How FERS Pensions Affect Social Security Benefits

How Your FERS Pension Affects Your Social Security Benefits  

 

Dreaming about that beach vacation you’re going to take when you retire? But does calculating your FERS pension and social security benefits make you feel itchier than all that sand? Insert Federal Educators. We strive to prepare our clients with retirement plan knowledge that will empower them so they can enjoy their best life.

Let’s start at the beginning. Before 1983, anyone that worked for the federal government was enrolled in the Civil Service Retirement System (CSRS) and did not pay Social Security taxes on their earnings. This system provided all retirement benefits for federal workers at that time.

Come 1983, a replacement program was created. The Federal Employees Retirement System (FERS), is the retirement program created for all U.S. civilian employees. Military personnel or state and local government employees do not qualify. Under FERS, employees receive retirement benefits from three sources – the Basic Benefit Plan, Social Security, and the Thrift Savings Plan (TSP). Workers could choose to remain in the CSRS program or opt-in to the newer FERS program. If you chose to stay in CSRS after 1983, you are not eligible for Social Security but do qualify for Medicare because those taxes are taken out of your federal earnings.

Workers hired after 1983 all participate in FERS and pay into the Social Security fund at the same rate as private employees. The Basic Benefit and Social Security programs require the employee to pay their share through payroll deductions. The agency will then pay its matching part too. Upon retirement, annuity payments begin for the remainder of the employee’s life. If you do choose to leave the federal government before retirement, two of the three FERS benefits, Social Security and TSP, can be transferred to your next job. In most cases, government pension benefits will be equal or greater to Social Security benefits.

All this information may feel a bit overwhelming to digest. Our team at Federal Educators is here to help guide you through the nuances of your earned benefits. Through our free analysis, we can determine your projected benefits amounts, help you understand the terms of a pension, and more. Give us a call at 866-226-8160 to get started. The beach is calling!