Implementing the New HR Changes: When Do These Benefits Become Effective?
By Ralph Smith
Friday, October 30, 2009
With the signing of the Department of Defense authorization bill into law this week, it isn't surprising that some readers have had questions. Many of these questions are from people who are in the FERS retirement system. From the questions, we can infer that some if not most of these folks are trying to decide when to retire and, apparently, basing their decision in part on how their sick leave will be credited in the calculation of their annuity. (See President Signs Defense Bill)
Whether delaying your retirement for this benefit is a good idea is a personal decision. Waiting to retire in 2014 to make sure you get the benefit of your unused sick leave may be an indication that you are looking for an excuse to keep working as the new benefit won't make you a wealthy person in any case. (See Sick Leave, FERS and Delaying Retirement)
We cannot answer many of these questions. As is usually the case, a law provides a broad outline for a topic and the implementing regulations and guidance fill in many of the details. In this case, the Office of Personnel Management (OPM) will be providing answers in coming weeks.
But, for any help that this will provide, we do have limited information based on guidance from OPM on when these new federal benefits will become effective.
First, if you had any doubt, credit for sick leave in the computation of FERS annuities is effective at 50% immediately and 100% beginning in 2014.
A number of readers have asked whether this benefit will be retroactively applied to those who have previously retired under FERS. In other words, if you retired in 2000 under the FERS system and did not use 1200 hours of sick leave, will you now get an revised annuity based on the sick leave that you did not use?
I cannot point to any guidance or regulation that definitively answers this question.
Any waiting for a retirement annuity to be recalculated based on sick leave that was turned in previously is probably wasting time and energy. The law does not create a provision for making the enhanced retirement benefits retroactive and I cannot imagine the director of OPM would give any thought to creating a morass for his agency with the myriad of administrative and legal problems that would ensue.
Several readers have opined that not making this provision retroactive is "unfair" to those who previously retired. That may be true but that is usually how a human resources system works. The benefit did not exist until this week and applying it retroactively would cost the government millions of dollars in administrative costs and handling the numerous appeals from people who disagreed with how it was applied in particular cases.
Second, another new benefit pertains to former federal employees under FERS who withdrew their contributions to the retirement trust fund. When they withdrew their contributions, they waived retirement credit for those years of service. The new provision allows them to redeposit their earlier contributions, plus interest, upon reemployment with the federal government. This provision is also effective immediately.
Third, a change in part-time computation for CSRS employees (going to a single deemed high-3) is effective immediately.
Fourth, a change of the ending date for periods of service under CSRS that can be redeposited by actuarial reduction (instead of for separations prior to October 1, 1990 it will be for separations prior to March 1, 1991) is effective immediately.
Fifth, the less-than-full-time dual compensation reemployed annuitant provision in the new DoD authorization authorizes federal agencies to reemploy retired federal employees under certain limited conditions. This can be done without offsetting an employees' annuity against their salary. This option is available for agencies to use right away.
Sixth, the provisions in the DoD authorization phasing out cost of living allowances for federal employees working in Hawaii, Alaska, and other non-foreign U.S. territories, and phasing in locality comparability pay in place of the allowance affecting retirement, will become effective in 2010.
I hope this is helpful and, as new information becomes available, we will be sure to make readers aware of it.
© 2009 FedSmith Inc. All rights reserved. This article may not be reproduced without express written consent of FedSmith Inc.
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