OPM has issued the following summary of changes in federal benefits due to inflation adjustments, changes in interest rates and other routine changes.
Many people who receive monthly payments from the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS) will receive a cost-of-living adjustment (COLA) effective December 1, 2011. They will receive the increase in their January 2012 annuity payment. The maximum increase is 3.6% for CSRS and 2.6% for FERS annuitants.
Annuitants who have been retired at least 1 year will receive the full COLA, or maximum increase. To get the full COLA, a retiree’s annuity has to begin no later than December 31, 2010.
Retirees whose annuities begin between January 1, 2011 and November 30, 2011, will receive a prorated COLA. They will receive one-twelfth of the applicable increase for each month they received an annuity. The following tables show the prorated percentage increase according to the month in which the annuity began.
CSRS COLA Proration Table
Monthly Annuity Began Amount of Percentage Increase
December 2010 or earlier 3.6%
January 2011 3.3%
February 2011 3.0%
March 2011 2.7%
April 2011 2.4%
May 2011 2.1%
June 2011 1.8%
July 2011 1.5%
August 2011 1.2%
September 2011 0.9%
October 2011 0.6%
November 2011 0.3
FERS COLA Proration Table
Monthly annuity began Amount of Percentage Increase
December 2010 or earlier 2.6%
January 2011 2.4%
February 2011 2.2%
March 2011 2.0%
April 2011 1.7%
May 2011 1.5%
June 2011 1.3%
July 2011 1.1%
August 2011 0.9%
September 2011 0.7%
October 2011 0.4%
November 2011 0.2%
Increase in Children’s Benefits
CSRS COLA rates apply to children’s benefits, regardless of whether the child’s parent was under CSRS or FERS. The following rates apply from December 1, 2011, through November 30, 2012.
When the child has a living parent who was married to the employee or retiree, the benefit payable to that child is the lesser of:
$486 per month per child; or
$1,460 per month divided by the number of eligible children (if over 3).
When the child has no living parent who was married to the employee or retiree, the benefit payable to that child is the lesser of:
$584 per month per child; or
$1,752 per month divided by the number of eligible children.
FERS Basic Employee Death Benefit
When a FERS employee dies, a surviving spouse (or former spouse) may be eligible for a death benefit called the Basic Employee Death Benefit (BEDB). This benefit is an amount equal to 50 percent of the employee’s final annual pay (or average pay if higher), plus $15,000, adjusted for COLA’s under CSRS rules. For deaths that occur on or after December 1, 2011, and before December 1, 2012, the $15,000 plus COLA’s amount is now, $30,792.98. Chapter 70 of the CSRS and FERS Handbook has detailed information on the Basic Employee Death Benefit.
The surviving spouse must elect whether to receive the BEDB in one payment or 36 monthly installments. The current factor used to determine the monthly installment is .0301643. Additional information on this can be found at http://www.gpo.gov/fdsys/pkg/FR-2011-09-07/html/2011-22873.htm in the September 7, 2011 Federal Register.
Interest Rate for Service Credit Payments, Refunds, and Voluntary Contributions
The interest rate that applies to both CSRS and FERS is 2.25% in 2012.
Employees who are subject to a salary cap pay retirement deductions on the capped amount and the capped amount is used to compute an employee’s high-3 average pay. The salary information on the SF-50, Notification of Personnel Action, should reflect the capped amount and not the salary that would have been payable without the cap.
Reminder Regarding Military Deposits
Use the table below to compute military deposits for service during those years and for the new 2012 rates. Chapter 23 of the CSRS and FERS Handbook has detailed information on Service Credit Payments for Post-56 Military Deposits and BAL 03-105 provides an explanation of the alternative method for employees under the Uniformed Services Employment Reemployment Rights Act (USERRA).
Employees who want to pay deposits for military service they performed during any of these years need to request that the military pay center provide year-by-year earnings so that you can compute deposits correctly.
1999 2000 Other Years
CSRS 7.25% 7.40% 7.00%
FERS 3.25% 3.40% 3.00%
This is a reminder that all military deposits have to be paid in full to the employing agency prior to the employee’s separation for retirement.
Reminder Regarding Waiver of Military Retired Pay
Employees requesting to waive military retired pay should submit their request directly to the Defense Finance and Accounting Service at the following address 30 days before their planned retirement date to avoid delay in the finalization of their retirement. A copy of this request must be attached to the retirement application:
Defense Finance and Accounting Service
U.S. Military Retirement Pay
London, KY 40742-7130
Phone: 1-800-469-6559 – fax
Chapter 22 of the CSRS and FERS Handbook (Chapter 22, Section 22 A4.1-2) contains information that must be provided and sample wording that can be used.
Present Value Factors
The Present value factors were revised on October 1, 2011, and can be found in the
June 3, 2011 Federal Register, Volume 76, Number 107.
CSRS factors can be accessed at http://www.gpo.gov/fdsys/pkg/FR-2011-06-03/pdf/2011-13708.pdf) and FERS factors can be accessed at http://www.gpo.gov/fdsys/pkg/FR-2011-06-03/pdf/2011-13707.pdf
OPM uses present value factors to compute reductions to:
• CSRS and FERS retiree’s benefits when the retiree elects the Alternative Form of Annuity;
• CSRS and FERS benefits with a CSRS component when the retirees elect to credit refunded service that ended before October 1, 1990, without paying the deposit owed for the service
• CSRS and FERS benefits when the retirees marry after retirement and elect to provide a survivor annuity benefits;
• Retirees’ benefits when the retiree elects to credit Nonappropriated Fund Instrumentality (NAF) service for retirement purposes under Public Law 104-106 or Public Law 107-107; and,
• Retirement benefits for individuals with certain types of retirement coverage errors who can receive credit for service by taking an actuarial reduction under the provisions of the Federal Erroneous Retirement Coverage Correction Act.
OPM uses discount factors to compute the reduction to annuity benefits when retirees elect to credit their NAF service. The discounted present value factors used for NAF calculation have also been revised and can be found in BAL 11-111.
Significant Social Security Figures for 2012
On October 19, 2011, the Social Security Administration published a Fact Sheet that listed 2012 figures that are significant for retirement matters. You can find that Fact Sheet on the Social Security Administration’s Internet site, at http://www.socialsecurity.gov/pressoffice/factsheets/colafacts2012.pdf
We have included some of the figures here for your convenience.
Social Security Maximum Wage Base
The Social Security maximum taxable wage for 2012 is $110,100.
The dollar amounts, or bend points, used in the benefit formula for workers who become eligible for benefits in 2012, and in the formula for computing maximum individual benefits for 2012, are $767 and $4,624.
FERS Retiree Annuity Supplement Earnings Limit
The Social Security earnings limitation for 2012 is $14,640. Any FERS annuitant who is receiving a FERS annuity supplement (unless he or she is under the Minimum Retirement Age (MRA) and retired under one of the special provisions for law enforcement officers, firefighters, air traffic controllers, or military reserve technicians separated for loss of military membership) will have his or her annuity supplement offset in 2012 by $1.00 for every $2.00 over this amount earned in 2012.
Increase in Age for Full Social Security Benefits
Legislation passed in 1983 provided that the age for receiving full Social Security benefits will gradually increase from 65 to 67. The first increase took effect in January 2001. It affects workers born in 1938 or later. More information on this change is available on Social Security’s web site at www.ssa.gov.
Note: This change does not affect the entitlement of any person who is age 62 to receive reduced benefits if he or she has sufficient Social Security credits to receive a benefit.
Thrift Savings Plan (TSP) Deferral Limit
The Internal Revenue Service annual limit on elective deferrals is $17,000 for tax year 2012. For purposes of the TSP, the term "elective deferrals" means the maximum amount that employees can contribute to their thrift accounts.
In addition, TSP participants that are age 50 or over can make tax-deferred “catch-up” contributions from their basic pay to their TSP accounts. These contributions are a supplement to the participant’s regular employee contributions and do not count against the Internal Revenue Code’s elective deferral limit. The catch-up contributions have their own annual limit and eligibility criteria. The limit is $5,500 for 2012. Additional information is available at: https://www.tsp.gov/PDF/bulletins/11-9.pdf