

[Kaufmanrider]

1. For most federal employees, the amount agencies will contribute to their pensions under the Federal Employees Retirement System will increase from 11.7 percent to 11.9 percent, beginning in fiscal 2012. The amount the government contributes to congressional members' pension plans will increase from the current rate of 17.9 percent to 18.3 percent as of Oct. 1. Individual contribution rates -- 0.8 percent of their wages for most of the federal workforce and 1.3 percent of wages for lawmakers -- will remain the same. The total cost of FERS pensions, adding individual and agency contributions, for most federal employees will be 12.7 percent in fiscal 2012; for lawmakers, the total is 19.6 percent. The changes will take effect at the beginning of the first pay period on or after Oct. 1.

Agency Contributions to Federal Pension Plans Will Rise in October - Kellie Lunney, Government Executive - NationalJournal.com


2. If you withdraw early, I am fairly certain you will only get what you have contributed into FERS over your Fedeal Employment. It should be listed somewhere on your Leave and Earning Statement. It won't be much. You will not get any of the Fed's contribution to your FERS retirement.

Hey guys, I searched the forums but couldnt find the answers so I decided to post a new thread. I have a couple of very specific questions regarding FERS.

1. The government contribution. Question: how much exactley does the government contribute to my fers annuity.I have read that it is $14 for every $1 of "my" money.So if I contribute $1000.00 in one year the government puts in $14,000.00. But this seems excessive. So what is the answer?

2. Early withdrawel. Question: If I quit government service and decide to withdraw my fers contributions ( yes making me unable to recieve a pension check when i retire) I believe form sf3106, would I get the money the government contributed all these years or just the money I contributed? ...Example.... say I work 8 years and I contribute 1k a year from my check thats 8k but if I get the government portion ( Im going to assume the 14k) that would be approx 112,000k..... HUGE difference there, so these are my 2 questions. Can anyone help?

 

[SkyPilot]

You make a very good point... not to mention 5 weeks annual leave. We (Bureau of Prisons) have had quite a few retire over the last few months. While being out of the environment has many advantaqes, if one has not made careful, specific and realistic plans, it is becoming apparent that the shade of green of the grass on the other side of the retirement fence is not as vibrant and vivid as was supposed.

Why not just decide to put in your 30 years and retire a millionaire like others want to/have do? Government work is easy (my opinion) and pays very well for what we do. Probably can't beat the retirement system or annual leave (which can be sold - ?) . Of course you may have your reason for questioning weather to stay or not. Whatever your reason, hope the very best to you.

 

[k0nkuzh0n]

Hey thanx mapper for looking at that, I am really glad you get what im trying to figure out here, I thought I was the only one.

no credit

I believe its:
Employee pays 0.8% of salary
Employer pays 11.9% of salary
So the ratio would be 0.8:11.9 Or 1:14.875

The employer contribution percentage changed last october (This fiscal year) from 11.7% to 11.9%