Understanding Your Federal Benefits Cindy Lundquist What will

Understanding Your Federal Benefits Cindy Lundquist

What will we discuss? Annuity • Eligibility • Calculation • Survivor election • Disability Page 2 Health Insurance Life Insurance • Eligibility • Coverage • Cost

Qualifying for Retirement Minimum requirements: FERS or CSRS Five (5) years of civilian service CSRS Only Subject to retirement system 1 of 2 years before retirement FERS or CSRS Meet age and length of service requirements Page 3

Age and Service Requirements Type of Retirement FERS or CSRS Age Years of Service Voluntary Unreduced Both 62 5 Both 60 20 CSRS 55 30 FERS 55 - 57* 30 *Age for FERS optional retirement is based on date of birth. See next slide.

Age and Service Requirements – FERS Page 5 Year of Birth Age Years of Service Born before 1948 55 30 1948 55 + 2 months 30 1949 55 + 4 months 30 1950 55 + 6 months 30 1951 55 + 8 months 30 1952 55 + 10 months 30 1953 - 1964 56 30 1965 56 + 2 months 30 1966 56 + 4 months 30 1967 56 + 6 months 30 1968 56 + 8 months 30 1969 56 + 10 months 30 1970 and later 57 30

Age and Service Requirements Type of Retirement Involuntary (RIF or Early Out) Deferred FERS or CSRS Age Years of Service Both 50 20 Both Any Age 25 Both 62 5 FERS 60 20 - 30 FERS MRA 10* *Reduced by 5% for each year you are under 62. Page 6

Reduced Retirement – FERS “Minimum Retirement Age + 10” Provision Special provision for FERS only MUST Attain minimum retirement age (MRA) Have 10 years of creditable service Reduction 5% for each year under age 62 Permanent reduction Not eligible for supplement Page 7

FERS – What is my MRA? Page 8 Year of Birth Age Years of Service Born before 1948 55 30 1948 55 + 2 months 30 1949 55 + 4 months 30 1950 55 + 6 months 30 1951 55 + 8 months 30 1952 55 + 10 months 30 1953 - 1964 56 30 1965 56 + 2 months 30 1966 56 + 4 months 30 1967 56 + 6 months 30 1968 56 + 8 months 30 1969 56 + 10 months 30 1970 and later 57 30

Annuity Computation Page 9

Annuity Computation Two basic factors Average high-3 salary Total length of service Page 10

Two Components FERS Transferees Page 11 CSRS FERS

FERS/CSRS Annuity CSRS component Service which CSRS deducted Military service before transferred to FERS Unused sick leave at time of transfer FERS component Service which FERS deducted Military service after transferred to FERS Page 12

Creditable Service Following used for eligibility and calculation of annuity Time from date of hire to separation LWOP—up to 6 months in calendar year OWCP Page 13

Creditable Service Part-time Fully creditable for eligibility but Prorated for computation Page 14

Deposit Service Period(s) of service with no retirement deductions (example: temporary service) Amount of deposit due Equal to amount that should have been withheld plus Interest Page 15

FERS Deposit Service Non-deduction service before 1 -1989: Credit for Eligibility Credit for Calculation Deposit Made Deposit Not Made Non-deduction service 1 -1989 or later, no credit for eligibility or calculation. Page 16

CSRS Deposit Service Non-deduction service before 10 -1 -1982: Credit for Eligibility Credit for Calculation Deposit Made Deposit Not Made Note: If deposit not made, annuity reduced by 10% of deposit due Non-deduction service 10 -1 -1982 or later: Credit for Eligibility Deposit Made Deposit Not Made Page 17 Credit for Calculation

Military Deposit Active duty military service Deposit amount FERS – 3% of base pay plus interest CSRS – 7% of base pay plus interest Cannot use if receiving military retirement unless: Military retirement waived at time of retirement from federal service Military retirement based on combat-connected disability or service in the reserves Page 18

FERS Military Service Credit for Eligibility Deposit Made Deposit Not Made Page 19 Credit for Calculation

CSRS Military Service Hired before 10 -1 -1982: Credit for Eligibility Credit for Calculation Deposit Made Deposit Not Made* *Note: Annuity reduced at age 62 if eligible for Social Security Hired 10 -1 -1982 or later: Credit for Eligibility Deposit Made Deposit Not Made Page 20 Credit for Calculation

FERS Redeposit If— FERS funds withdrawn at termination Subsequently re-employed Then— Previous employment only used for eligibility if earlier contribution plus interest are not paid Previous employment used for both eligibility and computation if contributions plus interest are paid Page 21

CSRS Redeposit Refunded contribution Time used for eligibility regardless if redeposit made If refund not made— Separated before 3 -1 -1991, actuarial reduction imposed Separated after 2 -28 -1991, time not used in computation Page 22

Interest Rates Through 12 -31 -1984 – 3%, thereafter: 1985 13. 0% 1996 6. 875% 2007 4. 875% 1986 11. 125% 1997 6. 875% 2008 4. 75% 1987 9. 0% 1998 6. 75% 2009 3. 875% 1988 8. 375% 1999 6. 75% 2010 3. 175% 1989 9. 125% 2000 5. 875% 2011 2. 75% 1990 8. 75% 2001 6. 375% 2012 2. 25% 1991 8. 625% 2002 5. 5% 2013 1. 625% 1992 8. 125% 2003 5. 0% 2014 1. 625% 1993 7. 125% 2004 3. 875% 2015 2. 0% 1994 6. 25% 2005 4. 375% 2016 2. 0% 1995 7. 0% 2006 4. 125% 2017 1. 875% 2018 2. 125% Page 23

Total Length of Service Example: Civilian Service 27 yrs 6 mos 7 days Military Service 3 yrs 9 mos 10 days Total 31 yrs 3 mos 17 days 6 mos 3 days 9 mos 20 days Plus unused sick leave (1061 hrs) Total Page 24 31 yrs

FERS General Formula 1% x years of service x High-3, or 1. 1% x years of service x High-3 if retiring at age 62 with 20+ years of service Examples: MRA with 30 years of service = 30% x High-3 Age 62 with 30 years of service = 33% x High-3 Page 25

CSRS General Formula 1. 5% x 5 years + 1. 75% x 5 years + 2. 0% x remaining years of service Retirement factor X High-3 Average Salary Annual Annuity Note: Maximum annuity = 80% of high-3 at 41 years 11 months of service. Page 26

CSRS General Formula Example: Age 55 with 30 years of service 1. 5% x 5 years = 7. 50% + 1. 75% x 5 years = 8. 75% + 2. 0% x 20 years = 40. 00% Retirement factor = 56. 25% X High-3 Average Salary Annual Annuity Page 27

CSRS Offset Annuity Who is “CSRS Offset employee? ” Rehired after 1 -1 -1984 with more than 1 year break in service Had 5 years of CSRS service before separation Did not transfer to FERS Annuity computed same as CSRS annuitant At age 62, annuity reduced for Social Security If not eligible for Social Security, no reduction Reduction at 62 regardless if you apply for Social Security Reduction less than Social Security check Page 28

FERS Annuity Supplement Paid by: OPM not Social Security Paid at: MRA with 30 years of service, or age 60 with 20 years, or early out, or discontinued service Paid until: Age 62 Based on: Estimated full career Social Security benefit x years of FERS service divided by 40 Subject to: Social Security earnings limit Not payable: If retirement based on MRA+10, disability, or deferred retirement Page 29

Electing Survivor Benefits Election made at time of retirement If less than maximum elected— Signed and notarized statement from spouse Cannot change election Exception—no survivor elected can change within 18 months of retirement Page 30

FERS Survivor Election Amount 50% of basic annuity, or 25% of basic annuity Reduction of annuity 10% if maximum elected 5% if 25% of basic annuity elected Page 31

CSRS Survivor Election Amount 55% of full annuity 55% of any portion of basic annuity Reduction 2 -1/2% of the first $3, 600 of annuity plus 10% of amount over $3, 600 Page 32

Example of CSRS Election CSRS annuity = $35, 000 Elect maximum survivor election $35, 000 x 55% = $19, 250 annually Or $1, 604 monthly to surviving spouse Annuity reduction $3, 600 x 2. 5% = $90 $35, 000 - $3, 600=$31, 400 x 10% = $3, 140 Total annual reduction Page 33 = $3, 230 (or $269. 16 per month)

Survivor Benefits for Children FERS Same amount payable for CSRS children Less any amount payable to children by Social Security CSRS Single orphaned - $522 month per child Maximum $1, 566 Double orphaned - $627 month per child Maximum $1, 881 Page 34

FERS Death in Service With more than 18 months of civilian service 1 Lump sum payment of $33, 072. 03, plus 2 Lump sum of half of employees pay, plus 3 Any Social Security benefit payable, plus 4 Any Thrift Savings Plan payable Page 35

FERS Death in Service With ten (10) or more years of creditable service, surviving spouse receives: 1 , 5 Page 36 2 , 3 , 4 (if payable), plus A survivor annuity equal to 50% of FERS basic annuity at time of death

CSRS Death in Service Spouse of employee receives 55% of the higher of: Annuity using regular CSRS formula Guaranteed minimum which is lesser of: 40% of deceased High-3 Regular annuity calculated increasing length of service up to age 60 Page 37

Survivor Benefits Starts Day after employee’s or retiree’s death Ends Spouse/former spouse Remarries before age 55 (unless married 30 years) Death Child(ren) Marries Becomes 18 (22 if full-time student) Recovers from disability Death Page 38

Disability Retirement FERS – 18 months of service CSRS – 5 years of service Unable to perform duties Current job or Other vacant job at same grade Page 39

Disability Retirement FERS Payment CSRS Payment • 60% of average High-3 salary for first year • Less than 22 years of service, based on 40% of High-3 salary • Thereafter, 40% of High-3 salary • More than 22 years, computed under general formula • Amount is reduced by Social Security Page 40

Date for Voluntary Retirement FERS Last day of the month CSRS Last day of the month, or 1 st, 2 nd, or 3 rd day of the month Page 41

Processing Your Retirement OPM Sends acknowledgement Authorizes interim payment Obtains missing documents Determines eligibility Annuity Health insurance Life insurance Computes benefits and sends letters Page 42

After Retirement Changes after retirement contact OPM www. opm. gov www. servicesonline. opm. gov/ (contact after CSA number received) 1 -888 -767 -6738 Address: US Office of Personnel Management, 1900 E St NW, Room 1323, Washington, DC 20415 Page 43

Health and Life Insurance Federal Employees Health Insurance (FEHB) and Federal Employees Group Life Insurance (FEGLI) Page 44

FEHB Eligibility requirements: Enrolled for at least 5 years prior to retirement CHAMPUS/TRICARE can count towards your 5 years Single or family coverage Covered by a family enrollment Enrolled since first opportunity Page 45

FEHB Coverage and premiums same as employee At age 65, Medicare is primary Survivors of retirees or employee may continue coverage if: Survivor benefit is payable, and Employee/Retiree enrolled in family plan at time of death Page 46

FEGLI Eligibility requirements: Enrolled for at least 5 years prior to retirement, or Enrolled since first opportunity Annuity is sufficient to cover costs Elections: Basic coverage Optional coverage (must elect Basic also) Page 47

FEGLI Basic Life Insurance: Annual base pay plus $2, 000 If under age 45, an “extra benefit” Amount into retirement based on your election Optional Life Insurance Option A – Additional $10, 000 Option B – One, two, three, four or five times basic pay Option C – Family coverage Page 48

Basic Life Insurance Options 75% Reduction Full coverage until 65 • Age 65 begins reducing 2% per month • 25% payable at death • Premium paid from retirement until age 65 Page 49 50% Reduction No Reduction Full coverage until 65 • Age 65 begins reducing 1% per month • 50% payable at death • Premium payable until death but reduces at age 65 Full basic insurance payable at death • Premium payable until death but reduces at age 65

Cost of Various Options Cost per $1, 000 of Basic Life Insurance Reduction at age 65 (and retired) Cost before age 65 Cost on and after age 65 (and retired) 75% Reduction $. 325 Free 50% Reduction $1. 035 $. 71 No Reduction $2. 455 $2. 13 Page 50

Optional Life Insurance May continue Optional Life Insurance coverage if: Basic elected Enrolled in Optional at least 5 years prior to entitlement Annuity is sufficient to cover costs Page 51

Optional Life Insurance Reductions Full coverage until 65, coverage decreases at 65 based on elections: Option A Reduces to 25% ($2, 500) No premium at 65 Option B Reduces to $0 unless no reduction election Premium age-based Option C Premium based on retiree’s age Not free if no reduction elected Page 52

Cost of Optional Insurance Option A Standard $10, 000 Option B Additional per $1, 000 Option C Family per $5, 000 Multiple Under age 35 $0. 43 $0. 043 $0. 48 35 through 39 $0. 65 $0. 065 $0. 59 40 through 44 $0. 87 $0. 087 $0. 89 45 through 49 $1. 52 $0. 152 $1. 28 50 though 54 $2. 38 $0. 238 $1. 99 55 through 59 $4. 33 $0. 433 $3. 21 60 through 64 $13. 00 $0. 953 $5. 85 65 though 69 FREE $1. 17+ $6. 80+ Age Group Page 53

Living Benefits – Lump Sum Lump-sum payment payable if: Terminally ill Documentation of life expectancy 9 months or less Lump-sum payment equal to Basic Retiree’s amount reduced based on post-65 election Eligible employees (not retirees) may elect partial payment Decision is irrevocable Page 54

Who receives my life insurance? Designated beneficiary (SF-2823) Widow or widower Children Parents Executor, Administrator of Estate Next of kin Page 55

Do You Have Any Questions? Placeholder, enter your own text here Page 56

Disclaimer This presentation is provided for educational purposes only. Please contact Office of Personnel Management, the Thrift Savings Plan Board, the Social Security Administration, or your financial representative for advice. Page 57