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Federal Employees Benefits Q &A

Do you have questions about your federal employee CSRS or FERS pension/annuity or federal employee retirement planning? Concerns about your Thrift Savings Plan (TSP) account or what about federal employee pay and leave issues?

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The Q&A forum is moderated by Ed Zurndorfer -- an expert on federal employee benefits -- and a Certified Financial Planner, chartered life underwriter and chartered financial consultant in Maryland.

Zurndorfer is also the author of several federal employee benefits guides published by Federal Employees News Digest.

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Mac86  
#1 Posted : Monday, February 04, 2019 4:22:25 PM(UTC)
Mac86

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Ed:

I started civilian federal service in Feb 1985 and plan on retiring this summer. I requested a retirement estimate from my personnel office and it showed that my service from 2/19/1985 to 12/31/1986 was classified as CSRS Offset. The rest of my service up until now is classified as FERS. I've done some research and it seems pretty clear that the 1985/86 period should have been classified as CSRS Interim. HR's retirement estimate, using FedHR Navigator, shows what I consider an accurate estimate of my federal retirement. However, the retirement estimate also indicates that my social security benefit will be 17% lower than what my social security statement stays it should be if I take social security this year (at age 64). I can't get a straight answer from my retirement specialist as to why the FedHR Navigator was showing such a major drop in my social security benefit. What do you think?
Ed Zurndorfer  
#2 Posted : Monday, February 04, 2019 4:49:14 PM(UTC)

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First. with respect to your Social Security benefits, your Social Security statement is official whereas the FedHR Navigator may be "close" but it is not official. Second, when you looked at your Social Security statement, did you look at your monthly benefit (in today's dollars) at your full retirement age compared to the benefit at age 64? The reason: If you were born in 1957, then your monthly benefit is 83 percent (17 percent less) of your benefit at your full retirement benefit of age 66 years and 6 months. Third, did you work outside Federal service and pay into Social Security? If you did not, then as of now you have about 34 years of Social Security earnings. Social Security computes benefits based on an individual's 35 highest years of Social Security earnings. If you worked during the two year period 1985-1986 under CSRS Interim and did not pay into Social Security, then that could reduce your Social Security benefits (by perhaps as much as 17 percent). These are all possibilities why your benefits differ under the two sources.
Mac86  
#3 Posted : Monday, February 04, 2019 5:36:59 PM(UTC)
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Ed: Thanks for your response. I was born in 1954, I'm 64 years old, and according to my most recent social security statement, I would collect $27,096 a year if I applied for social today. I have social security earnings going back to 1971. According to the social security earnings record on my social security statement, I had "taxed social security earnings" in 1985 of $12,073 and in 1986 of $18,815. I believe I was about a GS-5 or 7 then. The Retirement Benefit Estimate I received from HR, states that on 6/1/2019 I will have a social security benefit of $22560. The benefits estimate uses 2019 as the starting point, and then projects the FERS pension and the social security benefit all the way to age 92. My understanding is that I would have paid into social security in 1985 and 1986 regardless of whether or not I was classified as CSRS Interim or CSRS Offset. The difference is that under CSRS Offset, I would have paid a bigger chunk into the CSRS pension and a smaller chunk into social security. When I retired, I would have collected a full CSRS pension until I turned 62, and then my CSRS pension would be offset by social security (Somehow social security and OPM talk to each other and work this out). Under CSRS Interim, I would have paid into a temporary CSRS pension fund and also paid fully into social security and when FERS was fully activated in Jan 1987, all was supposedly converted (seamlessly) into the new FERS retirement. How much should I push (assuming I can) to get the CSRS Offset designation changed to CSRS Interim? If HR made the change, and then reran the FedHR Navigator, would it then recalculate my social security benefit higher, or is that just not the sort of thing it does?
Ed Zurndorfer  
#4 Posted : Monday, February 04, 2019 6:11:04 PM(UTC)

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Is your question: Should you have been classified as CSRS Offset since 1987 rather than FERS? Note that one of your statements is not correct. A CSRS Offset employee pays much less into CSRS than into Social Security? One other possibility about the fact there is almost a $5,000 difference in your Social Security benefits between your Social Security statement and FedHRNavigator. The Social Security statement computes your monthly retirement benefit based on your entire Social Security lifetime earnings (going back to 1971) whereas the FedHRNavigator could have computed your benefits based on your Social Security lifetime earnings while in Federal service only (going back to 1985). Not including 14 years worth of Social Security earnings in the computation of monthly benefits could result in a loss of $5,000 of annual Social Security retirement benefits.
Mac86  
#5 Posted : Monday, February 04, 2019 6:22:05 PM(UTC)
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No. I think I should have been CSRS Interim (instead of CSRS Offset) in 1985 and 1986 and FERS ever since (I have definitely been FERS since 1987). I'm wondering if I can insist that HR fix the mistake. I'm wondering how the mistake has affected my retirement. I'm also wondering why, with four months left before my planned retirement, I still don't know for sure, what my combined pension/social security will be!
Ed Zurndorfer  
#6 Posted : Tuesday, February 05, 2019 3:37:52 AM(UTC)

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You are asking two separate questions, namely: (1) Why is there a difference in your Social Security benefits between what your Social Security statement says and what the FedHRNavigator says?; and (2) How is being classified as CSRS Offset rather than CSRS Interim affected your retirement and if so, should you have the mistake corrected? With regard to the first question, you should read the answer to the last post about the 14 year difference in Social Security reported earnings used in the calculation of your Social Security benefits. With regard to the second question, the same amount should have been deducted from your paycheck during 1985-1986 and contributed to the CSRS Retirement and Disability Fund (namely, approximately 1.3 percent) and the same amount should have been deducted from your paycheck for Social Security (FICA) whether you were CSRS Offset or CSRS Interim. The real question that you need to find the answer to is whether the amount withheld from your paycheck and deposited into the CSRS Retirement and Disability Fund was shifted to the FERS Retirement and Disability Fund when you started in FERS in January 1987. In other words, for FERS annuity computation purposes is your service computation date (SCD) February 1985? Because if your SCD for FERS annuity computation purposes is January 1987, then you did not get credit for your two years of either CSRS Offset or CSRS Interim for FERS computation purposes. Note that for retirement eligibility purposes your SCD is February 1985.
Mac86  
#7 Posted : Tuesday, February 05, 2019 2:59:39 PM(UTC)
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Thanks Ed. There is some good advice in your post. I just heard from my HR specialist who said I was correct, I should be listed as CSRS Interim, but she said the OASAM system does not allow her to code employees as CSRS Interim, so she uses CSRS Offset. She also finally addressed the social security benefit issue by stating that the social security benefit value she gave me was for the FERS supplement (even though I'm well past the FERS supplement eligibility years). According to my pay voucher, my "SCD for Leave" is 10/10/1980. I bought back nearly 4-1/2 years active duty time.

Ed Zurndorfer  
#8 Posted : Tuesday, February 05, 2019 4:27:49 PM(UTC)

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You are most welcome. Glad things are straightened out with your FERS retirement and Social Security estimates.
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