Over the last few weeks, I’ve provided you with the information needed to determine if you are eligible to retire and the building blocks on which your annuity will be based. Now it’s time to explain how your annuity will be computed. I’ll start with FERS and move on to CSRS.

FERS — Immediate Unreduced Annuity
The formula for computing a FERS annuity is simple:
0.01 x your high-3 x all years and full months of service
or
0.011 if you have at least 20 years of service and retire at age 62 or later

FERS — MRA+10 Annuity
If you retire at your minimum retirement age with at least 10 years of service but fewer than 30, your annuity will be reduced by 5 percent for every year (5/12 of 1 percent per month) that you are under age 62

FERS — Retirement Under the Voluntary Early Retirement Authority
If you are offered and accept a VERA, you can retire at age 50 with 20 years of service or at any age with 25. If you do, your annuity will be computed using the standard FERS formula and, unlike an MRA+10 retirement, you won’t be subject to the 5 percent per year age penalty.

FERS — Special Category Employees
If you are a law enforcement officer, firefighter or air traffic controller who has at least 20 years of covered service, your annuity would be calculated as follows:
0.017 x your high-3 x 20 years of service, plus
0.01 x your high-3 x all additional years and full months of service
As noted above, unused hours of actual service can be combined with your unused sick leave to create additional months and used in the computation of your annuity.

Note: Regardless of the authority under which you retire, any leftover hours of actual service will be combined with your unused sick leave hours to create additional months and used in the computation of your annuity.

Special Retirement Supplement
The SRS approximates the Social Security benefit you earned while a FERS employee. Because the money comes from the Civil Service Retirement and Disability Fund, the SRS is based solely on actual FERS service. It doesn’t include military service for which you made a deposit or any other Social Security-covered employment.

If you retire on an immediate, unreduced annuity, you’ll be entitled to the SRS. If you retire on an MRA+10 annuity, you won’t.  Note: If you are a special category employee, your SRS will begin immediately, regardless of your age when you retire.

To estimate what your SRS would be, take your Social Security benefit estimate provided by the Social Security Administration, divide it by 40, and multiply the product by your total years of FERS service, rounded up to the nearest whole year.

You’ll continue to receive the SRS until age 62 unless you have earnings from wages or self-employment that exceed the annual Social Security earnings test. In 2015 that limit is $22,050. Note: Special category employees who retire before their MRA aren’t subject to the earnings test until they reach their MRA.

CSRS — Regular Employees
The formula for computing a CSRS annuity is a little more complicated than the one used for FERS.
0.015 x your high-3 (which we talked about last week) x 5 years of service, plus
0.0175 x your high-3 x 5 years of service, plus
0.02 x your high-3 x all remaining years and full months of service.

CSRS — Retirement Under the Voluntary Early Retirement Authority
If you are offered and accept a VERA, you can retire at age 50 with 20 years of service or at any age with 25. If you do, your annuity will be computed using the standard CSRS formula. However, your annuity will be reduced by 2 percent for every year (1/6 percent per month) that you are under age 55.

CSRS — Special Category Employees
If you are a law enforcement officer or firefighter who has at least 20 years of covered service, your annuity would be calculated as follows:
0.025 x your high-3 x 20 years of service, plus
0.02 x your high-3 x all additional years and full months of service

Note: Regardless of the authority under which you retire, any leftover hours of actual service will be combined with your unused sick leave hours to create additional months and used in the computation of your annuity.

So, what’s next? Having successfully retired you, I’m going to send you back to work for the government. That way you’ll be able to see what effect it would have on your annuity and your salary.