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FHWA Order M3000.1C

Order
Subject
FHWA Personnel Management Manual; Part 1: Personnel Systems & Procedures, Chapter 10: Retirement, Insurance, Income Protection, and Other Employee Services, Section 4: Federal Employees Retirement System (FERS)
Classification Code Date
M3000.1C November 4, 2005  

Par.

  1. What is the purpose of this section?
  2. Does this directive cancel an existing FHWA directive?
  3. What references were used when writing this section?
  4. What are the responsibilities for this section?
  5. What is the coverage for this section?
  6. What is the basic annuity plan?
  7. What is the Thrift Savings Plan?
  8. What are death benefits?
  9. How do I request an annuity computation?
  10. What are the procedures for applying for retirement?
  11. What are my health insurance benefits?
  12. What are my life insurance benefits?
  13. What is a refund of retirement deductions?
  14. What are deposits and redeposits to the retirement fund?
  1. What is the purpose of this section? This section establishes responsibilities and procedures for the Federal Employees Retirement System (FERS), the Basic Annuity Plan, and the Thrift Savings Plan.

  2. Does this directive cancel an existing FHWA directive? No. This is a new section that has been added to the Personnel Management Manual (PMM).

  3. What references were used when writing this section?

    1. Title 5, United States Code (U.S.C.), Chapter 84.

    2. Title 5, Code of Federal Regulations (CFR), Part 841, Federal Employment Retirement System.

    3. The Civil Service Retirement System and Federal Employees Retirement System Handbook for Personnel and Payroll Offices (CSRS/FERS Handbook)

  4. What are the responsibilities for this section?

    1. The servicing human resources office is responsible for:

      1. Determining the employee's eligibility for coverage;

      2. Counseling and informing the employees of their benefits, obligations, required forms, procedures, and providing assistance in completing required forms;

      3. Making creditable service determinations for computation purposes;

      4. Considering the position reassignment options, if possible, when the employee applies for disability retirement;

      5. Providing counseling assistance to the family of a deceased employee; and

      6. Reviewing and processing the completed retirement forms and resolving any problems that may arise.

    2. Supervisors are responsible for:

      1. Preparing the Standard Form (SF)-52, Request for Personnel Action, for each retiring employee and submitting it with other required forms to the servicing human resources office for processing;

      2. Arranging for the servicing human resources office to provide counseling assistance to employee's family upon death of an employee; and

      3. Furnishing a supervisor's statement in connection with the application for disability retirement.

    3. Employees are responsible for:

      1. Completing the required forms and providing other information when applying for retirement;

      2. Obtaining retirement counseling, annuity estimates, required forms, and other desired information; and

      3. Keeping the servicing human resources office apprised of any change in personal status affecting retirement entitlements.

  5. What is the coverage for this section? On June 6, 1986, the President signed the Federal Employees' Retirement System Act of 1986. FERS bases future pension benefits on a combination of Social Security, a FERS retirement annuity, and earnings from a tax-deferred savings plan. Those employees covered by FERS include:

    1. New employees first hired into the Federal government on or after January 1, 1984.

    2. Employees with a break in service of more than 365 days with less than five years under the Civil Service Retirement System (CSRS).

    3. Current CSRS employees who elected to transfer to FERS during the open seasons which occurred during July 1 through December 31, 1987, or July 1, 1998, through December 31, 1998.

    4. Employees rehired after December 31, 1986, with more than five years of service under the CSRS ("five-year rule") who elect to transfer to FERS. These employees will have an immediate six-month open season during which they may elect to transfer to FERS.

    5. Employees, serving on "Term, Temporary Appointment Pending Establishment of a Register (TAPER), or Indefinite" appointments, unless excluded because of the "five-year rule".

  6. What is the basic annuity plan?

    1. Employee contributions. Employee contributions to the Basic Benefit Plan is the difference between 7% of the employee's basic pay and Social Security's old age, survivor, and disability insurance tax rate, or 0.8%. Employee contributions into the Thrift Savings Plan are voluntary.

    2. Retirement eligibility. Under the FERS, employees may retire and receive an immediate annuity if they have at least the amount of Federal service shown in the Attachment 1 at the end of this section.

    3. Annuity formula. The basic annuity is computed on factors of length of service (no credit will be given for unused sick leave except for transferees from CSRS) and "high-3" average pay. "High-3" average pay is the largest annual rate of pay resulting from averaging over any period of three consecutive years of creditable service. The annual annuity is computed by multiplying 1 percent of "high-3" pay times years of service, or 1.1 percent if retiring after age 62 with 20 years or more of service.

    4. Amount of annuity

      1. Optional Based on accrual rate, without reduction if the employee meets all minimum age and service requirements.
      2. MRA + 10 Reduced 5 percent for each year under age 62 if employee has reached the Minimum Retirement Age (MRA) with at least 10 but less than 30 years of service.
      3. Discontinued Based on accrual rate without reduction.
      4. Deferred Full accrued benefit vested payable at age 62 with five years of service, age 60 with 20 years of service, or MRA with 30 years of service. Reduced benefit can be elected at MRA by a former employee with 10 years of service.
      5. Disability  
        a In first year of payments 60 percent of "high-3" minus year of 100 percent of any Social Security benefit payable to the employee.
        b After first year
      up to age 62
      40 percent of "high-3" minus 60 percent of initial Social Security benefit payable to the employee, increased by annual Cost of Living Adjustment (COLA) percentage.
        c After age 62 Recomputed from basic annuity formula, but limited to benefit payable to individual who gets Social Security (40 percent-less-60 percent formula stated above).
    5. Annuity Supplement Payable to Age 62. Employees who retire after reaching the MRA with 30 years of service, or age 60 with 20 years of service, will receive until age 62 an Annuity Supplement equal to an estimated Social Security benefit earned in the Federal service. The supplement is subject to an earnings test, similar to the test used by Social Security at age 62, which will reduce annual payments by one-half of the retiree's earned income above an annual exempt amount. However, it differs from Social Security in that earnings from one year reduces the supplement the following year. The annuity supplement is not subject to COLA increases.

  7. What is the Thrift Savings Plan? All FERS employees are eligible to participate in the Thrift Savings Plan. Participation is totally voluntary. Please refer to the Summary of the Thrift Savings Plan for Federal Employees for specific information about this program.

  8. What are death benefits?

    1. Upon the death of a married employee with 18 months or more of civilian service, the surviving spouse will receive:

      1. A lump sum payment of the employee's retirement deductions plus the higher of ½ of the employee's annual pay rate at death or ½ of the employee's "high-3" average pay.

      2. An annuity equal to 50 percent of the spouse's accrued annuity, if the employee had 10 or more years of service.

    2. These benefits will be paid in addition to any Social Security, group life insurance, or Thrift Savings Plan death benefits.

  9. How do I request an annuity computation? Employees may request an estimate of their annuity or other retirement information from their servicing human resources office.

  10. What are the procedures for applying for retirement?

    1. Employees should contact their servicing human resources office for a complete explanation and copies of the required retirement forms.

    2. Employees should submit the completed retirement forms to their supervisor prior to separation to apply for retirement benefits. The supervisor should forward these forms, along with a completed SF-52, Request for Personnel Action, to the servicing human resources office for processing.

  11. What are my health insurance benefits? Specific information regarding eligibility for continuing health benefits coverage during retirement and other aspects of the Federal Employees Health Benefits (FEHB) Program as it relates to the retiring employee is found in the FEHB Handbook.

  12. What are my life insurance benefits? Specific information regarding eligibility for continuing life insurance coverage during retirement and other aspects of the Federal Employees Group Life Insurance (FEGLI) Program as it relates to retiring employees is found in the FEGLI Program Handbook.

  13. What is a refund of retirement deductions? An employee who separates from the Federal service may request the refund of retirement deductions by submitting the SF-2802, Application for Refund of Retirement Deductions, to the servicing human resources office, or if he or she has been separated more than 30 days, directly to the OPM. Refunds under FERS may not be redeposited, and the employee permanently forfeits rights to any FERS benefits from the refunded service. If married, notification of the employee's current (or former) spouse is required.

  14. What are deposits and redeposits to the retirement fund? The SF-2803, Application to Make Deposit or Redeposit, is to be completed by the employee when applying to make a deposit to the retirement fund for creditable service when deductions were not made. The SF-2803 should be forwarded to the servicing human resources office for processing. There are no provisions to make redeposits when deductions were previously withdrawn.

FERS Retirement Eligibility Chart
Type of Retirement Minimum Age/Service Requirements
1. Optional Unreduced Annuity Age 62 & 5 years service, age 60 & 20 years service, or "Minimum Retirement Age" & 30 years service
Year of Birth Minimum Retirement Age
Before 1948 55
1948 55 & 2 months
1949 55 & 4 months
1950 55 & 6 months
1951 55 & 8 months
1952 55 & 10 months
1953 - 1964 56
1965 56 $ 2 months
1966 56 & 4 months
1967 56 & 6 months
1968 56 & 8 months
1969 56 & 10 months
1970 - after 57
2. Optional Reduced Annuity Minimum Retirement Age & 10 years Service
3. Involuntary Age 50 & 20 years service, or any age & 25 years service.
4. Deferred vested Unreduced benefit at age 62, if employee had 5 years civilian service at termination and did not get refund of contributions. Reduced benefit available at Minimum Retirement Age to vested employee with 10 years service.
5. Disability Any age, if employee has 18 months of civilian service.
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