Make Retirement Easy
The Office of Personnel Management says the new system is working as planned so far. But don't get too excited yet. Only about 26,000 federal employees are included in the first test of the system.
Only time will tell whether RetireEZ will live up to its name. In order to work, it must be able to address the vast range of employment scenarios that federal civil servants might have encountered during their careers.
The system promises employees more capability to project their potential retirement income. Not only will they be able to review data in the system to make sure it accurately documents their career, they will be able to compute 12 different retirement estimates and compare three at a time on the same screen -- all without the help or permission of their human resources office.
How will this work in the real world? Consider this question I recently received from a reader:
I have requested our personnel office to provide me an estimate. I have 20 years of service (not continuous), and am over 50 years old. Some of my earlier years (possibly eight of the 20 years) were under the Civil Service Retirement System. If I withdrew some of my retirement under CSRS when I left government service after my first five years of government service, how does this affect my possible Federal Employees Retirement System supplement, assuming I take an early-out prior to age 62?
Under the current paper-based system, a federal benefits specialist would have to provide the estimate this employee seeks. To do so, he or she would have to interpret exactly what information the employee needs. For example, the employee didn't ask, but it would be important to know, how taking a refund of CSRS contributions would affect the retirement computation. Another important unasked question concerns how much the employee's retirement benefit would be reduced if he or she retired before turning 55.
The answers to such questions are critical to determining how much of a retirement benefit this employee would be entitled to if offered an early out. This is the kind of insight and understanding an agency retirement specialist should have in order to provide useful information.
So how would the process work under RetireEZ? The goal is that the system would provide an estimate that would answer all of the above questions. Here's how it might play out.
The employee would log on to RetireEZ and enter information to calculate retirement at age 50 with 20 years of service. Human resources data previously entered into the system should indicate that this employee transferred to FERS with a frozen CSRS component. It should also show that he had received a refund of CSRS contributions upon leaving the government.
In computing the retirement estimate, the system should indicate that at 50, this employee would be eligible only for early retirement (voluntary or discontinued service) or disability. Depending on which option the employee selects, the program should compute an age reduction on the CSRS component, but the FERS benefit would not be reduced for age.
The employee also should compute an alternative scenario on RetireEZ to find out the value of his benefit if he stays until the FERS minimum retirement age. And the employee should compute a third estimate showing what would happen if he stays long enough to qualify for an unreduced optional retirement, since he will not have enough service for an unreduced benefit when reaching the minimum retirement age.
Will this employee and the RetireEZ system know to ask all of these questions and be able to interpret the data? The day that happens, federal employees will have reason to celebrate. It might also be the day I retire, because my services no longer will be needed.
Let's hope that day is soon. My husband is not planning to continue his career too many more years, and I'd like to start practicing what I preach about retirement.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.