When the Federal Employees Retirement System (FERS) was established, it differed from the Civil Service Retirement System (CSRS) in several ways. While it provided a less generous annuity calculation, it made up for that with a Social Security benefit and a Thrift Saving Plan, which included matching contributions from the government. Further, it smoothed the transition from employment to retirement for those employees who retire before age 62. It’s called the special retirement supplement (SRS).
The FERS annuity
If you are like most FERS employees, you can figure out your 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 at least 20 years of service, the first multiplier is increased to 0.011. Note: The rules are different for special category employees, such as law enforcement officers and firefighters. For them the multiplier is 0.017 for 20 years of covered service. Any additional service is multiplied by 0.01.
The Special Retirement Supplement
The SRS approximates the Social Security benefit you earned while a FERS employee. It’s added to your earned annuity if you retire at your minimum retirement age (MRA) with 30 years of service or age 60 with 20. The SRS will also 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 of service. Note: Special category employees receive the SRS regardless of when they retire.
While the dollar amount of your SRS can’t be precisely determined until you retire, there’s a simple formula that will allow you to estimate what it will be. And the closer you are to retirement, the better that estimate will be. Here’s the three step formula:
1. Take your latest Social Security benefit estimate at age 62, which you can get by setting up a personal account at www.ssa.gov/mystatement;
2. Multiply that figure by your total years of FERS service, rounded up to the next higher 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 non-FERS civilian service 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, even if you don’t apply for that benefit.
Also note that it’s generally 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 above an annual limit which this year is $18,960. 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 effect on their SRS. When they reach their MRA, they’re treated the same as everyone else.