I’ve been getting a lot of questions from employees wanting to know if their retirement contributions will be increased. Well, as is often the case, it all depends. Public Law 112-96 made significant changes to the Federal Employees Retirement System. Beginning in 2013, new employees have to contribute a much higher amount to the retirement fund. In fact, it jumped from .8 percent to 2.3 percent.
As a rule, FERS-RAE (Revised Annuity Employee) coverage applies to anyone who is appointed to a FERS position from outside government on or after January 1, 2013. Therefore, if you were covered by FERS on December 31, 2012, you’re off the hook. And there are two other exceptions. Anyone who meets either of them will be excluded from FERS-RAE coverage. Here they are:
1. On December 31, 2102, you were performing civilian service that is either creditable (or is potentially creditable) service under FERS, for example, coverage under another retirement system, such as CSRS, CSRS Offset or Foreign Service, which can be transferred to FERS, or
2. As of December 31, 2012, you had performed at least five years of civilian service which is either creditable (or potentially creditable) under FERS; for example, CSRS or CSRS Offset.
OPM has counseled personnel offices to make creditable civilian service determinations based on service that is potentially creditable on the effective date of the determination. Interestingly, that initial determination remains valid even if you never take action to make that service creditable, for example, by making a deposit to the FERS or waiving your entitlement to a benefit from another retirement system.
If you are one of those employees paying more, probably you’re wondering if your retirement benefits will change. For the present, the answer is no. Your retirement benefits will be calculated in exactly the same way as those who aren’t covered under the FERS-RAE provision.
But all FERS employees should be aware that there are members of Congress who would like to do away with the special retirement supplement. To refresh your memory, the SRS approximates the Social Security benefit you earned while a FERS employee if you retire before age 62. It is designed to bridge the gap between when you retire and that age, when you are eligible for a Social Security benefit.
If the SRS were eliminated, it would make it more difficult financially to retire before reaching age 62. To protect your interests, you might want to find out where your members of Congress stand on the issue. If they don’t stand where you want them to, give them a nudge in the right direction.