A Common Misconception about the FERS Annuity Supplement

By on December 22, 2011 in Current Events, Retirement with 36 Comments

The FERS annuity supplement is commonly believed to be linked to the Social Security Administration (SSA), even to the point where some believe the benefit is actually administered by SSA rather than the Office of Personnel Management (OPM).  This seems to be plausible, because the supplement is a quasi-Social Security payment prior to the start of the actual Social Security benefit at age 62.  Another reason some think this is true is it would account for the months of delay until the supplement finally starts – OPM is waiting to hear from Social Security, right?

The truth is that OPM calculates the supplement independently, without using any data from Social Security.  The SSA earnings figures are not the same as FERS earnings per se.  There are three reasons for this:

  1. Social Security counts income earned before age 22 and it counts income from non-Government sources.  Neither is included in computation of the supplement, and both are commingled by SSA with federal pay so they cannot be distinguished from each other.
  2. Social Security does not count income unless it is earned.  In contrast to this, the calculation of the supplement does, in fact, count non-earned income.  This is called “deeming.”
  3. The Social Security annual statement projects what might be the age-62 benefit, if the future is like the past, while the calculation of the supplement uses figures from the past, only, to arrive at a current benefit.

The above means the Social Security data cannot be used in calculating the FERS annuity supplement.  The data is not really satisfactory even for making a credible estimate.

The interim payment to new retirees includes a percentage of whatever the annuity is going to be, but  $0.0 for the annuity supplement.  Retirees must wait for months before they start receiving anything at all for the supplement.  This is despite the fact that the same documentation establishing title to the annuity also establishes title to the annuity supplement.  And the information needed regarding service time and salaries is also available at the outset for both benefits, but is used only for the annuity and not for the supplement.

Why do they withhold the retiree’s money in this way?  How much money is involved?  The money involved in most cases is from $700 to $1,100 monthly; thus, if OPM does not start paying the supplement until, say, six months after retirement, the shortfall for one retiree is from $4,200 to $6,600.

Why does OPM do this?  Well, one of the reasons offered is that the supplement calculation is quite complex and lengthy, and they want to start paying something as soon as possible.  Well, this logic glosses over the simple fact that the interim payment is an estimate, for crying out loud!  An estimate, by definition, is not precise – that is why they call it an estimate!  OPM could easily pay, say, 60-70% of what the supplement is going to be, just as they are already doing with the annuity itself. 

As for the “complex and lengthy” argument, why on earth doesn’t OPM get software for this data-intense  task?  They do not hesitate to ask for money for hiring 40 extra employees – why don’t they get the software instead?  (By the way, we should all be thankful congress refused the latest OPM request for additional staff.)

With regret, I have given up on the Office of Personnel Management.  For years, they have stubbornly persisted in their thick-headed policies, hurting many thousands in the process.  This deplorable situation will be remedied only when new management takes over – “new” means non-OPM people.  Until then, there is no hope.

Readers are cordially invited to my website.

Editor’s note: The opinions expressed herein are those of the author do not necessarily reflect the views of FedSmith.com

© 2016 Robert F. Benson. All rights reserved. This article may not be reproduced without express written consent from Robert F. Benson.

About the Author

Robert Benson served 35 years in various Federal agencies, as both a management analyst and IT specialist. He is a graduate of Northwestern University.

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  1. Toni Anthony says:

    I Retired Going on 6 Years Ago with 23 Years of Service and Age of 50. I Must Have Forgotton About FERS Annuity Supplement. To My Surprise I got a, “Notice of Annunity Adjustment,” and I Chalk It Up To Receiving Monies I’d Given Away, Sacificed and Wasted. I’m Now and Really RETIRED NOW!

  2. Thurstonaau says:

    If a postal employee takes disability retirement, does that person receive the FERS supplement?

  3. Ronald Cherry says:

    OPM is try to build their empire bigger.  They have no concern for their customers, Retiring  Federal Employees.  When I retired I had heard all the horror stories from other retirees.  I was pleasantly surprised by the service I received and told her that I hoped that when she retired that she got the same type of service.  I would recommend that every one that retired to give the state the commit.  I knew when I was doing good work And when I had doubts about it.  I was lucky to have had good supervisors who would provide someone to give me good advice or training to improve my work.  I always tried to do my best.  I had some co-workers who thought I was putting too much effort into my work.  Every study or project I ever completed was correct on the technical side and could always be defended by my back up material. I still say my biggest challenge is written communications. Before I retired I had a supervisor who always complained about studies he had to do.  He was 20 years younger than me.  and had on 5 years experience as an Industrial Engineering Technician (IET).  I told him that he should assign it to another technician to do the work. He stated he did not have any one who could do the work.  I told him he needed to train his technicians so they could do the work.  We had a reorganization in our division when our branch head retired.  He did not have a clue as to the capabilities of the technicians in our section. Most on our sections were better trained than he was.  The last 6 months before I retired my division director assigned directly to me around 6 special project of different types.  All were completed on time before I retired.  I had been assigned a new technician (With less than 2 years experience) to train to take over my program.  I trained him not only to take over my program but how to do special projects.  Computers and computer software reduced my former office in the last 20 years from over 220 employee in two divisions to one branch and 40 employees.  The really needed around 50 employees when I left.  Our Branch/Division had so many task assigned by higher headquarters in the Department of the Navy.  When we were notified by the CO to do a task that we no longer had the capability to do  Our office would send him a copies of the memos of our objection to personnel cuts and his decision to make the cuts anyway.   

  4. Wswift9999 says:

    I retired at the end of 2009 at age 60. I was eligible for FERS and for the supplement. I called OPM repeatedly about when I would get my money. I gotr the run around for 6 months and then I took action. I wrote to NARFE, my Congressman, and the President. I then got my back money and my regular retirement check, with supplement, in 2 weeks!

    My advice – don’t wait and don’t fail to complain and do it in writing. I am not a rabble rouser generally but, in this case, the squeaky wheel got quickly greased!

  5. Path04 says:

    Prior to entering my 2nd career in Federal service I had retired from a local government job and receive a modest pension, with no benefits.  Although certainly not the only reason, but since I needed to work a while longer, I also wanted health care insurance that I could keep when I retired again.  I have two questions and our HR folks don’t seem to have the answers.  I’ve surpassed the MRA (age requirement) and will soon have completed more than 10 years service.  Can I retire under FERS (with penalty), keep my health insurance, and am I eligible for the Social Security Supplement until I reach 62?

    • Kinderman says:

      The answer to both of your questions is yes, I believe.

    • FarWest says:

      You have to be the minimum retirement age and 30 years, or 60 and 20 years to get the supplement.  Unless in a VERA or Involuntary Separation.  So I think the anwser to your SRS question is no.

    • Jbcookie2 says:

      I believe you are eligible for the supplement, can keep your health insurance, and should you opt to start your FERs you would be penalized 2% for every year under 62. To avoid that, if you can, is to not start drawining your retirement until age 62.

  6. Fedbens says:

    On January 1, the 2012 version of my annuity supplement software will be made available at fedbens.us .  It will be no. 9 on the menu.  The program uses all your earnings data and the many requirements spelled out in Chapter 51 of the CSRS and FERS Handbook to precisely calculate how much your supplement will be if you retire in 2012.

    Above should be more helpful than estimates.

  7. Pol555 says:

    This is the bill that just got passed last weekend,I read it to say that
    if you don’t retire before 1/1/13 you will not get the supplement

    Section 5404. Annuity Supplement: Eliminates the FERS minimum supplement for
    individuals not subject to mandatory retirement, beginning January 1, 2013

    Individuals subject to mandatory retirement include certain categories of employees such as law
    enforcement, fire fighters, air traffic controllers, and nuclear materials couriers. Under
    current law, the FERS minimum supplement is paid to these employees and to federal
    employees who retire before the age of 62. The FERS minimum supplement represents
    the amount the employee would have received from Social Security if he were 62 years
    old on the day he retired, and is paid until the retiree reaches age 62 and begins receiving
    his actual Social Security payments. CBO estimates that this provision would reduce
    federal spending by $1.6 billion over ten years.

    Please tell me I am wrong…I will have 29yrs and 9 months on that date.

    • FedSmith says:

      It is not clear what bill you are referring to as you did not give a bill number. In any event, I am guesing you have confused the bill that originally passed the House regarding the extension of the payroll tax cut and the one that was passed into law.

  8. Sammyshanker says:

    Saying the Special Retirement Supplement (SRS) computation is complex is a joke.  I worked for SSA and I can and have manually computed my SRS in less than 5 minutes.  OPM really should consider software to compute the SRS to reduce the already ridiculous retirement application processing times.  

    • Fedbens says:

      All salaries from age 22 thru the year before retirement are counted, but not to exceed the Social Security maximum for the applicable year.  Then increase each salary by a 6-digit multiplier, to allow for contemporary levels.  Then delete the lowest five indexed salaries.  Add the remaining salaries and divide by (years * 12).  Apply the three-tier formula for the Primary Insurance Amount (PIA).   Reduce the PIA by 25-30% to get the age-62 benefit.  Divide this by 40.  Multiply by years of FERS service.  Done.

      You do all the above, MANUALLY, in “less than 5 minutes”?!  I am skeptical.


  9. Guest says:

    A better term would be a “Gift from the Taxpayers” since it isn’t earned and could be pulled tomorrow

    • Fed Peasant says:

      The dead bug on the windshield is back.

    • lazyfedsdad says:

      Do you have a life outside of putting down working people?

    • VAFedVet says:

      Coming from a “supposed” retired USAF O6 who is living off the taxpayers with one of the largest federally subsidized annuities available…  A Colonel makes well over 100K and leaves with between 50-75% for life day one, on top of Tricare for life for unlimited dependents at about $800 per year, for life.  Let’s be serious people, A USAF O6 is basically a civilian job in uniform.  Air Force officers outside of aviation and PJ’s is one of the biggest gravy train jobs someone can be lucky enough to get.  Just look at most of the current ROTC programs for USAF, there are no active duty officer slots for the graduates to take because none of them ever leave.  The only assured way of getting a USAF officer position today is the Air Force Academy, and it takes a letter from your congressman to get in, wanna guess who gets those 2 letters per year?… 
      I don’t like to put down other services but in all seriousness a USAF O6 never makes it past the Kuwaiti border while your average ass in the grass enlisted soldier or Marine does multiple combat tours in todays military, leaves with a broken body and mental psyche, and retires on a very modest pension.  This guy (lazyfed) sat in an office somewhere for 25+ years and collects a huge taxpayer giveaway…  All the while he criticizes regular middleclass fed employees as he sits at home on his computer living off the government dime… what a joke…  

      • Guest says:

        Shame that as a CS you know so little about the military let alone their benefits. Military retirees pension is based on their base pay which is 1/2 of their total compensation. So in your example a Col would retire in 20 with $25K a year. Compare that to a landcrab who’s pension includes locality pay and in the above case would retire on $50k.
        But then again its easy to criticise your betters while living a sheltered life and making 0 contributions to your country. But then again I would never criticise the military for all they do

        • PublicCitiZen says:

          Ahhh lazyDMK,

          What?  No denial that you are a retired USAF officer?

          Too busy defending yourself to notice that your non-denials validate the accusation?

          I guess it hurts when it’s your pay, service, pension, and benefits that are criticized instead of flaming someone elses.

          You are easily distracted. 

          We have to play poker some time when I am in need of some extra cash.

  10. Grayson Benoit says:

    You fail to mention FERS employees cost of social security.  When you add that cost to FERS annuity cost it comes out to about the same as CSRS cost.  The only FERS advantage is the Thrift Savings Plan agency matching contribution up to 5%.

    • Fedbens says:

      The article is not about the employee cost of Social Security.  It is about OPM’s refusal to pay ANYTHING for the supplement until months after the employee’s retirement.

  11. PH610 says:

    There has been speculation that the FERS annuity supplement will be done away with. How does this affect those of us who are currently receiving payments? BTW – Happy Holidays!

    • Fedbens says:

      I seriously doubt current retirees will be affected.  Ditto for current employees hired in the 5 years prior to the effective date of the new law, assuming they pass it.

      Above is just my opinion.

      Happy Holidays to all fedsmith readers!

  12. Fedbens says:

    Several readers have emailed me with this question.  Yes, I believe OPM does “catch up” on the supplement, just as they do with the annuity itself.

  13. Carl Banks says:

    The question below is exactly what I was going to ask…if OPM is late in making the supplemental payment for months, do they backpay the missing months?

  14. Qou says:

    I am confused by the fact that the writer on one hand slams OPM for taking so long to calculate annuities and then gleefully announces we should be thankful congress didn’t approve funds to hire additional staff.  Lastly, I’m not sure what evidence the author has to assert that all would be perfect if only non-OPM people calculated annuities.  Yes, OPM has a lot of work to do in improving their calculation times but these kind of blanket statements don’t help and don’t give the whole picture.  Or, may be he’s just suggesting the function should be outsourced and his software and his expertise if he were to contract with the government would result in better outcomes?

    • Fedbens says:

      RE: “…gleefully announces we should be thankful congress did not approve funds to hire additional staff.”  Have you forgotten they DID get approval for 40 more, last year, and they hired same.  It did not work.  Now they would like another 40 or so. 

      Added labor is not the answer to a situation that cries out for automation!

      “…I’m not sure what evidence the author as to assert that all would be perfect if only non-OPM people calculated annuities.”  If you will take another look at my article, you will find the “non-OPM” reference had to do with management, not labor.

      Yes, I have developed software for this function.  And yes, I would not mind selling it to OPM. But there are large corporations that can also develop software, and if there were a competition my product would be one of many, and not likely to be the best.  Point is, ANYTHING would be superior to the status quo.  Anything.


  15. Roadrunnernm54 says:

    I received my supplement within two months.  I don’t understand the OPM bashing.

    • Fedbens says:

      I’m happy for you, but my article was about the thousands and thousands who are being hurt by OPM’s refusal to pay anything at all for the supplement until months after the retirement, when they finally settle up.

      As I said, I am happy it worked well for you, but your case is quite obviously a departure from OPM’s usual policy.

  16. mandinka says:

    Although I am a retired CSRS employee of almost three years and my retirement went very smooth, I feel deep anger for the attacks on federal employees and the problems with OPM. When deciding to retire I thoroughly evaluated my situation long-term and based on educated guesses of my future pay and benefits had I stayed on. Obviously, I made the right decision. Started in 2012 my total income will exceed what I would be making had I stayed. It is very disturbing what our government is doing to federal employees. The current pay freeze is wrong and Obama is responsible. The Rupublicans know our unions vote Democrat and therefore don’t care about our vote. Most Democrats and the White House are for extending the pay freeze and cutting benefits…there merely say they’re against it now because its convenient to say so in light of the GOP bill. Polls have been taken of the American people’s attitudes towards federal employees and unfortunately they our not on our side. It seems hopeless. All you can do is get out if your eligible and can afford it. With the American people and our government against us, its a wonder the federal employee finds any pride in their work.

  17. Retired Fed says:

    I do not agree with your “no hope” part. That is too discourageing to imagine. I seem to remember that it was Congress, alone, who put together the FERS annuity laws. They did not invite OPM into it at all. Then Congress expected OPM to do it their way, in a great way. Congress always decides things in a great way, correct?

    • Fedbens says:

      Please note my “no hope” comment referred to the current leadership/administration at OPM.  With a change at the top, wonderful things can happen.

      Sorry if I did not make the above clear.


  18. DHSICE says:

    I have a question and not a comment.  Does OPM eventually catch up with the supplemental as they do with the annuity?