With bills being introduced on the Hill to eliminate the special retirement supplement (SRS) for future Federal Employees Retirement System (FERS) retirees, I thought it would be a good idea to explain what the special retirement supplement (SRS) is, why it is, and how the amount is figured.
What is the SRS and why is it provided?
The SRS approximates the Social Security benefit you earned while a FERS employee. It’s designed to bridge the gap between the time you retire and age 62, when you’ll be eligible for a Social Security benefit.
Notice the words “bridge the gap”? The FERS retirement system stands on three legs: a defined annuity benefit, the special retirement supplement, and the Thrift Savings Plan. Take away any one of those legs and the system collapses. If the SRS were eliminated, most FERS employees couldn’t afford to retire before age 62.
Now, notice the word “eligible”? The SRS ends at age 62, whether or not you apply for a Social Security benefit.
What is it based on?
The SRS is based solely on your years of FERS service. It doesn’t include any other Social Security-covered employment, such as work in the private sector. Nor does it include any period(s) of active duty service in the armed forces, even if you made a deposit to the retirement system to get credit for that time in determining your eligibility to retire and to have it used in your annuity computation. That’s because the SRS is paid out of Office of Personnel Management’s Civil Service Retirement and Disability Fund, not the Social Security Administration’s Old-Age and Survivors Insurance Trust Fund.
Who is eligible for the SRS?
To receive the SRS, you must be under age 62, eligible for an immediate annuity, and retire at your minimum retirement age (MRA) with at least 30 years of service; at age 60 with at least 20 years of service; under one of the special provisions for law enforcement officers, firefighters, air traffic controllers or military reserve technicians; or at your MRA under one of the early retirement or buyout provisions, whether the retirement is voluntary or involuntary.
If you meet the eligibility criteria for the SRS, it is automatically added to your FERS annuity.
The following categories of FERS retirees aren’t eligible for the SRS: disability retirees; anyone retiring under the MRA+10 provision; anyone who is only eligible for a deferred annuity; or anyone retiring at age 62 or later.
How is the SRS calculated?
The calculation begins with your total earnings from which Social Security taxes were deducted. It doesn’t include any earnings not covered by Social Security or any that exceeded the Social Security contribution rate limit for a given year. In 2015, the maximum amount of earnings from which those taxes can be taken is $118,500.
Your SRS will be computed using the same formula that the Social Security Administration uses to determine what your Social Security benefit will be when you reach age 62. The product is then multiplied by a fraction, which approximates the portion of your Social Security benefit that was earned while you were a FERS employee.
There’s a simple formula you can use to estimate what your SRS would be. Take your estimated Social Security benefit at age 62, divide it by 40, and multiply the product by the number of years you’ve been a FERS employee, rounded to the nearest whole number. For example, if your estimated annual Social Security benefit at age 62 is $18,000 and you have 20 years of FERS service, your SRS would be $9,000 ($18,000 ÷ 40 x 20) or $750 per month.
Because this is only an estimate, you may get more or less than that amount. That’s because in percentage terms, low income workers receive a greater return on their contributions than do higher paid workers.
Clearly, the closer you are to retirement the more dependable the SRS estimate will be. If you aren’t retiring in the near future, you’ll need to update that figure each time you get a benefit statement from the Social Security Administration.
P.S. If you want to see the official way your SRS will be calculated, and learn why you can’t do it yourself, go to opm.gov/retire/pubs/handbook/C051.pdf and scroll down to Part 51A2. Don’t blame me if you fall into a coma after reading it.
Two little known facts about the SRS
First, the SRS isn’t increased by cost-of-living adjustments (COLAs). Just as true of the annuities of non-special category retirees, it won’t budge from the amount you get when you first begin receiving it until your SRS ends at age 62. Then from that point forward, your FERS annuity will receive annual COLAs.
Second, with one exception, if you have earnings from wages or self-employment that exceed the Social Security annual earnings limit, your SRS will be reduced or stopped until your earnings fall below the limit. This year the limit is $22,050. If you exceed the limit, your SRS will be reduced by $1 for every $2 you earn above that amount. Note: The earnings limit doesn’t apply to other sources of income, such as your annuity or investments.
Here’s the exception I mentioned above. The earnings limit doesn’t apply to special category employees, such as law enforcement officers, firefighters or air traffic controllers who retire before reaching their MRA. If you fit into one of these job categories, you’ll receive the SRS regardless of your age. Further, you can earn as much as you want until you reach your MRA without it’s affecting your SRS. However, once you reach your MRA, the earning limit will apply and you’ll be treated the same as any other FERS retiree.
21 Comments
My high 3 is GS-7 step 1or partially GS-5 step 10. Can you check and see if my check is correct? Thanks!
No, we can’t.
I have read 2 of your articles recently one dated 4-15-2015 and one dated 6-15-2015. The subject of each article was the Special Retirement Supplement for FERS. In the first article you said the Social Security annual earnings limit for that year(2015) was $15720. In the June article you said the Social Security annual earnings limit was $22050. I’m just curious what the earnings limit is and when each year does it change. Also, where can you find the current Social Security annual earnings limit year to year as it changes ? Also are TSP withdrawals counted as income when figuring annual wages counting toward the special supplement? Thanks for any help you can give me on this. You do a great job.
The $15,720 figure is the maximum amount a retiree receiving a Social Security benefit (or the special retirement supplement for FERS retirees)could earn in 2015 without it affecting that benefit. The $22,050 figure is the amount of Social Security-covered wages a CSRS employee or retiree would need to earn in 2015 for it to be considered substantial earnings under the windfall elimination provision. Anyone who has fewer than 30 years of substantial earnings under Social Security at age 62 would have their Social Security benefit reduced, but not eliminated. Only earnings from wages or self employment are counted, not other sources of income.
If one is collecting Social Security Retirement Benefits between age 62 and Full Retirement Age, and has also earned wages that exceed the earnings test limit, then the excess amount is reduced by $1 for every $2 of excess. HOWEVER, the reduction is paid back via pro-rata additions to the social security benefit once the retiree reaches Full Retirement Age. Is this also true for the reductions to the SRS that are taken between MRA and age 62? Are the reductions paid back in the form of an increase to the FERS annuity after reaching age 62?
No.
If no, then what is the purpose or benefit associated with the deduction?
I’m not sure what you are asking.
Dear Reg,
If the SRS reductions deductions are not paid back in the form of an increase to the FERS annuity after reaching age 62, as would be the equivalent scenario in SSRB, what becomes of the money that is the SRS reduction? It seems to me that those dollars are just taken away from the annuitant in the form of a surcharge that comes into effect at one’s MRA. Or, is this reduction returned reimbursed to the annuitant some other way? I am not understanding what the purpose of the reduction is if it is not returned to the annuitant in some fashion. Is this just an arbitrary rule that has a negative financial impact on the annuitant? I am now under this rule as a retired FLEO, and am feeling the full effect of this diminishing action upon my income. Thank you for your insights and wisdom.
So just to clarify, an air reserve technician (ART) retiring under special provisions with over 20 credible years of federal civil service, at age 50, that in “involuntarily” removed from their dual status technician position is entitled to an immediate supplement annuity regardless of MRA if hired as an ART prior to 10 FEB 1996.
Yes.
I retired 12/31/2025, and I am drawing SRS. My question is this, I just went online to view my estimated social security benefits at age 62. these state they are estimated if I continue to make my annual income of 76,000. Will this be reduced since I retired at 60?
Your SS benefit was set at the point you retired and would only be increased if you had earnings from wages or self employment after that date
I am more of a visual learner. If using the above formula of the SRS, and estimating my monthly payment to be $ 700; (12 mos x $700 = $8,400 annually), (age 54/born 1963/federal LEO). Can you give an example of a hypothetical earnings over $15,720 and how much our SRS would be reduced? Would we be able to still keep our pay at our new job?
Is there a table anywhere which lists salaries with the deductions?
I was considering retiring and reapplying within the federal government.
You may find the Social Social Security Administration’s calculator helpful. You’ll find it at http://www.ssa.gov/planners/retire/anyPiaWepjs04.html
When going back work for the feds, i understand that ordinarily your annuity will be reduced by the amount of income earned in your new federal position.
This is a separate issue from the earnings test, which simply is theft of your earned and entitled benefit when your income surpasses $15,720 after reaching age 56, and is not returned to your benefit as is required when receiving social security.
I plan to leave federal service at age 56 (MRA) with 20+ years of service and defer retirement until 60. With this scenario, would I be eligible for SRS between age 60 and 62?
Although you’d be deferring the receipt of your annuity to a later date, you’d be retiring under the MRA+10 provision. Therefore, you wouldn’t be entitled to the SRS.
Are months calculated on FERS Service for SRS? For example: 20 years and 6 month of FERS Service. Is this rounded up(21 years) down(20 years) or not even counted in the formula.
The earnings limit does’nt apply to special category employees. Does this include military technicians. I notice in your final paragraph identifying special category employees you do not list military technicians. Are military technicians part of the group that the earnings limit does not apply to? Military technicians category is often overlooked.
No, they aren’t. The earnings limit applies to them.