Micah Shilanski 00:03
Part time work can be a great way to either transition in retirement, enjoy more time with a family while you still have a paycheck coming in, but it does change your pension a little bit, and it can be confusing on what are eligibility versus computation rules, and if you think this might affect you, then stay tuned for this, FERS Federal Fact Check, I’m Micah Shilanski, and we have a great question that came in from Martha about one of our YouTube videos we put together, and albeit probably some ambiguity we had in our video, and so wanted to take some time to make sure we clarify that. Martha did go ahead and call in with her question, which is fantastic, listen to what she has to say.
Martha 00:39
Yes, my name is Martha, and I tune into as many of your podcasts as I can for your valuable information, I have a question regarding part time work, previously, I thought that each year of part time service counted as a full year towards my years of creditable service, but I was listening to a recent podcast by JT titled “How to ensure your years count towards creditable service”, and at around timestamp, 4 minutes and 14 seconds, he says something that goes against what I previously thought, so I have several years of part time work, I could retire at my minimum retirement age and 30 years, even though I have all those years of part time work, as long as I paid FERS and FICA every year, of course, but he makes it sound like it’s more of a proportional thing with the gradual years of service, I do plan on hiring your company to do my retirement application processing about a year before I retire, but now I’m not sure when I should be contacting you for that process, can I get some clarification? I do appreciate your help, thank you.
Micah Shilanski 02:00
Martha, that is a wonderful question. Thank you so much for calling in with it, and thanks for the great comments, I really appreciate it. One of the things we strive to do is put out great information, but albeit, sometimes that can be a little confusing, and I really appreciate you guys writing in with comments and calling in with questions, being like, hey, could you clarify this just a little bit, and so let’s talk about that comment that JT was making regards to creditable service and how it’s going to work with our retirement. So let’s talk about your credible service and how it’s going to work, and let’s go through with an example. Let’s say Martha as your example, right? Let’s say you had 30 years of service, which is fantastic, by the way, and let’s just say for discussion, this is going to be part time service, and on your part time service, we’re just going to say you’re working half time because it makes our mouth really easy, so what are our rules for eligibility and retirement? Well, rules for the eligible retirement is going to be one of three dates for an immediate, unreduced pension. Number one is your MRA minimum retirement age and 30 years of service. You can be age 60 and have 20 years of service, or you can be age 62 and have 5 years of service. Those are our primary gates, the three criteria we have to meet one of these three in order to be eligible for a full and immediate pension. So when it comes to part time work, we got to sparse that into two things. Number one, what makes you eligible, and number two, how are we going to compute your annuity, or, better said, your pension? So when it comes to your computation, if you have part time work or 30 years, great news, every year of part time work, there’s a half time or more, whatever that combination is, is going to count as a full year of service for eligibility to retire, so Martha, in your case, you have 30 years, wonderful, that means you’re going to meet this first case right here, 30 years, once you hit your MRA, you’re eligible for a full, unreduced pension. But now it comes to the second part, which is the computation, and this is the part that we left out the details in the video, and I apologize for that, let’s get this information. When it comes to computing your pension, that’s where we’re going to take this proportionate aspect of it and say, hey, well, you had 30 years of service however that was at 50% of work, therefore it’s going to act like it had 15 years of service for your pension computation, so 15 years of service times 1% because you get 1% for every year you work is going to equal our 15% is what your pension is going to be, so if you had a high three of $100,000 because it makes my math super, super easy, and we times that by 15% you’re going to have a $15,000 pension divide by 12, round down that to the whole dollar, that is going to be your monthly pension amount. So that’s how we’re using those two different rules, your years of service, your bet, when you ask for your credible service, your certified summary of federal service, when you go and look at your records, it’s going to say, yeah, you really been working for 30 years, and that’s great, that’s step one, step two is how many of those 30 years were full time service or part time service, if you had a mix of that, let’s say you had 20 years full time and 10 years part time, well, then great news, you’re 20 years, you get that full 1% for every year for that 10 years, let’s say you work half time that 10 years really counts as 5, so you’d have 25 years for your pension computation, not your eligibility. Martha, I hope that sheds a little bit more light on this topic. If you have questions like this, to pick up the phone, give us a call, leave us a question, we’d love to hear your voice, we’d love to answer the question they have. If you think it might be a little more detailed, you want a little more one on one, help then reach out to us, our job has helped transform the lives of another one employees with retirement, and sometimes that means you need to pick up the phone and call so we can hear your personal situation and see if we can help, till next time, Happy Planning!