Last week we looked at issues to consider when deciding whether to retire. Now let’s look at some general considerations when choosing a run date. This is of most immediate interest to those who are thinking of heading out towards the end of this year, but it is also important information for those who are still a long way from retirement.
First, let’s briefly review the eligibility regulations. To retire, you must first meet age and service requirements. For FERS employees:
62 years old, 5 years of service.
60 years old, 20 years of service.or
Reach minimum retirement age (MRA) after 30 years of service
(MRA ranges from 55 to 57 depending on year of birth)
You can also retire with an MRA after 10 to 29 years of service. However, if you are under 62, your pension will be reduced by 5% each year (5/12 of 1% per month).
For CSRS employees:
62 years old, 5 years of service.
60 years old, 20 years of service.or
55 years old, 30 years of service
You can retire on any day of the week, even on holidays, and on any day you like during the pay period. However, there are rules regarding when the pension begins. And FERS and CSRS are different. Let me explain.
If you are a FERS employee, you must retire by the end of the month at the latest to receive your pension next month. For example, to be entitled to receive your pension in January this year, you must retire by Saturday 30th December and receive your first pension on 1st February. Even if it’s just one day, your pension will not be paid until the next month. In this case it’s March.
If you are a CSRS employee, you can retire by the 3rd of each month and receive your pension that month. However, the first month’s pension payment will be reduced by 1/30 for each day he is not listed in the pension register. Note: For pension purposes, OPM will divide his year into 12 months of his 30 days. This is to ensure that your monthly pension payments are equal and do not rise or fall depending on the calendar length of a particular month.
Now you have it. Rules governing when pensions begin. Next week, I’ll help you choose a retirement date that maximizes the value of your retirement savings.
Reg Jones, former Director of Retirement and Insurance Policy at the Office of Personnel Management and longtime contributor to FEDweek, is known throughout the federal employee community as an authority on pay and benefits.
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