The Civil Service Retirement System, specifically the Federal Employees Retirement System (FERS), was established by Congress in 1986, becoming effective on January 1, 1987. This system provides retirement coverage for new Federal civilian employees hired after this date. FERS is designed as a comprehensive retirement plan, drawing from three distinct sources to ensure a secure future for federal employees.
FERS is structured around three key components: a Basic Benefit Plan, Social Security, and the Thrift Savings Plan (TSP). It’s important to note that two of these components, Social Security and the TSP, are portable, meaning they can continue to benefit you even if you leave federal service before retirement. Both the Basic Benefit and Social Security portions of FERS require contributions directly from your paycheck each pay period. These deductions represent your share of the retirement system, matched by contributions from your employing agency. Upon retirement, these contributions translate into regular annuity payments, providing a steady income stream for the remainder of your life.
The Thrift Savings Plan (TSP) is automatically established for each federal employee by their agency. Your agency contributes an amount equal to 1% of your basic pay into your TSP account each pay period, regardless of whether you contribute personally. Furthermore, you have the option to make your own contributions to your TSP account, and your agency will provide matching contributions on these personal contributions, up to a certain limit. These contributions are tax-deferred, offering a significant tax advantage. The TSP is managed by the Federal Retirement Thrift Investment Board, ensuring professional oversight and management of these retirement savings.
For those seeking deeper information about the Thrift Savings Plan, the TSP website is an invaluable resource. Similarly, comprehensive details regarding the Social Security component of your retirement benefits can be found on the Social Security Administration (SSA) website. This overview provides a foundational understanding of the Civil Service Retirement System, and further exploration of the linked resources will offer a more complete picture of each aspect of FERS.
