In my last column, I laid out the retirement rules governing air traffic controllers under CSRS. This time I’ll do the same for those covered by FERS.
As an air traffic controller covered by FERS, you can retire at an early age without a reduction in your basic annuity if you meet the age and service requirements: at least age 50 with 20 or more years of service as an ATC or at any age with 25 or more years as an ATC, and retire from a position covered by FERS.
Unlike CSRS, there is no requirement that you be covered under FERS for at least one year within the two-year period immediately before you retire. Therefore, it would be possible for an ATC transferring from CSRS to FERS to retire on the date of the transfer. Note: Unused sick leave earned under CSRS cannot be used to meet the minimum service requirements, nor can military service be used, unless you go directly from an ATC position into the military on a military furlough.
Most ATCs are subject to mandatory separation at age 56. However, there are a few exceptions to the mandatory separation requirement: ATCs who were first appointed by the Department of Transportation before May 16, 1972 or by the Department of Defense before September 12, 1980, and flight service station specialists who were first appointed before January 1, 1987. In the public interest, an agency head may exempt an employee having exceptional skills and experience from mandatory separation until age 61.
Note: When you reach the minimum 20-year service requirement, you can take a non-covered job and avoid the mandatory separation provision.
Computing an Annuity
Because you usually have a shorter career as an ATC, you receive a special annuity computation, which is more generous than your fellow FERS employees get. For this enhanced benefit, you currently contribute 1.3 percent of your base salary to the retirement fund instead of .8 percent.
As an ATC eligible to retire under the FERS special provision, you annuity is computed as follows: 1.7 percent of your “high-3” average salary x 20 years of service; plus 1 percent of your “high-3” x any additional years of creditable service.
Let me illustrate. If you were an ATC who had a “high-3” average salary of $80,000, 1.7 percent of that would be $1,360. Multiplying that figure times 20 years of service would produce $27,200. (Note: If you were one of those people mentioned above who are exempted from mandatory retirement and you retired as an ATC at or after age 62, your years of service beyond 20 would not be calculated using the higher 1.1 percent factor used for other FERS employees.)
If you also had five additional years of service, you’d take 1 percent of the “high-3” – or $800 – and multiply it by five. The product – $4,000 – would be added to the $27,200 and yield an annuity of $28,000.
There’s some more good news. When you retire, there will be no age penalty for being under normal retirement age. And if you are under age 62 when you retire, you’d also receive a special retirement supplement, which approximates the Social Security benefit you earned while employed under FERS. Finally, you’d be eligible for annual cost-of-living adjustments (COLAs) regardless of the age at which you retired. However, those COLAs will not be applied to your special annuity supplement.
Mixed CSRS & FERS Service Computation
If you transferred from CSRS to FERS after completing five or more years of creditable civilian service, you will have a CSRS annuity component in your annuity. That component will be calculated according to CSRS rules. However, the guaranteed minimum benefit for ATCs under CSRS will not be used in computing the CSRS component. Instead, the regular CSRS formula will be used.
Note: If you retire before age 55, your CSRS component will be reduced by 2 percent for every year you are under age 55 (or 1/6 percent per month).
One final word: If you transferred to FERS, you are permitted to begin your 20-year countdown all over again. For some of you, that could mean working into your 60s without fear of mandatory separation until that new 20-year target is reached. Hang in there!