One of the tasks that consumes the time of pre-retirees is figuring out what their annuity will be. They run the numbers by themselves or with the help of agency benefits specialists, and sometimes pay good money to have private sector consultants do the figuring for them.
How close these calculations come depends in large part on which retirement system you are in. If you are covered by CSRS – including CSRS Offset – you can get close. On the other hand, if you are covered by FERS you’ll have to get an estimate from the SSA. Those estimates no longer are sent automatically every years, only every five years; you can get one on request by setting up an account at www.ssa.gov.
CSRS and FERS are both defined benefit systems, ones where what you will receive is based on three factors: your years and full months of service, highest three consecutive years of average salary, and a formula. What agitates the simple mechanics of a retirement calculation are such things as service – including active duty military – for which you have (or haven’t) made a deposit, service where you took a refund of your retirement contributions and for which you have (or haven’t) made a redeposit, unused sick leave, and any days of total service that don’t add up to a full month.
In the latter case, days that are left over are discarded and not included in your annuity computation. This is particularly troublesome if you are a FERS employee who will have a CSRS component in your annuity. Both benefits are calculated separately, and any left-over days are dropped from each calculation.
The final determination of what your annuity will be rests with OPM. It will do its first screening at the Retirement Operations Center in Boyers, Pennsylvania. This screening can either lead to a request for more information from you or your placement in what’s called interim pay. Interim pay is an amount which is less than the full amount that it appears at first glance you would be entitled to receive. Your retirement package then goes to OPM’s central office, where a final adjudication is made.
As a part of that process for FERS retirees, OPM will determine if you are eligible for the special retirement supplement, which approximates the amount of Social Security benefit you earned while covered by FERS.
If you believe that the final figure as calculated by OPM is wrong, the door is open to dispute their decision. OPM does err at times, but many such disparities involve a misunderstanding by retirees about what kinds of service are creditable for retirement purposes.