Reg Jones Expert's View

Last week I went through the formulas needed to calculate FERS annuities for both regular and special category employees. This time I want to explain the special retirement supplement .

FERS employees are covered by a three-part retirement system – an annuity, Social Security, and the Thrift Savings Plan. Because Social Security benefits aren’t payable before age 62, the law provides a bridge payment for FERS employees who retire before that age. It’s called the special retirement supplement, and it isn’t available to CSRS-covered employees, FERS-covered disability retirees or those FERS employees who retire under the MRA+10 provision.

The SRS approximates the Social Security benefit you earned while a FERS employee. Since the money for this benefit comes out of the Civil Service Retirement and Disability Fund, to which you and your agency made contributions, the SRS computation excludes any other Social Security-covered employment, including military service for which you‘ve made a deposit.

To get a rough estimate of what your SRS would be, use the following formula:

Take your Social Security benefit estimate available from the Social Security Administration, divide it by 40, and multiply the product by your total years of actual FERS service rounded to the nearest whole number.

For example, if your Social Security benefit at age 62 is estimated to be $6,000 and you have 30 years of service, you’d plug those numbers into the following formula to get your answer:

Social Security benefit at age 62 x 30 ÷ 40 or, in this example,
$6,000 x 30 ÷ 40 = $4,500

The amount of your SRS is set on the day you retire. It isn’t increased by cost-of-living adjustments, regardless of how long you receive it, unless you are a special category employee, such as a law enforcement officer or firefighter. Their SRSs are increased by COLAs.

You’ll continue to receive the SRS until age 62 unless you have earnings from wages or self-employment that exceed the annual Social Security earnings limit. If they do, your SRS will be reduced by $1 for every $2 you earn above the limit. In 2015 that limit is $15,720.

Note: Unlike regular FERS retirees, special category FERS retirees can earn as much as they want without it affecting their SRS until they reach their minimum retirement age. Then if they exceed it, they are subject to the Social Security earnings test like all other FERS retirees.