WASHINGTON, January 26, 2014 — According to the Office of Personnel Management (OPM), more federal employees retired in 2013 than in the past several years. The number of government employee retirement applications received last year was 114,697. In a fascinating detail, the number of retirement applications has been so high that OPM has published statistics about the backlog of retirement applications, numbering in the tens of thousands.
According to Federal News Radio “At the end of 2013, the backlog of retirement cases stood at 12,637 cases — a nearly 70 percent decline from the backlog’s peak of 41,000 cases earlier in the year.”
Accordingly, the expected wait time for retirement applications to be processed is approximately 91 days. That is sharply lower than the time period in 2012, when the wait time was nearly six months.
“The Civil Service Retirement System (CSRS) is a defined benefit, contributory retirement system. Employees share in the expense of the annuities to which they become entitled. CSRS covered employees contribute 7, 7 1/2 or 8 percent of pay to CSRS and, while they generally pay no Social Security retirement, survivor and disability (OASDI) tax, they must pay the Medicare tax (currently 1.45 percent of pay). The employing agency matches the employee’s CSRS contributions.
“CSRS employees may increase their earned annuity by contributing up to 10 percent of the basic pay for their creditable service to a voluntary contribution account. Employees may also contribute a portion of pay to the Thrift Savings Plan (TSP). There is no Government contribution, but the employee contributions are tax-deferred.”
The other plan offers more options:
“FERS is a retirement plan that provides benefits from three different sources: a Basic Benefit Plan, Social Security and the Thrift Savings Plan (TSP). Two of the three parts of FERS (Social Security and the TSP) can go with you to your next job if you leave the Federal Government before retirement. The Basic Benefit and Social Security parts of FERS require you to pay your share each pay period.
“Your agency withholds the cost of the Basic Benefit and Social Security from your pay as payroll deductions. Your agency pays its part too. Then, after you retire, you receive annuity payments each month for the rest of your life.
“The TSP part of FERS is an account that your agency automatically sets up for you. Each pay period your agency deposits into your account amount equal to 1% of the basic pay you earn for the pay period. You can also make your own contributions to your TSP account and your agency will also make a matching contribution. These contributions are tax-deferred. The Thrift Savings Plan is administered by the Federal Retirement Thrift Investment Board.”
In September 2013, FedSmith reported widespread disenchantment with processing for both programs, citing lengthy delays in receiving benefits. The website then offered strategies on how to maximize benefits for those intending to retire.
“If you are under FERS, your annuity will not receive any [cost of living adjustment] until age 62. If you are under CSRS, there will be a reduction to your annuity of 1/6 of 1% for each month you retire prior to age 55 (2% per year).
“Choosing the right Social Security election can significantly impact the amount of benefits you receive over your lifetime. Many people stand to gain or lose more than $100,000 in benefits by making the right or wrong claiming elections. Maximizing Social Security election strategies in light of your other assets, income streams and goals to identify potential opportunities may not be as rewarding if the earliest Social Security election is made.”
It is expected that OPM will receive a significant increase in retirement applications for January 2014. Statistics show that federal employees typically file such applications after the New Year begins.Click here for reuse options!
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