CSRS or FERS: Would you switch?

This is not a trick question but it is a tricky question: If Uncle Sam had a special open season when you could change retirement plans, would you pick the old Civil Service Retirement System program or the Federal Employees Retirement System that replaced it in the 1980s?

Most feds who are still working today are under the newer FERS plan and most federal retirees under CSRS. One of the groups has it made in the shade — the other, not so much.

Ask the typical FERS employee and he or she will point out the benefits of the CSRS plan. It provides a much larger starting annuity and its annual cost of living adjustments are fully indexed to inflation. In January, CSRS retirees will get a 2.8 percent COLA. Under their so-called diet-COLA formula, FERS retirees will get 2.0 percent. Not a big difference but over time it will drastically reduce how much they have to spend in retirement.

Ask the typical CSRS employee or retiree and he or she might point out the super benefits of FERS. Employees are covered by Social Security and they qualify for a 5 percent government match to their Thrift Savings Plan accounts. Most FERS people take the extra investment in stride. People who don’t get it dream of it.

CSRS employees contribute much more to their retirement plan than FERS workers, but FERS workers have to pay Social Security.

So what do feds think about the differences? Commenting on the diet-COLAs that FERS employees get, reader Marlis notes that FERS workers “receive matching contributions to their TSP accounts … it can be big money. CSRS retirees do not. Fair is fair? Matching funds or the 0.8 contribution FERS people make, what would you take?”

Wayne S. a retired law enforcement officer notes “there are the federal employees who voluntarily chose FERS when they had the ability to stay with CSRS. Short term thinking. Just sayin …”

Nearly Useless Factoid

By Amelia Brust

According to the American Academy of Orthopaedic Surgeons, in 2015 there were more than 295,000 medically treated trampoline injuries in the U.S. and 102,943 emergency department visits.

Source: AAOS

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