Q: I am a federal employee under FSRDS, the old foreign service retirement system, having been under CSRS from my 1979 employment date to my conversion to foreign service in 1989. I had active-duty military time that I purchased for federal retirement.
In 1968 I had about three months of civil service time with the Air Force as a civilian employee, and the $100 or so withheld for CSRS retirement was refunded to me in either the late 1960s or early 1970s. That three month’s service appears to be included in my Service Computation Date adjustment, along with the active military time.
When I rejoined federal service in 1979, for whatever reason, I apparently never made the three month’s civil service retirement redeposit, and by my calculations, the unpaid amount plus accrued interest, is about $1,200 or so.
The three months of civil service time is not going to increase my retirement computation (assuming I live another two years), as I will have over the maximum 35 years of service for retirement purposes (under FSRDS) without the three months, based on my current plans, to retire in the summer of 2012. Based on the comment in your Oct. 4 column, you write “if you don’t make a deposit for that period, your annuity will be reduced by 10 percent of the unpaid amount plus accrued interest.”
I am not sure what the reduction will be. I understand the math will give me a $120 reduction in annuity, so if that amount is per month, I recoup the redeposit in roughly 10 months. If the $120 reduction in annuity is based on the yearly annuity total, then it takes roughly 10 years to make up. Should I be worried about making a deposit for that three months? If my monthly annuity is reduced by $120, it would pay to make the redeposit. If the monthly annuity is reduced by much less, why worry? Based on the numbers above, what is the estimated monthly annuity reduction?
The three months prior civil service time is not going to increase my retirement computation (assuming I live another two years), as I will have over the maximum 35 years of service for retirement purposes (under FSRDS) without the three months, based on my current plans, to retire in summer of 2012.
A: Because you took a refund of your retirement contributions before March 1, 1991, you can either redeposit what you owe, plus accrued interest, or have your annuity actuarially reduced based on the amount you owe on the day you retire. The 10 percent reduction you referred to applies only to those who were employed before Oct. 1, 1982, and worked in a position where retirement deductions weren’t taken from their pay. If they don’t make a deposit for that time, their annuities will be reduced by 10 percent of what they owe, including accrued interest.