What is "FERS"?

FERS or Federal Employees Retirement System is the newest retirement system for Federal civil service employees. Almost 60% of  NASA employees are covered by FERS either because they chose to switch during an open season or because they were hired after January 1, 1984. Some employees chose not to switch and are still covered by the old retirement system "CSRS" or Civil Service Retirement System. A small number of NASA employees who had a break in service are covered by a combination of the two, called CSRS Offset.

Do I have a choice of which retirement system I’m covered under?

Generally speaking, you do not have a choice of retirement systems. If you were previously covered under the older CSRS system with at least 5 years service, left Federal service, and then returned, you would be given a choice of participating either under FERS or CSRS Offset. If you first came to work after January 1, 1984, you are automatically covered under FERS.

What does FERS consist of?

FERS has three components. Upon retirement, you may receive payments from each of three sources. The three components include:

Basic Benefit Plan that provides an annuity roughly equal to 1% of your "high 3" salary multiplied by your years of service. As an example: A $40K "Hi-3"-salary with 30 years service would provide a basic retirement benefit of $1000 per month.

Thrift Savings Plan (TSP) that is similar to a 401K investment plan. NASA automatically contributes into your account an amount equivalent to 1% of your salary. You may contribute up to 10% of your salary with NASA matching 4% of your contribution. TSP contributions are tax deferred -- meaning that you do not pay income tax on the amount contributed into your account until you withdraw the money. As an example: A $100k investment would provide approximately $700 a month as an annuity. In a 30 year FERS career, many employees are expected to accumulate account balances far in excess of these amounts.

Social Security Benefits (or an annuity supplement which may be payable until you reach age 62) On the average, this benefit is expected to fall within $700 to 1200 per month. If you are under age 62 -- not eligible for Social Security, you may receive an annuity supplement that approximates your projected Social Security benefit earned while you were covered under FERS.

How much does FERS cost?

You pay: (1) a small contribution (.8% of your salary) to the Basic Benefit Plan; (2) full Social Security taxes (6.2% for Social Security and 1.45% for Medicare); and (3) you may also make tax deferred contributions (up to 14% of your salary) to the Thrift Savings Plan with NASA matching the first 3% dollar for dollar and the next 2% is matched at 50 cents on the dollar. NASA automatically contributes: (1) an amount equal to 1% of your salary into your TSP account; (2) an amount equal to 10.7% of your salary into your basic benefit plan; and (3) NASA also matches your Social Security taxes.

Is CSRS better than FERS?

Both systems have their advantages. FERS is more portable and offers a greater potential for earnings through the Thrift Savings Plan. As a conservative rule of thumb, your FERS total annuity -- basic annuity, TSP annuity, and Social Security benefit (or annuity supplement until age 62)--will equal or exceed a CSRS annuity if you contribute 5% of your salary into the Thrift Savings Plan.

CSRS is predictable -- but not very flexible. If you separate before retirement under CSRS you may withdraw only your own actual CSRS contributions without earnings. Under FERS, you may withdraw everything (except Social Security) including – your own FERS contributions and earnings and both yours and NASA’s TSP contributions and earnings. Also, if you are vested (three years service) you may withdraw NASA’s automatic 1% TSP contribution.

How do I know which retirement system I’m covered under?

You may either contact your Employee Benefits Counselor or refer to either Your NASA Employee Benefits Statement or a recent SF-50, Notification of Personnel Action. Block 30 shows which retirement system you are covered by. If you first started working as a Federal civil service employee after January 1, 1984, you are covered under FERS.

General Requirements for Retirement under FERS

You must have at least 5 years of creditable civilian service (except for disability which requires at least 18 months of creditable civilian service).

Immediate Retirement
You must meet the following requirements for retirement with an immediate annuity: (Note: a table showing specific eligibility follows):

Deferred Retirement
If you leave the Federal service and do not withdraw your contributions, you may receive an unreduced annuity. The annuity may begin at:

Note: an age reduction will apply, in some circumstances, if you are under age 62.

Credit for Service under FERS

Civilian Service
For employees covered under FERS, all service you performed on or after January 1, 1984 is fully creditable toward retirement. However, service for which you had no FERS retirement deductions taken (e.g. , temporary service) is creditable only if your service was performed prior to January 1, 1989, and you make a deposit of 1.3 percent of your basic pay plus interest. Service for which you had no deductions taken after January 1, 1989 is not creditable under FERS for any retirement purpose. All FERS service for which you have received a refund is not creditable for retirement.

If you had five or more years of refunded CSRS service and later transferred to FERS, the redeposit is made under CSRS rules -- 7 percent of basic pay plus interest. You may refer to the deposit and redeposit for civilian service chart at the end of this section for the applicable interest rates.

Military Service
Periods of active and honorable service with the U.S. Armed Forces are creditable toward retirement if performed prior to the separation upon which the retirement is based, except that ALL post-1956 military service must be covered by a deposit to receive credit. The deposit is to be made directly to NASA before retirement. The amount of the deposit is 3% of the military basic pay (based on an estimate from the appropriate military finance center) for the period, plus interest. Interest begins 2 years after first becoming subject to FERS. These deposit provisions do not apply to you if you transfer into FERS from CSRS with 5 or more years of coverage under CSRS. If you are in that category, you are subject to CSRS military deposit provisions, outlined in the post -1956 military chart in Chapter 17. Refer to the post-1956 military chart at the end of this section for the applicable interest rates for credit under FERS

If you are FERS without CSRS service, you must pay a military deposit in order to obtain service credit for both FERS retirement eligibility and FERS annuity purposes. Plainly stated: if you have 10 years of military service and don’t pay the deposit – your ten years of military service do not count toward retirement.

Amount of FERS Retirement Annuity

The amount of your basic FERS annuity will depend upon your length of service and your "high 3" average pay. This is the highest pay obtainable by averaging your rates of basic pay in effect during any 3 consecutive years of civilian service. Each rate is weighted by the length of time it was in effect.

Annuity Formula
The basic FERS annuity formula is 1 percent of the "high 3" multiplied by your years of creditable service. If you retire after age 62 with at least 20 years of service, the formula is 1.1 percent of your "high 3" multiplied by your years of service.

Annuity Reduction
A reduction applies to your annuity if:

Cost-of-Living Adjustments (COLAs)
Unless you retire for disability, you do not begin receiving COLAs until you reach age 62, even if you retire earlier. You will receive the full adjustment when the increase in the consumer price index (CPI) is up to 2 percent. If the CPI increases 3 percent or more, the COLA will be the rate of increase in the CPI minus 1 percent. This means that your COLAs are slightly behind the rate of inflation. Any benefits that become payable to your survivors will also receive annual COLAs.

Retirement Supplement
If you retire at age 55/57 with 30 years of service or at age 60 with 20 years of service or at age 55/57 (MRA) under an early out, you will be eligible for a supplement to your annuity payable until age 62. This supplemental annuity is approximately equal to your social security benefit earned under FERS. The supplement will be subject to the same earnings test that applies to Social Security retirement benefits at age 62, reduced (or eliminated) if you have an earned income in excess of an exempt amount. Your special retirement supplement computation estimates a full career Social Security benefit and then approximates what portion of that full career benefit was during your service under FERS.

FERS Disability Annuity

Total income from both the disability benefit and Social Security will range from approximately 58% of average pay for the low income down to 46% for the high income. At age 62, your annuity is re-computed as a non-disability annuity. Service credit is given for your period of disability and your "high-3" average pay is adjusted for inflation. In addition to non-disability annuity, you will receive Social Security retirement benefits if you are eligible.

Alternative Form of Annuity (Lump-Sum Withdrawal) Under FERS

If you retire involuntarily or voluntarily with a life threatening illness (you have a specific illness and you are expected to die within two years), you may elect to receive your lump-sum credit with an actuarially reduced annuity. A lump-sum credit is equal to your retirement contributions. If you elect this option, you will still be subject to all provisions of FERS as would otherwise apply to a retired employee who does not elect this option.

Survivor Elections When You Retire

When you retire you may elect what type of annuity, if any, you want to provide your survivors. There are three types of annuities:

Charts at the end of this chapter provide an overview of your survivorship options.

Postponing Your Retirement Annuity

If you are retiring on an MRA + 10 annuity, you can reduce or eliminate your age reduction by postponing the starting date of your annuity. There is a 5/12 of 1 percent reduction for each full month (5 percent per year) your starting date is before your 62nd birthday.

Your life and health insurance coverage will be reinstated when your annuity starts, if you are eligible then to continue them into retirement.

Survivor benefits are payable if you die during the period that the annuity is postponed.

If you separate and are eligible for an MRA + 10 annuity, you may not receive a refund of your contributions to the retirement fund even if you have not applied for an immediate annuity benefit.

Refund of FERS Contributions

You may withdraw your FERS contributions at separation; however, a refund of the contributions permanently voids any annuity rights based on service covered by the refund. Unlike CSRS, there is no provision for redeposit of amounts refunded, even if you are re-employed. This provision is not the same as a lump-sum withdrawal that is available to certain retiring employees.

Lump-Sum Death Benefits under FERS

If your death occurs before retirement and you leave no survivors who can qualify for survivor annuities, your contributions to the retirement fund (but not the agency's contribution), will be paid as a lump-sum death (cash) benefit.

If you leave survivors who qualify for survivor annuities, no cash distribution of your contributions to the retirement fund is payable immediately. Cash benefits may be payable later if, when survivors' annuities end, they have received in annuities amounts which are less than your total contributions to the retirement fund. The amount payable will be the difference between your total contributions and the total paid out in survivor annuities.

If you die before you retire

If death occurs before you retire, your spouse and children may qualify for survivor benefits if:

Survivor Benefits to Spouse

To qualify for survivor benefits:

The Defense of Marriage Act of 1996 states that same sex marriages are not recognized for benefit entitlement purposes for Federal employees under FERS/CSRS (retirement), FEHB (health benefits), and FEGLI (life insurance).

Your surviving spouse will be entitled to two lump sums:

Survivor Annuity to Children.

To qualify for children’s benefits:

If a wife or husband survives, each eligible child receives the least of these three monthly amounts:

Under FERS the amount will be 3 percent of your basic military pay received (based on an estimate from your military finance center for the period), plus interest.

How to Make a Deposit for Post-1956 Military Service

If you make a deposit for post-1956 military service, it must be made with NASA prior to retirement. Contact your Employee Services Representative for information and documentation required to make the deposit Survivor Benefits (FERS)

The Federal Employee's Retirement System (FERS) provides survivor benefits to the eligible current and former spouse and child or children of deceased Federal retirees. When you retire you must decide whether you wish to provide a survivor annuity for your widow or widower and if so, you must pay for this protection. You do not need to elect or pay for a survivor annuity for your eligible children. Your children automatically receive survivor annuities when you die.

Because of the complexity of the survivor benefit provisions, the following charts provide an overview of your different retirement options. For more detailed information and counseling, you will need to contact your Employee Services Representative.

Note: A person with an insurable interest is one who derives a financial benefit from the continued life of the employee. An insurable interest relationship is presumed to exist with (a) the current spouse, (b) a blood or a adopted relative closer than first cousins, (c) a former spouse, (d) a person to whom you are engaged to be married, and (e) a person with whom you are living in a relationship that would constitute a common-law marriage in jurisdictions recognizing common-law marriage. When an insurable interest is not presumed, you must submit affidavits from one or more persons with personal knowledge of the named beneficiary having an insurable interest in your life.

The Defense of Marriage Act of 1996 states that same sex marriages are not recognized for benefit entitlement purposes for Federal employees under FERS, CSRS, FEHB, and FEGLI.