Social Insurance and Public Assistance

SOCIAL WELFARE PROGRAMS Series Bf722–734 813
TABLE Bf722–734 Federal employee and civil service retirement systems – annuitants: 1925–1997 Continued
separation requirement for federal employees who attain age 70 was removed.
In 1979, the Office of Personnel Management began to administer
the program, which was replaced by a new FERS in 1987.
As of 1999, almost all federal employees hired after 1983 are automatically
included in the FERS program. The FERS provides three types of benefits:
the basic Social Security benefits, a basic annuity component based on
contributions by the employer and the government, and the opportunity to
participate in a Thrift Savings Plan, which is essentially a tax-deferred savings
and investment plan similar to the 401(k) for corporations. Generally, the
basic annuity component of FERS is 1 percent of the employee’s “high-3”
year’s average pay, multiplied by years of service. If the employee retires at
age 62, or later, with at least twenty years of service, a factor of 1.1 percent is
used rather than 1 percent. The tax-deferred savings plan allows employees
to contribute up to 10 percent of their income. The government automatically
contributes to the employee’s account an amount equal to 1 percent
of basic pay, and, if the employee contributes, the government matches the
contribution up to a maximum of 4 percent of the employee’s salary to the
plan. A special retirement supplement designed to approximate the retiree’s
eventual Social Security benefits may be provided to compensate the retiree
for any lack of Social Security benefits for those retiring prior to reaching the
age of 62. Retirees may be eligible for the supplement if they retired after the
minimum retirement age with thirty years of service, at age 60 with twenty
years of service, or upon involuntary retirement. Law enforcement officers
and firefighters who retire at age 50 with twenty years of service or at any
age with twenty-five years of service are also eligible for the supplement. This
supplement is also payable, after attainment of the minimum retirement age,
to discontinued service and involuntary retirees as well as to members of the
Senior Executive Service (SES) who are removed from SES status and who
retire at the age of 50 with twenty years of service or at any age with twentyfive
years of service.
Employees hired prior to 1984 are typically included under the CSRS, although
they have the option to transfer to the FERS. Many of the features of
the CSRS plans are the same as in 1973, although as of September 30, 1978,
mandatory retirement was eliminated for federal employees. CSRS-covered
employees may also participate in the Thrift Savings Plan, but their participation
is limited to 5 percent of salary and no government contribution is
made.
As of 1997, there are two requirements that all retiring employees must
meet for the CSRS. First, the employee must have at least five years of civilian
service with the federal government. Second, unless retiring because of total
disability, the employee must have been employed under the CSRS for at
least one year of the last two preceding final separation. There is no “1-outof-2”
requirement under FERS as there is under CSRS. Employees are eligible
for immediate retirement if they meet these general requirements and any
combination of the following age/service requirements. (1) Employees may
elect optional voluntary early retirement, series Bf734, at a minimum age of
62 with at least five years of service; at age 60 with at least twenty years of
service; or at age 55 with thirty years of service. (2) Law enforcement officers
may retire at age 50 with twenty years of service. (3) Employees at any
age with at least twenty-five years of service may retire when the agency is
undergoing a major reduction in force. In the latter category, benefits may
be reduced.
Series Bf722. For 1920–1979, equals the sum of series Bf723–725 and
Bf727–733. For 1980–1997, equals the sum of series Bf726–734.
Series Bf723–726. The employees who retired under the “normal” rules are
reported from 1920 to 1979 in three categories: mandatory retirement, optional
retirement with thirty or more years of service, and optional retirement
with less than thirty years of service. Starting with 1980, these three series
were replaced by a single series for normal retirement (series Bf726). In 1979,
when both sets of series were reported, series Bf723–725 summed to series
Bf726. Series Bf723 ends in 1979 because the mandatory retirement age
requirement was abolished.
Series Bf727. Employees of any age with at least five years of service may
qualify for disability retirement if they become disabled for useful and efficient
service.
Series Bf728. An employee who meets the five-year service requirement for
retirement and who is separated from the federal service for any reason before
meeting the age requirement for a general annuity may receive a deferred
annuity that is payable upon attaining age 62. For 1945–1955, the information
for the series was listed in the original source under the title “optional
retirement with 5 years service at age 62.”
Series Bf729. Employees age 50 or older with at least twenty years of service,
or at any age with at least twenty-five years of service, may qualify for
discontinued service retirement with a reduced annuity in cases of involuntary
separation from the federal service. Involuntary separations include any
separation against the will and without the consent of the employee, other
than “for cause” for misconduct or delinquency. The most common cause of
an involuntary separation was a reduction in force. Employees who decline
“reasonable offers” of other positions are not eligible for discontinued service
annuities. A reasonable offer is defined as the offer of another position
in your agency and commuting area for which you are qualified and that is
no more than two grades or pay levels below your current grade or pay level.
Series Bf730–733. There are several categories of federal employees who operate
under special retirement rules, including those under hazardous duty,
air-traffic controllers, members of Congress, and annuitants who were transferred
from other systems. The hazardous duty series is referred to as “law
enforcement and firefighters” after 1980, but the data are comparable over
time.
Series Bf734. Refers to annuitants who chose voluntary early retirement.
Annuitants fall under this category when they volunteer to retire when an
agency undergoes a major reorganization, reduction in force, or transfer of
function, and a significant percentage of the employees will be separated
or reduced in pay. At that point, the head of the agency can ask the Office
of Personnel Management (OPM) to permit early optional retirement
for eligible employees to lessen the impact of involuntary separations and
demotions. After the agency head obtains approval, workers with at least
twenty-five years of service, or workers at least age 50 with twenty or more
years, may retire voluntarily on an immediate annuity. The annuity is reduced
by 2 percent for each year younger than age 55.