FERS Disability Retirement converting to FERS Regular Retirement at 62

[candidman]

They're going to recompute my FERS Disability Retirement to FERS Regular Retirement when I turn 62 in a few months. I'm anxious to know whether my annuity will be a little hiring or lower. I've been on disability since 2006, and I had nearly 20 years before that, giving me a total of 37 years of service.

My question is, how do they determine my new high three average salary when they recompute my annuity at 62. I don't want to call OPM, because the guy I spoke to today had nothing but negative information for me. Not only did he tell me the COLAs wouldn't be included, but he even told me they would multiply my high three average salary by only 1%, instead of 1.1%, even though I have over the 20 year requirement for them to multiply it by by 1.1%.

I think he meant they wouldn't include the COLAs I would have gotten if I kept working as a regular employee. Their COLA amounts are different from our COLA amounts, as well as the Social Security COLA amounts. This guy didn't make any of this clear to me, and I don't trust calling OPM again to give me my adjusted high three average salary, if they're able to. He also told me they would use my original high three average salary to recompute my annuity. But he didn't tell me it would include all the COLAs I've gotten over the last 17 years, which would make it much higher.

Anyway, if anybody had their FERS Disability Retirement recomputed to FERS Regular Retirement at 62, and was able to figure out the updated high three average salary OPM came up with, please let me know how you did it, or how they went about calculating it. Thanks.

 

[Blue Poles]

Here's one explanation. Sounds a bit different than what the guy (who was he with? OPM?) said to you.

https://www.federaltimes.com/your-c...the procedure used,disability rolls to age 62.

 

[donheff]

My Federal HR expertise is 30 years out of date. But my read of the current regulation is that you will Get recomputed based on your average rate of pay (calculated back then) and your length of actual service plus the disability years. For that computation, that old average pay will be adjusted up to include all of the intervening FERS COLAs. I don't know anything about your 1% vs 1.1% issue - but my guess is that if you had the needed length of service to qualify for the higher level then it will be applied. You should look thru the basic computation regs to see since they are what will be applied.

Laws and regs can get pretty convoluted - you have to jump around to check the "subject to" references. But if you take your time, you can figure them out. For example, the "including subsection (g)" reference below refers to computing time for part time employees. If you were not a part timer, you can ignore it.

Here is the governing provision on redetermination which refers you back to the standard computation provisions:

§ 844.305 Redetermination of disability annuity at age 62.

Effective on and after the annuitant's 62nd birthday, the rate of annuity payable to a disability annuitant will be the amount of an annuity computed with respect to the annuitant under 5 U.S.C. 8415 (including subsection (g) of that section), including credit for all periods before the annuitant's 62nd birthday during which he or she was entitled to an annuity under this part. The average pay used in computing the annuity under 5 U.S.C. 8415 is adjusted by all cost-of-living increases effective under 5 U.S.C. 8462(b) during the period the annuitant was receiving the disability annuity under this part.

 

[candidman]

Here's one explanation. Sounds a bit different than what the guy (who was he with? OPM?) said to you.

https://www.federaltimes.com/your-c...the procedure used,disability rolls to age 62.

Yes the guy I'm referring too, was the person I spoke to when I called OPM. I waited two hours for all that negative info, which I kinda expected from somebody at OPM. Btw, I didn't really stay on hold for two hours; I pressed 7, and had them call me back after being on hold for about 40 minutes. They called me back while I was on the road, right when it started to thunder. I had to pull over, but I still had them on my car speaker, which I didn't like either. Not being at home was the reason I couldn't read the info I had back to him. But I don't think it would have change his mind. Since when does that happen? Anyway, it took about an hour and a half to get a call back. So it was about two hours before I got a chance to finallly speak to someone from OPM.

Btw, I read that article you provided not long before I made this thread. What happened to that gentlemen shook me up. I sure hope OPM don't mess me up like that, when they recompute my annuity. I have a feeling that person spent some or all of his time under CSRS, and not FERS. Or perhaps he went over the maximum income limit. I kind of see why he email Reg Jones first, before calling OPM. Knowing OPM would probably hold their stance, he must have felt he needed info from an expert on the matter, before calling OPM. I hope things worked out for him.

Yes, the info in that article you provided really was a bit different from the info that guy at OPM gave me. The only thing the article doesn't mention is, you need 20 years or more to get the 1.1% calculation. Perhaps the article was aimed at the person OPM messed up, who had 24 + 5 years. Anyway, the OPM guy I spoke with could have been a little more positive. The only thing he told me positive, was that I would have 37 years, something I already knew. Why he kept telling me I would get the 1% calculation, instead of the 1.1% calculation, I don't know.

 

[candidman]

My Federal HR expertise is 30 years out of date. But my read of the current regulation is that you will Get recomputed based on your average rate of pay (calculated back then) and your length of actual service plus the disability years. For that computation, that old average pay will be adjusted up to include all of the intervening FERS COLAs. I don't know anything about your 1% vs 1.1% issue - but my guess is that if you had the needed length of service to qualify for the higher level then it will be applied. You should look thru the basic computation regs to see since they are what will be applied.

Laws and regs can get pretty convoluted - you have to jump around to check the "subject to" references. But if you take your time, you can figure them out. For example, the "including subsection (g)" reference below refers to computing time for part time employees. If you were not a part timer, you can ignore it.

Here is the governing provision on redetermination which refers you back to the standard computation provisions:

§ 844.305 Redetermination of disability annuity at age 62.

Effective on and after the annuitant's 62nd birthday, the rate of annuity payable to a disability annuitant will be the amount of an annuity computed with respect to the annuitant under 5 U.S.C. 8415 (including subsection (g) of that section), including credit for all periods before the annuitant's 62nd birthday during which he or she was entitled to an annuity under this part. The average pay used in computing the annuity under 5 U.S.C. 8415 is adjusted by all cost-of-living increases effective under 5 U.S.C. 8462(b) during the period the annuitant was receiving the disability annuity under this part.

The information you provided is the exact way I understand it. All other sources say something similar, including the OPM website. At first I thought the guy at OPM was telling me I would only get the 1% calculation, and not the 1.1% calculation, because I didn't have 20 years before I went on disability. Believe it or not, I had 19 years, 11 months, and several days. But since the entire time I've been on disability, which will be 17 years and one month, will be added to my years of service, this will bring my total years of service to 37. That should qualify me for the 1.1% calculation by a long shot. That's 17 years more than 20. Like how did he miss that. I sure hope he was wrong.

As far as COLAs, I think what misleads a lot of people, is when they say all the COLAs they would have received, will be used to recompute their annuity at 62. I think they mean all the FERS Disability COLAs we have received, not the same COLA amount you would have received as a regular federal employee, who's COLA amounts are different. Tbh, I always thought regular federal employees got the same COLA amount we got. But they don't. For example, they didn't get the 7.7% COLA we got in 2023. Theirs was 4.9% You may have already known this, but I didn't.

Anyway, To give that OPM guy the benefit of the doubt, perhaps this is what he meant by telling me COLAs aren't included in the recalculation. But why only tell me that, and not tell me what the rest of the sources are telling me, which says all COLAs we received will be included when they recompute our annuities. I sure hope they didn't just now stop including all COLAs when recomputing our annuities.

 

[donheff]

Anyway, To give that OPM guy the benefit of the doubt, perhaps this is what he meant by telling me COLAs aren't included in the recalculation. But why only tell me that, and not tell me what the rest of the sources are telling me, which says all COLAs we received will be included when they recompute our annuities. I sure hope they didn't just now stop including all COLAs when recomputing our annuities.

It may have been a confusion of terms. You won't get a recompute and then have COLA's applied to that recomputed pension figure.

Instead, the recompute itself will incorporate the COLAs. Your average pay will initially be computed as it was when you went on disability and then that average pay figure will be adjusted up by the FERS COLAs that took place while you were on disability. That upward adjusted average pay figure will be used to compute your new annuity using the normal formula just as if you were a regular employee retiring today with that average salary. Since you will be 62 with 37 years that should be 1.1% x 37 years. If there is some arcane part of the law that says only actual service (19 years, 11mths) count for the 1% vs 1.1% determination you will get screwed out of the extra .1%. I doubt that is the case, but I don't want to spend a lot of time looking into it only to give you my half assed opinion. OPM's determination is what counts. They do this all the time so they will very likely get it right. The biggest area for screwups was always with the service record inaccurately reflecting credible service, military service, things like that. But that doesn't sound like an issue in your case.

 

[candidman]

After reading another example, I think I've somewhat figured this thing out, as far as including all COLAs. What they do is accumulate all the COLA's you received since being on disability, and multiply it by the adjusted annuity they come up with in the formula they use, hoping it's the right formula. After they do all this, the amount should come close to what you're already getting. Btw, in the formula, before they multiply your COLAs you accumulated, they will convert it into a decimal, and add 1 to it.

In this example, this person went on disability at age 56. So they received disability for 6 years by the time they turned 62, and all the COLAs they accumulated during those 6 years equaled 10.5%. OPM will convert that 10.5% into decimal format, which would be .105. Then they will add 1 to that, equaling 1.105. They'll take this number, and multiply it by the adjusted annuity, giving this person their new annuity amount. Btw, this person worked 14 years before going on disability, therefore they would have 20 years of service after including years spent on disability. Therefore they have enough years to get the 1.1% calculation. Btw, their high 3-average salary was $120,000 when they retired on disability. Below is the formula OPM will use to recompute their annuity at 62.

20 X .011 X $120,000 X 1.105 = $29.172

So their total adjusted annuity would be $29, 172.

Now I finally have just about all the info I need to determine what to expect when they recompute my annuity, if they don't miscalculate anything. What I don't know is, what year to begin with when I start adding up my COLAs. I retired in September 2006. I don't know if I suppose to include 2006, or start counting from 2007.

 

[candidman]

An easier way to figure out your present high-3 average salary, is to just find your latest "NOTICE OF ANNUITY ADJUSTMENT" statement mailed to you at the beginning of the year. You can also view that statement at OPM Retirement Services Online, if you have an account.

Once you find your "NOTICE OF ANNUITY ADJUSTMENT" statement, look under the new status section, and find your new "Gross Monthly Annuity". Multiply that amount by 12. That should give you your present high-3 average salary, give or take a few dollars. Don't take a chance, and call OPM, and have somebody who just picked up the phone tell you some nonsense, like they're going to use your same high-3 average salary you got when you first went on disability to recompute your annuity, and that they won't include none of your COLAs. If that was the case, the example I borrowed above wouldn't have included the 10.5% they got when they added up all their COLAs. I thought they had stopped carelessly spreading negative information like that to people 60 and older. Anyway, it's probably best to wait a few weeks before your 62nd birthday, and let them mail to you what you're going to get, and how they came up with the amount.

 

[candidman]

Edit: I left something out with what I said above. There's a little more you have to do than get your latest NOTICE OF ANNUITY ADJUSTMENT statement, and multiply your new Gross Monthly Annuity by 12. That amount is not your high-3 average salary like I said earlier. Btw, of course this has to be from the NOTICE OF ANNUITY ADJUSTMENT statement you receive the year you turn 62, if you want to know the high-3 average salary they'll use when they recompute you annuity.

Since disability pays 40% of your high-3 average salary, you'll have to take that amount you came up with when you multiplied your Gross Monthly Annuity by 12, and find out what that amount would be 40% of.

Lets say the amount you came up with was 40,000. To get your high-3 average salary, you would multiply 40,000 x 100, then divide that total by 40 as follows: (40,000 X 100)/40=100,000. So 40,000 would be 40% of 100,000.

Therefore, 100,000 would be the high-3 average salary they will use when they recompute your annuity, or something very close.

 

[candidman]

Update: Just got finished talking with someone from OPM, and found out I do get the 1.1% accrual factor afterall. I was pretty sure that guy I spoke to earlier was wrong anyway, because he sounded too negative. I just needed to call OPM again to make sure. I know the people who answer the phones there don't do the recomputations, but no way do you have any business working at OPM, and telling somebody with 37 years of service, that they only get the 1% accrual factor when they recompute their annuity at 62. There's no excuse for that, I'm sorry...even if they just started working there.I knew the answer to this myself many years before I retired, just by being a government employee. He would have been better off saying he didn't know. Tbh, I didn't really call OPM for that information. I was calling to find out which high-3 average salary they were going to use when they recompute my annuity. And that's where he first started messing up. He almost had me thinking they changed the non-disability provisions, and that the OPM website hadn't yet posted these changes.

Even the guy I just spoke with at OPM barely wanted to answer my question, and said very little, as though he didn't want to tell me I was correct about getting the 1.1% accrual factor, when he should have been happy to tell that to a man my age. He wasn't even able to tell me whether all my COLAs I received since on disability would be added, which was a simple yes, just like the answer to my other question should have been. The way they recompute your high-3 average salary isn't all that clear on the OPM website, but what accrual factor they'll use, and the fact they'll add all your COLAs you've received since you've been on FERS Disability Retirement is clearly stated on their website, and it's been clearly stated there for decades, just like it's clearly stated on the rest of the websites discussing FERS Disability Retirement. Like what are them people answering the phones at OPM even there for. No retiree near 62 should have to read any Bi-Laws to get the answer to those two simple questions I had. I see they're still stuck in that day when they'd rather give certain people bad news than good news, no matter what age you are...and for that, they will continue to learn the hard way.

 

[candidman]

A little late, but I thought I'd give an update:

They converted my annuity to regular retirement like they were scheduled to, and I wound up with $138 more per month. Having those 17 years on disability retirement added to my total years of service, paid off, along with getting the 1.1% accrual factor, and all the COLA's. I hope I never have to call OPM again for anything.

It feels good no longer being on FERS Disability Retirement, and now being on FERS Regular Retirement, especially when it increases your annuity. Plus being on FERS Disability Retirement never came with any perks, unlike the perks that would have came with Social Security Disability Insurance (SSDI).

 

[Blue Poles]

Glad everything worked out for you.