Are you a FERS employee? If you are 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 MRA 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. To see what I’m talking about, go to www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c051.pdf and scroll to Part 51.A2.
Fortunately, because any FERS employee closing in on retirement wants some idea of how much the SRS will be, OPM has a simple formula you can use to get a ballpark estimate. Here it is.
Social Security benefit x Total years of FERS service 40
What that formula means in English is this. Take your Social Security benefit estimate, multiply it by your total years of FERS service, rounded to the nearest whole number, and divide the product by 40.
There are three 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 the annual earnings limit. As a rule, if you have earnings from wages or self employment that exceed the limit, your SRS will be reduced by $1 for every $2 over that limit. In 2015 the limit is $15,720.
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.