Of all federal retirement benefits, “special retirement supplement” is one of the benefits that are less understood by employees. Many retirees and near-retirees might have heard of it but don’t know much about it and might have included it in retirement planning, even if they are not eligible. Some fail to include it also though they are eligible.
The special retirement supplement benefit applies only to FERS employees under certain circumstances. No CSRS retirees are retiring on an immediate annuity not reduced for age or involuntarily retire before retirement or voluntarily because of a re-organization, reduction in workforce, or early retirement. All except the first category including those retiring on an immediate annuity not reduced for an age–their payment is not released before they reach minimum retirement age.
For those who don’t know, the special retirement supplement decides the amount that an employee would receive for his or her FERS service from the Social Security Administration and is determined based on your eligibility to receive SSA benefits on the day of your retirement. Your ability continues until before the last day of the month before the first month for which you would be eligible for actual Social Security benefits, or the last day of the month when you reach 62.
The Office of Personnel Management calculates your full career (40 years) Social Security benefit. Then the department computes the amount of your civilian service under FERS and, based on that, reduces the estimated full career Social Security benefit.
Understanding this by taking an example, if your estimated full career Social Security benefit is $1,000 and you served for 30 years under FERS, then the department would divide 30 by 40 (.75) and multiply the answer by your estimated full career Social Security benefit that means, $1,000 X .75 = $750). This will be your special retirement supplement.
This unique retirement supplement depends on the Social Security earnings test, which may reduce or sometimes eliminate the security benefit if you are earning well from outside sources.
The primary FERS benefit isn’t counted as earnings, and any reduction (due to the earnings test) will not impact your primary benefits.
