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Benefits

July 8, 2021
0

Former Temporary Workers Could Make Catch-Up Pension Contributions Under New Bill

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A bipartisan group of lawmakers has introduced legislation to allow most federal employees who were initially hired as temporary workers to make catch-up contributions to defined benefit pensions so they can retire on time.

Reps. Derek Kilmer, D-Wash., and Tom Cole, R-Okla., on Wednesday introduced the Federal Retirement Fairness Act (H.R. 4268), which would allow employees enrolled in the Federal Employees Retirement System who initially entered government as a temporary worker the ability to make catch-up retirement contributions to cover for the years when they were temps and unable to contribute to their retirement accounts.

Former temporary workers once had access to a similar provision to make “buy back” contributions to account for their time as temps under the Civil Service Retirement System, but the practice was phased out in 1989, after the implementation of FERS. As a result, federal workers who began as temporary employees must choose between accepting a lower defined benefit pension annuity or working additional years to receive their full retirement allowance.

“Many federal employees begin their careers in temporary positions before transitioning to permanent status—so we need to have their backs,” Kilmer said in a statement. “This bill will ensure that all federal workers . . . have the opportunity to retire on time, regardless of how they started their careers.”

“Whether first hired under temporary status or not, civil service should be recognized, and these workers should have the option to pay toward retirement credit for the entirety of their employment,” Cole said. “I am proud to join in re-introducing the Federal Retirement Fairness Act that allows this buy-in benefit to give these civil employees earned time credit toward retirement.”

The bill already has the support of an array of federal employee groups, including the American Federation of Government Employees, the Federal Managers Association, and the National Active and Retired Federal Employees Association.

“When a temporary employee converts to a permanent employee, the temporary service time is not considered when calculating the FERS retirement benefit,” NARFE National President Ken Thomas said. “This bill would allow the once temporary, now permanent employee to make a deposit of employee contributions to make their temporary service creditable towards retirement.”

“Seasonal and temporary employees who answer the call of duty deserve the same level of deference as the permanent employees they work with,” said Randy Erwin, national president of the National Federation of Federal Employees. “It is unconscionable to ignore temporary or seasonal labor upon becoming permanent employees given many of these employees risk their lives and health for these jobs, as thousands of wildland firefighters do each year . . . If they put the time in, they deserve to have it counted toward retirement.”

If you need assistance or want to get a Free Retirement review, please Contact Us today to schedule your retirement review.

July 2, 2021
0

Leaving Government Now and Retiring Later

By | Benefits, Retirement | No Comments

The ins and outs of deferred or postponed retirement.

In her swearing-in ceremony, newly confirmed OPM Director Kiran Ahuja, had this to say about the major issues federal employees are facing: “From shaping how and where we work in the future to ensuring everyone is safe while working during this pandemic, and discussions regarding how we rebuild our federal workforce, there’s no shortage of conversations to be had and issues to tackle.”

Based on the increased number of emails I’ve been receiving requesting information about deferred or postponed retirement benefits, it appears that some employees may not be returning to their offices to help with this reshaping. Some are contemplating early retirement or transitioning outside of federal service to finish their careers.

Here’s one typical scenario:

I would like to get some information concerning deferred retirement. I have 20 years of federal service under FERS but I am only 49 years old. I am thinking of retiring now and defer my retirement pay until 57. Will there be a reduction in pay because I am retiring at 49 instead of waiting until 57? What forms do I need to complete to retire now?

Here’s another:

I’m writing because I am starting to talk with private sector employers and there’s a good chance I may pursue early retirement when I reach my minimum retirement age (56 years and 2 months). I currently have around 25 years of federal service. I would pursue the deferred/postponed retirement benefit and reinstate health insurance when I apply at age 60. I plan to use the insurance from whatever firm I join until 60 years old. My question is what do I want to do to make sure this happens before I leave the federal government, including what forms do I want to make sure I get copies of and retain? 

If you are under the Federal Employees Retirement System and considering a move outside of federal service before being eligible to retire with immediate retirement benefits or postponing your retirement, here are some things to know:

  • In order to qualify for a deferred retirement, you will need to complete a minimum of five years of creditable civilian service. Your benefit will begin the first day of the month after you reach age 62.
  • If you complete at least 10 years of creditable service, including five years of civilian service, then you are eligible for a deferred annuity beginning the first day of the month after you reach your minimum retirement age.
  • Your deferred annuity is based on the length of service and high-three average salary in effect when you separate from federal service. You will be entitled to a benefit computed at 1% of your high-three average salary for each year of service.
  • You will begin to receive cost of living adjustments on your deferred retirement benefits once you are over 62.
  • Former employees who receive a deferred or postponed annuity are not eligible for a retiree annuity supplement.
  • If you have already reached your MRA and you have at least 10 years of service, you can separate but postpone receiving your retirement benefit to avoid an age reduction.
  • Most of your insurance benefits such as health, dental and vision, and life insurance will end when you separate without applying for immediate retirement benefits.

There will be no forms to file until you are ready to apply for your deferred annuity. Your separation will be treated as a resignation, but form SF 50, Notification of Personnel Action, will note that you are entitled to a deferred or postponed retirement in the remarks section of the form.

Form RI 92-19 is used to apply for a deferred or postponed FERS retirement benefit. There are instructions for this form available in companion pamphlet RI 92-19a. You should file the application directly with the Office of Personnel Management 60 days before you want your monthly annuity benefit to begin.

It’s a good idea to request a retirement estimate for a deferred or postponed retirement from your agency’s human resources office before leaving federal service. This will give you an idea of the value of this benefit at the time you are entitled to receive it.

If you are married when your annuity begins, it will be computed with a reduction to provide a maximum survivor annuity (50 percent of your unreduced annuity) for your spouse upon your death. You can choose to provide a partial survivor annuity (25 percent of your unreduced annuity) or no survivor annuity; however, you must get your spouse’s consent.

If you separate from federal service, but die before receiving your deferred or postponed retirement, there would be a survivor annuity payable to your spouse if they were married to you at the time of your separation and you had 10 or more years of creditable service (and did not apply for a refund of your retirement contributions). Your surviving spouse may elect to receive a lump-sum payment of your retirement contributions in lieu of a survivor annuity.

You should keep personal copies of certain documents filed in your electronic Official Personnel Folder, because you will lose immediate access to this folder after your separation. These include:

  • FERS Designation of Beneficiary Form (SF 3102)
  • SF-50 forms showing appointments into federal service, prior separations from federal service, changes in your work schedule, changes in your retirement coverage, and pay changes over the last (or highest) three years of service, because they will be used to compute your high-three average salary for your future retirement benefit.
  • FEGLI forms if you are retiring with an immediate retirement, including SF 2817 (Life Insurance Election) and SF 2823 (Designation of Beneficiary).
  • SF 2809 FEHBP election forms.

If you are considering employment related to your government work or possibly returning to federal service later on, you may want to maintain information regarding training, duty stations, security clearances, pay, and positions that were held during your career.

The pandemic has upended our lives and made us think about our priorities. There is a big difference between retiring with an immediate, unreduced, retirement based on a full career of federal service versus a reduced or postponed deferred retirement. So be sure to think it through before you make the leap out of government.

We can also run a free benefits analysis for you as well, just visit out simple contact us page to request yours today.

June 10, 2021
0

FERS Retiree Annuity Supplement

By | Benefits, Federal Pay, Retirement | No Comments

If you are a FERS employee and you retire on an immediate, unreduced annuity before reaching age 62, you will not only receive your basic annuity but an additional payment that represents the amount of Social Security benefit you earned while a FERS employee. It’s called the special retirement supplement (SRS).

An immediate, unreduced annuity is payable to any FERS employee who retires:
• at age 60 with 20 years of service,
• at his minimum retirement age (MRA—currently 56) with 30 years of service,
• at his MRA, if involuntarily retiring, for example during a RIF, or
• at his MRA, if retiring under the Voluntary Early Retirement Authority (VERA)

Note: Employees who retire under the MRA+10 provision aren’t eligible for the SRS. Nor are deferred retirees or disability retirees.

The amount of the SRS is determined using a complicated formula that relies on data that isn’t available to you. A ballpark formula: multiply your Social Security benefit by your total years of FERS service then divide by 40.

There are three key things you need to know about the SRS: 1) It’s a fixed amount that’s established on the day you retire; 2) it isn’t increased by any cost-of-living adjustments (COLAs); and, 3) it ends when you reach age 62 and become eligible for a Social Security benefit.

The money used to pay the SRS doesn’t come from the Social Security Administration. Instead it comes from the Civil Service Retirement and Disability Fund. That’s why it’s based solely on your actual FERS service. However, like a Social Security benefit, the SRS is subject to an annual earnings limit, above which the benefit is reduced.

There is an exception to that earnings limit rule: If you were employed under the special provision for law enforcement officers, firefighters and air traffic controllers and you retired before your minimum retirement age, you can earn as much as you want without your SRS being reduced. However, once you reach your MRA, you’ll be subject to the earnings limit just like any other FERS retiree.

The SRS is subject to the annual earnings limit, just like your Social Security benefit. If you have earnings from wages or self employment that exceed the limit, your SRS will be reduced by $1 for every $2 that exceed that limit.  In 2020 that limit is $18,240.

February 1, 2021
3

Most “401k” Federal Savings Plan Funds Stumble to Start 2021

By | Benefits, Federal Pay, TSP | No Comments

All but two of the portfolios in the federal government’s 401(k)-style retirement savings program lost ground for January.

The federal government’s 401(k)-style retirement savings program got off to a rocky start in 2021, as most of its portfolios ended January slightly in the red.

The small- and mid-size businesses of the “401k” Federal Savings Plan ’s S Fund were the top performers, gaining 2.85% last month. The G Fund, made up of government securities, also increased 0.07%.

But the common stocks of the C Fund fell 1.01% in January, while the international (I) fund lost 1.09%. The fixed income (F) fund fell 0.71%.

All of the “401k” Federal Savings Plan ’s lifecycle (L) funds, which shift to more stable investments as participants get closer to retirement, also lost ground last month. The L Income Fund, for people who already have begun making withdrawals, fell 0.10%; L 2025, 0.24%; L 2030, 0.32%; L 2035, 0.35%; L 2040, 0.37%; L 2045, 0.39%; L 2050, 0.41%; L 2055, 0.44%; L 2060, 0.44%; and L 2065, 0.44%.

 

January 28, 2021
0

Billions Flow Out of “401k” Federal Savings Plan Due to COVID and More

By | Benefits, Retirement, TSP | No Comments

Officials at the federal government’s 401(k)-style retirement savings program said this week that nearly $3 billion exited the “401k” Federal Savings Plan this year as a result of the COVID-19 pandemic.

The CARES Act authorized “401k” Federal Savings Plan participants to take loans from their accounts of up to double the normal amount, and it waived requirements that participants be 59 1/2 years old, cite a specific financial hardship or take a 10% tax penalty.

At the January meeting of the Federal Retirement Thrift Investment Board, which administers the “401k” Federal Savings Plan , Participant Services Director Tee Ramos outlined how federal employees and retirees made use of these flexibilities.

Over the course of the programs, which both expired last year, “401k” Federal Savings Plan participants took out 3,043 CARES Act loans over the normal $50,000 cap, for a total of $229 million. And 119,720 participants withdrew money using the CARES Act flexibilities, totaling $2.9 billion. Despite these figures, assets in the “401k” Federal Savings Plan grew in 2021.

“Plan assets were up to $710 billion in December, and the total number of participants reached 6.2 million,” Ramos said. “Hardship withdrawals and loan volumes were 18% lower than the prior year, likely driven by the availability of CARES Act withdrawals and loans.”

In other retirement news, a bipartisan group of lawmakers last week reintroduced legislation that would eliminate two provisions of the Social Security program reviled by many federal retirees. The Social Security Fairness Act (H.R. 82), introduced by Reps. Rodney Davis, R-Ill., and Abigail Spanberger, D-Va., would eliminate the windfall elimination provision and the government pension offset from the Social Security Act.

The windfall elimination provision reduces the Social Security benefits of retired federal, state and local government employees who worked in private sector jobs in addition to a government job where Social Security is not intended as an element of their retirement income, like employees in the Civil Service Retirement System. And the government pension offset prevents government retirees from collecting both their own pension like the CSRS annuity and Social Security benefits derived from their spouse’s work in the private sector.

“Virginians shouldn’t be penalized for careers in public service—and that’s why eliminating the government pension offset and windfall elimination provision is so important,” Spanberger said in a statement. “Many central Virginians—including teachers, first responders and public employees—are negatively impacted by these outdated provisions that unfairly reduce the Social Security benefits they’ve earned.”

In a statement, National Active and Retired Federal Employees Association National President Ken Thomas endorsed the legislation.

“For decades, NARFE has supported full repeal of the windfall elimination provision and the government pension offset, and applauds introduction of a bill . . . to do just that,” Thomas said. “These policies have unfairly punished retired public servants through reduced Social Security benefits for far too long. This bill would provide much-needed relief for the millions of retirees and survivors currently affected by this inequitable practice and will improve fairness for future retirees.”

 

 

January 21, 2021
3

New Bill Would Standardize Federal Retiree Annual Increases and More

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A Washington, D.C., area lawmaker last week filed legislation that would standardize the annual increase in annuity payments that retired federal employees receive across retirement systems.

The Equal COLA Act (H.R. 304), introduced by Rep. Gerry Connolly, D-Va., would ensure that federal retirees in the Federal Employee Retirement System and the Civil Service Retirement System both receive the same annual percentage cost of living increase each year.

Under the current rules, which date back to 1986, the CSRS methodology for calculating cost of living adjustments is tied to the annual change in the third quarter consumer price index for workers. But FERS COLAs are based on an extrapolation from the CSRS adjustment: if the CSRS sees an increase of under 2%, FERS retirees will receive the full COLA. If the adjustment is between 2% and 3%, FERS enrollees would only receive a 2% increase. And if the CSRS COLA is 3% or more, FERS retirees would receive that adjustment, minus 1 percentage point.

Connolly’s bill, which he last introduced in 2018, would tie both systems’ annual increase directly to the CPI-W. The prospects for success seem brighter in this session of Congress, with Democrats controlling both chambers. President-elect Biden also vowed to the National Active and Retired Federal Employees Association last year that he would push for retiree cost of living adjustments to be based on the more generous consumer price index for the elderly.

Elsewhere on Capitol Hill, a bipartisan pair of House lawmakers have introduced a bill that would double the cash bonus available to federal employees who identify wasteful spending at their agencies.

The Bonuses for Cost-Cutters Act of 2021 (H.R. 103), introduced by Reps. Chuck Fleischmann, R-Tenn., and Jim Cooper, D-Tenn., would increase the maximum reward for feds who successfully identify wasteful spending to 1% of the amount saved, up to $20,000.

Under the bill, agency heads would be able to grant the cash bonus to federal workers if the agency chief financial officer or other designated official determines the spending is unnecessary. Employees of offices of the inspector general and Senate-confirmed political appointees are ineligible for the benefit.

“In the private sector, employees work hard to identify ways to save their organization money and they are often rewarded for their diligence,” Fleischmann said in a statement. “It doesn’t make sense that federal agencies are encouraged to spend, spend, spend instead of being rewarded for working to save taxpayer dollars and reduce our national debt.”

If you or any coworker has any questions about his or her retirement and would like to have a Free Retirement review, please Contact Us today to schedule your personalized one on one call to get the information you are looking for.

December 15, 2020
5

OPM retirement claims backlog reaches over 20k

By | Benefits, Federal Pay, Retirement | No Comments

By the end of November, the Office of Personnel Management’s backlog of retirement claims in need of processing was more than 20,000 after taking a slight dip over the last seven months of the COVIC-19 pandemic, according to the agency’s latest numbers.

The claims inventory stood at 20,022 last month, up from 19,605 in October and having remained between 17,000 and 19,000 between the months of April and September.

OPM received 5,876 applications for retirement last month, compared to 8,323 in October and having received an average of 6,000 claims per month from March through September.

It processed 5,459 claims in November, which is down from 6,992 the month prior and significantly less than the 8,931 claims it processed in March at the start of the COVID-19 pandemic.

The agency took an average of 76 days to process claims last month, which is comparable to the number of days it took to process a claim throughout the pandemic, but more than the average of 59 days in February, before the pandemic.

The figures come from OPM’s monthly claims processing progress report available on the OPM website.

Want to add your name to this list of applicants?  We can help you get into retirement.  Schedule your free consultation today.

August 31, 2020
6

“401k” Federal Savings Plan Participants Move Out of Stock Funds Right Before Record Highs

By | Benefits, Federal Pay, Retirement, TSP | No Comments

The participation rate in the “401k” Federal Savings Plan ( “401k” Federal Savings Plan ) for federal employees has leveled off in the last several months. That is a normal change for this time of year.

The “401k” Federal Savings Plan notes that participation in the “401k” Federal Savings Plan for federal employees under the Federal Employees Retirement System (FERS) is still up two percentage points above last year.

Implementing the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed on March 27, 2020. The Federal Retirement Thrift Investment Board (FRTIB) created the CARES Act project to implement key provisions of the law. The project included four key provisions to enable “401k” Federal Savings Plan participants and beneficiaries to respond to their financial management needs during the COVID-19 pandemic.

These four provisions were:

  • Changes in 2020 Required Minimum Distributions
  • Loan Payment Suspensions
  • An increase in the maximum loan amount to $100,000
  • CARES Act withdrawal provisions.

CARES Act Loans, Suspensions and Withdrawals

CARES Loans

Date Count Amount
June, 2020 2,462 $61,429,570.22
July, 2020 4,990 $115,588,460.67
MTD – Aug 12, 2020 1,704 $37,803,631.74

CARES Loans Over $50,000

Count Amount
499 $37,018,575.68
825 $61,766,534.20
267 $19,935,382.67

CARES Loan Suspensions

Date Count Amount
June, 2020 245 $ 12,514,932.41
July, 2020 354 $ 16,419,035.09
MTD – Aug 12, 2020 41 $ 1,958,857.50

CARES Withdrawals

Date Count Amount
July, 2020 21,296 $ 554,831,990.61
MTD – Aug 12, 2020 11,621 $ 277,567,169.17

“401k” Federal Savings Plan Participants Move into Bonds

In July, many “401k” Federal Savings Plan participants decided to transfer money from stock funds and into the “401k” Federal Savings Plan ’s G and F Funds.

The G Fund took in more than $1.1 billion dollars in transfers in July and the F Fund took in more than $1.6 billion. The Lifecycle Funds received more than $933 million in transfers in July.

Also during July, more than $2 billion was transferred out of the C Fund and almost $1.7 billion from the S Fund.

After the transfers into the G and F Funds, the asset allocation in funds for “401k” Federal Savings Plan participants breaks out in this way:

Fund Allocation Percentage
G Fund 33.3%
F Fund 4.6%
C Fund 28.5%
S Fund 9.3%
I Fund 3.5%
L Funds 20.9%

The latest month shows a change in direction for “401k” Federal Savings Plan investors. As of December 30, 2019, 30.7% of asset allocation was in the G Fund, 29.7% was in the C Fund, 3.8% was in the F Fund and 21.6% was in the L Funds. In effect, participants are moving away from stocks and putting more of their assets into the bond funds.

If you would like some help navigating your “401k” Federal Savings Plan , or some safe options with your “401k” Federal Savings Plan , you can use our Contact Us form and someone will be in touch with you.

August 19, 2020
6
federal early retirement - voluntary early retirement for federal employees

USPS Restructured and VERA

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In an effort to operate in a more efficient and effective manner and better serve customers, Postmaster General Louis DeJoy today announced a modified organizational structure for the U.S. Postal Service.

The new organizational structure is focused on three operating units and their core missions:

• Retail and Delivery Operations — Accept and deliver mail and packages efficiently with a high level of customer satisfaction. This organization will be led by Kristin Seaver.
• Logistics and Processing Operations — Process and move mail and packages efficiently to the delivery units, meeting determined standards. This organization will be led by David Williams.
• Commerce and Business Solutions — Leverage infrastructure to enable growth. This organization will be led by Jakki Krage Strako.

“This organizational change will capture operating efficiencies by providing clarity and economies of scale that will allow us to reduce our cost base and capture new revenue,” said DeJoy. “It is crucial that we do what is within our control to help us successfully complete our mission to serve the American people and, through the universal service obligation, bind our nation together by maintaining and operating our unique, vital and resilient infrastructure.”

As part of the modified structure, logistics and mail processing operations will report into the new Logistics and Processing Operations organization separate from existing area and district reporting structures. This includes all mail processing facilities and local transportation networks offices. Splitting operations into the two organizations of Retail and Delivery Operations, and Logistics and Processing Operations, is designed to allow for improved focus and clear communication channels. The transition to this new organizational structure will take place over the next several weeks. Transition coordinators have been identified to assist in the process.

These organizational changes do not initiate a reduction in force, and there are no immediate impacts to USPS employees. However, to prepare for future changes, the Postal Service has implemented a management hiring freeze and will be requesting future Voluntary Early Retirement Authority from the Office of Personnel Management for non-bargaining employees.

We want to hear your feedback of these new changes, or if you need help deciding if this VERA is right for you, Contact us to schedule your retirement review.

August 12, 2020
4
Early Retirement - VER Eligibility for postal service employees - what is vera

USDA IT Shop Freezes Hiring and Offers Early Retirement

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The CIO Office at the Department of Agriculture has instituted a hiring freeze and plans to offer early retirement options to IT workers in an effort to optimize the agency’s tech investments and update the skillset of its workforce, according to a report on Federal News Network.

Voluntary Early Retirement Authority options will be offered to eligible IT specialists – excluding cybersecurity professionals — with 20 years of service at age 50, or those with 25 years of service at any age. Those staffers may voluntarily retire and earn an immediate annuity. Eligible employees can apply for VERA through mid-August, the department said.

USDA said it plans to accept as many VERA requests as it can, but early retirement offers will be extended on a first-come, first-serve basis, and those who have been accepted are expected to retire by Sept. 30.

The hiring freeze was instituted June 30 and will extend through fiscal 2021. It only applies to IT professionals who “report directly or indirectly to the mission area chief information officers or program executives,” the USDA spokesperson told Federal News Network.

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