Age Reduction
Under CSRS your discontinued-service annuity reduces by 2 % a year for every year you are under age 55. Under FERS, if you retire at the MRA with less than 30 years your annuity reduces by 5% a year for every year you are under age 62. There is no age reduction under FERS early retirement provisions — retirements resulting from involuntary separations or voluntary separations during a major reorganization or major reduction-in-force.

Alternative Form of Annuity
An option that a retiree may choose if they have a life-threatening affliction and are eligible for optional retirement — electing a lump sum (cash payment) of retirement contributions and accepting an actuarial (age) reduced annuity.

Annuitant
A retired Federal civil service employee or survivor receiving an annuity from the Civil Service Retirement Fund.

Annuity
Payments to a retired employee, a surviving spouse, former spouse, or children. The annuity is an annual computation paid on a monthly basis.

Annuity Commencing Date
This is the date an annuity begins. Under CSRS, the annuity for voluntary/optional retirees who separate after the first three days in the month of retirement begins on the first day of the following month in which the employee retires — if you retire on January 4, then your annuity begins on February 1; however, if you retire on January 3, your annuity begins on January 4. Under FERS, the annuity for voluntary/optional retirements begins on the first day of the month following the month when you retired — if you retire on January 4, or any other day in January then your annuity begins on February 1.

Basic Annuity Formula:

• Under FERS the basic annuity formula is 1% of the "high-3" average pay multiplied by length of service. At age 62 with at least 20 years of total service, the formula is 1.1% of the "high-3" average pay multiplied by length of service.

• Under CSRS the formula is:

1.5 % of the "high-3" multiplied by the first 5 years of service;
plus 1.75 % of the "high-3" multiplied by the years of service between 5 and 10;
plus 2 % of the "high-3" multiplied by all service over 10 years.

Basic Pay
The pay or compensation set by law or regulation. It does not include bonuses, overtime pay, military pay, special allowances, cash awards for suggestions or superior accomplishment, holiday pay, or other compensation given in addition to the base pay of a particular position. Retirement deductions are from the basic pay.

Catch 62 (CSRS)
Refers to the benefit cut forced on many veterans who retire under the CSRS and later are eligible for Social Security benefits at age 62. The benefit cut may now be avoided by making a deposit for the post-1956 military service.

Children's Benefit
Under CSRS and FERS children of a deceased employee or annuitant may be eligible for survivor benefits. The child must be unmarried and under age 18, or up to age 22 if a full-time student, or any age if disabled before age 18. For example, in 2001, a child can receive about $369 per month (for no more than 3 children).

Civil Service Retirement and Disability Fund
This fund contains the assets from employee and employer contributions, plus additional payments of the CSRS and the FERS. The retirement fund investments are in Federal Government securities.

Common Stock Index Investment Fund
This fund consists of equity investments made in proportion to a diversified common stock index. It is for long-term growth. Since it is a stock fund, the rate of return will vary from time to time. The investments are in a stock index such as the Standard and Poor's 500. FERS employees as well as CSRS employees may invest in this fund.

Cost-of-Living Adjustment (COLA)
An adjustment based on the Consumer Price Index (CPI) that increases the basic annuity in order to maintain the annuity's earning power against inflation. CSRS retirees receive the total increase after retirement — the first increase pro-rated. FERS retirees receive the total increase less 1% starting at age 62 unless disability retired. If the COLA is less than 2%, then FERS retirees receive the actual COLA.

Coverage
Employees first hired after December 31, 1983, have FERS coverage. FERS also includes employees rehired after 1983 with a break in service exceeding 1 year and who have less than 5 years of civilian CSRS creditable service as of December 31, 1986, or date of rehire, if later. Employees with more than 5 years of civilian CSRS creditable service have coverage under the CSRS Offset Plan. Employees with previous coverage under the CSRS whose separation was for less than 1 year have CSRS coverage upon reemployment.

CSRS - (the Civil Service Retirement System)
The retirement system created for Federal employees in 1920. CSRS ultimately will be phased-out as new Government employees have FERS coverage, which went into effect January 1, 1984.

CSRS Offset Plan
A retirement plan for employees who were under CSRS, separated for more than 1 year, and then rehired. The benefits under this plan are similar to CSRS benefits except the employees pay into Social Security as well as into CSRS. They also receive benefits from CSRS which are offset by the Social Security benefit earned under the Offset Plan

Employees contribute 6.2% of gross pay to Social Security (up to maximum taxable wage base) plus .8% to the CSRS retirement plan increasing to 7% when wages exceed the maximum taxable Social Security wage base.

Deductions
The amount withheld for retirement purposes from the basic pay of an employee. CSRS employees contribute 7% of basic pay and firefighters and law enforcement officers 7.5%. CSRS offset and FERS employees deductions are 6.2% for Social Security and .8% for retirement. In addition, deductions for the Medicare tax (HIT) are 1.45% for all employees.

Deposit
A sum of money you (or your survivor) pay to the Fund to cover a period of service when retirement deductions were not withheld from your pay. Under FERS, you may not deposit for civilian service after 1988 if no contributions were withheld.

Disability Retirement
Retirement, regardless of age, because you can no longer perform useful service in your position or any similar position. A benefit paid to you if you have at least 18 months of civilian service (FERS) or 5 years (CSRS) and as a result of injury or illness you are unable to do your job.

• Under CSRS the benefit is a guaranteed minimum or your accrued annuity, whichever is higher.
• Under FERS the benefit is 60% of your high-3 average salary the first year of disability, dropping to 40% for the following years. The FERS benefit is re-computed at age 62 and increased by the amount of time on disability annuity rolls.

Discontinued Service Retirement
An involuntary retirement, through no personal fault of your own, after age 50 and 20 years of service, or at any age with 25 years of service. Under CSRS your annuity reduction is 1/6 of 1% for each full month under age 55 — 2% per year. Under FERS there is no age reduction.

Early Retirement
A retirement term that refers to the benefit available in certain involuntary separation cases and in cases of voluntary separations during a major reorganization or RIF. Eligibility under CSRS and FERS is age 50 with 20 years service or 25 years of service at any age. There is an age reduction if retirement is under CSRS. See Discontinued-Service Retirement above.

Executive Director
The Executive Director is the manager of the FERS Thrift Plan. The Executive Director has direct responsibility for Thrift Plan investment decisions and must be a financial investment and pension benefit expert.

Exempt Amount
The amount of earnings a FERS retiree under age 62 can receive without reducing the Special Retirement Supplement. Earnings in excess of the annual exempt amount under Social Security ($10,680 in 2001) will reduce the Supplement by $1 for every $2 in earnings in excess of the exempt amount. Excess earnings in 1 year reduce the Supplement the following year. Earnings include all wages and self-employment income.

Federal Employees Retirement System (FERS
The FERS was created by Congress and signed into law on June 6, 1986, to cover all new Federal employees hired after December 31, 1983. FERS is a three tiered system based on Social Security with a basic benefit plan and a savings program (TSP).

Federal Retirement Thrift Investment Board (The Board)
A Board of five members that oversees the FERS Thrift Plan. The Board, through the Executive Director, decides what entities to contract with for specific investments in the Fixed Income Investment Fund. The Board chooses a commonly recognized stock index for the Common Stock Investment Fund. The Board must provide summary descriptions of the investment options with historical evaluations of each option at least 30 days prior to an Open Season.

Fixed Income Securities Investment Fund
This fund emphasizes protection of your savings while providing an attractive rate of return. Your invested money is in Guaranteed Investment Contracts, bank certificates of deposit, or other private sector securities. These investments provide a fixed rate of return for a specified period. Employees under FERS as well as CSRS may invest in this fund.

Government Securities Investment Fund (G Fund)
One of the five investment funds in the Thrift Savings Plan. The investment is in specially issued Federal Government securities and has the Federal Government's guarantee. Employees under FERS as well as CSRS may invest in this fund.

Gross Pay
Gross pay includes basic pay, overtime, night differential, bonuses, etc. Social Security taxes are withheld from your gross pay while retirement deductions are withheld from your basic pay only.

Guaranteed Minimum Annuity (CSRS)
A minimum annuity guaranteed under CSRS if you retire on disability. The guaranteed minimum is not a fixed amount but may vary from one employee to another depending on their age and service. The guaranteed annuity is the lesser of the two following formulas unless your accrued (earned) annuity is higher:

• 40% of the high-3 average pay; or
• the amount obtained under the general formula after increasing your actual creditable service between the date of your separation and the date you reach age 60. The guaranteed minimum offers no advantage if you have completed 21 years and 11 months of service or you are age 60 or older. Retired military employees are not eligible for the guaranteed minimum. Surviving spouses receive guaranteed annuities when an employee dies.

High-3 Average Pay
The largest annual rate resulting from averaging, over any consecutive 3-year period of creditable service, your rates of basic pay in effect during that period, with each rate weighted by the time it was in effect. The "high-3" is one of the major factors used in computing annuity amounts.

Immediate Annuity
An annuity which becomes payable within 30 days after your separation from Federal employment. Note that, except for deferred retirement, you must meet the age, service, and for disability retirement the physical requirements on the day of your separation. Therefore, except for deferred retirement, all retirements result in an immediate annuity.

Income Averaging (TSP)
An elective method by which you may lower the income taxes you pay on TSP distributions made in one or more substantially equal payments, over a 5 or 10 year period, and for which you must file IRS Form 4972 with your income tax return.

Insurable Interest
A phrase which describes a person who has a financial interest in another person's life. A retiree may elect (with certain restrictions) an annuity payable to any named person who has an insurable interest. If this type of annuity election is in effect when the annuitant dies, the person named would be eligible for a survivor annuity.

Interim Plan
The Interim Plan refers to the retirement plan of Federal employees hired after December 31, 1983, and before implementation of the FERS on January 1, 1987. The service under this plan is creditable in the FERS if a payment of 1.3% was or is made to the Retirement Fund.

International Stock Index Investment Fund (I Fund)
The I Fund is the TSP's international stock index fund.  The objective of the I Fund is to track the returns of the Morgan Stanley Capital International EAFE (Europe, Australasia, and Far East) stock index, an index that tracks the overall performance of the major companies and industries in the European, Australian, and Asian stock markets.

Loan Program
You may borrow from your Thrift Savings Plan account (up to the full amount of your contributions) for financial needs. There are two types of TSP loans:

• purchase of your primary residence;
• general purpose

Lump-Sum Credit

• If you have a life threatening affliction and retire on an optional retirement, you may receive your retirement contributions with a reduced annuity.
• If your separation is not a retirement, you may apply for a refund of your retirement deductions, giving up your rights to any future annuity.

Maximum Annuity (CSRS)
The maximum annuity under CSRS is 80% of your high-3 average salary. You need 41 years and 11 months of service to earn the maximum annuity. Therefore, no credit is given for earned service in excess of 41 years and 11 months. However, when unused sick leave added to your service totals above 41 years and 11 months, an annuity greater than 80% will be paid. There is no such limit under FERS.

Military Deposit
A sum of money paid to the Fund or owed to the Fund by an employee (or his/her survivor) to cover a period of military service after 1956. You may not credit post-1956 military service towards FERS retirement unless you pay a deposit to cover the post-1956 service. If you transfer to FERS with 5 or more years of CSRS creditable civilian service, you pay the deposit under CSRS rules. If you have less than 5 years under CSRS, you make deposit under FERS rules. CSRS - 7% of military base pay; FERS - 3% of military base pay.

Military Finance Center
The office which handles your military annuity payments and that you notify if you decide to waive military retirement in favor of civilian retirement benefits. If you want to request estimated earnings for post-1956 service, you must contact the specific finance center for your military branch.

Military Service
Service in the Army, Navy, Air Force, Marine Corps, and Coast Guard, the Commissioned Corps of the Public Health Service, and the Commissioned Corps of the National Oceanic and Atmospheric Administration.

Military Service Credit
You receive military service credit under CSRS if first employed prior to October 1, 1982 There is a possible reduction at age 62 for post-1956 military service unless you make a deposit. If you were first hired on or after October 1, 1982, you must deposit for post-1956 military service for retirement credit. FERS employees must make a deposit for post-1956 military service credit if they wish to receive credit for their military service for retirement eligibility and annuity purposes.

Minimum Retirement Age (MRA)
Under FERS, this is the earliest age that you may retire. You receive a reduced annuity if you have less than 30 years of service. The MRA increases over time based on your year of birth between years 1948 through 1970 and ranges from age 55 to age 57.

Occupationally Disabled
Occupationally disabled means you are no longer able to render useful and efficient service in your position or a similar position. This differs from the disability definition under Social Security which requires total disability for at least 1 year and being unable to perform any gainful employment.

Office of Personnel Management (OPM)
The Federal Government's central personnel agency. OPM is charged under the FERS with writing regulations to implement the Basic Annuity tier of the FERS.

Open Season
Open season is a period when you can make elections, changes, or terminate your benefits.

• Every 6 months under the Thrift Savings Plan (TSP) there is an open season for commencing, terminating, or changing your contribution rates and investments in your Thrift Plan account. TSP Open Seasons begin in May and November with effective dates in January and July.
• During November there is an open season for electing or changing your Federal Employees Health Benefits coverage. The election or change is effective at the beginning of the first pay period in January.
• The Office of Personnel Management determines when an open season for Federal Employees Group Life Insurance occurs. The last open season was in April 1999.

OWCP (Office of Worker's Compensation)
The office in the Department of Labor that determines your rights and benefits for a job-related injury or disability that occurred while employed by the Federal Government.

Present Value Factor
The present value factor represents the number of months required at the time of retirement to fund an annuity that:

• starts out at the rate of $1 a month and is payable in monthly installments for the annuitant's lifetime based on mortality rates for non disability annuitant; and
• increases each year at an assumed rate of inflation. Interest, mortality, and inflation rates used in computing the present value are those used by the Board of Actuaries for valuation of the System, based on dynamic assumptions.

The present value factors are unisex factors obtained by averaging sex-distinct present value factors, weighted by the total dollar value of annuities typically paid to new retirees at each age.

Present Value of an Annuity
The present value of an annuity is the amount of money, together with interest, needed at the time of retirement to fund an annuity for the life of the annuitant. This amount of money (present value) earns interest at an assumed rate (e.g. 6.5% per year) and the annuity increases at an assumed rate (e.g. 4% per year). Using these assumptions, the annuity payments gradually deplete the initial amount of money, until the end of the expected lifetime, the amount reduces to zero. Of course, this computation is done at the time of retirement and is based on actuarial-determined assumptions and expectancies for a large group rather than on individual cases. To determine the present value of an annuity, multiply the monthly rate of annuity by a present value factor defined above.

Re-computed Annuity (FERS)
The disability annuity is re-computed at age 62 to an amount that represents the annuity the individual would have received if he or she had continued working until the day before his or her 62nd birthday and then retired under FERS non-disability provisions.

The total service used in the computation is increased by the amount of time the individual received a disability annuity. The high-3 average salary is increased by all FERS cost-of-living increases that were effective during the time he or she received a disability annuity, regardless of whether the retiree's annuity was actually increased by the COLA's.

Note: If an annuitant leaves the disability annuity rolls because he or she is found recovered or restored to earning capacity and later returns to the disability rolls:

• The time spent off the annuity rolls is not included as service for annuity computation purposes; and
• Any COLA's that take effect during this time are not used to increase the high-3 average salary.

Redeposit (CSRS)
A sum of money paid into or owed to the Fund by an employee (or his/her survivor) to cover a period of service during which deductions were withheld but later refunded. A redeposit may not be made for a refund covering FERS service - credit for such service is irrevocably lost. You may redeposit if you have received a refund of CSRS retirement deductions.

Refunds
Retirement contributions withdrawn when you separate from the Federal Government if you are not eligible for an immediate retirement annuity. You forfeit benefits unless you are reemployed under CSRS. Under FERS, the benefits are irrevocably forfeited.

Retirement Fund
The retirement fund is the Civil Service Retirement and Disability Fund. The Retirement Fund holds the assets from employee and employer contributions, plus additional payments of the CSRS and the FERS. The Retirement Fund is invested in Federal Government securities.

Service Computation Date (SCD)
The date, either actual or constructed, which is used to determine leave accrual rate, length of service for retirement, retention standing for reduction-in-force, or for TSP vesting.

If you have no prior civilian or military service, your SCD is the effective date of your first Federal civilian appointment.

If you have prior service, your SCD is the date computed by totaling the days, months, and years of your creditable civilian and military service and subtracting that total from the effective date of your most recent appointment.

Sick Leave Credit (CSRS
Unused sick leave may be credited for CSRS retirement computation but not under FERS.

Small Capitalization Stock Index Investment (S Fund)
The S Fund is the TSP's medium and small company stock fund.  The objective of the S Fund is to track the returns of the Wilshire 4500 stock index, which includes those U.S. stocks that are not found in the S&P 500 index.

Spouse's Benefit
Your surviving spouse may receive a survivor benefit if you had 18 months of creditable civilian service at time of death.

• Under CSRS the annuity is 55% of the guaranteed minimum or 55% of the accrued annuity if higher.
• Under FERS the surviving spouse can receive 50% of accrued annuity only if you had 10 or more years of service.
• Under FERS the surviving spouse receives two cash payments of:
  $15,000 indexed to the CPI ($23,386.98 for 2001) and
  50% of salary or 'high-3' — whichever is higher.
  
• The surviving spouse must not be remarried if under age 55 — required for CSRS as well as for FERS.

The surviving spouse of a retiree may receive an annuity if the retiree elected a survivor benefit.

Spousal Consent
Current spouse must consent to an employee retiring with less than maximum survivor benefits for spouse (CSRS/FERS) or no survivor benefits (CSRS/FERS); election of an alternative form of annuity upon retirement or a lump-sum refund if separated; loans from the Thrift Savings Plan; etc.

Supplement (FERS)
An additional amount paid to you if you retire with unreduced benefits. Your retirement must be at the minimum retirement age (MRA) with 30 years service or age 60 with 20 years under FERS. Your retirement must be before age 62 and not a deferred or disability retirement. If you involuntarily retire (age 50 with 20 years or any age with 25 years), you may receive a Supplement when you attain your MRA.

The Supplement is equal to a portion of a hypothetical Social Security retirement benefit based on your pay during FERS-covered civilian employment and deemed earnings during years before FERS service. Your supplement is subject to an earnings test similar to the test under Social Security. When your entitlement to an actual Social Security benefit based on your own earnings begins then your supplement stops. The supplement does not continue beyond age 62 in any case.

Supplementary Annuity (FERS)
An additional amount paid to a surviving spouse of a FERS retiree when the survivor is not receiving Social Security survivor benefits. When Social Security survivor benefits are payable — normally at age 60 — the supplement ceases. The supplement does not continue beyond age 60.

You compute the supplement by taking the lesser amount of two different formulas.

• The first formula determines what the spouse would have received if the deceased annuitant had retired under the CSRS. The payment is the excess of the CSRS survivor annuity over the regular FERS survivor annuity.
• The second formula determines what the spouse would have received from the Social Security system as a survivor had the spouse been of the requisite age — that is, 60.

Tax-Deferred
Tax deferred means that you do not pay taxes on your TSP contributions, the Government match (FERS), and accumulated investment earnings. The money is taxable as current income when you receive funds from your account. IRS rules limit the maximum amount high-salaried employees can contribute to tax-deferred savings plans (see non- discrimination rules). Your contributions reduce gross income for Federal income tax purposes.

Thrift Savings Plan (TSP)
The Thrift Plan offers you the opportunity to save a percentage of your salary on a tax-deferred basis. FERS employees may have a portion of that money matched by the Government. FERS and CSRS employees may have the total sum invested at their direction in three different investment funds.

The Thrift Plan is comparable to IRA's or private sector 401(k) and Keogh plans. You can terminate participation in the Thrift Plan at any time, but you can reduce or change your amount of contributions only during an Open Season. Termination during a period outside of the Open Season will prevent you from participating in the Thrift Plan until the second Open Season after your termination.

The Tax Reform Act limits your contributions (private or public sector). The limit is indexed annually -- $10,500 for 2001.

Vesting (FERS)
Vesting is the right to receive benefits after certain requirements are met.

CSRS

• after 5 years of civilian service for retirement (including disability)
• after 18 months for survivor's death benefit annuity

FERS

• after 5 years of civilian service for retirement benefits
• after 3 years for the Thrift Plan 1% NASA automatic contribution
• after 18 months of service for disability retirement
• after 18 months of service for survivor's death benefit annuity