A Little Extra Under FERS
Almost half of all employees who retire under the Federal Employees Retirement System are entitled to receive the FERS Supplement. The supplement is a temporary boost to the basic retirement benefit designed to take the place of the Social Security tier of FERS when an employee retires at an age younger than 62. Those who retire under the Voluntary Early Retirement Authority option also are entitled to the FERS supplement when they reach the FERS minimum retirement age of 55 to 57, depending on their year of birth.
In 2011, a total of 37,839 employees retired under FERS. Of those, 18,490 were not eligible to receive the supplement, since they were retiring at 62 or later -- or on a disability retirement or an immediate or postponed “MRA+10” retirement (a reduced benefit for employees who are old enough to retire, but don’t have the minimum service required for an unreduced benefit). The supplement is payable when you retire at the MRA with 30 years or more of service, or at age 60 with at least 20 years of service. It also is payable to employees who retire under special provisions, such as law enforcement officers and firefighters.
How Much Is It?
The easiest way to estimate the monthly supplement is by using the following formula: Number of civilian years under FERS (military service and other Social Security-covered employment is not included) divided by 40, multiplied by your Social Security benefit at 62.
So, for example, suppose Sue works 30 years under FERS and is entitled to $1,600 per month in Social Security benefits at 62. She would be eligible for a supplement of about $1,200 (30/40 x $1,600) per month.
If you're getting close to your retirement date, you may want to request a retirement computation from your agency's human resources office that includes an estimated supplement.
There’s no need to apply specifically for the FERS supplement. If you’re entitled to it, it will be included with your FERS basic retirement benefit. It is not paid during the interim retirement period while your retirement application is being processed by the Office of Personnel Management, but once your claim is finalized, you will receive the full amount.
The supplement ends when you turn 62, regardless of when you intend to apply for Social Security retirement benefits. Like Social Security, the supplement is subject to an earnings test. If a retiree's earnings exceed an annual earnings limit, the supplement will be reduced by $1 for every $2 earned above that amount. The earnings limit for 2013 is $15,120.
OPM asks each retiree who has reached the minimum retirement age for a statement of earnings each year he or she is eligible to receive the supplement. Earnings, for purposes of calculating the supplement reduction, consist of the sum of wages for services performed in the year, plus all net earnings from self-employment, minus any net loss from self-employment. For members of special groups such as law enforcement retirees and firefighters, the earnings test will not be used until they reach the minimum retirement age.
Lloyd retired under an early retirement authority on Aug. 31, 2008, on his 55th birthday, with a combined 30 years of civilian and military federal service. He was not entitled to the supplement at first, but when he turned 56 (his minimum retirement age) he became eligible. Lloyd’s 56th birthday was Aug. 31, 2009. His first supplement was paid on Oct. 1, 2009, (covering the month of September). He received $552 based on his civilian service under FERS. But Lloyd had begun working at a new job in March 2009 and had earnings that would exceed the earnings limit and eliminate his supplement. Still, he received the supplement for the months of September, October, November and December of 2009 even though he had returned to full-time employment in March.
Lloyd continued to receive the supplement in 2010, until he got his first RI-92-99 Earnings Report on Sept. 18. Since Lloyd had reported income for 2009 that was enough to completely eliminate the supplement, his supplement was reduced to zero retroactive to August 2010. (He was entitled to the supplement for the first year since the annual earnings reduction cannot exceed the total annuity supplement to which the individual was entitled in the first year.) In November 2010, Lloyd was informed that he would no longer be entitled to receive the supplement due to the earnings report for 2009. Lloyd had been overpaid the supplement from August to October, for a total of $1,656. OPM collected the overpayment by reducing his FERS benefit over the next 10 months.
Lloyd is no longer receiving the supplement, because he continues to work full time. But he now plans to fully retire at the end of January 2013. He is only 58 years old and is entitled to have the supplement restored now that his earnings will be below the 2013 limit of $15,120. He has contacted OPM to let them know that his earnings will end on Jan. 31. He will be entitled to resume the supplement in August 2013 (the month of his 60th birthday) and the benefit will end at age 62.
Here are some resources to help you further understand the FERS Supplement and the earnings limit:
- Form RI 92-22, to report earnings to OPM
- OPM’s page on the FERS Supplement
- OPM Fact Sheet on the FERS Supplement