Q. I am 45 years old with 13 years of service under FERS and will be resigning this month to pursue other activities. I understand that I would eligible for a full pension (computed on my high-3) at age 62. That is 17 years away and, in the meantime, my defined benefit pension would remain static and thus be seriously eroded by inflation. Is there a way to protect myself against this within the pension system, or can I take a lump sum on separation and roll that into an IRA? If I take the lump sum, must I do it as of my separation, how is it computed, and does it represent only my contributions to the basic pension, or also those of the government? I have a separate Thrift Savings Plan, which I plan to roll into an IRA.
A. You are correct when you say that your annuity amount would be frozen on the day you resigned from the government and that it wouldn’t be payable until you reached age 62. If you decided to take a refund of your retirement contributions, they would be returned to you with accrued interest. You wouldn’t be entitled to the government’s contributions.