Driving Federal Government Employees Into Retirement

FERS is separate from TSP and SS. It is a defined benefit pension system period.

Compared to CSRS, there were changes in FER related to pension computation and COLAs, but it is still a defined benefit pension system.

As a retired USG employee with 36 years service, I had to decide whether to join FERs in 1983 or stay in the old system. I chose the latter for a number of different reasons.

...whether to join FERs in 1983

1987 vice 1983. 1983 was when all new hire federal employees had to join SS.

FERS is separate from TSP and SS. It is a defined benefit pension system period. Compared to CSRS, there were changes in FER related to pension computation and COLAs, but it is still a defined benefit pension system. As a retired USG employee with 36 years service, I had to decide whether to join FERs in 1983 or stay in the old system. I chose the latter for a number of different reasons.

FERS is a three tiered system, two of which are SS and TSP.

"In economics, a defined benefit pension plan is a major type of pension plan in which an employer promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending on investment returns." Source

The fact that TSP, an entirely investment return source, is part of FERS removes FERS from the defined benefit system.

CSRS, of course (and the reason you and I chose CSRS), is a defined benefit system.

BTW, I currently have 40 years of Navy civil service under my belt.

FERS is a three tiered system, two of which are SS and TSP.

I know that is the way they sold it. It was supposed to be a three legged stool rather than three tiered. Prior to FERS, you could already join SS and the TSP. What they did is to decrease the benefits under the CSRS annuity. In return, you could get a matching TSP up to 5% or just a 1% federal contribution without any match. And you would be contributing to SS and avoid the windfall impact.

Under the old CSRS, you got 2% per year of service multiplied by the high three average. Under the FERS annuity you get 1% of your high three if you retire under 62 and 1.1% if you retire 62 or older. You could receive SS supplementary payments until you reach 62. Under FERS you get 1% less on COLA for the annunity portion compared to full COLA for CSRS.

"In economics, a defined benefit pension plan is a major type of pension plan in which an employer promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending on investment returns." Source

That's correct. The FERS defined benefit pension meets that description. Currently, Senators Coburn and Burr have sponsored a bill to eliminate the FERS defined benefit pension.

BTW, I currently have 40 years of Navy civil service under my belt.

I have 36 years of federal service including 8 years of service as a naval officer credited without having to contribute anything for it. I also receive a minimal SS retirement annuity, largely due to that service.

I think we don't have any real differences in our understanding of the way the pension systems work. I have always thought of FERS in the terms of the pension annuity portion and not the way the USG tried to sell it when it was introduced. The idea was to shift more people into FERS and shift the burden to SS and the TSP and reduce the defined benefit pension system. We were provided with several computer programs to see which system would be best based on your personal circumstances.

I stayed in the Foreign Service Retirement System(similar to CSRS with a few slight differences.) After 12 years of retirement, I still believe I made the right choice to stick with the old system. I suspect that Congress will eventually go after those of us in the old system by linking the amount of COLA increases to some sort of means tested reduction based on the amount of your pension. I received close to a $4,000 annual increase due to the latest COLA increase. It is only a matter of time before many of these benefits are cut including the 70% federal subsidies for the FEHB program even for retirees.

... traditional pensions are disappearing in the private sector, but that’s the private sector’s fault.

Bzzzt, nope. It is the fault of Congress. The Federal Government. You know, the folks who gave you your cushy pension.

traditional pensions are disappearing

traditional pensions are mostly gone and only if you are over 50.