I’ll start 2013 with a summary of changes to federal pay, cost-of-living adjustments and Social Security benefits.
Regarding pay, sorry to say, 2013 is beginning as a repeat of the past two years. While your take-home pay can still be increased by within-grade increases and promotions, the freeze on annual across-the-board pay adjustments continues at least through March.
If you’d like to see what you will be making this year, go to the salary tables on the Office of Personnel Management website.
Although you haven’t seen across-the-board increases in your salaries because of the pay freeze, the Social Security maximum taxable wage base has increased from $110,100 to $113,700. Once you’ve earned that much, Social Security taxes won’t be deducted from your salary for the rest of the year. However, taxes for Medicare Part A will continue to be deducted, even if you earn more than that.
If you are a CSRS Offset employee who earns more than the maximum taxable wage base, you won’t see an increase in your take-home pay. That’s because full Civil Service Retirement System deductions will be taken from that pay. So instead of 6.2 percent going to Social Security and 0.8 percent to CSRS, all 7 percent will go to CSRS. If you are a law enforcement or other special category employee, instead of 6.2 percent going to Social Security and 1.3 percent to CSRS, all 7.5 percent will go to CSRS.
For the second year in a row, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has gone up. That means both CSRS and Federal Employees Retirement System retirees will get cost-of-living adjustments of 1.7 percent in 2013.
If you are a CSRS retiree who has been retired for at least one year as of Nov. 30, 2011, you’ll receive the full COLA in your January 2013 annuity payment, regardless of the age at which you retired.
If you are a FERS retiree, you’ll only receive that COLA if you meet one of the following three criteria: You are age 62; you retired under the special provisions for law enforcement officers, firefighters or air traffic controllers; or you are a survivor or disability annuitant.
If you’ve been retired for less than one year when you become eligible for a COLA, the amount you get will be proportional to the number of months you’ve been on the annuity roll. For example, if you were on the annuity roll in June 2012, you’d receive half of the 2013 COLA.
If you are a FERS retiree with a CSRS component in your annuity, the CSRS component will be increased under CSRS rules. In other words, you’ll get the full COLA on the CSRS portion regardless of your age.
Social Security benefits, like COLAs, are increased by the annual change in the CPI/W. In 2013, that’s a 1.7 percent increase in your Social Security payment, regardless of the month in which you became eligible for it.
Eligibility for a Social Security benefit begins at age 62, but with a reduced benefit. The amount of the reduction decreases until you reach your full retirement age, which ranges between 65 and 67, depending on the year in which you were born. For example, if your full retirement age is 65 and you apply for a Social Security benefit at age 62, the reduction will be about 20 percent. If your full retirement age is 67, the reduction will be around 30 percent.
If you are a retiree receiving a Social Security benefit and you haven’t yet reached full retirement age, your Social Security benefit will be reduced by $1 for every $2 you earn from wages or self-employment of more than $15,120, up from $14,640 in 2012. In the year you reach your full retirement age, the reduction is $1 for every $3 above $40,080. There is no reduction beginning with the month in which you reach full retirement age.
The earnings limit also applies if you are a FERS retiree receiving the special retirement supplement. The SRS, which approximates the amount of Social Security benefit you earned while employed under FERS, continues until age 62, when you are eligible for a Social Security benefit. In most cases, your SRS will be reduced by $1 for every $2 above the $15,120 earnings limit.