 BENEFIT INSIGHTS
Frequently Asked Questions
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Terms
CSRS
FERS
Trans-FERS
Survivor Benefit
Thrift Savings Plan
FEGLI
CSRS
- The Civil Service Retirement System (CSRS) is
a defined benefit contributory retirement system. Employees
share in the expense of the annuities to which they
become entitled.
- CSRS benefits are based on the
employee’s “high 3” average
pay and the years of service. Under the general formula,
30 years of service provides 56.25 percent of “high 3” average
salary.
- CSRS covered employees contribute 7, 7-1/2 or
8 percent of pay to CSRS and, while they generally
pay no Social Security retirement, survivor and disability
(OASDI) tax, they must pay the Medicare tax.
The employing agency matches the employee’s CSRS contributions.
- Employees
may contribute up to 10 percent of the basic pay
for their creditable service to a voluntary
contribution account. Accounts earn a market rate
of interest. The employee may withdraw the
funds from the account at any time or use them to
purchase an additional annuity at retirement. The additional
annuity is $7 a year for each
$100 in the account, plus $.20 for each full year
the person is over age 55 at retirement.
- Employees
may contribute up to 5 percent of pay to the Thrift
Savings Plan. There are no Government
contributions.
- CSRS-Offset employees are covered
by Social Security benefits because they were separated
from CSRS Federal Employment for more than one year
and returned to
a position in which they were covered
by CSRS after 1983. For these employees, their
OASDI withholdings are offset from their CSRS
contributions, so the combined Social Security
and CSRS contributions are the same as for employees
who have CSRS coverage only.
- When CSRS Offset
employees retire, they receive full CSRS benefits
until they are eligible for
Social Security benefits, generally at age
62. At that time the CSRS benefit is offset by the
portion of their Social Security benefit that
represents the period of time they were covered
by both CSRS and Social Security.
FERS
- The Federal Employees Retirement
System (FERS) is a three-tiered plan consisting of
Social Security, a basic FERS annuity and the Thrift
Savings Plan.
- Employees under FERS are covered by full Social
Security taxes.
- The basic FERS annuity is based on the
employee’s length
of service and the “high-3” average pay. For most employees,
the formula for computing the annual annuity is 1 percent
of average pay for each year of creditable service.
Employees contribute 0.8 percent
of pay to FERS for the basic benefit.
- Employees
may contribute up to 10 percent of their pay to the
Thrift Savings Plan.
These contributions
are tax-deferred. The Government contributes 1 percent
of pay and matches a portion of the employee’s contributions.
The maximum Government contribution is 5 percent of
pay.
Trans-FERS
- Employees transferring to
FERS from CSRS can take advantage of both retirement
systems. These employees keep the benefits they have
already earned and build on them.
- All CSRS service is
creditable toward eligibility for death and disability
benefits, as well as retirement,
so that there is no gap in protection.
- If the employee
transfers, the past CSRS service and all future FERS
service will be added together
to determine retirement. Instead of the CSRS retirement
rules, the employee will follow the FERS
retirement rules.
Survivor Benefit
Benefit paid to an individual entitled
to a benefit based on the service of a deceased employee
or annuitant.
Thrift Savings Plan
A retirement savings
and investment plan established by Congress in the Federal
Employees’ Retirement
System Act of 1986 to provide Federal employees savings
and tax benefits to those offered by many private corporations.
It is a defined contribution
plan administered by the Federal Retirement Thrift Investment
Board. CSRS employees can also contribute but receive
no agency contributions.
FEGLI
- Federal Employees'
Group Life Insurance (FEGLI) Program was established
August 29, 1954. It is the largest
group life insurance program in the world, covering
over 4 million Federal employees
and retirees, as well as many of their family members.
- FEGLI
provides group term life insurance. As such,
it does not build cash value or paid-up value.
It consists of Basic life insurance coverage and three
options. In most cases, if you are
a new Federal employee, you are automatically covered
by Basic life insurance and your payroll office
automatically deducts premiums from
your paycheck unless the coverage is waived. In
addition to the Basic plan, there are three forms
of optional insurance that can be elected.
Basic insurance must be in effect in order to elect
any of the options. Unlike Basic, enrollment in
Optional
insurance is not automatic -- you
must take action to elect the options.
- The cost
of Basic insurance is shared between you and
the Government. You pay 2/3 of the total
cost and the Government pays 1/3. Your age does
not affect the cost of Basic insurance. You
pay the full cost of Optional insurance, which
cost is dependent on age.
- The Office of Federal
Employees' Group Life Insurance (OFEGLI), is
a private entity that
has a contract with the Federal Government,
claims are processed and
paid
under the FEGLI program.
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