More feds doing life sentences

[Amethyst]

Ziggy,

OPM runs the pension system, and it takes a while for OPM to get a handle on anything. The OPM folks in D.C. whom I've dealt with on the phone, are pretty sharp, but the folks in Boyer, PA are the ones who administer the pensions, and they are not what I'd call bustle-hustlers. Apologies to any of them who may be in this forum, but that's been our experience over the years.

Husband's experience was fairly typical. He retired at the end of December, got his first annuity check in March for ~ 50%, next one was ~75%, and in May he finally was "made whole" retroactively.

The day of the month that one retires, makes a difference. Under CSRS, if one retires within 3 days of the 1st of a month, the annuity starts that month (although one will not see a check from OPM for at least another month). If one retires 4 days into the month, the annuity won't start till the 1st of the following month - making a 2-month wait till the first annuity check.

The final paycheck (we are paid every 2 weeks, in arrears) is supposed to help tide one over. The final check includes any unused annual leave, converted to pay dollars.

Amethyst

Is that how it works, even under CSRS? It takes several months for the pension to kick in after retirement?

 

[Amethyst]

Judging by age, the vast majority of my cow-orkers are under FERS. I would be very surprised if any of them weren't contributing everything they could get their hands on to TSP. I would also be very surprised if any of my CSRS contemporaries weren't contributing to TSP - it's such an obvious thing to do. But I've long since learned that people censor themselves (when was the last time you heard someone admit to having an accident where THEY were at fault?) so who knows.

Amethyst

Were these CSRS feds or FERS feds, though? Helen was mentioning CSRS feds above with respect to not using TSP. I can't imagine many feds on FERS who are *not* using TSP will have a very comfortable retirement... or may have to wait until FRA for SS to kick in -- if then.

This would be something much easier for CSRS retirees to ignore than FERS retirees, or at least I'd think.

 

[ziggy29]

Judging by age, the vast majority of my cow-orkers are under FERS.

Yeah, I'd imagine they *need* to be more aware of the need for personal savings; a FERS pension isn't really going to be enough for most of them, even when SS is added into the mix.

 

[GregLee]

I know only a couple of people with fed jobs, ...

I have never in my life met a civilian fed in person, so far as I know. Just some brief conversations on the phone with IRS or SS people, and of course I read posts here. It seems odd.

 

[happy2bretired]

I have never in my life met a civilian fed in person, so far as I know. Just some brief conversations on the phone with IRS or SS people, and of course I read posts here. It seems odd.

Maybe they are in hiding... I know for the last few years of my working life, I didn't advertise the fact that I worked for the federal government.

 

[ChrisC]

Hmmm, I think there are far too many generalizations about the federal civilian workforce here. Let me add a few other dubious ones. I would expect many higher-graded employees to stay well beyond initial eligibity to retire because many of these managers might really like their jobs and the feeling of authority or power they might have over programs they're responsible for implementing. But there are some positions in the federal workforce that call for mandatory retirement at certain ages (I believe this is the case for law enforcement positions or air traffic controllers). There are some agencies where most employees there actually like their work (NRC is typically rated the best federal workplace) and other agencies where most employees are challenged to work there (the Postal Service), so I bet most retirement eligible employees stay a few years beyond initial eligibility at NRC and others at the Postal Service head for the retirement hills as soon as eligible.

I don't know whether the anecdotal evidence of CSRS employees not participating in TSP is suported by any real hard data. It's been my observation that higher-graded employees generally have higher contribution rates than lower graded-employees and I think this cuts across CSRS and FERS employees.

I think you will see a major run to the retirement hills in many agencies the next few years for the following generalized observations: (1) FERS employees will have all of their sick leave counted for retirement service credit purposes in January 2014 so many of these employees sitting on a year of sick leave creditable in 2014 will wait until then; (2) on top of the recently legislated freeze on pay, there's a strong likelihood that Congress and the Administration (who ever that might be in 2012 and beyond) will pass additional legislation that will pare down retirement and health benefits such as the "high-5" proposals on annuity pension/annuity calculations; (3) many retirement eligible employees are hanging on for the next "buy-out" they think is around the corner; and (4) the federal workforce has many older workers and many of the old folks are really at the KMA stage of their careers -- they are literally 3 bad days from retirement, which will probably coincide when new pension reforms like the "high-5" is legislated.

I think there will be a tsunami in the next few years.

 

[zinger1457]

Khan...Your EX will retire with about 80 to 82 percent of salary. Adding sick leave will push the retirement above 80 percent. That's pretty good...a 13...step 10...makes around $106,000.

Which means they are really getting paid about $20K/year to continue working. The additional years don't really increase the pension that much, these folks are usually at the highest GS step and salary increases have been frozen so the high-3 doesn't change much. I worked for the Army in a department of mostly engineers. Almost all the ones under CSRS would retire at 30 years and if they wanted to continue working come back as a contractor.

 

[Amethyst]

Hmmm, I think there are far too many generalizations about the federal civilian workforce here.

As there would be about any large diverse group of 2 million (or thereabout) folks...

One thing to throw into the mix, if I may: Pension income is fully taxable. Years before joining this forum, I had the "bright" idea that due to our tax system, it would take less investment income, than pension income, to arrive at the same net income (please correct me if my terminology is off). In other words, a $50K pension plus $50K in investment income, would be taxed less than $100K in pension income.

Knowing that, I reckoned (not calculated; back then, I didn't yet know how) that if we could just increase our investment income, I would have to spend fewer years beyond retirement eligibility, trying to maximize pension income.

As we are all painfully aware, investments are not generating income as easily as they were a few years ago; so I will be staying on at work longer than I'd planned. Thank goodness that option exists for me.

Amethyst

 

[ChrisC]

One thing to throw into the mix, if I may: Pension income is fully taxable.

Well, it's not fully taxable from both the Federal or State standpoint. The pension annuity you receive includes a return of your contributions, which has already been taxed before from your prior earnings. So, a portion of that annuity is not taxed for Federal and State income tax purposes. Also, many States exempt Federal pension annuities from State income taxes (Pennsylvania, for example) and several States also exempt TSP drawdowns (North Carolina, for example) or other Federal defined contribution plans from State income taxes, as well.

 

[Redbugdave]

Hmmm, I think there are far too many generalizations about the federal civilian workforce here. Let me add a few other dubious ones. I would expect many higher-graded employees to stay well beyond initial eligibity to retire because many of these managers might really like their jobs and the feeling of authority or power they might have over programs they're responsible for implementing. But there are some positions in the federal workforce that call for mandatory retirement at certain ages (I believe this is the case for law enforcement positions or air traffic controllers). There are some agencies where most employees there actually like their work (NRC is typically rated the best federal workplace) and other agencies where most employees are challenged to work there (the Postal Service), so I bet most retirement eligible employees stay a few years beyond initial eligibility at NRC and others at the Postal Service head for the retirement hills as soon as eligible.

I don't know whether the anecdotal evidence of CSRS employees not participating in TSP is suported by any real hard data. It's been my observation that higher-graded employees generally have higher contribution rates than lower graded-employees and I think this cuts across CSRS and FERS employees.

I think you will see a major run to the retirement hills in many agencies the next few years for the following generalized observations: (1) FERS employees will have all of their sick leave counted for retirement service credit purposes in January 2014 so many of these employees sitting on a year of sick leave creditable in 2014 will wait until then; (2) on top of the recently legislated freeze on pay, there's a strong likelihood that Congress and the Administration (who ever that might be in 2012 and beyond) will pass additional legislation that will pare down retirement and health benefits such as the "high-5" proposals on annuity pension/annuity calculations; (3) many retirement eligible employees are hanging on for the next "buy-out" they think is around the corner; and (4) the federal workforce has many older workers and many of the old folks are really at the KMA stage of their careers -- they are literally 3 bad days from retirement, which will probably coincide when new pension reforms like the "high-5" is legislated.

I think there will be a tsunami in the next few years.

Good points and great post Chris. I also think there will be a tidal wave of retirements in the coming 4 years or so. However, with the stock market down many FERS people may not afford to retire. Just in my workplace, probably 60 percent of the employees will be retired within 3 years...almost all of them are CSRS.

So far, there have been no changes to our pay or benefits...except no cola for another year. And that could be extended by Congress. That not only affects our pay but also our high 3. I think many new changes will come for the new employees, though.

 

[Bimmerbill]

I know a lot of folks who say they will retire if the pension calculation gets changed from High-3 to High-5. I don't know if they are at the max step on their pay scale or not. I would guess not, and that they are probably working their way up the steps.

 

[Amethyst]

True; and I know from earlier posts of yours, that you are aware of civil service benefits that I am not (since they do not apply to my career service).

In husband's case, and eventually mine, the portion of annuity that is a return of contributions is small. For us, its effect on calculations of pension vs. investment income is negligible.

Amethyst

Well, it's not fully taxable from both the Federal or State standpoint. The pension annuity you receive includes a return of your contributions, which has already been taxed before from your prior earnings. So, a portion of that annuity is not taxed for Federal and State income tax purposes. Also, many States exempt Federal pension annuities from State income taxes (Pennsylvania, for example) and several States also exempt TSP drawdowns (North Carolina, for example) or other Federal defined contribution plans from State income taxes, as well.

 

[East Texas]

I retired from the private sector so I can't add anything to the federal retirement discussion. However, I might note, once I start collecting social security in 18 months the net (of taxes) of my pension plus social security is more than I took home when I w*rked. And retirement is so much better!

 

[Amethyst]

Not to nit-pick, but you know there is no "COLA" (cost of living allowance) with respect to salary, right? COLA applies to annuities. The yearly salary raise is just that - a pay raise.

I predict we'll end up contributing more to our pensions.

Amethyst

G
So far, there have been no changes to our pay or benefits...except no cola for another year. And that could be extended by Congress.

 

[Amethyst]

Yay!

Amethyst

However, I might note, once I start collecting social security in 18 months the net (of taxes) of my pension plus social security is more than I took home when I w*rked. And retirement is so much better!

 

[martyb]

I'm a CSRS'r who does contribute the max to my TSP, including the over-50 catch-up amount. However, I wasn't doing that before I found this site and the light bulb went came on in my head. I was contributing some, but not as much as I could or should have. It took me finding you folks to bring me to my senses. Unfortunately, Mr. stock market isn't going to allow me to reach my previous desired goal, if I retire on time, but at least I won't go out empty handed. Also, I won't have any trouble getting by for awhile if it takes OPM some additional time finalizing my pension. I'll be fine, and I know I'll get any missed pay reimbursed to me when they finally do get it straightened out.

 

[Dreamer]

I retired with CSRS pension. I started as a GS-2 step 1 temporary not to exceed 90 days and retired 32 yrs and 8 mos later as a GS-11. I took an early retirement at age 53 and have not regretted it. I always contributed the max including the over age 50 extra, but there was not a TSP when I first started working many years ago. We were also limited to 5% max contributions for a long time. The federal gov never put 1 cent into my TSP. I am very grateful for my career with the fed gov and also for my pension.

It did not bother me to wait for my pension from OPM, but I did find it ironic that we had lists for the retirement claims that we took and pressure was high to get the claims cleared within 10 days and it was really bad if a claim was over 30 days. However, when we retired we had to wait months for our pension. I had heard the typical horror stories about OPM and waiting for your pension to start and was pleasantly surprised when I received my check. I don't remember now how long it took, but it was faster than I thought it would be.

 

[Khan]

Is that how it works, even under CSRS? It takes several months for the pension to kick in after retirement?

Okay, now *that* I find just plain sad.

Used to. When I retired, I received an estimated check ~2 months along; after another month or 2, received pension check with adjustments for previous several months (original was pretty close).

 

[Khan]

Hmmm, I think there are far too many generalizations about the federal civilian workforce here. Let me add a few other dubious ones. I would expect many higher-graded employees to stay well beyond initial eligibity to retire because many of these managers might really like their jobs and the feeling of authority or power they might have over programs they're responsible for implementing. But there are some positions in the federal workforce that call for mandatory retirement at certain ages (I believe this is the case for law enforcement positions or air traffic controllers). There are some agencies where most employees there actually like their work (NRC is typically rated the best federal workplace) and other agencies where most employees are challenged to work there (the Postal Service), so I bet most retirement eligible employees stay a few years beyond initial eligibility at NRC and others at the Postal Service head for the retirement hills as soon as eligible.

I don't know whether the anecdotal evidence of CSRS employees not participating in TSP is suported by any real hard data. It's been my observation that higher-graded employees generally have higher contribution rates than lower graded-employees and I think this cuts across CSRS and FERS employees.

I think you will see a major run to the retirement hills in many agencies the next few years for the following generalized observations: (1) FERS employees will have all of their sick leave counted for retirement service credit purposes in January 2014 so many of these employees sitting on a year of sick leave creditable in 2014 will wait until then; (2) on top of the recently legislated freeze on pay, there's a strong likelihood that Congress and the Administration (who ever that might be in 2012 and beyond) will pass additional legislation that will pare down retirement and health benefits such as the "high-5" proposals on annuity pension/annuity calculations; (3) many retirement eligible employees are hanging on for the next "buy-out" they think is around the corner; and (4) the federal workforce has many older workers and many of the old folks are really at the KMA stage of their careers -- they are literally 3 bad days from retirement, which will probably coincide when new pension reforms like the "high-5" is legislated.

I think there will be a tsunami in the next few years.

I don't suppose that will be retroactive?

 

[Khan]

Khan...Your EX will retire with about 80 to 82 percent of salary. Adding sick leave will push the retirement above 80 percent. That's pretty good...a 13...step 10...makes around $106,000.

Under CSRS you start losing money after 40 years.

BTW his wife is a few years younger and a GM-15

 

[ChrisC]

I don't suppose that will be retroactive?

It would take another Act of Congress for that to happen. The answer for now is "no" and it's likely to be forever "no" for people who have retired before January 1, 2014. I think if you retired between Oct 2009 and December 31, 2013, existing legislation permits a credit of 50 percent of sick leave for annuity purposes for FERS employees.

 

[martyb]

CSRS pension actually maxes out at 41 yrs, 11 months, at 80% of hi-three average. Any sick leave is added on top of that. A year's worth of saved up sick leave would add 2% on top of the 80%. If a person continues to work beyond the 41 yrs, 11 months, they will still pay 7% into the CSRS pension fund, but when they retire, they will get a refund of the overage, with interest, I BELIEVE. Had to emphasize the "I believe" part, since I'm not actually at the point where I've experienced that particular situation, but from what I've read that's what happens. Also...even though the CSRS'er no longer accumulates the 2% per year thing after they hit the 80% max, they do still (normally) get the annual pay increases, which still would serve to increase their hi-three average, which would in turn increase their pension. Of course, we're currently under a 2 year pay freeze...

Personally, I'll never see the 80% pension, since I'll be retiring at around 36 yrs right after the first part of 2013. Also, although I'm a GS-11, I'm only a step 5 out of 10 steps of GS-11, so I'm not nearly maxed out in my grade. If I wasn't expecting to receive a military retirement starting at age 60, I'm not sure I'd feel confident enough to retire in 2013. I might have to work 2 - 4 more years just to sweeten the pot a little. GS-11 step 5 retirement isn't all that much, after deductions for taxes, insurance etc. If wifey wasn't planning to continue working for 3 yrs after my retirement, it might be less attractive too.