My Nov. 12 and Dec. 3 columns reviewed the retirement rules for Civil Service Retirement System and Federal Employees Retirement System law enforcement officers and firefighters. In this column, I’ll do the same for those who started their careers under CSRS and then switched to FERS.
CSRS law enforcement officers and firefighters can retire at age 50 with 20 years of covered service. FERS law enforcement officers and firefighters can retire at any age with 25 years of covered service.
Once the minimum 20-year service requirement is met, a law enforcement officer or firefighter does not need to stay in a covered position to retire and receive the enhanced annuity computation for that service.
All law enforcement officers and firefighters are subject to mandatory separation based on age, but only if they are currently in an LEO or firefighter position. For both groups of employees, that age is 57.
If you have completed 20 years of service as an LEO or firefighter, you must be separated on the last day of the month in which you reach the mandatory age. If you are already at the mandatory separation age and haven’t completed 20 years of service, you must be separated on the last day of the month in which you complete 20 years. However, in the public interest, an agency head may exempt an employee from mandatory separation until age 60. To secure an exemption beyond that, the agency head must get the approval of the Office of Personnel Management.
Because of their generally shorter and more hazardous careers, LEOs and firefighters have a more generous annuity computation. For this enhanced benefit, they contribute 0.5 percent more of basic pay to the retirement fund than non-LEO and firefighter employees do: 7.5 percent for any period of CSRS service and 1.7 percent for any FERS service.
If you had at least five years of CSRS-covered service before transferring to FERS, you’ll have a CSRS component in your annuity. This means that part of your annuity will be computed under CSRS rules and the remainder under FERS rules.
For example, if your high-three — the average of your highest three consecutive years of pay — was $100,000 and you had five years of CSRS service and 15 years of FERS service, your annuity would be $38,000, the sum of:
- 2.5 percent of $100,000 multiplied by the five year of CSRS service, $12,500.
- 1.7 percent of $100,000 multiplied by the 15 years of FERS service, $25,500.
If you had five additional years of non-LEO or firefighter service, your annuity share for those years would be calculated under the standard FERS formula: 1.0 percent of $100,000 multiplied by the five additional years of FERS service, or $5,000, increasing your annuity to $43,000.
If you transfer from CSRS to FERS, you are able to begin your 20-year countdown all over again. As a result, more of your years of LEO- or firefighter-covered service would be computed using the enhanced benefit formulas. In the example above, if you had five additional years of covered service, your annuity would be increased by $8,500 (1.7 percent of $100,000 multiplied by the five additional years of FERS LEO or firefighter service) — increasing the LEO or firefighter portion of the annuity from $38,000 to $46,500.
While unused sick leave may not be used to meet the years of service needed to qualify for retirement, it would be added to your actual service and increase the amount of your final annuity.
If you are under age 62 when you retire, you’ll also receive a special retirement supplement, which approximates the Social Security benefit you earned while you were a FERS employee. It doesn’t include service under CSRS or active-duty military service for which you’ve made a deposit to the retirement system.
If you retire before your minimum retirement age, you’ll be able to earn as much as you want without being subject to the annual Social Security earnings limit. However, when you reach your minimum retirement age, the earnings limit will apply. And it will reduce the special retirement supplement by $2 for every $3 you receive from wages and self-employment. In 2012, that limit is $14,640.