The FERS Special Retirement Supplement (and Special Category Employees)

The Special Retirement Supplement (SRS) is a payment that is made by OPM and is designed to approximate the amount of an age 62 Social Security benefit that is due to civilian service under the FERS retirement system. Most FERS retirees begin receiving the SRS at their Minimum Retirement Age.

There is a newer version of this article available on FedSmith.com. See The FERS Special Retirement Supplement and Special Category Employees

Though this article is addressed specifically to special category employees, those who want a refresher in exactly what the Special Retirement Supplement is, can read it as well.

First, we need to define Special Category Employee (SCE). For the purpose of the Special Retirement Supplement (SRS), an SCE is an employee who can voluntarily retire at an age under their Minimum Retirement Age (MRA). Those would be law enforcement officers, firefighters, and some military technicians.

Second, a review of the Special Retirement Supplement is in order. The SRS is a payment that is made by the Office of Personnel Management (OPM) and is designed to approximate the amount of an age 62 Social Security benefit that is due to civilian service under the FERS retirement system. Most FERS retirees begin receiving the SRS at their Minimum Retirement Age. The SRS ends at age 62.

Here is how the SRS is computed for a retiree whose MRA is age 56 and who retires under FERS with 30 years of civilian service and an estimated age 62 Social Security benefit of $1200 a month.

  • The FERS service is divided by 40. Forty represents the number of years that the Social Security Administration considers a full career. In our example, the result is 30/40, or 75%.
  • The age 62 Social Security benefit is multiplied by the fraction derived above. In our example, 75% of $1200 is $900. The Special Retirement Supplement will be $900 a month and will not receive a cost of living adjustment.

The computation for a Special Category Employee would be done in a similar fashion. Let’s say a law enforcement employee retires at age 49 with 25 years of FERS civilian service and the same estimated age 62 Social Security benefit of $1200. Their SRS would be $750.

SCEs are allowed to receive their Special Retirement Supplement at an age earlier than regular employees. Our Special Category Employee with a $750 SRS would be able to collect it beginning upon their retirement at age 49. If our SCE received the SRS for the full 13 years up to age 62, they would receive $117,000.

In contrast, the regular employee who retired at their MRA of 56 would receive their $900 a month SRS for only 6 years, giving them a total of $64,800. If a regular employee retired at age 49 by electing early retirement during a Voluntary Early Retirement Authorization (VERA), they would not be eligible for their SRS until they reached their Minimum Retirement Age.

Special Category Employees are treated differently regarding the earnings test that applies to the Special Retirement Supplement. The earnings test that applies to the SRS is the “first tier” Social Security earnings test. In 2009, this test results in a reduction of $1 in the SRS for every $2 or earned income over $14,160. Earned income is income from wages, salary, tips and self-employment income, and does not include pensions, investment income, etc.

Both Special Category and regular employees are subject to the earnings test beginning at their Minimum Retirement Age. However, SCEs are not hit by the earnings test between the time they retire and the time they reach their MRA. Let’s re-do the above example, assuming that both the SCE and the regular employee earned so much money that the earnings test wiped out their SRS.

Our regular employee would receive nothing from the SRS, as they are not entitled to it until they reach their MRA – exactly the same age where the earnings test kicks in. Our Special Category Employee would have received seven years of SRS that was not subject to the earnings test (from 49 to 56). They would have received $63,000 up to the time the earnings test began to apply.

But, we should all beware of legislation proposed by John Boehner (R-OH), which proposes eliminating the SRS altogether. The legislation does not appear to be going anywhere at the moment, but it sends a shot across the bow of FERS employees. The legislation also proposes changing the method of computing retirements from using the high-three years of salary to using the high-five years.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at johnfgrobe@comcast.net to discuss schedules and costs.

About the Author

John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.