Retirement Benefits

Employees who retire under the MRA+10 provision aren’t eligible for the SRS. Image: Steve Heap/Shutterstock.com

One of the most complex provisions of the FERS retirement system is the “special retirement supplement,” also sometimes generically called the “annuity supplement.”

By either name, it is a payment in addition to your regular annuity benefit if you retire on an immediate, unreduced FERS annuity before reaching age 62. It represents the amount of Social Security benefit you earned while a FERS employee and essentially is a make-up for the Social Security portion of the overall FERS benefit until you reach that age and can start drawing Social Security benefits.

An important definition: An “immediate, unreduced annuity” for this purpose is one that is payable to a FERS employee who retires:

• at age 60 with 20 years of service,

• at the minimum retirement age (MRA—varies between 55 and 57 depending on year of birth) with 30 years of service,

• at the MRA, if involuntarily retiring, for example during a RIF, or

• at the MRA, if retiring under the Voluntary Early Retirement Authority (VERA).

That means that employees who retire under the MRA+10 provision aren’t eligible for the SRS. Nor are deferred retirees or disability retirees.

The amount of the SRS is determined using a complicated formula that relies on data that isn’t available to you. A ballpark formula: multiply your Social Security benefit by your total years of FERS service then divide by 40.

There are three key things you need to know about the SRS: 1) It’s a fixed amount that’s established on the day you retire; 2) it isn’t increased by any cost-of-living adjustments (COLAs); and, 3) it ends when you reach age 62 and become eligible for a Social Security benefit.

The money used to pay the SRS doesn’t come from the Social Security Administration. Instead it comes from the Civil Service Retirement and Disability Fund. That’s why it’s based solely on your actual FERS service. However, like a Social Security benefit, the SRS is subject to an annual earnings limit, above which the benefit is reduced.

There is an exception to that earnings limit rule: 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.

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