What is the FERS Enhanced Pension Multiplier?

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Any Federal employees hired after January 1, 1987, are covered under the Federal Employees Retirement System (FERS). However, not all employees covered under FERS have the same retirement options; special category employees, namely law enforcement officers (LEOs), firefighters, and air traffic controllers (ATCs), have different requirements and options available to them. These designated employees are eligible for an enhanced FERS pension multiplier and have a mandatory separation requirement.

Mandatory Separation

The special retirement benefits offered to air traffic controllers, LEOs, and a few other designated groups are connected to their limited federal service. This reduced service is due to the high physical demands required of such positions, and consequently, the mandatory retirement age mandated for these occupations.

For example, LEOs and firefighters are generally subject to mandatory retirement at age 57 or as soon as 20 years of service have been completed after age 57. While most ATCs are subject to mandatory separation at age 56 or as soon as 20 years of service, have been completed after age 56. (OPM Handbook Ch 46)

Note: When you reach the 20-year service requirement, you don’t need to stay in a covered position to retire with the enhanced FERS benefits. You can take a non-covered job, avoid mandatory retirement, and still receive the special FERS benefits for those 20 years of covered service. (OPM FERS Handbook C-100).

Enhanced Pension Multiplier

Due to the expectation that special category employees will have a career that ends at an earlier age with fewer years of service, they are offered an enhanced pension multiplier designed to provide an adequate retirement income. The FERS pension is based on the average of your highest-paid consecutive 3 years of service (“high-3”), multiplied by your years of creditable Federal service, and by a percentage multiplier (either 1% or 1.7%). The “high-3” salary is time-weighted and includes basic pay, locality pay adjustments, and shift differentials, but not overtime, bonuses, or payments for unused annual leave. The following is the formula used to compute your enhanced pension:

High-3 Salary X First 20 Years of Creditable Service X 1.7% = A

High-3 Salary X Remaining Years of Creditable Service X 1% = B

A + B = FERS Special Provision Annual Pension

Special Retirement Supplement

If you retire before age 62, you may be eligible for a pension supplement called the Special Retirement Supplement (SRS), also known as the FERS Supplement. The SRS was designed to bridge the gap between when you retire and age 62 (the age you become eligible for Social Security). Essentially, the FERS supplement represents what you would receive if you were eligible to receive Social Security.

To estimate your SRS, take your Social Security benefit estimate at age 62 (provided by the Social Security Administration), divide it by 40, and then multiply the result by the number of years you’ve been a FERS employee (rounded to the nearest whole number).

Note: As a special category employee, you do not have a wage limit. Meaning regardless of how much you earn, your supplement will not be reduced or stopped until you reach your Minimum Retirement Age (MRA).

Final Thoughts

As a FERS special category employee, you have a robust and distinct pension benefit that can help you achieve your retirement goals. And now that you understand some of the essential components, such as the mandatory separation provision and the enhanced pension multiplier, you have the knowledge to make informed decisions when planning your retirement. In addition to this article, you should review the OPM web pages cited and consult with your human resource personnel. If you do not feel confident in creating your financial plan or want a professional opinion, you should consult with a qualified financial planner.

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2023 Legislative Change Notice

The SECURE ACT 2.0 passed and impacted many of the articles on this website. While the articles were correct when written, it’s impossible to re-write every article. Please consult a qualified professional (i.e., CFP®, CPA, or attorney) before implementing any strategy.

Published by Jose Armenta, MsBA, CFP®, ChFC®, EA

Jose Armenta is a CERTIFIED FINANCIAL PLANNER™ professional who specializes in helping federal employees get the most out of their federal benefits. Jose’s experience serving federal employees has provided him with valuable insight into federal employees' unique financial planning needs.

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