Legislation Would Expand Retirement Options for Some Federal Employees

Legislation has been reintroduced to allow a buyback for time working as a temporary employee to count toward federal retirement payments.

Legislation has been reintroduced to expand retirement options for some federal employees.

The Federal Retirement Fairness Act (H.R. 5995) has been reintroduced by Congressman Derek Kilmer (D-WA). It would ensure that federal employees who began their careers as temporary workers are granted the opportunity to make catch-up retirement contributions so that they can retire on time, otherwise they would have to work longer to obtain full retirement benefits.

The legislation was previously introduced in 2021 and has been introduced at least three times before.

“Many federal employees begin their careers in temporary positions before transitioning to permanent status. We need to have their backs,” said Kilmer. “The Federal Retirement Fairness Act will ensure that all federal workers, from those at Puget Sound Naval Shipyard to postal workers and beyond, have the opportunity to retire on time, regardless of how they started their careers.”

Purpose of the Legislation

Prior to 1989, the Office of Personnel Management permitted federal employees to make catch-up payments, enabling them to compensate for years they didn’t contribute to their retirement accounts. However, this provision was eliminated when the government transitioned to a new federal employee retirement system.

Usually, in order to obtain credit toward a future retirement pension, a federal employee must be employed in a job in which there is a Federal Employees Retirement System (FERS) retirement deduction. Federal jobs requiring these deductions from an employee’s pay are usually working in a job as a career or career-conditional appointment with the federal government.

With a few exceptions, a FERS employee cannot make a deposit for “non-contributory service” performed after January 1, 1989. Creditable service under FERS can include working as a federal employee before 1989—even when an employee’s pay was not subject to retirement deductions—if a deposit has been made. This includes service under a temporary appointment. 

Federal employees who began as temporary employees and later transitioned to full-time positions might have to work extra years compared to their colleagues to achieve equivalent retirement benefits. The legislation aims to reinstate the option for employees hired post-1989, allowing them to retroactively purchase the time they served as temporary federal employees, mirroring the terms that existed before 1989.

Only Counting Time Prior to 1989

Under FERS, in order to count federal employment prior to 1989 toward a retirement payment where a retirement deduction was not taken from an employee’s salary, a deposit must be paid to count toward your retirement computation.

A deposit is a payment for a period of employment when retirement deductions were not withheld. The deposit amount is generally 1.3% of salary plus interest.

You are not required to make this type of payment. However, not making the payment means that this time does not count toward federal retirement.

This bill would eliminate the requirement that creditable service would have to have been performed before January 1, 1989.

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.