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Even if a new employee doesn’t think they are going to stay with the federal government for their full career, it’s important that they are aware of their federal benefits.
If they plan on staying until retirement, they need to know how to maximize their benefits. If they think they’re going to leave federal employment before becoming eligible for retirement, they need to know what will happen to their benefits.
Whether you are a new employee, a manager of a new employee, or a well-meaning senior employee, what follows are things that new employees should know.
Federal Employees Retirement System (FERS)
• They will be vested in a future retirement benefit after five years of service
• They will be eligible to retire on an immediate annuity when they meet specified age and length of service criteria
For regular employees
Minimum retirement age (MRA) (57 for those born in 1970 or later) and 30 years of service;
Age 60 and 20 years of service;
Age 62 and 5 years of service;
MRA and 10 years of service (reduced if retiring before age 62).
For special category employees (e.g., Law Enforcement, Firefighter, etc.)
Age 50 and 20 years of qualifying service;
Any age and 25 years of qualifying service.
Deferred annuities are available for employees who leave after they are vested in, but before they are eligible for, an immediate annuity
The FERS annuity provides lifetime income
The FERS annuity has a modified cost of living adjustment (COLA)
Thrift Savings Plan (TSP)
• They are automatically enrolled at a contribution rate of 5% of their salary
• The government provides an automatic contribution of 1% and matching contributions of up to 4%
• They have choices as to how their contributions and the government match are invested
• When they separate from federal service they will have many choices as to what to do with their TSP account
• They should be given a link to the TSP publication Summary of the Thrift Savings Plan
Social Security
• Beginning at age 62 they will be able to collect a Social Security benefit (subject to earnings tests)
• They should be given a link to the Social Security publication Retirement Benefits
• They should be encouraged to sign-up for a mySocialSecurity account
If you’re a new employee, do yourself a favor and pay attention to your retirement benefits. If you’re a seasoned employee, do a new employee a favor by helping them learn about their retirement benefits.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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