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Part Time Service Annuity Calculations

Part Time Work's Annuity Impact



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Updated 8/15/2016

Part Time Federal Work Will Impact Your Retirement Annuity

Many federal employees had some part time work experience during their careers.  Part-time employees receive full-time credit for retirement eligibility (years of service), but the impact on the annuity can be significant. To determine how your part time service will affect your annuity you have to understand the differences between pre and post April 7, 1986 rules.

Part-time calculations are complex and the computation rules changed on April 7th 1986.  Unless you dig, the OPM website is extremely vague on this topic.

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Assistance

CSRS Proration

If you have part-time service before and after April 7th 1986, the retirement calculators used by most agencies computes the figure separately for these periods of time.  The combined basic annuity of a CSRS employee who has any part-time service on or after April 7, 1986, is the sum of two separate computations:

  • A pre-April 7, 1986, basic annuity, using the employee's total creditable service through April 6, 1986 (plus unused sick leave as of the date of the employee's separation); and
  • A post-April 6, 1986, basic annuity, using the employee's service from April 7, 1986, through the date of separation, and leftover days from the length of service used to compute the pre-April 7, 1986, basic annuity. The result of this computation is prorated to reflect the difference between full-time and part-time service.

The CSRS proration factor is a fraction, expressed as a percentage rounded to the nearest percent. It is used in the computation of the post-April 6, 1986, annuity benefit to reflect the difference between full-time and part-time service performed after April 6, 1986.

Compute it as follows:

  • Actual Hours Worked from 4-7-86 to Date of Separation
    Total Full-Time Hours Possible from 4-7-86 to Date of Separation

What basically happens with the proration factor is they compute the annuity as if you worked full-time, however  the annuity is reduced for the period after 4-6-1986 by the amount of hours you worked in comparison to a full-time worker.  If you worked 50% of the time, you will receive 50% of the annuity for that period of time.  

FERS Proration

 

The FERS proration factor is used to compute FERS and FERS component annuities that include credit for part-time service. The factor reflects the difference between full-time and part-time service for the entire period of covered FERS service (including military service credited under FERS).

 

 Compute it as follows:

  • The actual Hours Worked During All Creditable FERS Service
    Total Full-Time Hours Possible During All Creditable FERS Service


Visit http://federalretirement.net/annuity.htm#Part_Time_Work  for more information and a direct links to OPM guidance.  The OPM guide provides detailed examples for calculating part time service annuity impact. The CSRS part time example is located on page 6 of this guide , see page 21 for a detailed FERS analysis.

Attaining Part Time Service With Your Agency

 

There are a couple ways to attain part-time service with your agency: one before you retire and one after you retire.  You could also look to see if there are contractor opportunities available.  

1. Before you retire:

Part-time service will not affect your high three calculation, since the part-time service is after April 6, 1986. Part-time service will affect the final annuity calculation.  With part-time service, the CSRS basic annuity is prorated to reflect the percentage of a full-time tour the employee actually worked after April 6, 1986.  The actual total hours worked after April 6, 1986 is divided by the total number of hours you could have worked if you were full time.  I know this is a little confusing, but it is not necessarily adverse – it is just an adjustment so you only receive credit for the hours worked. If you are considering this, I would request a retirement estimate from your benefit department to review the calculation in your situation.  

2. After you retire:

Normally, if you are reemployed as a federal employee after you retire, your salary is reduced by the amount of your annuity. However, there has been a recent exception to this requirement.  On January 12, 2010, the National Defense Authorization Act allowed the reemployment of CSRS and FERS annuitants on a limited basis (less than a year and limit hours), allowing the employee to receive both the annuity and the salary.  It does not apply the same way to all agencies.  (The DOD has a different law and criteria than other agencies.)  There is specific criteria an agency must use to justify retaining an annuitant without the reduction in pay. For more information see: http://www.opm.gov/retire/pubs/bals/2010/10-101.pdf

 

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