Do you have questions about your Federal Benefits? You aren’t alone. In a Federal Employee Benefits Survey, OPM found a gap between worker participation in benefits programs and their understanding of them.
Employee participation in benefits programs was high, with over 96% of surveyed workers enrolled in the Thrift Savings Plan, nearly 91% in FERS, and almost 80% in FEGLI.
However, Federal Workers indicated their level of knowledge regarding their benefits varied. Just 56% of employees reported an “Excellent” or “Good” understanding of their TSP accounts. On another survey question, only 54% said they understood the FEGLI program.
Studies and research confirm a connection between employee well-being and understanding workplace benefits as well as key financial concepts. Here is an overview of different Federal Benefits.
Retirement Benefits for Federal Employees
With regard to their retirement benefits, Federal Employees may be involved in one of two retirement systems: the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS).
Federal Employees Retirement System (FERS)
FERS is the dominant system today. It replaced CSRS on January 1, 1987. Today Federal Employees who came into service on or after January 1, 1984 are covered by this retirement system.
Under FERS, Federal Employees have benefits from three different sources:
- FERS basic annuity
- Social Security benefits
- Thrift Savings Plan
Payments from the basic annuity and Social Security will be in fixed-dollar sums. On the other hand, retirement money from the TSP will depend on the quality of the money management practices over the years.
Civil Service Retirement System (CSRS)
CSRS was started on August 1, 1920. For Federal Employees who came into service before January 1, 1984 and who meet other conditions, they are covered by this retirement system.
Under CSRS, Federal Employees will receive a basic annuity that is based on their years of service, age, when they retire, and other factors. They may contribute anywhere from 7%-8% of their base pay toward the CSRS system, with their employing agency giving a contribution match.
CSRS covered employees may also choose to increase retirement benefits through contributions of their pay to a voluntary contribution account and/or the TSP Voluntary Contribution Plan. Up to 10% of their base pay may be contributed in this way. The government doesn’t match these contributions, however.
Social Security Benefits
Which retirement system covers you will play a big part in whether your benefits will include Social Security.
FERS retired employees will receive Social Security benefits. In certain circumstances, FERS retirees may also receive a supplemental benefit before they reach age 62.
CSRS retired employees may receive benefits if they worked for 40 quarters, with 10 years in the private sector. However, their benefits may be subject to the Windfall Elimination Provision, or WEP.
If you, as a CSRS covered retiree, are subject to WEP, a modified formula will be used to calculate your earned Social Security benefits. However, this formula won’t be used to calculate survivor benefits upon death.
Retirees under CSRS with active military time and eligibility for Social Security benefits may have unique considerations. You will want to consider your options carefully, as the wrong decision could mean reductions in the CSRS annuity.
A knowledeable Benefits Counselor can help you detemine how different situations might apply to your Social Security payments.
Federal Employees’ Group Life Insurance (FEGLI)
Established since August 29, 1954, the Federal Employees’ Group Life Insurance Program (FEGLI) has been around for a long time.
Most Federal Employees are eligible for FEGLI coverage. If they meet specific criteria, Federal retirees may continue life insurace coverage by FEGLI into their retirements. The family members of Federal retirees and employees may be covered as well.
Under FEGLI, you hold group term life insurance coverage. In other words, your life insurance policy doesn’t build cash value or paid-up value.
More on FEGLI Coverage Options
FEGLI coverage comes with Basic life insurance, with three forms of Optional insurance that may be purchased. Basic insurance covers someone for their annual pay rate, rounded up to the nearest whole $1,000 plus $2,000.
The three choices of Optional insurance provide more life coverage depending on whole-number sums and multiples of your annual rate of pay, as well as on the person being covered.
Federal Employees should be mindful of their choices for life coverage, especially as they prepare to retire.
Need Help with Your Federal Benefits?
This is only a general overview of different Federal Benefits. You can use this as a starting point to see how your benefits will fit in with the rest of your financial picture.
If you would like guidance in navigating your benefits and making choices that will help you make the most of them, we can help you.
Contact us or request your no-cost Personal Federal Benefits Analysis today.