OPM annuities funding


Q. I plan on applying soon for a FERS deferred annuity.

Nowhere have I read whether the Office of Personnel Management actually purchases an annuity from a private insurance company, creates its own version of annuities, or a FERS deferred annuity is simply a transfer of monies out of the General Fund (tax payments)? Please explain whether a FERS annuity is a private annuity contract, a public contract or just another tax payment transfer program (like the Social Security Administration).

If it is private, what insurance company is used?  If it is public, is this just another transfer program from FERS current contributors?

A. CSRS and FERS annuities are primarily funded through the taxing power of the federal government, with employee contributions providing only a part of the revenue needed to meet benefit obligations. These benefits are paid out of the Civil Service Retirement and Disability Trust Fund, which contains employee contributions and Treasury payments. Because of this arrangement, benefit checks are independent of any annual appropriations.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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