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 COMPUTATION OF RETIREMENT ANNUITIES

The annuity for FERS law enforcement officers, firefighters and air traffic controllers is based on:

  • Years of creditable service for retirement.
  • High-3 average salary.
  • FERS special retirement annuity computation formula.
YEARS OF CREDITABLE SERVICE

Creditable service includes all creditable civilian service performed as a Federal employee, honorable active military service, and unused sick leave.

HIGH-3 AVERAGE SALARY

Your high-3 average salary is based on the highest 3 years of basic pay or salary you earned in any consecutive 3-year period. Generally, the final 3 years of service include the highest pay, but pay from an earlier period can be used if it was higher.

Basic pay includes locality pay, night differential pay (for wage grade only), and premium pay for firefighters/law enforcement officers. It does not include night differential pay for general schedule employees or bonuses, allowances, or overtime pay.

Under the Non-foreign Area Retirement Equity Assurance (NAREA) provision of the National Defense Authorization Act for Fiscal Year 2010, beginning January 1, 2010 employees working in non-foreign areas will start receiving locality pay in lieu of Cost of Living Allowance (COLA). The transition from COLAs to locality pay will be phased in over a three-year period beginning in 2010. Employees who separate on immediate retirement between January 3, 2010 and December 31, 2012, are permitted under NAREA to elect a credit for a portion of their COLA in 2010 and 2011 as basic pay for retirement annuity computation purposes. The employees must pay retirement deductions on the portion of the COLA that is being credited as basic pay and the employing agency will pay employer contributions on the basic pay portion of the COLA. Employees who want to make this election must submit their election to the Civilian Benefits Center at the time they separate for retirement. Contact the Benefits Line for additional information.

FERS FORMULA FOR COMPUTING THE ANNUITY

The basic annuity is computed as follows:

  • One and seven-tenths percent of the high-3 average salary multiplied by creditable service up to 20 years; plus
  • one percent of the high-3 average salary multiplied by any additional creditable service.

If you work a part-time work schedule your annuity will be prorated based on the number of hours you work. Your Retirement Specialist can provide additional information.

FERS ANNUITY SUPPLEMENT

The annuity supplement is a benefit paid, until age 62, to certain FERS employees who retire before age 62 and are entitled to an immediate annuity. The supplement approximates the value of FERS service in a Social Security benefit. The general purpose of the supplement is to provide a level of income before age 62, similar to any Social Security you may receive at age 62.

The annuity supplement is subject to an earnings test and may be affected if you are employed after retirement.

REDUCTIONS TO THE BASIC ANNUITY COMPUTATION

Your annuity will be reduced if:

  1. You elect a survivor annuity for your current or former spouse. The reduction is dependent on the base you elect for the survivor annuity. You can elect either the full amount or 50 percent as the base for the survivor annuity. Your annuity will be reduced by 10 percent of the survivor base you select.
  2. You elect a survivor annuity for a person who has an insurable interest. Your annuity will be reduced by 10–40 percent, depending on the difference between your age and the age of the person you name.
  3. You elect an alternative form of annuity because you are eligible for a nondisability annuity but have a life threatening or other critical medical condition.
WITHHOLDINGS FROM ANNUITIES

OPM will automatically withhold the following from your retirement annuity:

  • Federal income tax in the amount that is currently withheld from your salary. Withholdings for State income tax are not automatic. OPM has agreements with some States to allow the withholding of State income tax, but you must specify the dollar amount ($5 or more) you want withheld.
  • Premiums for Federal Employees Health Benefits, if you are eligible to continue coverage.
  • Premiums for Federal Employees’ Group Life Insurance, if you are eligible to continue coverage.
  • Premiums for Federal Dental and Vision Insurance Program, if you are enrolled.
COST OF LIVING ADJUSTMENTS

The year following your retirement, you are eligible for cost of living adjustments to your annuity. The first year’s increase is prorated based on how many months you were retired.

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