"...The Senior Citizens League (TSCL) — a nonpartisan seniors group — delivered letters last week to all members of Congress asking them cosponsor the bipartisan CPI-E Act (HR 1251). If passed, the bill would base the annual cost-of -living (COLA) adjustment for benefits under the Civil Service Retirement System (CSRS), the Federal Employees Retirement System (FERS), and Social Security on increases in the Consumer Price Index for the elderly (also known as CPI-E).
“The inflation index that is currently used – the Consumer Price Index for Urban Wage Earners (CPI-W) – fails to capture the inflation seniors experience because items like gasoline and electronics are given more weight than medical costs, prescription drugs, and housing expenses. The fastest growing cost for seniors – Medicare Part B premiums – is not accounted for at all in the CPI-W since young workers are not enrolled in Medicare,” wrote TSCL Chairman Art Cooper...."
Oct 26, 2018
Sep 26, 2017
6 Federal Retirement Myths
"...We all know how complex the federal retirement system is...
so it makes sense that many details are not fully grasped by the average civil servant.
These misunderstandings sort of take a life of their own, evolve and develop into myths. I’ve spoken to many federal workers contemplating retirement that have stated these myths as fact to me. These myths all have an element of truth to them which possibly causes people to believe them so readily.
Let’s take a look at these 6 common myths:..."
Apr 20, 2017
Using Military Service to Increase Your FERS Pension
"...There’s a provision in FERS that allows you to make a deposit, or “buy back”, your active duty military service—and that time will count as creditable service for FERS retirement. Creditable service is important because it’s used to figure out when you can retire with a FERS pension AND how much your monthly pension will be!
Military service with a deposit counts as though you worked under FERS during that time—years, months and days are added to your creditable service. This can really add up to a tidy sum in retirement!..."
Sep 21, 2016
Retirees Prepare for Minimal COLA
"...With one month left to go in the cost of living adjustment countdown, federal, military and Social Security retirees are braced for what could be an almost invisible COLA.
Something like $10.59 per month for the average retiree under the old Civil Service Retirement System and $4.07 for the average retiree under the FERS retirement program.
The amount of the January inflation catch-up won’t be determined until price data for this month (September) is compiled by the Bureau of Labor Statistics. The final COLA figure will be released Oct. 18..."
Jan 28, 2014
Best Way to Capitalize on FERS
"...For those who entered covered service with the United States Government on or after January 1st, 1984, retirement benefits are referred to as FERS (Federal Employees Retirement System).
FERS is a complex system and much depends on an individual’s status with the government when planning for what to expect upon retirement. This is a guide intended to assist readers in understanding, calculating, and maximizing their FERS..."
Read more at FedSmith.com
Jan 31, 2013
Taxes and Your Retirement Income
"...Exactly how is your retirement income taxed for federal income tax purposes? Let’s look at it one piece at a time.
Most of your CSRS or FERS pension will be taxable. You receive your already taxed contributions back without having to pay any more tax on them. Unfortunately, you receive them back over your life expectancy. For a retiree who is age 55, that is 360 months, or 30 years. The bulk of the pension you receive consists of Uncle’s contributions and earnings on both Uncle’s contributions and your contributions. Each year OPM will send you a form 1099-R which lists your total annuity, the taxable portion of your annuity, and your total contributions to the retirement fund..."
Dec 13, 2012
The Creation of FERS
"...The process that resulted in FERS has relevance today. Many of the issues faced and actions taken during the FERS evolution in some ways foreshadow issues in the news today — including the pressure created by the so-called "fiscal cliff." Some discussion of the problems encountered 25 years ago and the methods used to resolve them may thus resonate with current events. So, let's get to it..."
Dec 12, 2012
FERS Timeline
"...The Federal Employees Retirement System, which overhauled federal pensions, turned 25 years old this year. But the history of the federal retirement structure extends farther back than even that. In this timeline, follow the key events that led to the creation of FERS..."
Nov 15, 2012
Understanding Federal Retirement System Funding
"...Most current federal employees will eventually receive retirement payments from the federal retirement system. And, of course, current federal retirees are already receiving payments from this system.
How much do you know about the funding of your federal retirement? Most of us never paid much attention to where the money comes from but have confidence the money will be there to support a comfortable lifestyle during the decades following departure from federal service. A Congressional Research Service report sheds light on the financing for federal retirement. Here is a brief explanation of a complex system of funding..."
Nov 14, 2012
Projected USPS Pension Surplus Shrank
"...The cash-strapped U.S. Postal Service has less of a surplus in a pension fund than previously thought, the federal government told the agency late last month.
John Berry, the director of the Office of Personnel Management, said that the surplus in the Federal Employees Retirement Service had shrunk to $2.6 billion in 2012, down from almost $11 billion last year.
Berry told Postmaster General Patrick Donahoe, in a letter obtained by The Hill, that a drop in long-term interest rates was the main cause for the decline in the surplus.
The Postal Service, which is bleeding millions of dollars a day, has been hoping to use the FERS surplus to help stabilize its financial situation. USPS has also defaulted on two separate prepayments for retiree healthcare this year, and has incurred steep losses for years..."
Nov 12, 2012
Are Federal Pensions Fully Funded?
"...The Obama administration and lawmakers from both parties generally favor increasing the amount government workers contribute to their pensions. Federal employee unions, including the American Federation of Government Employees and the National Treasury Employees Union, are poised to do battle to protect retirement benefits and pay as the lame-duck session gets under way and the new Congress convenes in January 2013. During a conference call with reporters Wednesday morning, AFGE President J. David Cox argued against increasing feds’ pension contributions in part by claiming that “federal employee retirement is fully funded.” In other words, why change a system that’s working fine as it is and not breaking the bank? It’s an argument others have made before. But what does it mean?
Most federal workers fall under the Federal Employees Retirement System or the Civil Service Retirement System; both contain a mix of employee- and employer-financed contributions to the Civil Service Retirement and Disability Fund. FERS annuities are fully funded by the sum of employee and employer contributions and interest earned by the Treasury bonds held by the CSRDF, but that is not the case with CSRS retirement benefits..."
Oct 11, 2012
Your 2013 Federal COLA Increase
"...If you are a retired federal employee and wondering how much your income will go up next year, those in the CSRS federal retirement system who qualify are probably going to end up getting between 1.5 and 1.7%. The final figure will be available October 16th but, without a doubt, the amount will be less than the 3.6% COLA paid to retirees in January of 2012.
The rate will not be the same for all former federal workers. As is often the case with government benefits, you will probably need to diagram some of the sentences to understand the amount of the increase—even after the October 16th date..."
Aug 7, 2012
USPS Considers Stopping FERS Payments
"...U.S. Postal Service executives are considering suspending contributions to the Federal Employees Retirement System because the agency may run out of cash, a new inspector general’s report says. The IG said the agency could face a $100 million cash gap in mid-October, when it is supposed to reimburse the Labor Department $1.4 billion for workers’ compensation costs. The Postal Service tried to suspend contributions to FERS last year on the grounds that the agency had a $7 billion surplus with FERS, but it backed down after the Justice Department refused to sanction the move. The news of the Postal Service’s cash problems came shortly before it failed to make a legally required $5.5 billion payment for future retiree health care..."
Aug 2, 2012
Pay Raises and COLAs
"...COLAs for retirees are governed by a formula set in law. They are determined in reference to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as calculated by the Bureau of Labor Statistics. As of the end of June, the CPI-W had increased 1.6 percent in the previous 12 months.
The 2013 COLA for retirees will be determined based on the results posted at the end of September 2012. That means price increases and decreases during July, August and September will affect the COLA that retirees receive in their Civil Service Retirement System and Federal Employees Retirement System benefit checks payable on Jan. 1, 2013..."
Jul 9, 2012
Retiring Feds Can Still Rely on COLA
"...Congress hasn’t yet managed to alter the law that provides annual cost-of-living adjustments to retirees. That’s a good thing, too, because COLAs are one of the best benefits provided to federal retirees and survivors. They help you to keep up with the pace of inflation. After a two-year drought during which no COLAs were paid, COLAs in 2012 jumped to 2.6 percent for Civil Service Retirement System annuitants and to 2 percent for Federal Employees Retirement System annuitants. The Congressional Budget Office is predicting that the 2013 COLA will be 1.6 percent for both..."
Jun 29, 2012
Postponed vs. Deferred Retirement
"...Are you thinking about leaving federal service before you are eligible for an immediate FERS retirement?
Then you need to know the difference between a postponed and a deferred retirement. They sound similar, but there are big differences..."
Jun 23, 2012
USPS Retirement Incentive Offer Update
"...The purpose of this article is to clear up any confusion in the field regarding the “irrevocability dates” relative to the May 22, 2012 Memorandum of Understanding (MOU) regarding the One-Time Retirement Incentive offer for Mail Handlers. While there are some limitations and exclusions, there are essentially three (3) categories of Mail Handlers who are eligible to participate under the terms of the MOU, and who might qualify to receive the retirement incentive payments: 1) Mail Handlers who are eligible for optional retirement (those who have satisfied the normal requirements to qualify for retirement under either CSRS or FERS); 2) Mail Handlers who have not yet satisfied the requirements for optional retirement, but who have fulfilled the Voluntary Early Retirement (VER) requirements outlined in the MOU; and 3) those Mail Handlers who have not yet satisfied the requirements for either optional or Voluntary Early Retirement, but who are nevertheless eligible to receive the incentive payments if they elect to resign their Mail Handler position..."
Jun 18, 2012
Early Outs And Buyouts Explanation
"...employees at some agencies, including the U.S. Postal Service, are weighing whether to accept offers of early outs or buyouts. There are two flexibilities agencies can use to reduce the disruption of downsizing: the Voluntary Early Retirement Authority (VERA) and the Voluntary Separation Incentive Payment (VSIP)...
To qualify for early retirement, Civil Service Retirement System or Federal Employees Retirement System employees must be at least age 50 with 20 years of service or any age with 25 years of service. For both CSRS and FERS, the early-out annuity, like a regular annuity, will be based on a formula that includes your high-three, which is the average of your highest three consecutive years of salary, and your years and full months of creditable service...."
To qualify for early retirement, Civil Service Retirement System or Federal Employees Retirement System employees must be at least age 50 with 20 years of service or any age with 25 years of service. For both CSRS and FERS, the early-out annuity, like a regular annuity, will be based on a formula that includes your high-three, which is the average of your highest three consecutive years of salary, and your years and full months of creditable service...."
May 21, 2012
Auto Escalation of TSP Proposed in Senate
"...Newly hired federal employees participating in the $313 billion Thrift Savings Plan, Washington, would have automatic escalation of their contributions under legislation introduced in the Senate.
Since 2009, federal employees have been automatically enrolled in TSP at a default employee contribution rate of 3% of salary. The employer contribution for the $412 billion Federal Employees Retirement System is capped at 5%...
The proposal, introduced Monday by Sen. Daniel Akaka, D-Hawaii, would authorize the Federal Retirement Thrift Investment Board overseeing TSP to add auto escalation of 1% per year for at least two consecutive years, to reach a savings goal of 5%. Employees could opt out of either feature..."
Since 2009, federal employees have been automatically enrolled in TSP at a default employee contribution rate of 3% of salary. The employer contribution for the $412 billion Federal Employees Retirement System is capped at 5%...
The proposal, introduced Monday by Sen. Daniel Akaka, D-Hawaii, would authorize the Federal Retirement Thrift Investment Board overseeing TSP to add auto escalation of 1% per year for at least two consecutive years, to reach a savings goal of 5%. Employees could opt out of either feature..."
May 19, 2012
Federal Retirement Rates and Returns
"...In April, I wrote about a webinar I had conducted on the subject of long- and short-term planning for retirement. Following the webinar, participants posted hundreds of questions about topics I had covered. I decided that over the next two weeks, I’ll try to address some of them. So let’s get right to it..."
Subscribe to:
Posts (Atom)
