Understanding the Retirement System for Government Employees

 

One of the key benefits that set the US civil service apart is the retirement benefits. The Civil Service Retirement Act came into being on August 1st, 1920, to help civil service employees maintain a decent lifestyle during their golden years.



Here the details of those benefits:

What is FERS?

The retirement system for government employees in the US is governed by the Federal Employees Retirement System (FERS). This plan covers the retirement benefits for employees working in the legislative, executive, and judicial branches of the US federal government. This plan doesn’t cover any employees of the state or local government or military personnel.

The system is based on the following three benefit sources:

a. The Basic Benefit Plan

b. Social Security

c. Thrift Savings Plan

What do the three plans mean?

The basic benefit plan is a fixed amount of pension that a federal employee receives—irrespective of the amount that he or she has contributed.

Federal employees contribute to the Social Security Fund at the same rate as the private sector employees. All employees under FERS are required to pay 6.2% of their earnings to the Social Security Fund. Let’s say an employee was born in 1975 and earn $50,000 a year. If they plan to retire by the age of 65, the estimated retirement benefit would be equal to $4,200 per month (after being adjusted for inflation).

As far as the Thrift Savings Plan is concerned, it is similar to a 401(k). Your employer deposits 1% of your total basic pay into the TSP account during each pay period. You can also make additional contributions up to 5% of your total pay. These contributions are tax-deferred and regulated by the Federal Retirement Thrift Investment Board.

The Social Security Fund and the TSP go with you to your next job if you leave the civil service before retirement. The TSP and Social Security require you to contribute to the funds, whereas the government pays for the basic benefit plan entirely.


 

Who is eligible for the FERS?

A civil service employee’s eligible for the FERS depends on a number of factors, including:

a. Their age

b. Number of years of creditable service

c. Minimum retirement age (in some cases)

d. If they’re disabled, the age requirements may be relaxed.

Other than that, if the employee leaves the Federal Service and meets the age and service requirements, they’ll be eligible for an optional annuity. If they leave before they meet the same requirements, they’re eligible for deferred retirement benefits. For this option, they must be 62 years of age and must have completed at least five years of creditable civilian service.

If you’re planning on appearing for the NYC Firefighter Exams or the Suffolk County Police exam, Civil Service Success can help you prepare and guarantee a promising career in the civil service! 

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