We specialize in helping Federal Employees navigate their Federal Benefits

The Federal Employees Retirement System (FERS)

The Federal Employees Retirement System (FERS) is the current retirement system for US federal civilian employees. Effective January 1, 1987, the Federal Employees Retirement System (FERS) was created to replace CSRS. FERS was designed to conform federal retirement plans more closely with those in the private sector. It became effective in 1987 but has been applied to employees who joined federal service in 1984. While most federal and postal retirees remain under CSRS, the majority of Federal Employees working today- about 80%- are under FERS.

Calculating creditable years of service can be confusing because it can also be impacted by used and unused sick leave and differences in civilian and military service. FERS is a retirement system that provides benefits from three different sources: the Basic FERS Pension Benefit; Social Security Benefits; and Tax-Deferred Thrift Savings Plan (TSP).  According to OPM.gov, under FERS you can take your Social Security and your Thrift Savings Plan (TSP) with you to your next job if you leave your federal employment position before you retire. FERS eligibility is determined by your age and the year you were born, your total years of creditable service (usually a minimum of five creditable years), and whether or not you have reached the minimum retirement age for the agency you served.

Then there’s added possibility for confusion if you left your government job before 1987 and then returned after. In this scenario, there’s the possibility you may have been placed in the wrong retirement system when you returned. In 2000, The Federal Erroneous Retirement Coverage Corrections Act (FERCCA) was passed to help correct these errors.

We can provide your FERS pension calculations as part of your Federal Benefits Analysis. Call to schedule your analysis with one of our benefit consultants today. 

The Civil Service Retirement System (CSRS)

Established in 1920, the Civil Service Retirement System (CSRS) predates Social Security which wasn’t established until 1935. CSRS is described as a “defined benefit contributory retirement system.”The CSRS system applies to you if you are a federal employee hired before January 1, 1987. After that date, CSRS was replaced by the Federal Employees Retirement System (FERS).  If you’re a federal employee still covered under CSRS, you contribute from 7 percent to 8 percent of your pay into this retirement system. Your employing agency then matches your CSRS contributions.  You can further increase your earned retirement benefits by contributing up to 10 percent of your basic pay to a voluntary contribution account and/or contribute a portion of your pay to the Thrift Savings Plan Voluntary Contribution Plan (TSP). Keep in mind, there is no government “matching” contribution to your TSP under CSRS, your contributions are tax-deferred.

Eligibility for Civil Service Retirement System (CSRS) retirement benefits is determined by your age at retirement, your number of years of creditable service, what type of retirement you choose and in some cases, other special requirements. We can assist you with a detailed analysis to evaluate your CSRS pension benefit. 

The Thrift Savings Plan (TSP)

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. It was established by Congress in the Federal Employees' Retirement System Act of 1986 and offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.

The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency, if you are eligible to receive agency contributions) put into your account during your working years and the earnings accumulated over that time.

As you approach retirement it makes sense to evaluate your TSP allocation strategies. Are you too aggressive or to conservative? How much income can you produce in retirement? Are you at risk of loosing money if the market drops? How should you structure your TSP to produce income when your retire? These are many of the questions you should be asking yourself if you are within 5 years of retirement.

Freedom Financial is here to help and answering those questions for you is our top priority. We want to learn more about your personal situation, identify your dreams and goals, and understand your tolerance for risk and desire for income. The decisions you make today will effect you and your quality of life long into retirement.  It is important to note that a loss of 35% in your TSP account will require a return of 54% just to get back to where you started. The probability of that happening in 5 years is only 61.1%.

Your first step is requesting our confidential retirement benefits analysis. This analysis will review your TSP strategies, Social Security, FERS / CSRS, health insurance and provide you with a written plan with options and action recommendations.

Federal Employee Group Life Insurance (FEGLI)

The Federal Government established the Federal Employees' Group Life Insurance (FEGLI) Program on 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.

Most employees are eligible for FEGLI coverage. FEGLI provides group term life insurance. As such, it does not build up any 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 deducts premiums from your paycheck unless you waive the coverage. In addition to the Basic, there are three forms of Optional insurance you can elect. You must have Basic insurance 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, and the cost depends on your age.

Currently The Office of Personnel Management (OPM) contracts with Metropolitan Life Insurance Company (MetLife) to provide this life insurance coverage to eligible employees. The Office of Federal Employees’ Group Life Insurance (OFEGLI) was established by MetLife to process and pay claims and perform other administrative functions needed to run the program. Therefore, many employees, especially those over 45 years old, could be eligible for significant cost savings by ‘shopping’ for FEGLI comparisons. We highly recommend that all eligible FEGLI recipients review their potential cost savings at least annually. We can provide detailed analysis of your FEGLI coverages and offer alternatives that could save you thousands of dollars over the life of your contract depending on your age and other factors. Ask us about receiving your FEGLI comparison.