In this example, we know that the employee is not fully-eligible to retire at age 50 (even with a whopping 30 years of service). You’ll notice that there is no “penalty” assessed to the pension, but not receiving any pension for 12 years feels like penalty enough! Example scenario #2: Jason In this case, she’d need to wait until age 62 to begin drawing the pension of $6,400/year. If Cindy leaves service with 8 years under her belt, she’ll need to wait until such age that she would have been eligible with only 8 years of service. The formula we would use is: High-3 X # years of service X 1.0% = Pension We must pretend for a moment that she is eligible to retire and calculate her pension as of “now” – even though we know she can’t get it now. This is where the “deferred” retirement scenario comes into play. In fact, with only 8 years of service, she would need to be age 62 to be fully-eligible to retire. In this example, we know that the employee is not fully-eligible to retire at age 50. Regular employee type (not Law Enforcement, etc.).The only difference between these two examples is how many years of service each employee has when they leave federal service (because that dictates WHEN they can begin drawing their deferred pension). Let’s take a look at two examples to put some numbers to all of these rules. The employee permanently loses eligibility for the FERS Special Retirement Supplement.The employee permanently loses access to their life insurance (FEGLI) upon leaving federal service.The employee permanently loses access to their health insurance (FEHB) upon leaving federal service.NOTE: The employee does NOT have a choice to draw their pension immediately (even with a penalty) – this is an involuntary delay in the pension startingĪdditionally, several other benefits are also permanently affected:.Sick leave is never used in calculating a deferred retirement (it is just lost).The pension will begin when the employee reaches the age when they would have qualified to retire (based on the years of service they had when they left service).The pension is calculated (using their creditable years of service, their current high-3 and the appropriate percentage).When an employee retires under a “deferred” retirement scenario, the following happens: So, now that is all cleared up, let’s talk about what a deferred retirement entails. We did a FedImpact Podcast on MRA+10 Retirements a while back, so take a listen if you need to brush up on that scenario. Just so we’re clear, a deferred retirement is NOT the same thing as the MRA+10 retirement that it is often confused with (since you can “postpone” receipt of the pension to avoid the penalty…that sounds like “deferred,” but it is wildly different).Īn MRA+10 retirement is an entirely separate retirement option that is available only to FERS employees who have reached their Minimum Retirement Age AND have at least 10 years of service. you do NOT take a refund of your CSRS/FERS retirement contributions.you have at least 5 years of federal service, and.you are NOT old enough to be “fully-eligible,” and.Presuming you meet these basic criteria, you qualify for a deferred retirement if: If you were to do so, you will surrender any future pension payments you would have been eligible for down the road. NOTE: This is true as long as you do NOT take a refund of the contributions you made to the CSRS/FERS retirement system. If you meet that criteria, you have a pension waiting for you… eventually. That is, you must have contributed to the CSRS/FERS retirement program for at least 5 years. If you’re unfamiliar with these rules, you can check out OPM’s eligibility requirements for both CSRS and FERS.įirst off, to have any monthly pension paid out to you, you must be considered “vested” within the federal retirement system. Those age and service year requirements will depend on a few factors such as which retirement system you are participating in (CSRS/FERS) and perhaps what your federal job is (such as a regular employee or Law Enforcement). To be considered “fully-eligible” to retire from federal service, the Office of Personnel Management (OPM) will insist that you meet BOTH age and service year requirements. First, we probably need to explain what it means to be fully-eligible to retire from federal service. Like most questions we get, it isn’t as simple as answering that question alone. A question that we often hear is, “I have plenty of years in the federal system (but I am nowhere near the required age), yet I want to retire now! Can I retire today and still get a pension?”
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |