Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

When You Go

ARCHIVES

Perhaps it is a sign of age or maybe just a sign of the uneasy times we are living in, but the subject of death has come up in several of my conversations lately. Not that anything is wrong or anticipated, but the topic has been on the water cooler list. For instance, during a recent dinner with friends, the topic came up as a "what if" situation. I guess we want to be sure that we get our money's worth out of our retirement -- or at least someone does.

So now is as good a time as any to look at death benefits payable under the Civil Service Retirement System and the Federal Employees Retirement System. There are additional benefits payable upon your death if you have Federal Employees Group Life Insurance, unpaid compensation (last paycheck and unused annual leave, for instance) Social Security, workers' compensation and the balance in your Thrift Savings Plan. Some of these payments are governed by your valid designation of beneficiary or the standard federal order of precedence. Social Security provides widow, children and sometimes dependent parent benefits to surviving family members. Workers' compensation could be payable if the death is work-related.

I want to address three scenarios under CSRS and FERS: the death of a current employee, a former employee and a retiree.

1. Current Employee

Spouse

If the employee has a minimum of 18 months of creditable service and is survived by an eligible current or former spouse with a valid court order awarding a survivor annuity, then a basic death benefit and/or a monthly survivor annuity could be payable. If the employee's death is work-related, the surviving spouse could be entitled to compensation from the Office of Workers' Compensation Programs instead of a CSRS or FERS surviving spouse benefit. The compensation benefits are more generous than the CSRS or FERS benefit and are tax-free. If the death is not work-related, then the surviving spouse benefits could be payable from CSRS or FERS. (An eligible spouse is defined as one who was married to a current employee or retiree at the time of his or her separation from federal civilian service and the spouse was married to the deceased for at least nine months, the death occurred before nine months of marriage, the death was accidental, the couple had a child.)

  • CSRS: An eligible surviving spouse is entitled to 55 percent of the earned CSRS retirement benefit as of the date of death or 55 percent of the guaranteed minimum disability benefit if greater.

    For example, if Georgia, who is covered by CSRS, were to die at age 53 and she had 35 years of service, her surviving spouse would receive 55 percent of 66.25 percent of her high-three average salary (the computation of a CSRS benefit based on 35 years of service). There would be no penalty if her death was before age 55 -- unlike the reduction for retiring before age 55.

    This is a lifetime benefit and payable immediately to the surviving spouse. The benefit also includes an annual cost-of-living adjustment to help maintain its value over the years. It ends upon the death of the surviving spouse or upon the surviving spouse's remarriage prior to age 55, with the exception of those who were married for 30 years or more. For those who were married for 30 years or more, or for surviving spouses who remarry after age 55, the benefit is not affected by the remarriage. This is an entitlement to the current spouse or to a former spouse who was awarded this benefit in a divorce agreement. This is not a benefit that is chosen by the employee.
  • FERS: An eligible surviving spouse is entitled to the FERS Basic Death Benefit as long as the employee had a minimum of 18 months of civilian service. This benefit equals 50 percent of the employee's final salary (high-three average salary, if higher), plus $15,000 (increased by Civil Service Retirement System cost-of-living adjustments beginning Dec. 1, 1987). The $15,000 has increased to $29,722.95 for deaths on or after Dec. 1, 2008. This benefit could be paid as a lump sum to the surviving spouse or in 36 equal monthly payments.

    If the employee had completed at least 10 years of creditable service, the spouse also would receive (in addition to the Basic Death Benefit) a monthly survivor benefit that equals 50 percent of the earned FERS Basic Retirement Benefit as of the date of death.

    For example, if Andy, who is covered by FERS, died at age 53 with 20 years of service, his surviving spouse would receive 50 percent of 20 percent of his high-three average salary (the FERS basic computation provides either 1 percent or 1.1 percent of the high-three for every year of creditable federal service, such as 20 years times 1 percent equals 20percent of the high-three average salary). He also would be entitled to the basic death benefit in addition to the survivor annuity benefit.

    The same rules regarding remarriage and the duration of this benefit apply to FERS as they do to CSRS. If the surviving spouse is not eligible for Social Security benefits as a widow or a parent of a dependent child, then there also could be a supplemental benefit until the surviving spouse qualifies for Social Security.

Dependent Children

This benefit is payable to dependent children upon the death of an employee or retiree with no election required. Someone has to apply for this benefit on behalf of the eligible child or children. The benefits are adjusted annually for inflation.

CSRS: A fixed rate per child is determined each year. The 2009 rates are:
  • $470 per month per child with a maximum of $1,409 (if the child, or children, has a living parent who was married to the employee or retiree)
  • $564 per month per child with a maximum of $1,691 (if the child, or children, has no living parent who was married to the employee or retiree)

FERS: A child's survivor benefit rate is calculated as follows: The total amount payable to all children under CSRS minus the total amount payable to all children by Social Security divided by the number of children.

No Eligible Spouse or Dependent Children

When an employee is not survived by anyone entitled to a monthly survivor annuity, then the employee's contributions to the retirement fund are refunded. The payment is made to the beneficiary designated on a valid designation of beneficiary form or according to the standard federal order of precedence if there is not a valid beneficiary designation on file.

2. Former Employee

CSRS

As long as the former employee did not receive a refund of his or her retirement contributions, then the contributions are returned to the beneficiary designated on a valid designation of beneficiary form, or according the standard federal order of precedence if there is not a valid beneficiary designation on file. A survivor annuity is not payable if the former employee did not apply for a deferred annuity.

FERS

If a former employee with at least 10 years of creditable service (five years of which must be creditable civilian service) is survived by an eligible surviving spouse, the spouse could be eligible for a monthly survivor benefit. The benefit begins on the date the former employee would have been eligible for an unreduced annuity, unless the survivor chooses to have it begin at a lower rate on the day after the former employee's death.

Children

No monthly benefits are payable to children of deceased former FERS employees if the death occurs after leaving federal employment and before retirement.

Lump-Sum Benefit

If a former employee dies and no survivor annuity is payable, the retirement contributions remaining to the deceased person's credit in the retirement fund, plus applicable interest, are payable. The payment is made to the beneficiary designated on a valid designation of beneficiary form, or according the standard federal order of precedence if there is not a valid beneficiary designation on file.

3. Retiree

Employees elect the type of retirement they want under CSRS and FERS when they file their retirement application. The choices include:

  • Reduced annuity with full survivor benefits to my spouse
  • Reduced annuity with partial survivor benefits to my spouse
  • An annuity payable only during the retiree's lifetime (no reduction and no survivor annuity elected)
  • Reduced annuity with survivor annuity for a person named who has an insurable interest in the retiree
  • Reduced annuity with survivor benefit for former spouse(s) or a combination of current and former spouse(s).

Employees can elect to provide a maximum, a partial or no survivor benefit for a current spouse. The spouse must provide consent unless a full survivor benefit is elected. The maximum or partial election ensures continued health benefits for a spouse who is covered under a self and family health plan and is not eligible for Federal Employees Health Benefits under his or her own retirement.

The dependent children benefits described above also are payable if the retiree is survived by a dependent child or children. Employees will be asked to name their unmarried dependent children on the retirement application so the Office of Personnel Management is aware of their existence.

I've written about the election that employees make at retirement in previous columns. Here's a link to those columns:

If you die leaving no one who qualify for a survivor benefit, the contributions that are left in your retirement fund (if any) will be paid as a lump-sum payment according to your most recent valid beneficiary designation. Your retirement contributions are depleted when you have received retirement benefits equal to the amount of your contributions to the retirement fund.

Domestic Partner Benefits

There are no federal benefits extended to domestic partners at this time, other than the availability to elect an insurable interest survivor benefit upon retirement and naming the partner as the beneficiary for any lump-sum payments. For more on this subject, my colleague, Alyssa Rosenberg, has recently written on this topic in her May 2009 feature, "Foreign and Domestic".

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.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Monday mornings at 10 a.m. ET on federalnewsradio.com or on WFED AM 1500 in the Washington metro area.

 

Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at www.tammyflanagan.com and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on NITPInc.com.

FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.