I guess it’s not surprising that I’m being inundated with e-mails from employees ready to jump ship who want to know how to compute their annuities, especially FERS employees who have the added wrinkle of the special retirement supplement to factor into to their calculations.
FERS employees can calculate their basic retirement annuity by using a simple formula: 0.01 x your high-3 x your years and full months of FERS service. However, if you are at least age 62 and have 20 years of service, the multiplier is increased to 0.011. For special category employees, such as law enforcement officers and firefighters, the multiplier is 0.017, but only for 20 years of covered service. Any additional service is multiplied by 0.01.
The special retirement supplement (SRS) approximates the Social Security benefit you earned while a FERS employee. For most of you, it’s added to your earned annuity if you retire at your minimum retirement age (MRA—currently 56) with 30 years of service or age 60 with 20. The SRS also will be added to your annuity when you reach your MRA if your agency is undergoing a major reorganization, RIF or transfer-of-function and you retire, either voluntarily or involuntarily, at age 50 with 20 years of service or at any age with 25 years. Note: Special category employees receive the SRS regardless of the age at which they retire.
The dollar amount of the SRS is harder to figure out. That’s because you don’t have access to the information on which the calculation is based. It’s held by two different organizations – OPM and the Social Security Administration – and can’t be accurately determined until you retire. However, there’s a simple formula that allows you to estimate what your SRS will be. And the closer you are to retirement, the better that estimate will be.
1. Take the latest Social Security benefit estimate at age 62, which you can get by going to www.ssa.gov/mystatement;
2. Multiply that figure by your total years of FERS service, rounded to the closest full year;
3. Divide the product by 40.
Note: “Total years of FERS service” means actual years of FERS service. It doesn’t include any years of civilian or military service for which you’ve made a deposit to the retirement system.
The SRS ends at age 62, when you first become eligible for a regular Social Security benefit. And it ends whether or not you apply for that benefit. Up to age 62, it’s subject to the Social Security annual earnings limit, which will reduce the SRS by $1 for every $2 you earn from wages or self-employment. In 2012 the limit is $14,640. Note: There’s an exception for special category employees. If they retire before their MRA, they can earn as much as they want without it having any affect on their SRS. However, when they reach their MRA, they’re treated the same as everyone else.