Estimates of Benefits Changes in 2012

OPM has not yet released official numbers for costs in benefits changes for 2012 that would be affected by the recent COLA. The author offers his best estimates as to how the cost of the FERS basic death benefit and children’s survivor benefits are likely to change next year.

FedSmith.com author John GrobeBy Categories Current Events, Federal Employee Retirement Leave a comment

An OPM official stated on November 23rd that there has been no discussion over any changes to employee benefits due to the recent cost-of-living-adjustment (COLA).  The items that would be affected by the COLA are the FERS basic death benefit and children’s survivor benefits. 

In the past, OPM has announced such changes via “Benefits Administration Letters” (BALs).  However, in recent memory, they have never issued a BAL until at least January (and then only in 2009).  In 2008, OPM waited until May 29th to issue the BAL.  By means of comparison, Social Security publicly announced how their 2012 benefits would be affected within one day of the COLA announcement.  Medicare quickly followed suit, and the IRS announced all of their changes over a month ago.

I followed up with OPM asking about 2012 figures and an official stated that at this time there were no changes in the numbers, but that did not rule out any changes in the future. 

Each year those of us who deliver pre-retirement seminars have to estimate what the OPM benefits will be when designing our training material.  2012 is no different.  So, for those who are interested, here is my estimate of how the benefits will change. 

   2011  2012
 FERS basic death benefit (annual amount)  $29,722.95  $30,792.97
 Children’s survivor benefit (one surviving parent) (monthly amount)  The lesser of:
60% of high-three;
$409 per child;
$1409 divided by number of eligible children

  The lesser of:
60% of high-three;
$423 per child;
$1459 divided by number of eligible children
 Children’s survivor benefit (no surviving parent) (monthly amount)  The lesser of:
75% of high-three;
$563 per child;
$1691 divided by number of eligible children

 The lesser of:
75% of high-three;
$583 per child;
$1751 divided by number of eligible children
 

 

As I remind participants in my pre-retirement seminars, the last math class I successfully completed was as a sophomore in high-school, so my numbers may be a little off.  I guess we will see whenever OPM gets around to announcing the “official” numbers.

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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.

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