In recent articles about end-of-year retirement I covered general considerations but some of you have since asked for further information on a specific provision that is part of the retirement income picture for some Federal Employee Retirement System employees, the special retirement supplement (SRS). Happy to oblige.
Who is eligible for the SRS?
The SRS is paid to FERS employees who retire on an immediate, unreduced annuity before reaching age 62, when they become eligible for Social Security benefits—if you retire at 62 or above, you are immediately eligible and thus no SRS will be paid—and ends when they reach that age.
Those eligible will not only receive your basic annuity but an additional payment that represents the amount of Social Security benefit you earned while a FERS employee.
To be entitled to an immediate, unreduced, you must retire
• at age 60 with 20 years of service,
• at your minimum retirement age MRA with 30 years of service,
• at your MRA, if involuntarily retiring, for example during a RIF, or
• at your MRA, if retiring under the Voluntary Early Retirement Authority (VERA)
Employees who retire under the MRA+10 provision, deferred retirees and disability retirees aren’t eligible for the SRS.
How is the SRS determined?
While, the amount of the SRS is determined using a formula that relies on data that isn’t available to you, OPM has developed a simple formula you can use to get a good idea of what the dollar amount will be. Here it is:
Take your Social Security benefit estimate provided by the Social Security Administration, multiply it by your total years of FERS service, rounded to the nearest whole number, and divide the product by 40.
The SRS is a fixed amount that’s set on the day you retire. Not only isn’t it increased by any cost-of-living adjustments (COLAs), but it ends when you reach age 62 and become eligible for a Social Security benefit. That’s true whether or not you apply for a Social Security benefit at that time.
Where does the money come from?
The money used to pay the SRS comes from the Civil Service Retirement and Disability Fund and is based solely on your actual FERS service. However, the SRS is subject to the annual earnings limit, just like your Social Security benefit. If you have earnings from wages or self employment that exceed the limit, your SRS will be reduced by $1 for every $2 that exceed that limit. In 2020 that limit is $18,240.
Note: There is an exception to the earnings limit. If you were employed under the special provision for law enforcement officers, firefighters and air traffic controllers and you retired before your minimum retirement age, you can earn as much as you want without your SRS being reduced. However, once you reach your MRA, you’ll be subject to the earnings limit just like any other FERS retiree.
ask.FEDweek.com: FERS Retiree Annuity Supplement